ABN 78 008 947 813
2008 Annual General Meeting
Meeting Documents
Notice of Annual General Meeting & Explanatory Memorandum
Proxy Form for Annual General Meeting
Corporate Representative Certificate for Annual General Meeting
To be held on Thursday, 16 October 2008 at the Celtic Club,
48 Ord Street, West Perth, Western Australia commencing at
11.00am WST
Contact Details
Imdex Limited
Level 1, 15 Rheola Street
West Perth 6005 Western Australia
PO Box 1325 West Perth 6872
Western Australia
Telephone: +61 8 9481 5777
Fax: +61 8 9481 6527
Email: imdex@imdexlimited.com
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www.imdexlimited.com
Providing Drilling Fluids and Leading Down Hole Instrumentation to the World
Annual Report
Contents
Imdex Group at a Glance
FY08 Highlights
Comparative Financial Performance
Board of Directors
Chairman’s Report
Managing Director’s Report
Imdex’s Operations
Supporting Operations for Future Growth
Financial Report 2008
1
3
4
6
9
10
14
26
33
Imdex Group at a Glance
Imdex is a Western Australian based S&P/ASX 300 listed company, which provides drilling
fluids and leading down hole instrumentation to the mining, oil and gas, water well, and civil
engineering industries worldwide. The Group has a presence in all significant mining and
exploration regions, and now has the global profile and resources to position it for extended
future growth.
Key Data as at 30 June 2008
Market Capitalisation
Shares on Issue
Shareholders
$304.6 million
183,490,932
3,690
Employees
285
Group Structure
DRILLING FLUIDS &
CHEMICALS DIVISION
IMDEX LIMITED
DIVISIONS
TRADING COMPANIES
RESEARCH & DEVELOPMENT
SAMCHEM
AUSTRALIAN
MUD
COMPANY
POLY-DRILL
SUAY
ENERGY
SOUTHERN-
LAND
FLEXIT
(OIL & GAS)
REFLEX
(MINERALS)
SEG
IMDEX TECH
UK
Imdex 2008 Annual Report | 1
The 2008 financial year marks the fifth consecutive
year of revenue and profit growth for the Imdex Group.
Imdex 2008 Annual Report | 2
FY08 Operational Highlights
The 2008 financial year saw many positive operational achievements for the Imdex Group,
including strategic acquisitions, sales and distribution alliances, and growth in new geographical
regions and markets.
• July 2007, acquired Poly-Drill Drilling Systems (Poly-Drill).
• April 2008, supply agreement - Layne Christensen.
• July 2007, acquired a 75% interest in Suay Energy Services LLP (Suay).
• June 2008, acquired remaining 25% of Suay Energy Services
• August 2007, supply agreement – Boart Longyear.
• September 2007, distribution agreement with Sandvik Mining
and Construction.
LLP (Suay).
• FY08, further penetration into the global oil & gas market.
• FY08, growth across all geographical regions.
• October 2007, divestment of non-core business Surtron Technologies
• FY08, continued strengthening of the management team.
for $20 million cash.
• November 2007, acquired Southernland S.A. (Southernland).
• January 2008, acquired System Entwicklungs GmbH (SEG).
• March 2008, supply agreement - Major Drilling.
• March 2008, supply agreement - Swick.
• March 2008, Imdex was included in the S&P/ASX 300 for the first time.
• FY08, production capacity expansion at Samchem commenced.
• FY08, increased production capacity at Imdex Technology (UK)
Limited (formerly Chardec) in the United Kingdom and Southernland
in Chile.
• FY08, consolidated position as a leading provider of drilling fluids and
down hole instrumentation to the resources industry globally.
Market Highlights
• Continuing demand for commodities, largely driven by China and India.
• Increased mining and exploration activity in a number of
• Continuing demand for energy, the interest in this sector was reported
African countries.
to be at a 30 year high.
• High levels of exploration expenditure in Latin America.
Financial Highlights
UP
137%
UP
62%
UP
25%
UP
60%
UP
45%
UP
18%
Operating
Revenue
EBITA (normal
operations)
Net Profit
after Tax
Operating
Cash Flow
(before tax)
Earnings
Per Share
11.22 cents
Fully Franked
FY08 Dividend
Per Share 4.0 cents
Imdex 2008 Annual Report | 3
2008 Comparative Financial Performance
Operating Revenue from continuing operations
Operating Revenue from discontinuing operations
Total Operating Revenue (excluding interest income) *
Change in percentage - Total Operating Revenue
Operating Profit before Interest, Tax, Depreciation & Amortisation *
Depreciation *
Earnings before Interest, Tax & Amortisation (EBITA) *
EBITA margin *
Amortisation *
Earnings before Interest & Tax (EBIT) *
Net interest expense *
Net profit before tax *
Income tax expense *
Net Profit after Tax *
Non-operational items
RTE/Imdex Joint Venture Recovery
Profit on sale of Surtron business
Tax effect of non-operational items
Net Profit for the Year after Tax
Change in percentage - EBITA
Change in percentage
Change in percentage
EBITA of continuing operations (excluding non-operational items)
Change in percentage
Basic earnings per share from continuing operations (cents)
Net Cash provided by Operating Activities before Tax
Cash on hand
Net Assets
Total Borrowings
Net Tangible Assets per Share
Change in percentage
Change in percentage
Change in percentage
Change in percentage
Change in percentage
Change in percentage
Change in percentage
* - denotes items that include both continuing and discontinued operations
4 | Imdex 2008 Annual Report
2008
$’000
142,009
6,584
148,593
25%
43,804
(3,733)
40,071
27%
62%
(6,055)
34,016
60%
(923)
33,093
(11,011)
22,082
73%
-
12,139
(2,219)
32,002
137%
38,802
74%
11.22 ¢
45%
25,619
18%
13,276
-13%
105,643
38%
35,552
-12%
14.02 ¢
82%
2007
$’000
103,849
14,591
118,440
29,075
(4,368)
24,707
21%
(3,430)
21,277
(1,986)
19,291
(6,558)
12,733
1,121
-
(336)
13,518
22,260
7.72 ¢
21,651
15,271
76,614
40,437
7.69 ¢
12.0 c
10.0 c
8.0 c
6.0 c
4.0 c
2.0 c
-2.0 c
-4.0 c
50%
40%
30%
20%
10%
0%
-10%
-20%
Normalised Earnings and Dividends per share
Normalised Revenue by Division ($m)
160
140
120
100
80
60
40
20
0
FY04
FY05 FY06 FY07 FY08
FY04 FY05 FY06 FY07 FY08
Final Dividend
Interim Dividend
Fluids and Chemicals
Down Hole Instrumentation
Earnings per Share
Minerals Processing
Return on Equity (EBITA/Equity)
Normalised EBITA ($m)
45
40
35
30
25
20
15
10
5
0
-5
-10
FY04
FY04 FY05 FY06 FY07 FY08
FY04 FY05 FY06 FY07 FY08
Normalised numbers include profit from discontinued operations and exclude non-operational items.
Imdex 2008 Annual Report | 5
Imdex’s Board of Directors
Mr. Ian Burston AM – Non Executive Chairman. Age: 73 years
• Appointed to the Board 22 November 2000.
• Previously Managing Director of Hamersley Iron, Chief Executive Officer for Kalgoorlie Consolidated Gold Mines,
Managing Director and Chief Executive Officer of Aurora Gold, and Managing Director of Portman Limited.
• Diploma in Aeronautical Engineering and a Bachelor of Engineering (Mechanical).
• Fellow of the Institution of Engineers Australia, Australasian Institute of Mining and Metallurgy, and the Australian
Institute of Company Directors.
• Extensive experience leading publicly listed and private companies.
Mr. Bernard Ridgeway B.Bus (ACCTG) ACA – Managing Director. Age: 54 years
• Appointed to the Board 23 May 2000.
• 23 years experience with public and private companies as owner, director and manager.
• Qualified Chartered Accountant.
• Member of the Institute of Chartered Accountants Australia, and the Australian Institute of Company Directors.
• Mr. Ridgeway has a hands on and participative management style with extensive experience and expertise in
finance, administration, marketing and business development.
Mr. Ross Kelly BE (HONS) FAICD – Non Executive Director. Age: 70 years
• Appointed to the Board 14 January 2004.
• Previously Chairman and Non Executive Director of Clough Limited, Sumich Group Limited, Orbital
Corporation Limited, Beltreco Limited, and Director of Aurora Gold Limited, PA Consulting Services Ltd and the
Fremantle Football Club.
• Qualified Engineer and specialist consultant to the Western Australian Government and major Australian
companies within the mining and heavy process industries.
• Comprehensive professional and international experience in the offshore gas, oil refining and steel industries.
• Previously a Councillor of the Australian Institute of Company Directors and Member of the Advisory Board for
the Curtin Graduate School of Business.
Mr. Kevin Dundo B.Com, LLB – Non Executive Director. Age: 55 years
• Appointed to the Board 14 January 2004.
• Practicing Lawyer specialising in commercial and corporate law, and in particular mergers and acquisitions, with
experience in the mining services, and financial services industries.
• Director of Intrepid Mines Ltd and Computercorp Limited.
• Previously Director of St Barbara Mines Limited and Defiance Mining Corporation (listed on the Toronto Stock
Exchange).
• Bachelor of Commerce and Bachelor of Laws.
• Member of the Law Society of Western Australia, Law Council of Western Australia, Australian Institute of
Company Directors, and a Fellow of the Australian Society of Certified Practicing Accountants.
Mr. Magnus Lemmel B.A. – Non Executive Director. Age: 68 years
• Appointed to the Board 19 October 2006.
• Management Consultant based in Brussels, Belgium.
• I nvolved in small business development in Sweden and Chairman of the Technical Advisory Committee for
Reflex and Imdex Technology (UK) Limited (formerly Chardec).
• Previously Senior Vice President of Ericsson Telecommunications, Chief Executive Officer of the Federation
of Swedish Industries, Director General for Enterprise Policy of the European Commission and President of
Småföretagsinvest AB (the previous owners of Reflex).
6 | Imdex 2008 Annual Report
Imdex 2008 Annual Report | 7
Imdex 2008 Annual Report | 7
FY08 was a year of strong growth
with positive contributions from
all business units.
8 | Imdex 2008 Annual Report
Mr. Ian Burston
Chairman’s Report
To our shareholders,
On behalf of the Board it is my pleasure
to present the Imdex Group 2008 Annual
Report. FY08 was a year of strong growth with
positive contributions from existing business
units, buoyant market conditions, and new
acquisitions offering scope to leverage Imdex’s
scale and global presence.
I am pleased to report that in FY08, Imdex
achieved the highest revenue and profit figures
in its history. The Imdex Group achieved a
25% increase in revenue to $148.6 million
(excluding interest income), and a 137%
increase in total net profit to $32 million. This
delivered earnings per share of 11.22 cents.
These strong results reflect the Imdex Group’s
unwavering commitment to the priorities set
down by the Board at the 2007 AGM, including
an ambitious growth agenda set against the
backdrop of a major acceleration across the
globe in exploration and resource activity.
The acquisitions undertaken in the current
year have been an integral part of our strategy
to ensure a broad global presence for our
businesses. Acquisitions made in the current
financial year were:
• Suay Energy Services (Suay) in Kazakhstan;
• Poly-Drill Drilling Systems (Poly-Drill);
in Canada;
• Southernland S.A. (Southernland) in Chile; and
• System Entwicklungs (SEG) in Germany.
Suay, Poly-Drill and Southernland are all
drilling fluid companies and represent our
entry into markets in the Caspian Sea region,
Canada and Latin America. SEG is primarily
aimed at the down hole instrumentation
business in the oil and gas industry and offers
world class technology.
instrumentation to the resources industry
with an increasing market share of the oil and
gas sector.
The Board’s emphasis on acquiring businesses
that complement existing operations and are
earnings accretive, will create long term value
for shareholders. Increased size and global
reach has already started to deliver scale and
efficiency benefits which position the Imdex
Group for strong earnings growth in 2009 and
beyond.
Another important dimension of Imdex’s
medium term strategy has been streamlining
the business into two distinct divisions
which focus on the specific end markets of
resources and energy. This strategy led to the
divestment of the services oriented Surtron
business from 31 October 2007.
The Group now has a clear focus on the
resource and energy markets through its
Fluids and Chemicals Division, providing
fluids essential for drilling, and its Down Hole
Instrumentation Division, providing drill hole
survey and measurement tools.
Our presence in the oil and gas market
began to grow during FY08 and will expand
in FY09 with the introduction of specific
products dedicated to meeting demands in
this market.
In the medium term the Down Hole
Instrumentation Division will continue to move
away from a sales based model towards a
rentals based model. This is underpinned by
the Imdex Group’s control of manufacture
and ownership of IP allowing maximisation of
our competitive advantage. Building a rental
instrumentation fleet will ensure a sustainable
and more profitable business in the future.
The main strategic objective of growing Imdex
into a global company supporting drilling clients
in the resources and oil and gas industries is
being successfully implemented. There remains
much to do in order to fully capitalise on the
opportunities ahead and to continue to deliver
sustainable and increasing dividend streams to
our valued shareholders.
The Imdex Group became a constituent
member of the S&P/ASX 300 in March
2008. This will project the company onto the
investment radar of large scale institutions
and fund managers who now have greater
awareness of the Imdex Group’s exposure to
and strong position in the global resources and
energy industries.
The Imdex Group subscribes to best practice
in corporate governance principles with the
main objective being a functional Board that
brings corporate insight and commercial
acumen to its deliberations. The Board
continues to enhance its corporate governance
policies and procedures to ensure it maintains
high standards.
I express my thanks and pay tribute to Imdex’s
Managing Director Bernie Ridgeway and
my other fellow Board members, Imdex’s
General Manager Gary Weston and all Imdex
employees for what was a very busy and
successful year.
I would also like to acknowledge and thank
our valued shareholders, for your ongoing
support. Despite investing substantial resources
to expand our existing businesses and acquire
new ones, the Board is pleased to announce
the declaration of a 2.25 cent per share final
dividend payable on 31 October 2008.
The Imdex Group’s greatest achievement in
FY08 has been the successful growth of our
existing businesses in parallel with the seamless
integration of new acquisitions. The Imdex
Group has now firmly consolidated its position
as the world’s leading provider of down hole
The Fluids and Chemicals Division, by its
nature, is easily scalable and Imdex is investing
in expanded production facilities globally to
meet the demands of supporting global supply
alliances and growing the Company’s markets
in other major exploration regions.
I F Burston
Chairman
Imdex 2008 Annual Report | 9
Mr. Bernie Ridgeway
Managing Director’s Report
The growth strategy that the Imdex Group put
in place at the beginning of FY07 has paid off in
FY08. The Group has successfully acquired four
complementary businesses and consolidated
its position as the world’s leading provider of
down hole instrumentation to the resources
industry with operations in all significant mining
and exploration regions in the world.
The Imdex Group has established a strong
market position in supplying products to the
mineral and mining industries, has access to
resources on a global scale, and is securely
positioned for a period of sustained and
extended growth in the years ahead.
With mining and exploration drilling
expenditure (non ferrous) forecast to exceed
US$13.1 billion in 2008 (up 25% on US$10.5
billion in 2007), the Imdex Group is set to
unlock significant growth potential. FY09
will see the Imdex Group capture scale and
efficiency benefits from its expanded business
network.
The 2008 financial year marks the Group’s fifth
consecutive year of revenue and profit growth.
In addition to breaking financial records
the Imdex Group has also made significant
operational achievements.
Key Financial Highlights
• Revenue (excluding interest revenue of
$1.9 million) up 25% to $148.6 million
(FY07 - $118.4 million);
• EBITA up 62% to $40.1 million
(FY07 - $24.7 million);
• Earnings per share from continuing
operations up 45% to 11.22 cents per share
(FY07 - 7.72 cents per share); and
• Final dividend up 50% to 2.25 cents fully
franked, bringing the full year distribution for
FY08 to 4 cents (up 60% on FY07).
Key Operational Highlights
• Strong performance across both divisions:
- Drilling Fluids & Chemicals (DFC) revenue
up 37% to $85.7 million (FY07 - $62.4
million); and
- Down Hole Instrumentation (DHI) revenue
up 12% to $62.9 million (FY07 - $56.1
million);
• Acquired four complementary businesses and
strengthened our operating presence in major
mining and exploration regions - Canada,
Latin America, Africa and Asia Pacific;
• Consolidated our position as a world leading
provider of Drilling Fluids & Chemicals
and Down Hole Instrumentation to the
resources industry;
• Divested the Surtron business for cash
proceeds of $20 million;
• Grown our pool of blue-chip customers
signing strategic alliance agreements for the
distribution and supply of drilling fluids and
down hole instrumentation; and
• Positioned for growth in the oil and
gas market.
The Imdex Group’s continued success
depends on its ability to attract and retain
experienced and dedicated employees with a
record of achievement across a diverse range
of technical and business disciplines.
In FY08 the Imdex Group recruited a
number of additional senior managers to
assist in implementing our key strategic
goals and maximise value for shareholders.
The Board is grateful for the exceptional
contribution of its 285 management and staff
in achieving this year’s result and in creating
and sustaining a framework for continued
future growth.
Global Expansion
Part of Imdex’s strategy has been to acquire
bolt-on businesses that can benefit from
the Group’s leading market position and be
integrated into existing operations.
The DHI Division’s acquisition of the German
technology company System Entwicklungs
(SEG) has delivered world class down hole
instrumentation and a platform for the Imdex
Group to launch its technology into the oil and
gas market.
The three acquisitions made during the year
in the DFC Division were aimed at building a
global presence and ensuring that the Group
has a local fluids manufacturing capability in
major mining and mineral exploration regions
of the world.
With the acquisitions of Suay Energy Services
in Kazakhstan, Poly-Drill Drilling Systems in
Canada and Southernland in Chile during
FY08, the Imdex Group is now a truly
global company. I am pleased to report that
integration is proceeding successfully and
management continues to focus on ensuring
that synergy and scale benefits that have already
started to generate value are maximized.
Rationalisation
In October 2007, the non core business of
Surtron was divested for $20 million, and more
recently the Imdex Group’s Drilling Products
& Services Division was renamed the Down
Hole Instrumentation Division.
In FY08 the Imdex Group streamlined
the business into two distinct divisions
concentrating on high growth end markets;
the resources and energy industries. The two
divisions focus on the Group’s key strengths,
Drilling Fluids and Chemicals and Down Hole
Instrumentation.
10 | Imdex 2008 Annual Report
The growth strategy that the Imdex Group put
in place at the beginning of FY07 has paid off
in FY08.
Imdex 2008 Annual Report | 11
In 2009, Imdex will expand its market share
in the onshore oil and gas business in Australia,
PNG, East Africa and the Caspian Sea Region.
12 | Imdex 2008 Annual Report
Managing Director’s Report (continued)
Drilling Fluids and Chemicals
The DFC Division recorded a revenue increase
of 37% to $85.7 million (FY07 $62.4 million),
and an EBITA increase of 34% to $14 million
(FY07 $10.4 million). All companies in this
Division, including those recently acquired,
contributed positively to the Divisional result.
During the year divisional management focused
its efforts on expanding existing businesses and
the integration of the newly acquired entities.
Key achievements include:
• The continued strong growth by the
Australian Mud Company (AMC) and
Samchem, with both companies producing
record performances in FY08;
• Increased production capacity commenced
at Samchem in Johannesburg with the
installation of a polymer manufacturing plant.
This plant is expected to be completed in
1H09 and will ensure Samchem can control
both quality and quantity of polymer supply
and decrease costs;
• The relocation in May 2008 of Southernland
employees and operations to new premises
in Santiago. An upgraded and expanded
manufacturing and storage capability, to be
completed in 1H09, will meet increased
demand and reduce costs in Latin America.
A similar relocation and upgrade process is
intended for Poly-Drill in Canada in FY09; and
During the year Divisional management
focused on launching new and improved
technology and increasing market share in the
mineral exploration and mining industries as
well as positioning the business to penetrate
the oil and gas market.
The Imdex Group has strengthened its DHI
customer loyalty by exceeding its competition
with superior technology and faster, more
efficient service.
Customer feedback has also shown a
preference for renting as opposed to
purchasing DHI equipment. The Imdex Group
continues to transition toward this rental
model which delivers a more sustainable and
profitable business in the longer term. The
Imdex Group continues to invest significant
resources into research and development to
maintain its reputation as the world leader
in DHI product technology for the mineral
exploration and mining industries.
Key achievements:
• Divestment of non-core business Surtron;
• Continued success of the core orientation
tool and down hole survey instrumentation
yielding record revenue and earnings
for Reflex;
• Strong earnings by Flexit and the re-
positioning of the company to focus primarily
on the oil and gas industry;
• The introduction of a common accounting and
reporting system which will continue in FY09.
• Continued development of the MEMS
gyro technology;
Our priorities for the Drilling Fluids
and Chemicals Division over the coming
financial year are as follows:
• Complete the various plant relocations,
installations and upgrades;
• Focus on driving operational efficiencies;
• Continue to support global distribution and
supply alliances; and
• Continue to expand the business, particularly
in Africa, the Caspian Sea region and the
Americas.
Down Hole Instrumentation
The DHI Division recorded a revenue increase
of 12% to $62.9 million (FY07 $56.1 million)
and an EBITA increase of 61% to $28.3 million
(FY07 $17.6 million). All companies in this
Division, including SEG, contributed positively
to the Divisional result.
• Greater cost efficiencies by streamlining
Imdex Technology and Reflex operations;
• Introduction of a common accounting and
reporting system which will continue in FY09;
and
• Further expansion of the down hole
instrumentation range for oil and gas
applications with the acquisition of SEG.
Positive Outlook
The outlook for FY09 is for strong organic
growth in all of Imdex’s businesses.
The Imdex Group anticipates continued
favourable economic conditions for
resources and energy and has invested heavily
in the businesses and structures that will
support revenue and earnings growth in the
years ahead.
Priorities for the coming financial year are to:
• Further penetrate the oil and gas market
with both drilling fluids and down hole
instrumentation;
• Maintain profit margins;
• Build intellectual property and invest in
R&D to maintain the Group’s reputation as
the world leader in DHI technology in the
resources sector;
• Maintain strong customer loyalty
through superior technology and faster,
more efficient service;
• Continue to build scale across all
Imdex Group businesses and service
global supply partners;
• Continue to attract and retain experienced
staff and managers by establishing an engaging
work environment, competitive remuneration
and career opportunities; and
• Acquire additional drilling fluids and
down hole instrumentation businesses
that complement the overall Imdex
Group strategy.
Imdex’s acquisition strategy and integration
performance has been well received by the
investment market and we remain committed
to pursuing growth opportunities that are
value accretive for shareholders.
I would like to take this opportunity to thank
my Imdex colleagues and consultants for their
hard work and dedication during the year.
I am very excited about the future and look
forward with great anticipation and enthusiasm
as Imdex continues to carve out a significant
global presence in the supply of drilling
fluids and down hole instrumentation in the
resources and oil and gas markets.
The Imdex Group model has been
constructed for long term sustainable growth.
Over FY09 and beyond, we will work hard to
deliver that for our shareholders.
Bernie Ridgeway
Managing Director
Imdex 2008 Annual Report | 13
14 | Imdex 2008 Annual Report
Imdex’s Operations
Imdex expanded its presence in all geographical
regions throughout the 2008 financial year, and is
well positioned to take advantage of the forecast
increase in global exploration and drilling activity.
Imdex 2008 Annual Report | 15
Imdex’s Core Business
Imdex’s core business is to manufacture and provide drilling fluids and leading down hole
instrumentation to the resources and energy industries, both of which are significant growth markets.
The Company has streamlined its business into two clearly defined and distinct operational divisions;
the Drilling Fluids and Chemicals Division, and the Down Hole Instrumentation Division.
Drilling Fluids and Chemicals Division
Australian Mud Company
Head Office: Perth, Western Australia
The Australian Mud Company (AMC) was incorporated in January 1988 for the purpose of
supplying drilling fluids to the mineral and water well industries throughout Australia. Since
then AMC has diversified its product range to cater for the oil and gas, mineral, water well,
horizontal directional drilling, and tunnelling industries worldwide.
Samchem
Head Office: Johannesburg, South Africa
Samchem manufactures and supplies a full range of drilling fluids, lubricants and environmental
chemicals. The company has been the largest supplier of drilling fluids to the mining industry in
Africa for over 20 years, and now supplies 18 countries within the continent. Samchem also
exports drilling fluids to Australia, Chile and Europe.
Poly-Drill Drilling Systems
Head Office: Calgary, Canada
Poly-Drill manufactures and supplies polymer drilling fluid and solids control systems. These
fluid systems enable drilling without the use of numerous conventional drilling products, such
as fluid loss control agents and gels. Polymer drilling fluids are utilised throughout North
America and have established new standards in drilling fluids technology. The acquisition of
Poly-Drill strengthens Imdex’s position as an advanced drilling fluids provider.
Southernland
Head Office: Santiago, Chile
Southernland manufactures and supplies a range of drilling fluids to the Latin American
market including Chile, Peru, Bolivia, Argentina and Mexico. The acquisition of Southernland
complements Imdex’s Drilling Fluids Division and facilitates expansion as a significant drilling
fluids supplier to the mining, oil and gas and water well industries in the region.
Suay Energy Services
Head Office: Aktau, Kazakhstan
Suay provides drilling fluids and serves as an excellent platform for Imdex into the highly
prospective oil and gas markets in Kazakhstan, Russia, Turkmenistan, Kurdistan, Azerbaijan
and Uzbekistan. The Caspian Sea region is one of the fastest growing oil and gas regions in
the world.
What are Drilling Fluids?
Drilling fluids, or mud, as it is known in the
industry, are a key part of the drilling process
for mining, oil and gas, and civil applications.
There is a broad range of drilling fluids, all
with unique properties and uses; however
they are principally used to clean, cool and
lubricate the drill bit, return chips of rock
known as cuttings to the surface, and keep
the borehole stabilised and open. During
the drilling process, a continuous circulation
of drilling fluid is used where fluid is pumped
down the drill pipe, through the drill bit,
and up the space between the drill pipe and
borehole which brings the cuttings to the
surface. The fluid then circulates through
a shale shaker or mud tanks to remove the
cuttings from the fluid for reuse.
16 | Imdex 2008 Annual Report
Down Hole Instrumentation Division
Reflex Instruments
Head Office: Perth, Western Australia
Reflex is a leading supplier of down hole digital survey and core orientation instruments
for the mining and resources industries. The company has service and support facilities
in Asia Pacific, Africa, Europe and the Americas.
Flexit
Head Office (Minerals): Vallentuna, Sweden
Head Office (Oil & Gas): Perth, Western Australia
Flexit is renowned as a market leader in technologically advanced down hole survey
instruments, and in particular, its micro-electro mechanical systems (MEMS) gyro technology.
A new division of Flexit was established in Australia in February 2008. Flexit Australia will
focus on marketing Imdex’s range of instrumentation for the oil and gas industry.
System Entwicklungs GmbH (SEG)
Head Office: Riegel, Germany
SEG has strong research and development capabilities, and specialises in down hole
instrumentation for the oil and gas industry. Of particular note is the company’s
development of the Target inertial navigation system.
Imdex Technology (UK) Limited
Head Office: Lewes East Sussex, United Kingdom
Imdex Technology, formerly Chardec Consultants, is dedicated to manufacture and research
and development for Imdex’s Down Hole Instrumentation Division.
What are Down Hole Instruments?
Survey Instrumentation
Down hole survey instruments give
geologists and drillers comprehensive data
including azimuth and dip, which allows them
to determine the exact trajectory of bore
holes, even at thousands of metres below
the surface.
Bore hole deviations, where the actual path
is different to the planned path, are common.
Geological variations, drilling parameters,
including excessive or irregular thrust and
hole design, are just some of the reasons a
bore hole may deviate.
A 2 degree deviation at the surface can
lead to a 35 metre lateral displacement
at a hole depth of 1000 metres, resulting
in significant additional drilling costs and
loss of opportunity if zones of economic
mineralisation are missed.
By surveying the bore hole throughout the
drilling process, deviations can be corrected
and the likelihood of intercepting desired
targets is significantly enhanced.
Core Orientation
Core orientation instruments are used to
determine the exact position of a core
sample in the ground prior to extraction.
Geologists are then able to accurately assess
the sample to determine the structural
geology, which often controls the mineralised
ore body.
By understanding the structural geology, time
and money are not wasted drilling in the
wrong location.
Core orientation is also particularly important
during mine planning to avoid potential
problem areas such as faults or slip zones.
Gyroscopes & Directional Steering
Drilling is becoming increasing complex and
challenging due to diminishing accessible
reserves, high explorations costs and
environmental impact concerns.
As a result, energy companies are drilling
deeper and for smaller targets, re-entering
existing wells, and drilling multiple wells from
a single platform or wellbore.
In such an environment, technology and
accurate data is crucial to locate reserves
efficiently, and to avoid collision with existing
wells which can be catastrophic and cost
millions of dollars to remediate.
Imdex has developed a range of advanced
instruments specifically designed for
challenging multiple well environments
in areas of high magnetic interference,
and allow directional drillers to accurately
control the path of the wells.
Imdex 2008 Annual Report | 17
Imdex’s Global Reach
Imdex has established operations in all key mining and exploration
regions of the world, including the four major mineral exploration
and mining regions, Canada, Latin America, Africa and Asia Pacific.
Americas
Europe
Calgary (Canada)
Timmins (Canada)
Vallentuna (Sweden)
East Sussex
(UK)
Riegel (Germany)
Aktau (Kazakhstan)
Asia Pacific
Santiago
(Chile)
Johannesburg (South Africa)
Africa
Perth
Kalgoorlie
Brisbane
18 | Imdex 2008 Annual Report
Americas
Europe
Calgary (Canada)
Timmins (Canada)
Vallentuna (Sweden)
East Sussex
(UK)
Riegel (Germany)
Aktau (Kazakhstan)
Asia Pacific
Santiago
(Chile)
Johannesburg (South Africa)
Africa
Perth
Kalgoorlie
Brisbane
Imdex 2008 Annual Report | 19
The successful integration of Imdex’s acquisitions
can be largely attributed to Imdex’s experienced
management team.
Imdex 2008 Annual Report | 20
20 | Imdex 2008 Annual Report
Quality People
Imdex has a strong management team with extensive
technical and product knowledge, hands on experience,
and respect within the drilling industry.
Mr. Gary E Weston
Imdex Limited – Group General Manager
• 37 years in the drilling industry, in both the oil and gas and minerals sectors.
• 1987, co-founder of Imdex Limited.
• 1988, co-founder of Australian Mud Company.
• 35 years management experience.
• Strong international marketing experience.
• Drilling Fluid Engineering and Marketing Certificate from leading drilling company, Baroid International.
Mr. Derek Loughlin
Imdex Limited – Divisional General Manager, Down Hole Instrumentation Division
• 21 years experience within the drilling industry.
• 17 years with leading drilling company Boart Longyear in engineering, operations, sales and global exports.
• International experience, working in Ireland, Australia and Germany.
• Honours Degree in Mining Engineering from the Camborne School Of Mines, UK.
• Diploma of Executive Development at the International Institute for Management and Development
in Lausanne.
Mr. Paul Mander
Imdex Limited – Divisional General Manager Drilling Fluids & Chemicals Division (Minerals)
• 20 years experience within the mining and drilling industries.
• 11 years experience with leading drilling company Boart Longyear as a Senior Driller, Supervisor,
Operations Manager, Area Manager and Business Development Manager.
• Extensive experience in operating and managing rotary core, surface and under ground diamond coring
and horizontal directional drilling.
• Bachelor of Engineering (Mining Engineering), currently completing a Master of Business Administration.
Mr. Peter Wright
Imdex Latin America – General Manager
• 34 years experience within the drilling industry.
• Extensive hands on experience in both surface and underground drilling environments undertaking
exploration and drill and blast operations.
• President of Mineral Drilling Association of Australia for three years prior to joining Imdex in 2007.
• Qualified Automotive Mechanical Engineer, qualifications in Small Business Management, Safety and
Training Management and Front Line Management.
Mr. Keith Steel
Australian Mud Company – Manager Asia
• Commenced his career within the drilling industry in 1971 as a University Graduate.
• 20 years experience with Baroid Drilling Fluids.
• 7 years experience with Imdex.
• Extensive international management experience.
Mr. Nick Santarelli
Australian Mud Company – Oilfield Manager
• 27 years experience within the mining and oil and gas industries.
• Experience with leading companies including Chevron Texaco, IDF / Dowell Schlumberger, Geofluids,
Milchem, and Milpark.
• 10 years experience with Imdex.
• Extensive international industry experience including: South America; Papua New Guinea; Kazakhstan;
Saudi Arabia; Indonesia; Vietnam; Malaysia; Thailand; and the Philippines.
• BA Flinders University – Masters Program.
Imdex 2008 Annual Report | 21
Imdex 2008 Annual Report | 21
Mr. Joe Barker
Samchem – General Manager
• 40 years experience with wireline equipment and drilling fluids.
• Experience with leading drilling companies including Baroid, Baker Hughes, Schlumberger and MI.
• International oilfield experience managing Mid-Continent Oilfield Supply in Dubai.
• Degree in Geology.
Mr. Mike O’Connell
Poly-Drill Drilling Systems – General Manager
• 19 years experience within the drilling fluids industry.
• 10 years experience with leading drilling fluids company Baker-Hughes.
• 9 years experience with the Australian Mud Company.
• Extensive experience working throughout Asia Pacific.
Mr. Dave Carswell
Suay – General Manager
• Extensive management, drilling fluids and solids control experience in the oil and gas industry.
• International experience working in Indonesia, Dubai, Singapore, Thailand, Papua New Guinea, Saudi Arabia,
Australia and New Zealand.
• Bachelor of Science in Biochemistry, Microbiology and Combined Biology and a strong research background.
Mr. Peter Jacobs
Reflex Instruments – General Manager
• 21 years experience within the drilling industry.
• 18 years experience with leading drilling company Boart Longyear.
• Extensive international experience working in Papua New Guinea, Indonesia, Canada, the United States, Chile,
Peru, Brazil and Ghana.
• Diploma of Executive Development at the International Institute for Management and Development in Lausanne.
Mr. Dag Billger
Flexit – General Manager
Down Hole Instrumentation Research and Development – General Manager
• 5 years experience with design and development of inertial navigation systems for the drilling industry.
• 10 years applied research and development experience in inertial micro-system sensor systems.
• Project Manager and leading role in the research and development team for the micro gyro system which the
Flexit GyroSmart is based on.
• Ph.D. in Mechanical Engineering from Chalmers University of Technology and a M.Sc. in Mathematical Physics
from the University of Gothenburg.
Mr. Dieter Goetze
System Entwicklungs GmbH (SEG) – Chief Engineer
• 42 years experience with inertial navigation and gyro technology.
• 15 years as a project engineer designing gyroscopes for Litton Industries (now Northrop Grumman) in Germany.
• Joined SEG in 1981 as partner and Engineering Manager, playing a major role in building SEG’s gyro and
downhole steering survey systems, including the Target inertial navigation system.
• Diploma in Physics from the Philipps-University in Marburg.
Mr. Richard Parfitt
Imdex Technology (UK) Limited - Chief Electronics Engineer
• Founder and owner of Chardec Consultants Ltd (Chardec), which was acquired by Imdex in August 2006.
• 20 years experience in the design, development and manufacturing of electronic down hole surveying
instruments for Reflex and Flexit.
• Extensive hands on experience working with Schlumberger as a field engineer running wireline geophysical
surveys on offshore oil and gas rigs off the coast of Indonesia.
• Bachelor and Masters Degrees in Physics at Oxford University with first class Honours.
Mr. Duncan Crowder
Imdex Technology (UK) – General Manager
• 16 years experience in manufacturing logistics and warehousing management.
• Experience working in the United Kingdom and Australia.
• Honours degree graduate (UK).
22 | Imdex 2008 Annual Report
22 | Imdex 2008 Annual Report
Imdex ensures that experienced managers are locally
based at its operations throughout the world.
Imdex 2008 Annual Report | 23
Imdex 2008 Annual Report | 23
Imdex has established global supply agreements for
drilling fluids and down hole instrumentation with
three of the world’s largest drilling contractors.
24 | Imdex 2008 Annual Report
24 | Imdex 2008 Annual Report
Marketing & Sales
The development of quality products, technologically advanced down hole survey instrumentation,
and customer service is central to Imdex’s marketing and sales strategy. The Company exceeds its
competition by offering superior technology, and faster, more efficient service. As an innovator in
the market, Imdex also gains market leverage through its intellectual property ownership.
Advanced and Leading Technology
Imdex’s gyroscopic inertial navigation systems
are the most modern available, and offer
features not previously available to the market.
Imdex is also proud to have designed and
patented the leading digital core orientation
instrument on the market, the Reflex ACT.
The instrument’s advanced technology
replaces existing mechanical devices. It is more
accurate and reliable, and does not interrupt
the drilling process allowing more metres to
be drilled while obtaining higher quality
planning data.
Strong Brands
Imdex has strong brands within its portfolio,
particularly the Australian Mud Company, and
Samchem and Reflex. The Australian Mud
Company is the largest drilling fluid supplier to
the Australian onshore market, and Samchem
has been the largest supplier of drilling fluid
to the African mining industry for 20 years.
Reflex is the leading supplier of down hole
instrumentation for the mining industry
globally, and the brand has become a generic
trademark for such instrumentation throughout
Canada.
Expansion into Prospective Markets
Imdex’s research and development capabilities
and leading product range facilitates further
expansion into new markets such as the oil
and gas market.
To continue to strengthen Imdex’s brands,
the Company engaged a Group Marketing
and Communications Manager in August 2007,
whose principal role is to oversee continual
improvement of the Company’s marketing
and communication to support Imdex’s
internal and external branding, and sales
activities globally.
Global Supply Agreements
Imdex has established global supply
agreements for drilling fluids and down hole
instrumentation with three of the world’s
largest drilling contractors servicing mining and
exploration, Boart Longyear, Major Drilling
and Layne Christensen. These companies
represent 35% to 40% of global exploration
drilling rigs. Imdex aims to strengthen its
relationship with its customers by providing
drilling fluids, down hole instrumentation, and
a high level of service in all areas of operation
globally. Imdex also supplies to a broad
range of medium to smaller sized customers
throughout the world.
Customer Service, Distribution & Logistics
Imdex strives to build customer loyalty by
offering superior products and a high level of
customer service. Although Imdex has a low
labour component, the Company is able to
support its customers by having strategically
placed businesses in all of the major mining
and exploration regions of the world, highly
mobile and capable teams, and a network
of strong global distribution channels.
Imdex also engages dedicated logistics and
distribution managers to ensure that customers
receive orders efficiently and within an agreed
time frame.
In September 2007, Imdex executed a
significant distribution agreement with Sandvik
Mining and Construction, a division of the
Sandvik Group (Sandvik). Sandvik is a world-
leader in the provision of equipment and
solutions for mineral exploration, underground
and surface mining, and specific areas of
the construction industry such as tunnelling
and quarrying. The alliance agreement with
Sandvik complements Imdex’s network of
global distribution outlets for both Divisions.
Imdex 2008 Annual Report | 25
Supporting Operations
for Future Growth
Imdex focuses on all support activities to ensure the Group
maintains a strong platform for future growth and success.
26 | Imdex 2008 Annual Report
Imdex 2008 Annual Report | 27
Quality, Health, Safety & the Environment
During the 2008 financial year, Imdex’s Quality and HS&E department continued to work
towards achieving International Standard for Quality Management (ISO9001) across the Imdex
Group in accordance with the Company’s Quality and Continual Improvement Policy.
Key Achievements for FY08
• Imdex Technology (UK) and Flexit Australia
• Samchem commenced accreditation to
ISO17025 for its Drilling Fluids Laboratory.
received Quality System certification
to ISO9001.
• Imdex Limited, the Australian Mud Company,
Reflex Asia Pacific and Samchem successfully
maintained certification to ISO9001.
• Implementation commenced for ISO9001
certification for Flexit Sweden.
• Regional Quality Alert representatives
were appointed in Africa, Australia,
Sweden and the United Kingdom to
enable greater efficiency within Imdex’s
Quality Assurance Department.
Key Statistics
Work-Safe Loss Time Incident Frequency
Rate Benchmark (number of lost time injuries/
diseases for each one million hours worked).
• Worksafe Benchmark = 12.4 / LTIFR
• Imdex Group Result = 2.34
Work-Safe Loss Time Incident Rate
Benchmark (number of lost time injuries/
diseases for each one hundred workers)
• Worksafe Benchmark = 2.8 / LTIR
• Imdex Group Result = 0.46
Lost Time Injury Frequency Rates (LTIFR) FY08
n
o
i
l
l
i
m
r
e
p
s
t
n
e
d
i
c
n
I
(
R
F
I
T
L
)
s
r
u
o
h
n
a
m
16
14
12
10
8
6
4
2
0
WorkSafe Benchmark
(Services to Mining)
Average
Imdex’s LTIFR
JUL
AUG SEP OCT NOV DEC JAN
FEB
MA
APR MAY
JUN
Month
Imdex measure world-wide performance against the stringent Western Australian WORKSAFE LTIFR Industry Benchmark
(Services to Mining). This Benchmark is reported on a monthly basis, using a 12 month rolling snapshot.
Managing Risk
In February 2008 Imdex engaged a Group Manager for Risk and Compliance. This manager works
closely with the Audit Committee and management to identify threats to the achievement of the
Imdex’s objectives and assesses the appropriateness of management’s response to these risks.
Key areas of focus include:
• Reviewing the reliability and integrity of
financial and operating information and the
means used to identify, measure, classify and
report such information;
• Examining and evaluating the adequacy and
effectiveness of internal control mechanisms,
appraising information technology systems
and related risk areas and assessing the
quality of performance in carrying out
assigned responsibilities;
• Assisting the Audit Committee to fulfil its
• Reviewing processes in place to
roles and objectives;
• Reviewing effectiveness of functions against
identify, assess and manage risk within
the organisation;
stated objectives and strategies;
• Reviewing operations or programs to
• Reviewing the systems established by
management to ensure compliance with
those policies, plans, procedures, laws and
regulations which could have a significant
impact on operations and reports;
ascertain whether results are consistent with
established objectives and goals, and whether
the operations or programs are being carried
out as planned; and
• Coordination of activities with external
auditors.
28 | Imdex 2008 Annual Report
Utilising Technology
Throughout the 2008 financial year, Imdex implemented a number of systems to enhance efficiency,
accuracy and communication to support the needs of Imdex’s expanding Group. The Company
also engaged a Group ICT Manager to oversee Imdex’s current and future requirements.
Prophix
In February 2008, Imdex implemented a
consolidation, budgeting and forecasting
application known as Prophix. Prophix
complements Imdex’s existing reporting
system by taking financial data from business
units in their local currencies, and generating
standard financial reports in Australian dollars.
Prophix can also store budget and forecast
information, and generate a range of additional
financial reports. The principal benefits of the
Prophix system include:
• Greater reporting efficiency;
• Enhanced global customer sales and
margin reporting;
• Additional forecasting and sub-group reports.
Critical IT Systems and
Remote Access
In April 2008, all of Imdex’s critical IT
systems were moved to a new data centre
which significantly enhances the security
and reliability of Imdex’s IT communication
systems. A new remote access system was
also implemented, which enables access to
centralised data, email and reporting systems
from anywhere in the world.
Imdex Group Intranet
In March 2008, Imdex commenced
development of a new global intranet. The
principal objectives of the new system are to:
• Enhance efficiency, accuracy and quality by
having a central repository of information
which is accessible by all, monitored and
kept up to date by departmental or business
unit custodians;
• Improve internal communication regarding
company news and procedures, product
developments and events throughout Imdex;
• Encourage knowledge sharing between the
companies within Imdex;
• Provide a valuable induction tool for new
employees joining Imdex; and
• Provide greater access to market and
industry information for all employees.
Attracting and Retaining Experienced
Employees and Managers
The principal focus for the Human Resources team in the 2009 financial year will be attracting
and retaining experienced employees and managers by offering competitive remuneration,
career opportunities and establishing an engaging work environment.
In August 2007, Imdex employed a dedicated
Group Human Resources Manager. This
Manager oversees Imdex’s human resources
policies and procedures to ensure that they
are adequate for the Group’s future needs
and are consistent across the expanding
global operations.
Key achievements for FY08 include:
• Establishment of benchmarks for salary
reviews within Australia;
• Revision of the remuneration policy and
short term incentive program for the Imdex
Group; and
• The successful engagement of a number
of key managers who have brought
significant technical knowledge, industry and
management experience to the Group.
Imdex 2008 Annual Report | 29
Continual research and development of
innovative products remains a priority,
enabling Imdex to maintain industry leadership.
30 | Imdex 2008 Annual Report
Continual Research & Development
The Imdex Group continues to invest significant resources in research and development to
maintain and enhance its position as the world leader in down hole instrumentation technology for
the resources industry.
Oil and Gas Innovations
In FY08, Imdex’s research and development
team built two new down hole survey
instruments for oil and gas applications: a multi-
purpose magnetic survey instrument capable
of single or multi-shot surveys and a MEMS
based Gyro survey instrument. These new
instruments have been developed to withstand
the higher pressures and temperatures
encountered in oil and gas applications and
offer advanced features not currently available
to the market. Prototypes are being evaluated
in the United States and the Middle East
and extensive field testing is being carried
out. Together Flexit and SEG enable Imdex
to offer a suite of advanced down hole
instrumentation, including the Target INS, to
the oil and gas industry worldwide. The Down
Hole Instrumentation Division, is increasing
its presence in the lucrative global oil and gas
industry by providing world class technology to
independent service providers in this sector.
Continual Improvement
The research and development team is also
finalising designs for two new generation
instruments for Reflex. These instruments
have been designed to keep the brand at the
forefront of down hole instrumentation for the
mining and mineral exploration industries and
to satisfy the demands of customers for robust
and highly accurate survey instruments.
Developing Our
Environmental Products
During the 2008 financial year, Imdex
continued to develop its range of
environmental drilling fluid products and
packaging. Regular consultation with customers
highlighted the need to reduce the use of
plastic packaging which can accumulate at
drilling sites and cause environmental and
logistical waste removal concerns. To address
these concerns, Imdex has introduced
biodegradable and recyclable cardboard
packaging alternatives for both liquid and
powder based drilling fluids and will continue
to expand the range in the future.
Dust Suppressants
Imdex’s Drilling Fluid Division has also
developed a range of dust suppressant
products for the mining industry.
Benefits include:
• The quantity of water normally used in
suppressing dust, is substantially reduced.
• A cleaner working environment;
• Improves vehicle and tyre life; and
• Health risks associated with excessive dust
inhalation are reduced.
Strategically Placed Manufacturing Capabilities
During the 2008 financial year, Imdex
continued to enhance its manufacturing
capabilities for both the Drilling Fluids and
Chemicals Division and the Down Hole
Instrumentation Division, allowing the
Company to have greater control over its
production, quality and supply.
The acquisition of Poly-Drill in Canada, and
Southernland in Chile significantly enhanced
Imdex’s capabilities to manufacture drilling
fluids in two of the world’s most significant
mining and mineral exploration regions.
Plans to expand and complement these
manufacturing facilities at both Poly-Drill and
Southernland are scheduled for FY09.
Construction of a polymer (PHPA) plant also
commenced at Samchem in Johannesburg
during the year. PHPA is an important
drilling fluid which will enable Samchem to
manufacture a higher quality product in house,
rather than rely on third parties for supply.
The acquisition of SEG in Riegel
Germany complements Flexit and Imdex
Technology, and contributes to Imdex’s
range of products for the Down Hole
Instrumentation Division.
Imdex 2008 Annual Report | 31
The Imdex model has been constructed
for long term sustainable growth.
Imdex 2008 Annual Report | 32
32 | Imdex 2008 Annual Report
Financial Report 2008
Directors’ Report
Auditors’ Independence Declaration
Independent Audit Report
Directors’ Declaration
Corporate Governance Statement
Income Statement
34
46
47
49
50
55
Balance Sheet
Statement of Changes in Equity
Cash Flow Statement
Notes to the Financial Report
56
57
59
60
Additional Stock Exchange Information
119
Imdex 2008 Annual Report | 33
Imdex 2008 Annual Report | 33
IMDEX LIMITED
IMDEX LIMITED
IMDEX LIMITED
IMDEX LIMITED
and its controlled entities
and its controlled entities
and its controlled entities
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2008
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2008
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2008
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2008
The Directors of Imdex Limited (“Imdex” or “the Company”) present their report together with the annual Financial Report of the
Company and its Subsidiaries (“the Group”) for the financial year ended 30 June 2008.
The Directors of Imdex Limited (“Imdex” or “the Company”) present their report together with the annual Financial Report of the
The Directors of Imdex Limited (“Imdex” or “the Company”) present their report together with the annual Financial Report of the
The Directors of Imdex Limited (“Imdex” or “the Company”) present their report together with the annual Financial Report of the
Company and its Subsidiaries (“the Group”) for the financial year ended 30 June 2008.
Company and its Subsidiaries (“the Group”) for the financial year ended 30 June 2008.
Company and its Subsidiaries (“the Group”) for the financial year ended 30 June 2008.
In order to comply with the provisions of the Corporations Act 2001, the Directors’ report as follows:
In order to comply with the provisions of the Corporations Act 2001, the Directors’ report as follows:
In order to comply with the provisions of the Corporations Act 2001, the Directors’ report as follows:
In order to comply with the provisions of the Corporations Act 2001, the Directors’ report as follows:
(a)
(a)
(a)
(a)
Directors
Directors
Directors
Directors
The names and particulars of the Directors of the Company during or since the end of the financial year are:
The names and particulars of the Directors of the Company during or since the end of the financial year are:
The names and particulars of the Directors of the Company during or since the end of the financial year are:
The names and particulars of the Directors of the Company during or since the end of the financial year are:
Name
Name
Name
Name
Role
Role
Role
Role
Age
Age
Age
Age
Particulars
Particulars
Particulars
Particulars
Mr I F Burston
Mr I F Burston
Mr I F Burston
Mr I F Burston
Independent, Non Executive Chairman
Independent, Non Executive Chairman
Independent, Non Executive Chairman
Independent, Non Executive Chairman
73
73
73
73
Mechanical Engineer
Member of the Audit and Compliance & Remuneration
Committees
Director since November 2000
Mechanical Engineer
Mechanical Engineer
Mechanical Engineer
Member of the Audit and Compliance & Remuneration
Member of the Audit and Compliance & Remuneration
Member of the Audit and Compliance & Remuneration
Committees
Committees
Committees
Director since November 2000
Director since November 2000
Director since November 2000
Mr B W Ridgeway
Mr B W Ridgeway
Mr B W Ridgeway
Mr B W Ridgeway
Managing Director
Managing Director
Managing Director
Managing Director
54
54
54
54
Chartered Accountant
Chartered Accountant
Chartered Accountant
Chartered Accountant
Director since May 2000
Director since May 2000
Director since May 2000
Director since May 2000
Mr R W Kelly
Mr R W Kelly
Mr R W Kelly
Mr R W Kelly
Independent, Non Executive Director
Independent, Non Executive Director
Independent, Non Executive Director
Independent, Non Executive Director
70
70
70
70
Mr K A Dundo
Mr K A Dundo
Mr K A Dundo
Mr K A Dundo
Independent, Non Executive Director
Independent, Non Executive Director
Independent, Non Executive Director
Independent, Non Executive Director
55
55
55
55
Mr M Lemmel
Mr M Lemmel
Mr M Lemmel
Mr M Lemmel
Independent, Non Executive Director
Independent, Non Executive Director
Independent, Non Executive Director
Independent, Non Executive Director
69
69
69
69
Engineer
Member of the Audit and Compliance Committee
Chairman of the Remuneration Committee
Director since 14 January 2004
Engineer
Engineer
Engineer
Member of the Audit and Compliance Committee
Member of the Audit and Compliance Committee
Member of the Audit and Compliance Committee
Chairman of the Remuneration Committee
Chairman of the Remuneration Committee
Chairman of the Remuneration Committee
Director since 14 January 2004
Director since 14 January 2004
Director since 14 January 2004
Lawyer
Chairman of the Audit and Compliance Committee
Member of the Remuneration Committee
Director since 14 January 2004
Lawyer
Lawyer
Lawyer
Chairman of the Audit and Compliance Committee
Chairman of the Audit and Compliance Committee
Chairman of the Audit and Compliance Committee
Member of the Remuneration Committee
Member of the Remuneration Committee
Member of the Remuneration Committee
Director since 14 January 2004
Director since 14 January 2004
Director since 14 January 2004
Management Consultant
Director since 19 October 2006
Management Consultant
Management Consultant
Management Consultant
Director since 19 October 2006
Director since 19 October 2006
Director since 19 October 2006
Additional information on the Director’s experience and qualifications is contained in the preface to the financial statements.
Additional information on the Director’s experience and qualifications is contained in the preface to the financial statements.
Additional information on the Director’s experience and qualifications is contained in the preface to the financial statements.
Additional information on the Director’s experience and qualifications is contained in the preface to the financial statements.
(b)
(b)
(b)
(b)
Directorships of other listed companies
Directorships of other listed companies
Directorships of other listed companies
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:
Directorships of other listed companies held by the Directors in the 3 years immediately before the end of the financial year are as
Directorships of other listed companies held by the Directors in the 3 years immediately before the end of the financial year are as
Directorships of other listed companies held by the Directors in the 3 years immediately before the end of the financial year are as
follows:
follows:
follows:
Name
Name
Name
Name
Company
Company
Company
Company
Position
Position
Position
Position
Period of Directorship
Period of Directorship
Period of Directorship
Period of Directorship
Mr I F Burston
Mr I F Burston
Mr I F Burston
Mr I F Burston
NRW Holdings Ltd
NRW Holdings Ltd
NRW Holdings Ltd
NRW Holdings Ltd
Kansai Mining Corporation
Kansai Mining Corporation
Kansai Mining Corporation
Kansai Mining Corporation
Mincor Resources NL
Mincor Resources NL
Mincor Resources NL
Mincor Resources NL
Cape Lambert Iron Ore Ltd
Cape Lambert Iron Ore Ltd
Cape Lambert Iron Ore Ltd
Cape Lambert Iron Ore Ltd
Aztec Resources Ltd
Aztec Resources Ltd
Aztec Resources Ltd
Aztec Resources Ltd
Aviva Corporation Ltd
Aviva Corporation Ltd
Aviva Corporation Ltd
Aviva Corporation Ltd
Non Executive Chairman
Non Executive Chairman
Non Executive Chairman
Non Executive Chairman
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Chairman
Non Executive Chairman
Non Executive Chairman
Non Executive Chairman
Chairman and Chief Executive Officer
Chairman and Chief Executive Officer
Chairman and Chief Executive Officer
Chairman and Chief Executive Officer
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
2007 – Current
2007 – Current
2007 – Current
2007 – Current
2006 – Current
2006 – Current
2006 – Current
2006 – Current
2003 – Current
2003 – Current
2003 – Current
2003 – Current
2006 – 2008
2006 – 2008
2006 – 2008
2006 – 2008
2004 – 2006
2004 – 2006
2004 – 2006
2004 – 2006
2003 – 2006
2003 – 2006
2003 – 2006
2003 – 2006
Mr R W Kelly
Mr R W Kelly
Mr R W Kelly
Mr R W Kelly
Clough Limited
Clough Limited
Clough Limited
Clough Limited
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
1996 – 2008
1996 – 2008
1996 – 2008
1996 – 2008
Mr K A Dundo
Mr K A Dundo
Mr K A Dundo
Mr K A Dundo
Computercorp Limited
Computercorp Limited
Computercorp Limited
Computercorp Limited
Intrepid Mines Ltd
Intrepid Mines Ltd
Intrepid Mines Ltd
Intrepid Mines Ltd
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
2006 – Current
2002 – Current
2006 – Current
2006 – Current
2006 – Current
2002 – Current
2002 – Current
2002 – Current
Imdex 2008 Annual Report | 34
Page 1 of 87
Page 1 of 87
Page 1 of 87
Page 1 of 87
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2008
(c)
Company Secretary
Mr P A Evans
Mr Evans, a Chartered Accountant, joined Imdex Limited on 17 October 2006. After leaving professional practice he worked in a range
of commercial and financial roles in the media, manufacturing and telecommunications industries. Mr Evans 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, six Board meetings, three Audit and Compliance Committee and three Remuneration Committee meetings were held.
Board of Directors
Audit and Compliance
Committee
Remuneration Committee
Held
Attended
Held
Attended
Held
Attended
I F Burston
B W Ridgeway
R W Kelly
K A Dundo
M Lemmel
6
6
6
6
6
6
6
6
6
3
3
-
3
3
-
3
-
3
3
-
3
-
3
3
-
3
-
3
3
-
(e)
Directors’ Shareholdings
At the date of this report the Directors held the following interests in shares and options in shares of the Company:
Directors
I F Burston
B W Ridgeway
R W Kelly
K A Dundo
M Lemmel
Shares Held
Directly
Shares Held
Indirectly
Options Held
Directly
-
-
343,786
1,000,000
3,500,000
2,000,000
33,711
256,289
-
300,000
200,000
247,347
-
-
-
At the date of this report, the options on issue by the Company are disclosed at (g) below and in Note 33.
Page 2 of 87
Imdex 2008 Annual Report | 35
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2008
(f)
Remuneration Report
Remuneration policy for Directors and Executives
Non Executive Directors
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 cash remuneration of Non Executive Directors is not linked to the Company’s performance in order to preserve
independence. Other than statutory superannuation, no Non Executive Director is entitled to any additional benefits on retirement from
the Company.
Managing Director
The Managing Director’s remuneration is determined by the Remuneration Committee with due regard to current market rates.
The Managing Director has a short term incentive bonus amounting to 22% of his cash compensation package. Each year the
Remuneration Committee sets the key performance indicators (KPIs) for the Managing Director. These KPIs include financial, strategy
and risk measures. The Remuneration Committee set these performance hurdles as they are significant profit and cash flow drivers
which are linked to Imdex’s increased growth and profitability and hence shareholder value. Performance is measured relative to budget
and forecast results as these are the most accurate measures available against which to assess the achievement of set hurdles. The
balance of his cash compensation package for the current year is not linked to the Group’s performance.
From time to time options may be issued to the Managing Director as an additional performance incentive. The portion of the Managing
Director’s compensation package that comprises options is linked to the Company’s performance. The performance conditions for
granting options are determined with regard to current market trends. The issue of any such options requires the approval of
Shareholders in General Meeting. No such options were granted to the Managing Director in the current year.
The Managing Director is employed under a permanent contract that provides for a 12 month termination period.
Executives and Staff
All Executives and staff of the Company are subject to a formal annual performance review. The remuneration of Executives comprises
a fixed monetary total, which is 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. The base component of Executive salaries is
benchmarked against current market trends and is not linked to Company performance as it serves as a base salary only which is
required to attract and retain suitably qualified and experienced staff. Performance incentives that are linked to Company performance
are used to reward Executives for exceptional performance that benefits the Company and Shareholders. Refer table on page 5 for
further details. Each year the Remuneration Committee sets the KPIs for each key management person. These KPIs include people,
customer, system, financial, strategy and risk measures. The Remuneration Committee set these performance hurdles as they are
significant profit and cash flow drivers which are linked to Imdex’s increased growth and profitability and hence shareholder value.
Performance is measured relative to budget and forecast results as these are the most accurate measures available against which to
assess the achievement of set hurdles. No bonus is awarded where hurdles are not met.
All Executives are employed under permanent contracts, none of which provide for any termination payments. Mr G E Weston’s contract
provides a 12 month notice period and Mr D J Loughlin’s and Mr P A Evans’ contracts provide a 6 month notice period.
Incentives
The remuneration policy for the Managing Director is linked to the Company’s performance as an additional incentive to build
shareholder value. The remuneration of Non Executive Directors is not linked to the Company’s performance in order to preserve their
independence. The increase in net profits of the Company and dividends paid which drives an increase in shareholder value over the
last five years is indicative of the success of this policy.
Management of the Company believes that in order to retain quality Non Executive Directors on the Board, some incentive to maintain
their future involvement, commitment and loyalty to the Company, is required on certain occasions, over and above nominal Directors'
fees.
No Director or Senior Manager received a payment during the current or prior years as consideration for agreeing to hold the relevant
position.
Imdex 2008 Annual Report | 36
Page 3 of 87
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2008
Director and Senior Management details
The Directors of Imdex Limited during the year were:
(i)
(ii)
(iii)
(iv)
(v)
Mr I F Burston (Non Executive Chairman);
Mr B W Ridgeway (Managing Director);
Mr R W Kelly (Non Executive Director);
Mr K A Dundo (Non Executive Director); and
Mr M Lemmel (Non Executive Director).
The term ‘Senior Management’ is used in this remuneration report to refer to the following persons:
(i)
(ii)
(iii)
Mr G E Weston (Group General Manager);
Mr D J Loughlin (General Manager: Down Hole Instrumentation Division); and
Mr P A Evans (Company Secretary and Chief Financial Officer).
Elements of Director and Senior Management Remuneration
Remuneration packages contain the following key elements:
(i)
(ii)
(iii)
Short-term benefits – salary/fees, bonuses and non monetary benefits including motor vehicles and health benefits;
Post-employment benefits – including superannuation and prescribed retirement benefits;
Equity – share options granted under the Staff Option Scheme (Note 33) or any other options granted as approved by
Shareholders in General Meeting; and
(iv) Other benefits.
Earnings and Movements in Shareholder Wealth
The table below sets out summary information about the Consolidated Entity’s earnings and movements in shareholder wealth for the
five years to June 2008:
30 June 2008
30 June 2007
30 June 2006
30 June 2005
30 June 2004^
Revenue – continuing and
discontinued operations ($000s)
Net profit before tax from continuing
operations ($000s)
Net profit after tax from continuing
operations ($000s)
Share price at start of year (cents)
Share price at end of year (cents)
Interim dividend (cents) – fully
franked
Final dividend (cents) – fully franked
Basic earnings per share (cents) –
continuing operations
Diluted earnings per share (cents) –
continuing operations
150,493
119,340
31,885
21,081
150
165
1.75
2.25
11.22
10.79
18,115
11,950
61
150
1.00
1.50
7.72
7.09
66,792
11,864
7,984
22
61
1.00
1.00
6.07
5.95
40,051
5,005
3,282
11.5
22
-
-
3.66
3.66
39,831
(3,776)
(3,689)
9.5
11.5
-
-
(3.07)
(3.07)
^ - Imdex Limited adopted the Australian equivalents to International Financial Reporting Standards with effect from 1 July 2004, which
resulted in various changes to its accounting policies from that date. The results for the year ended 30 June 2004 are reported in
accordance with Imdex Limited’s previous accounting policies as permitted under Australian accounting standards as applicable at that
time.
Elements of remuneration related to performance
(i)
(ii)
(iii)
Managing Director: Of the cash remuneration package of the Managing Director, 22% is linked to the performance of the
Company by way of short term cash incentives. In addition options have been the long term 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.
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 2006 Annual General
Meeting and is currently $500,000. In the current year remuneration to Non Executive Directors totalled $416,750, including
statutory superannuation. The Board determines the apportionment of directors’ fees between each Director.
Senior Management: The remuneration of specified Senior Managers generally comprises a fixed monetary total that is not
linked to the performance of the Company. Bonuses dependant on individual performance criteria are set annually by the
Remuneration Committee for Senior Managers. In addition, subject to a qualifying period, Executives may be issued options in
the Staff Option Plan at the discretion of the Board. These options are linked to the performance of the Company. The
percentage of the value of remuneration that consisted of options for each Senior Manager is set out below.
Page 4 of 87
Imdex 2008 Annual Report | 37
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Imdex 2008 Annual Report | 38
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Imdex 2008 Annual Report | 39
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2008
(i) Mr B W Ridgeway is a party to a service contract with Imdex Limited, which sets out a fixed compensation package reviewable
annually. The service contract specifies a twelve month notice period in the event that the contract is terminated. There are no
termination benefits specified in this contract. Additional performance incentives may be agreed between Mr Ridgeway and Imdex
Limited from time to time. The Managing Director’s compensation is reviewed and determined annually by the Remuneration
Committee.
During the current year Mr B W Ridgeway earned a cash bonus of $60,000, representing 60% of the possible bonus payable for the
year. This bonus was paid on the satisfaction of performance criteria linked to Group operational progress and profitability. During the
prior year a cash bonus of $75,000 was earned, representing 75% of the possible bonus payable for that year. This bonus was paid on
the satisfaction of criteria linked to prior year audited EBITA.
No options were granted to Mr Ridgeway in the current year or in the prior year. The options expense shown in the tables above are the
value of options granted in past years that has been spread over the two year vesting period. Refer Note 33 for further details.
(ii) Mr G E Weston is party to a service contract with Imdex Limited, which sets out a fixed compensation package, reviewable annually.
The service contract stipulates a twelve month notice period in the event that the contract is terminated. There are no termination
benefits specified in this contract. Performance incentives may be agreed between Mr Weston and Imdex 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 of Imdex Limited. This ‘right’ lapses automatically should Mr Weston no longer be
employed by Imdex.
During the current year Mr Weston earned a cash bonus of $60,000. This represents 100% of the possible bonus available for the
current year and was earned on the satisfaction of operational and EBITA related hurdles. During the prior year Mr Weston was entitled
to a cash bonus of $70,000 which was linked to the satisfaction of EBITA hurdles. A bonus of $25,000 was approved by the
Remuneration Committee based on performance.
In the current year Mr Weston was granted 500,000 options under Staff Option Scheme Tranche 7 along with other staff of the Group.
The percentage of the value of current year compensation that consisted of options was 4%. Mr Weston was not granted any options in
the prior year. The options expense shown in the tables above includes a portion of the value of options granted in past years that has
been spread over the three vesting period. Refer Note 33 for further details.
(iii) Mr D J Loughlin is a party to a service contract with Imdex Limited, which sets out a fixed compensation package reviewable
annually. The service contract specifies a six month notice period in the event that the contract is terminated. There are no termination
benefits specified in this contract. Additional performance incentives may be agreed between Mr Loughlin and Imdex Limited from time
to time.
Mr Loughlin earned a bonus of $47,250 in the current year. This represents 100% of the possible bonus available for the current year
and was earned on the satisfaction of operational and EBITA related hurdles. During the prior year a cash bonus of $17,500 was
earned, representing 100% of the possible bonus payable for that year. This bonus was paid on the satisfaction of criteria linked to prior
year audited EBITA.
No options were granted to Mr Loughlin in the current year. In the prior year, Mr Loughlin was granted 500,000 options, under Staff
Option Scheme Tranche 3, along with other staff of the Group (Refer Note 33). The percentage of the value of prior year compensation
that consisted of options was 22%. The options expense shown in the tables above includes a portion of the value of options granted in
past years that has been spread over the three vesting period. Refer Note 33 for further details.
(iv) Mr P A Evans is a party to a service contract with Imdex Limited, which sets out a fixed compensation package reviewable annually.
The service contract specifies a six month notice period in the event that the contract is terminated. There are no termination benefits
specified in this contract. Additional performance incentives may be agreed between Mr Evans and Imdex Limited from time to time.
During the current year Mr Evans earned a bonus of cash $50,000, representing 100% of the possible bonus payable for the year. This
bonus was paid on the satisfaction of specific EBITA, people and systems based criteria. During the prior year Mr Evans earned a cash
bonus of $20,000, representing 67% of the possible bonus payable for that year. This bonus was paid on the satisfaction of criteria
linked to current year audited EBITA.
In the current year, Mr Evans was granted 200,000 options, under Staff Option Scheme Tranche 7, along with other staff of the Group.
The percentage of the value of compensation that consisted of options was 19%. In the prior year, Mr Evans was granted 300,000
options, under Staff Option Scheme Tranche 4, along with other staff of the Group. The percentage of the value of prior year
compensation that consisted of options was 14%. The options expense shown in the table above includes a portion of the value of
options granted in past years that has been spread over the three vesting period. Refer Note 33 for further details.
(v) In the prior year Mr S J Lyons was party to a service contract with Imdex Limited, which set out a fixed compensation package,
reviewable annually. The service contract specified a two month notice period in the event that the contract was terminated. There were
no termination benefits specified in this contract. Additional performance incentives were agreed between Mr Lyons and the Company
from time to time. Mr Lyons resigned on 17 October 2006. No options were granted to Mr Lyons in the prior year. The options expense
shown is the value attributable to options granted in past years that have been spread over the vesting period. Refer Note 33 for further
details.
Imdex 2008 Annual Report | 40
Page 7 of 87
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2008
(vi) In the prior year Mr D L Kinley was a party to a service contract with Imdex Limited, which set out a fixed compensation package,
reviewable annually. The service contract specified a one month notice period in the event that the contract was terminated. There were
no termination benefits specified in this contract. Additional performance incentives were agreed between Mr Kinley and the Company
from time to time. Mr D L Kinley ceased to be a key management member on 17 October 2006 following the appointment of Mr P A
Evans as Company Secretary and Chief Financial Officer on that date. No options were granted to Mr Kinley in the prior year. The
options expense shown is the value attributable to options granted in past years that have been spread over the vesting period. Refer
Note 33 for further details.
(vii) In the prior year Mr C S Munyard was a party to a service contract with Surtron Technologies Pty Ltd, which set out a fixed
compensation package reviewable annually. The service contract specifies a one month notice period in the event that the contract was
terminated. There were no termination benefits specified in this contract. Additional performance incentives were agreed between Mr
Munyard and Surtron Technologies Pty Ltd from time to time. Mr C S Munyard ceased to be a key management member on 1
September 2006 following the appointment of Mr D J Loughlin as General Manager: Down Hole Instrumentation on that date. No
options were granted to Mr Munyard in the prior year. The options expense shown is the value attributable to options granted in past
years that have been spread over the vesting period. Refer Note 33 for further details.
Bonuses granted to Directors and Senior Managers
The table below sets out the bonuses earned by Directors and Senior Managers in the current year. Bonuses are paid on the
achievement of performance criteria specific to the individual. Where performance hurdles are not met, no bonus is paid. The
performance criteria used are chosen by the Remuneration Committee annually and are linked to the financial performance of the
company and hence shareholder value. Performance criteria typically revolve around areas of risk management, people development,
systems improvement and EBITA performance. Performance criteria are reviewed by the Remuneration Committee against budgeted
outcomes before granting bonuses.
Bonus
% of possible
bonus earned
% of possible
bonus forfeited
% of compensation for the
year consisting of
performance based
bonuses
B W Ridgeway
G E Weston
D J Loughlin
P A Evans
$
60,000
60,000
47,250
50,000
%
60%
100%
100%
100%
%
40%
0%
0%
0%
%
11%
13%
11%
12%
Value of options issued to Directors and Senior Managers
The following table discloses the value of options granted, exercised or lapsed during the year:
Options
Granted
Value at
grant date
Options
Exercised
(i)
Value at
exercise
date
Options
Lapsed
Value at
lapsing date
Total value
of options
granted,
exercised
and lapsed
Number of
options
vested in the
current year
Value of
options
included in
remunerati
on during
the year(ii)
Percentage
of
remuneration
for the year
that
consisted of
options
$
$
$
$
Number
$
%
I F Burston
B W Ridgeway
-
-
-
-
G E Weston
209,667
810,000
D J Loughlin
-
P A Evans
83,667
-
-
-
-
-
-
-
-
-
-
176,000
2,000,000
5,152
1,019,667
1,000,000
20,206
-
166,667
139,750
83,667
100,000
78,217
68%
1%
4%
31%
19%
(i)
(ii)
On 26 October 2008 Mr G Weston exercised 500,000 options. The options exercised were issued as part of Staff Options
Tranche 1 and are exercisable at $0.20 each. These options had a fair value of $1.62 each at the date of exercise. No amounts
were paid by Mr G Weston when these options were granted. These options carry no performance criteria and are subject to a
service period only. For more details on options held by Senior Managers refer to Note 29.
The total value of options included in remuneration for the year is calculated in accordance with Accounting Standard AASB 2
“Share Based Payments”. These non-cash numbers include a portion of the value of options issued in prior periods that are
being expensed in the current period to recognise the progressive vesting of these options.
Page 8 of 87
Imdex 2008 Annual Report | 41
Issuing
Entity
Class of option
Class of
shares
Exercise
price of
option
Issue date of
Expiry date of
Number of
option
option
shares
issued
Staff Share
Ordinary
20 cents
1 Aug 2004
31 Jul 2009
922,168
Staff Share
Ordinary
35 cents
1 Feb 2006
31 Jan 2011
326,998
Staff Share
Ordinary
100 cents
23 Feb 2007
22 Feb 2012
436,333
IMDEX LIMITED
and its controlled entities
Imdex
Limited
Imdex
Limited
Imdex
Limited
Options
Options
Options
(h)
Principal Activities
products.
(i)
Review of Operations
(j)
Dividends
During the financial year the Group acquired three drilling fluids businesses and one down hole instrumentation business. The drilling
fluids businesses acquired were Suay Energy Services LLP, Poly-Drill Drilling Systems Ltd and Southernland SA. The down hole
instrumentation business acquired was System Entwicklungs GmbH. In addition the Surtron Technologies business was disposed of.
More details of these acquisitions and disposal are contained in notes 26 and 28 respectively.
Other than the above, there were no significant changes in the state of affairs of the Group.
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2008
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2008
Share options granted to Directors and Senior Managers
(ii)
Share options exercised during or since the end of the financial year
During or since the end of the financial year an aggregate of 700,000 options were granted to the following executives of the Group.
None of these options had vested at 30 June 2008. No options were issued to Directors in the current year. Options are issued for no
consideration and none were forfeited. There is no policy in place limiting the risk of exposure to the securities in respect of the recipient
of options.
Name
Number of
options
granted
Applicable
tranche
Fair
value at
date of
issue
Grant Date
Expiry
Date
Terms
Issuing
entity
G E Weston
500,000
P A Evans
200,000
Staff Share
Options
$3.00
Staff Share
Options
$3.00
$0.42
28 Mar 08
27 Mar 13
$0.42
28 Mar 08
27 Mar 13
Exercisable in
1/3 lots on the
anniversary
date of issue
Exercisable in
1/3 lots on the
anniversary
date of issue
Imdex
Limited
Number of
ordinary
shares
under
option
500,000
Imdex
Limited
200,000
No options were exercised by Directors in the current year.
(g)
Share options
(i)
Share options on issue at the date of this report
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
The Group’s principal continuing activities during the course of the financial year were manufacturing and sale of a range of drilling
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 Report.
Imdex
Limited
Imdex
Limited
Imdex
Limited
Imdex
Limited
Imdex
Limited
Imdex
Limited
Imdex
Limited
Imdex
Limited
Imdex
Limited
Staff Share
Options
Staff Share
Options
Staff Share
Options
Staff Share
Options
Staff Share
Options
Staff Share
Options
Staff Share
Options
Managing
Director Options
Chairman’s
Options
Ordinary
300 cents
28 Mar 2008
27 Mar 2013
(aa)
4,815,000
Ordinary
180 cents
18 Oct 2007
17 Oct 2012
(aa)
500,000
A fully franked interim dividend of 1.75 cents per ordinary share was paid on 25 March 2008 to shareholders registered on 7 March
2008. A fully franked final dividend of 1.5 cents per ordinary share was paid on 2 November 2007 to shareholders registered on 15
October 2007. In the prior year a fully franked interim dividend of 1 cent per ordinary share was paid on 26 March 2007 to shareholders
registered on 13 March 2007. Since 30 June 2008 the Directors have declared a fully franked final dividend of 2.25 cents per ordinary
share, the financial effect of which has not been reflected in the Financial Report.
Ordinary
180 cents
12 Jun 2007
11 Jun 2012
(aa)
625,000
(k)
Changes in State Of Affairs
Ordinary
100 cents
23 Feb 2007
22 Feb 2012
(aa)
3,513,667
Ordinary
75 cents
23 Feb 2007
22 Feb 2012
(aa)
700,000
Ordinary
35 cents
1 Feb 2006
31 Jan 2011
(aa)
1,792,872
Ordinary
20 cents
1 Aug 2004
31 Jul 2009
(aa)
1,168,333
Ordinary
30 cents
15 Sep 2005
14 Sep 2010
(bb)
2,000,000
Ordinary
75 cents
19 Oct 2006
18 Oct 2011
(bb)
1,000,000
(aa) exercisable one year after the date of issue, in one-third lots each year thereafter.
(bb) exercisable at any point from 2 years after date of issue until expiry.
The holders of these options do not have the right, by virtue of the option, to participate in any share issue or interest issue of the
Company or of any other body corporate or registered scheme.
Imdex 2008 Annual Report | 42
Page 9 of 87
Page 10 of 87
IMDEX LIMITED
and its controlled entities
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2008
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2008
Share options granted to Directors and Senior Managers
(ii)
Share options exercised during or since the end of the financial year
Issuing
Entity
Class of option
Class of
shares
Exercise
price of
option
Issue date of
option
Expiry date of
option
Number of
shares
issued
Imdex
Limited
Imdex
Limited
Imdex
Limited
Staff Share
Options
Staff Share
Options
Staff Share
Options
Ordinary
20 cents
1 Aug 2004
31 Jul 2009
922,168
Ordinary
35 cents
1 Feb 2006
31 Jan 2011
326,998
Ordinary
100 cents
23 Feb 2007
22 Feb 2012
436,333
No options were exercised by Directors in the current year.
(h)
Principal Activities
The Group’s principal continuing activities during the course of the financial year were manufacturing and sale of a range of drilling
products.
(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 Report.
Issue date of
Expiry date of
option
option
Key terms
of option
Number of
shares under
option
(j)
Dividends
Ordinary
300 cents
28 Mar 2008
27 Mar 2013
(aa)
4,815,000
Ordinary
180 cents
18 Oct 2007
17 Oct 2012
(aa)
500,000
A fully franked interim dividend of 1.75 cents per ordinary share was paid on 25 March 2008 to shareholders registered on 7 March
2008. A fully franked final dividend of 1.5 cents per ordinary share was paid on 2 November 2007 to shareholders registered on 15
October 2007. In the prior year a fully franked interim dividend of 1 cent per ordinary share was paid on 26 March 2007 to shareholders
registered on 13 March 2007. Since 30 June 2008 the Directors have declared a fully franked final dividend of 2.25 cents per ordinary
share, the financial effect of which has not been reflected in the Financial Report.
Ordinary
180 cents
12 Jun 2007
11 Jun 2012
(aa)
625,000
(k)
Changes in State Of Affairs
During the financial year the Group acquired three drilling fluids businesses and one down hole instrumentation business. The drilling
fluids businesses acquired were Suay Energy Services LLP, Poly-Drill Drilling Systems Ltd and Southernland SA. The down hole
instrumentation business acquired was System Entwicklungs GmbH. In addition the Surtron Technologies business was disposed of.
More details of these acquisitions and disposal are contained in notes 26 and 28 respectively.
Other than the above, there were no significant changes in the state of affairs of the Group.
During or since the end of the financial year an aggregate of 700,000 options were granted to the following executives of the Group.
None of these options had vested at 30 June 2008. No options were issued to Directors in the current year. Options are issued for no
consideration and none were forfeited. There is no policy in place limiting the risk of exposure to the securities in respect of the recipient
of options.
Name
Number of
Applicable
Fair
Grant Date
Terms
Expiry
Date
Issuing
entity
Number of
ordinary
options
granted
tranche
value at
date of
issue
G E Weston
500,000
Staff Share
$0.42
28 Mar 08
27 Mar 13
P A Evans
200,000
Staff Share
$0.42
28 Mar 08
27 Mar 13
Options
$3.00
Options
$3.00
shares
under
option
500,000
Imdex
Limited
Imdex
Limited
200,000
Exercisable in
1/3 lots on the
anniversary
date of issue
Exercisable in
1/3 lots on the
anniversary
date of issue
(g)
Share options
(i)
Share options on issue at the date of this report
Details of unissued shares or interests under option are:
Issuing
Entity
Class of option
Class of
shares
Exercise
price of
option
Imdex
Limited
Imdex
Limited
Imdex
Limited
Imdex
Limited
Imdex
Limited
Imdex
Limited
Imdex
Limited
Imdex
Limited
Imdex
Limited
Staff Share
Options
Staff Share
Options
Staff Share
Options
Staff Share
Options
Staff Share
Options
Staff Share
Options
Staff Share
Options
Director Options
Chairman’s
Options
Ordinary
100 cents
23 Feb 2007
22 Feb 2012
(aa)
3,513,667
Ordinary
75 cents
23 Feb 2007
22 Feb 2012
(aa)
700,000
Ordinary
35 cents
1 Feb 2006
31 Jan 2011
(aa)
1,792,872
Ordinary
20 cents
1 Aug 2004
31 Jul 2009
(aa)
1,168,333
Managing
Ordinary
30 cents
15 Sep 2005
14 Sep 2010
(bb)
2,000,000
Ordinary
75 cents
19 Oct 2006
18 Oct 2011
(bb)
1,000,000
(aa) exercisable one year after the date of issue, in one-third lots each year thereafter.
(bb) exercisable at any point from 2 years after date of issue until expiry.
The holders of these options do not have the right, by virtue of the option, to participate in any share issue or interest issue of the
Company or of any other body corporate or registered scheme.
Page 9 of 87
Imdex 2008 Annual Report | 43
Page 10 of 87
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2008
(l)
Subsequent Events
On 1 July 2008, $500,000 cash was paid and 168,530 fully paid Imdex Limited ordinary shares were issued to acquire the remaining
25% of the issued share capital of Suay Energy Services LLP. Refer note 26(d).
On 31 July 2008 Imdex Limited paid the next deferred settlement instalment of GBP 1,090,000 (A$2,271,000) due to the vendors of
Imdex Technology UK Limited (formerly Chardec Technology Limited).
Subsequent to year end the Directors declared a 2.25 cent per share fully franked dividend with an entitlement date of 17 October 2008
and a payment date of 31 October 2008. The effect of this dividend has not been reflected in this financial report.
(m)
Future Developments
Disclosure of information regarding likely developments in the operations of the Group in future financial years and the expected results
of those operations is likely to result in unreasonable prejudice to the Group. Accordingly, this information has not been disclosed in this
report.
(n)
Environmental Regulations
The only entity in the Group that is subject to environmental regulations is Samchem Drilling Fluids and Chemicals (Pty) Ltd. They are
required to comply with the South African National Water Act, Act No 36 of 1998 which requires the management of effluent discharge.
This is controlled through an effluent pit system using an oil separator. No known environmental breaches have occurred in relation to
the Group’s operations.
(o)
Non-audit services
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in Note 6 to
the Financial Report.
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.
The Directors are of the opinion that the services as disclosed in Note 6 to the financial statements do not compromise the external
auditor’s independence, based on advice received from the Audit and Compliance Committee, for the following reasons:
(cid:120)
(cid:120)
All non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the
auditor, and
None of the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES
110 Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board, including
reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as
advocate for the Company or jointly sharing economic risks and rewards.
Imdex 2008 Annual Report | 44
Page 11 of 87
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2008
(p)
Auditor’s Independence Declaration
The auditor’s independence declaration is included on page 13 of the Annual 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, except to the extent permitted by law, 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 I F Burston
Chairman
Mr Ian Burston
Chairman
PERTH, Western Australia, 15 August 2008.
Imdex 2008 Annual Report | 45
Page 12 of 87
Imdex 2008 Annual Report | 46
Imdex 2008 Annual Report | 47
Imdex 2008 Annual Report | 48
IMDEX LIMITED
and its controlled entities
DIRECTORS’ DECLARATION
The Directors declare that:
(a)
(b)
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;
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 Group; and
(c)
the Directors have been given the declarations required by s.295A of the Corporations Act 2001.
At the date of this declaration, the Company is within the class of companies affected by ASIC Class Order 98/1418. The nature of the
deed of cross guarantee is such that each company which is party to the deed guarantees to each creditor payment in full of any debt in
accordance with the deed of cross guarantee.
In the Directors’ opinion, there are reasonable grounds to believe that the Company and the companies to which the ASIC Class Order
applies, as detailed in note 25 to the financial statements will, as a group, be able to meet any obligations or liabilities to which they are,
or may become, subject by virtue of the deed of cross guarantee.
Signed in accordance with a resolution of the Directors made pursuant to s.295(5) for the Corporations Act 2001.
Dated at Perth, 15 August 2008.
Ian F Burston
Chairman
Imdex 2008 Annual Report | 49
Page 16 of 87
IMDEX LIMITED
and its controlled entities
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 2008. In addition,
the Company has a Corporate Governance section on its website: www.imdexlimited.com (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 2008, 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.
(i) Board Structure
The Board consists of a Non Executive Chairman, three Non Executive Directors and one Executive Director. Of the five Board
members, four are considered independent.
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 the decision making of the Board. To facilitate this, each Director has the
right to seek independent legal advice at the Group’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
Mr I F Burston,
Non Executive Chairman
Mr B W Ridgeway,
Managing Director
Mr R W Kelly,
Non Executive Director
Mr K A Dundo,
Non Executive Director
Mr M Lemmel,
Non Executive Director
Assessment
Existence of any matters contained in
ASX Recommendation 2.1 affecting Independence
Independent
Nil
Not Independent
Managing Director
Independent
Independent
Independent
Nil
Nil
Nil
Imdex 2008 Annual Report | 50
Page 17 of 87
IMDEX LIMITED
and its controlled entities
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:
(cid:120)
(cid:120)
(cid:120)
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 Chief Financial Officer
The Managing Director and the Chief Financial Officer have signed a declaration to the Board attesting to the fact that the 2008 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.
Imdex 2008 Annual Report | 51
Page 18 of 87
IMDEX LIMITED
and its controlled entities
CORPORATE GOVERNANCE STATEMENT
(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, appropriate ethical standards for the management of the Company and to approve the annual internal audit plan. 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; 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 Company Secretary acts as secretary of this Committee.
The Group Risk Manager, external auditors, the Managing Director and the Chief Financial Officer 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 Report and involves discussions with the auditors and
the Group'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 be available to answer questions from
Shareholders.
(iv) Internal Audit
The Group has an independent internal audit function that reports directly to the Audit and Compliance Committee. The conduct and
independence of the internal audit function are governed by the Internal Audit Charter which is approved by the Audit and Compliance
Committee. The annual work plan of the internal audit function is approved annually by the Audit and Compliance Committee.
(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 Group '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 Group during the year, changes in the
state of affairs of the Group 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 Group during the
period. Half-Year Financial Report 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 Half-Year Financial
Report is sent to any Shareholder who requests them;
(iii) regular reports released through the ASX and the media;
(iv) proposed major changes in the Group, which may impact on share ownership rights are submitted to a vote of Shareholders; and
Imdex 2008 Annual Report | 52
Page 19 of 87
IMDEX LIMITED
and its controlled entities
CORPORATE GOVERNANCE STATEMENT
(v) the Board encourages full participation by Shareholders at the Annual General Meeting to ensure a high level of accountability and
identification with the Group'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.imdexlimited.com. Further information can also be obtained by emailing the Company at:
imdex@imdexlimited.com 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.
The Company has an independent internal audit function that operates under a Charter approved by the Audit and Compliance
Committee. One of the tasks of the internal audit function is to review and evaluate the Company’s and Group’s risk management and
internal control processes on a continuous basis.
The risk management policy is published on the Company’s website.
(ii) Statement by the Managing Director and Chief Financial Officer
The Managing Director and the Chief Financial Officer 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 32. The Company’s remuneration policies are set out in the
Remuneration Report contained in the Directors Report.
Imdex 2008 Annual Report | 53
Page 20 of 87
IMDEX LIMITED
and its controlled entities
CORPORATE GOVERNANCE STATEMENT
(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 R W Kelly (Chairman);
Mr I F Burston; and,
Mr K A Dundo.
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 2006 Annual General Meeting and is currently $500,000.
(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.
Imdex 2008 Annual Report | 54
Page 21 of 87
IMDEX LIMITED
and its controlled entities
INCOME STATEMENT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008
Continuing operations
Revenue from sale of goods, rendering of services and
operating lease rental
Other revenue from operations
Total revenue
Other income
Raw materials and consumables used
Employee benefit expense
Depreciation expense
Amortisation expense
Finance costs
Other expenses
Profit before tax
Income tax expense
Profit from continuing operations
Profit from discontinued operations
Profit for the year
Attributable to:
Equity holders of the parent
Minority interest
Earnings per share
Continuing operations:
Basic earnings per share (cents)
Diluted earnings per share (cents)
Continuing and discontinued operations:
Basic earnings per share (cents)
Diluted earnings per share (cents)
Consolidated
Company
Year Ended Year Ended Year Ended Year Ended
30 June 2008 30 June 2007 30 June 2008 30 June 2007
Notes
$’000
$’000
$’000
$’000
142,009
1,900
143,909
103,849
900
104,749
-
3,338
3,338
369
1,597
27,474
(59,589)
(22,996)
(3,266)
(6,055)
(2,762)
(17,725)
31,885
(10,804)
21,081
10,921
32,002
(51,403)
(10,950)
(3,207)
(3,430)
(2,736)
(16,505)
18,115
(6,165)
11,950
1,568
13,518
-
(5,720)
(198)
-
(1,575)
(4,474)
18,845
(2,520)
16,325
-
16,325
22,503
2,849
25,352
8,084
(7,202)
(3,646)
(2,269)
-
(1,543)
(5,691)
13,085
(3,219)
9,866
-
9,866
31,966
36
13,518
-
16,325
-
9,866
-
11.22
10.79
17.04
16.38
7.72
7.09
8.74
8.00
4
4
4
4
4
4
4
4
5
28
20
20
20
20
The Income Statement should be read in conjunction with the accompanying notes.
Imdex 2008 Annual Report | 55
Page 22 of 87
IMDEX LIMITED
and its controlled entities
BALANCE SHEET
AS AT 30 JUNE 2008
Current Assets
Cash and Cash Equivalents
Trade and Other Receivables
Inventories
Other Financial Assets
Other
Non Current Assets Classified as Held for Sale
Total Current Assets
Non Current Assets
Other Financial Assets
Property, Plant and Equipment
Goodwill
Other Intangible Assets
Other
Total Non Current Assets
Total Assets
Current Liabilities
Trade and Other Payables
Borrowings
Current Tax Payables
Provisions
Total Current Liabilities
Non Current Liabilities
Borrowings
Deferred Tax Liabilities
Provisions
Total Non Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed Capital
Foreign Currency Translation Reserve
Employee Equity-Settled Benefits Reserve
Retained Profits/(Accumulated Losses)
Total Equity
Consolidated
Company
30 June 2008 30 June 2007 30 June 2008 30 June 2007
Notes
$’000
$’000
$’000
$’000
30
7
8
9
10
11
9
12
13
14
10
15
16
5
17
16
5
17
18
19
19
13,276
32,079
21,716
13,237
1,200
81,508
4,500
86,008
-
7,140
52,626
27,289
-
87,055
173,063
16,522
15,703
8,792
972
41,989
19,849
5,024
558
25,431
67,420
105,643
64,883
(4,863)
2,573
43,050
105,643
15,271
27,806
13,839
11,556
224
68,696
4,500
73,196
-
13,207
35,033
27,746
664
76,650
149,846
16,741
11,881
8,913
1,212
38,747
28,556
5,481
448
34,485
73,232
76,614
60,982
(2,137)
751
17,018
76,614
869
2,401
-
13,237
20
16,527
4,500
21,027
71,022
522
-
-
-
71,544
92,571
1,811
9,000
2,643
245
13,699
8,000
273
128
8,401
22,100
70,471
64,883
-
2,573
3,015
70,471
962
10,213
2,085
11,556
49
24,865
4,500
29,365
43,959
4,886
-
429
664
49,938
79,303
5,570
2,685
5,450
265
13,970
10,064
796
116
10,976
24,946
54,357
60,982
-
751
(7,376)
54,357
The Balance Sheet should be read in conjunction with the accompanying notes.
Imdex 2008 Annual Report | 56
IMDEX LIMITED
and its controlled entities
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008
CONSOLIDATED
Notes
$'000
$'000
$'000
$'000
$'000
Fully Paid
Mandatory
Ordinary
Convertible
Foreign
Currency
Shares
Capital
Translation
Equity-
Settled
Employee
Retained
Total
Earnings
Attributable to
Reserve
Benefits
Reserve
Equity
Holders of the
Entity
$'000
26,490
(494)
105
6,552
32,653
Balance at 1 July 2006
Exchange differences on
translation of foreign operations
after taxation
Net income recognised directly in
equity
Profit for the period
Total recognised income and
expense for the period
Dividend paid
Share based payments
Issue of equity securities for
working capital
Issue of equity securities on
conversion of debt
Issue of equity securities on
purchase of entity
Share issue costs (net of tax)
Issue of shares under staff option
plan
Deferred consideration - mandatory
convertible capital
Balance at 30 June 2007
Exchange differences on
translation of foreign operations
after taxation
Net income recognised directly in
equity
Profit for the period
Total recognised income and
expense for the period
Dividend paid
Share based payments
Issue of shares as part
consideration for the acquisition of
Poly-Drill
Issue of shares as part
consideration for the acquisition of
Southernland
Tax effect of prior period share
Issue of shares under staff option
issue costs
plan
Balance at 30 June 2008
19
19
18
18
18
18
18
18
19
19
18
18
18
18
-
-
-
-
-
-
-
-
-
-
-
-
-
16,500
10,400
200
(510)
1,202
54,282
1,750
1,387
(113)
877
58,183
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
728
(82)
-
751
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,025
(1,643)
(1,643)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,643)
(1,643)
13,518
13,518
(3,052)
728
16,500
10,400
200
(510)
1,120
6,700
76,614
(2,726)
(2,726)
31,966
31,966
(5,934)
2,025
1,750
1,387
(113)
13,518
13,518
(3,052)
17,018
31,966
31,966
(5,934)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,700
6,700
(2,137)
(2,726)
(2,726)
The Statement of Changes in Equity should be read in conjunction with the accompanying notes.
6,700
(4,863)
43,050
(203)
2,573
674
105,643
Page 23 of 87
Page 24 of 87
IMDEX LIMITED
and its controlled entities
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008
Fully Paid
Ordinary
Shares
Mandatory
Convertible
Capital
Foreign
Currency
Translation
Reserve
Employee
Equity-
Settled
Benefits
Reserve
Retained
Earnings
CONSOLIDATED
Notes
$'000
$'000
$'000
$'000
$'000
Total
Attributable to
Equity
Holders of the
Entity
$'000
(494)
105
6,552
32,653
Balance at 1 July 2006
Exchange differences on
translation of foreign operations
after taxation
Net income recognised directly in
equity
Profit for the period
Total recognised income and
expense for the period
Dividend paid
Share based payments
Issue of equity securities for
working capital
Issue of equity securities on
conversion of debt
Issue of equity securities on
purchase of entity
Share issue costs (net of tax)
Issue of shares under staff option
plan
Deferred consideration - mandatory
convertible capital
Balance at 30 June 2007
Exchange differences on
translation of foreign operations
after taxation
Net income recognised directly in
equity
Profit for the period
Total recognised income and
expense for the period
Dividend paid
Share based payments
Issue of shares as part
consideration for the acquisition of
Poly-Drill
Issue of shares as part
consideration for the acquisition of
Southernland
Tax effect of prior period share
issue costs
Issue of shares under staff option
plan
Balance at 30 June 2008
19
19
18
18
18
18
18
18
19
19
18
18
18
18
26,490
-
-
-
-
-
-
16,500
10,400
200
(510)
1,202
-
54,282
-
-
-
-
-
-
1,750
1,387
(113)
877
58,183
-
-
-
-
-
-
-
-
-
-
-
-
(1,643)
(1,643)
-
-
-
-
-
-
-
-
-
6,700
6,700
-
(2,137)
-
-
-
-
-
-
-
-
-
(2,726)
(2,726)
-
-
-
-
-
-
-
-
-
-
-
-
728
-
-
-
-
(82)
-
751
-
-
-
-
-
2,025
-
-
-
-
(1,643)
-
13,518
13,518
(3,052)
-
-
-
-
-
-
-
17,018
(1,643)
13,518
13,518
(3,052)
728
16,500
10,400
200
(510)
1,120
6,700
76,614
-
(2,726)
-
31,966
31,966
(5,934)
-
-
-
-
(2,726)
31,966
31,966
(5,934)
2,025
1,750
1,387
(113)
-
6,700
-
(4,863)
(203)
2,573
-
43,050
674
105,643
The Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Imdex 2008 Annual Report | 57
Page 24 of 87
IMDEX LIMITED
and its controlled entities
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008
Fully Paid
Ordinary
Shares
Mandatory
Convertible
Capital
Foreign
Currency
Translation
Reserve
Employee
Equity-
Settled
Benefits
Reserve
Retained
Earnings /
(Accumulated
Losses)
COMPANY
Notes
$'000
$'000
$'000
$'000
$'000
Total
Attributable to
Equity
Holders of the
Entity
$'000
Balance at 1 July 2006
Profit for the period
Total recognised income and
expense for the period
Dividend paid
Share based payments
Issue of equity securities for
working capital
Issue of equity securities on
conversion of debt
Issue of equity securities on
purchase of entity
Share issue costs (net of tax)
Issue of shares under staff option
plan
Deferred consideration - mandatory
convertible capital
Balance at 30 June 2007
Profit for the period
Total recognised income and
expense for the period
Dividend paid
Share based payments
Issue of shares as part
consideration for the acquisition of
Poly-Drill
Issue of shares as part
consideration for the acquisition of
Southernland
Tax effect of prior period share
issue costs
Issue of shares under staff option
plan
Balance at 30 June 2008
19
18
18
18
18
18
18
19
18
18
18
18
26,490
-
-
-
-
16,500
10,400
200
(510)
1,202
-
54,282
-
-
-
-
1,750
1,387
(113)
877
58,183
-
-
-
-
-
-
-
-
-
-
6,700
6,700
-
-
-
-
-
-
-
-
6,700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
105
-
-
-
728
-
-
-
(82)
-
-
751
-
-
-
2,025
-
-
-
(14,190)
9,866
9,866
(3,052)
-
-
-
-
-
-
-
(7,376)
16,325
16,325
(5,934)
-
-
-
-
(203)
2,573
-
3,015
12,405
9,866
9,866
(3,052)
728
16,500
10,400
200
(592)
1,202
6,700
54,357
16,325
16,325
(5,934)
2,025
1,750
1,387
(113)
674
70,471
The Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Imdex 2008 Annual Report | 58
Page 25 of 87
IMDEX LIMITED
and its controlled entities
IMDEX LIMITED
IMDEX LIMITED
CASH FLOW STATEMENT
and its controlled entities
and its controlled entities
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008
CASH FLOW STATEMENT
CASH FLOW STATEMENT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008
Consolidated
Company
Notes
Year Ended Year Ended Year Ended Year Ended
30 June 2008 30 June 2007 30 June 2008 30 June 2007
Consolidated
Consolidated
$’000
$’000
Company
Company
$’000
$’000
Year Ended Year Ended Year Ended Year Ended
Year Ended Year Ended Year Ended Year Ended
30 June 2008 30 June 2007 30 June 2008 30 June 2007
30 June 2008 30 June 2007 30 June 2008 30 June 2007
$’000
$’000
154,253
(126,292)
-
154,253
154,253
-
(126,292)
(126,292)
(2,342)
-
-
(15,362)
-
-
10,257
(2,342)
(2,342)
(15,362)
(15,362)
10,257
10,257
30(c)
30(c)
30(c)
Notes
Notes
14
26(f)
26(g)
14
14
26(h)
26(f)
26(f)
26(g)
26(g)
26(b)
26(h)
26(h)
26(c), (d)
26(e)
26(b)
26(b)
26(a)
26(c), (d)
26(c), (d)
28
26(e)
26(e)
26(a)
26(a)
28
28
Cash Flows From Operating Activities
Receipts from customers
Payments to suppliers and employees
Cash Flows From Operating Activities
Cash Flows From Operating Activities
Intercompany management fees received
Receipts from customers
Receipts from customers
Intercompany dividend received
Payments to suppliers and employees
Payments to suppliers and employees
Interest and other costs of finance paid
Intercompany management fees received
Intercompany management fees received
Income tax paid
Intercompany dividend received
Intercompany dividend received
Net cash provided by / (used in) Operating Activities
Interest and other costs of finance paid
Interest and other costs of finance paid
Income tax paid
Income tax paid
Cash Flows From Investing Activities
Net cash provided by / (used in) Operating Activities
Net cash provided by / (used in) Operating Activities
Interest and bill discounts received
Payment for property, plant and equipment
Cash Flows From Investing Activities
Cash Flows From Investing Activities
Proceeds from sale of property, plant and equipment
Interest and bill discounts received
Interest and bill discounts received
Proceeds from Rashid Trading Establishment
Payment for property, plant and equipment
Payment for property, plant and equipment
Payment for development costs capitalised
Proceeds from sale of property, plant and equipment
Proceeds from sale of property, plant and equipment
Payment for shares of Flexit net of cash acquired
Proceeds from Rashid Trading Establishment
Proceeds from Rashid Trading Establishment
Payment for shares of Reflex net of cash acquired
Payment for development costs capitalised
Payment for development costs capitalised
Payment for shares of Imdex Technology net of cash acquired
Payment for shares of Flexit net of cash acquired
Payment for shares of Flexit net of cash acquired
Payment for shares of Reflex net of cash acquired
Payment for shares of Reflex net of cash acquired
Payment for shares of Poly-Drill net of cash acquired
Payment for shares of Imdex Technology net of cash acquired
Payment for shares of Imdex Technology net of cash acquired
Payment for shares of Suay net of cash acquired
Payment for shares of Southernland net of cash acquired
Payment for shares of Poly-Drill net of cash acquired
Payment for shares of Poly-Drill net of cash acquired
Payment for shares of SEG net of cash acquired
Payment for shares of Suay net of cash acquired
Payment for shares of Suay net of cash acquired
Proceeds on the sale of Surtron net of cash disposed
Payment for shares of Southernland net of cash acquired
Payment for shares of Southernland net of cash acquired
Payment for the acquisition of patent
Payment for shares of SEG net of cash acquired
Payment for shares of SEG net of cash acquired
Amounts advanced to Sino Gas & Energy Ltd
Proceeds on the sale of Surtron net of cash disposed
Proceeds on the sale of Surtron net of cash disposed
Amounts repaid by Sino Gas & Energy Ltd
Payment for the acquisition of patent
Payment for the acquisition of patent
Net cash provided by / (used in) Investing Activities
Amounts advanced to Sino Gas & Energy Ltd
Amounts advanced to Sino Gas & Energy Ltd
Amounts repaid by Sino Gas & Energy Ltd
Amounts repaid by Sino Gas & Energy Ltd
Cash Flows From Financing Activities
Net cash provided by / (used in) Investing Activities
Net cash provided by / (used in) Investing Activities
Advances from / (to) Controlled Entities
Proceeds from issue of equity securities
Cash Flows From Financing Activities
Cash Flows From Financing Activities
Advances from / (to) Controlled Entities
Advances from / (to) Controlled Entities
Payment for share issue costs
Proceeds from issue of equity securities
Proceeds from issue of equity securities
Cash received on exercise of options
Payment for share issue costs
Payment for share issue costs
Dividend paid to equity holders of the parent
Cash received on exercise of options
Cash received on exercise of options
Hire purchase and lease payments
Dividend paid to equity holders of the parent
Dividend paid to equity holders of the parent
Payment for interest rate cap
Hire purchase and lease payments
Hire purchase and lease payments
Payment of convertible note interest
Payment for interest rate cap
Payment for interest rate cap
Proceeds from borrowings
Payment of convertible note interest
Payment of convertible note interest
Repayment of borrowings
Proceeds from borrowings
Proceeds from borrowings
Net cash provided by / (used in) Financing Activities
Repayment of borrowings
Repayment of borrowings
Net cash provided by / (used in) Financing Activities
Net cash provided by / (used in) Financing Activities
Net Increase / (Decrease) in Cash and Cash Equivalents
Held
Net Increase / (Decrease) in Cash and Cash Equivalents
Held
Cash and Cash Equivalents At The Beginning Of The Financial
Year
Cash and Cash Equivalents At The Beginning Of The Financial
Cash and Cash Equivalents At The Beginning Of The Financial
Effects of exchange rate changes on the balance of cash and
Year
Year
cash equivalents held in foreign currencies
Effects of exchange rate changes on the balance of cash and
Effects of exchange rate changes on the balance of cash and
Cash and Cash Equivalents At The End Of The Financial
cash equivalents held in foreign currencies
cash equivalents held in foreign currencies
Year
Cash and Cash Equivalents At The End Of The Financial
Cash and Cash Equivalents At The End Of The Financial
Year
Year
The Cash Flow Statement should be read in conjunction with the accompanying notes.
Net Increase / (Decrease) in Cash and Cash Equivalents
Held
18
18
18
18
18
18
30(a)
30(a)
30(a)
30(a)
30(a)
30(a)
21
21
21
451
(4,803)
1,138
451
451
-
(4,803)
(4,803)
-
1,138
1,138
-
-
-
-
-
-
(5,088)
-
-
-
-
(899)
(5,088)
(5,088)
(246)
(1,446)
(899)
(899)
(13,853)
(246)
(246)
18,000
(1,446)
(1,446)
-
(13,853)
(13,853)
-
18,000
18,000
-
-
-
(6,746)
-
-
-
-
(6,746)
(6,746)
-
-
-
-
-
-
-
674
-
-
(5,934)
674
674
(888)
(5,934)
(5,934)
(239)
(888)
(888)
(464)
(239)
(239)
12,000
(464)
(464)
(9,983)
12,000
12,000
(4,834)
(9,983)
(9,983)
(4,834)
(4,834)
15,271
15,271
(672)
(672)
(672)
13,276
(1,323)
(1,323)
13,276
13,276
(1,323)
15,271
The Cash Flow Statement should be read in conjunction with the accompanying notes.
The Cash Flow Statement should be read in conjunction with the accompanying notes.
$’000
$’000
128,311
(105,170)
-
128,311
128,311
-
(105,170)
(105,170)
(1,490)
-
-
(5,392)
-
-
16,259
(1,490)
(1,490)
(5,392)
(5,392)
16,259
16,259
267
(5,733)
710
267
267
1,121
(5,733)
(5,733)
(429)
710
710
(10,274)
1,121
1,121
(15,194)
(429)
(429)
(6,352)
(10,274)
(10,274)
(15,194)
(15,194)
(352)
(6,352)
(6,352)
(306)
-
(352)
(352)
-
(306)
(306)
-
-
-
(328)
-
-
(11,307)
-
-
200
(328)
(328)
(47,977)
(11,307)
(11,307)
200
200
(47,977)
(47,977)
-
16,500
-
-
(729)
16,500
16,500
1,120
(729)
(729)
(3,052)
1,120
1,120
(1,801)
(3,052)
(3,052)
-
(1,801)
(1,801)
-
-
-
33,890
-
-
(5,700)
33,890
33,890
40,228
(5,700)
(5,700)
40,228
40,228
8,510
8,510
8,510
6,421
6,421
6,421
340
$’000
$’000
-
(7,565)
4,665
-
-
3,378
(7,565)
(7,565)
(1,562)
4,665
4,665
(8,907)
3,378
3,378
(9,991)
(1,562)
(1,562)
(8,907)
(8,907)
(9,991)
(9,991)
212
(42)
-
212
212
-
(42)
(42)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,571)
-
-
(246)
(1,533)
(1,571)
(1,571)
-
(246)
(246)
19,873
(1,533)
(1,533)
-
-
-
-
19,873
19,873
-
-
-
16,693
-
-
-
-
16,693
16,693
(5,443)
-
(5,443)
(5,443)
-
-
-
674
-
-
(5,934)
674
674
(89)
(5,934)
(5,934)
(239)
(89)
(89)
(464)
(239)
(239)
12,000
(464)
(464)
(7,300)
12,000
12,000
(6,795)
(7,300)
(7,300)
(6,795)
(6,795)
(93)
$’000
$’000
18,124
(12,583)
1,363
3,000
(1,022)
(3,241)
5,641
18,124
18,124
(12,583)
(12,583)
1,363
1,363
3,000
3,000
(1,022)
(1,022)
(3,241)
(3,241)
5,641
5,641
217
(3,358)
2,886
217
217
1,121
(3,358)
(3,358)
(429)
2,886
2,886
-
1,121
1,121
-
(429)
(429)
-
-
-
-
-
(352)
-
-
(306)
-
(352)
(352)
-
(306)
(306)
-
-
-
(328)
-
-
(11,307)
-
-
200
(328)
(328)
(11,656)
(11,307)
(11,307)
200
200
(11,656)
(11,656)
(20,444)
16,500
(20,444)
(20,444)
(729)
16,500
16,500
1,120
(729)
(729)
(3,052)
1,120
1,120
(721)
(3,052)
(3,052)
-
(721)
(721)
-
-
-
18,000
-
-
(5,700)
18,000
18,000
4,974
(5,700)
(5,700)
4,974
4,974
(1,041)
(93)
(93)
962
(1,041)
(1,041)
2,003
962
962
-
2,003
2,003
-
340
340
15,271
-
-
869
-
-
962
15,271
15,271
869
869
962
962
Imdex 2008 Annual Report | 59
Page 26 of 87
Page 26 of 87
Page 26 of 87
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Interpretation 10 ‘Interim Financial Reporting and Impairment’
Interpretation 10 ‘Interim Financial Reporting and Impairment’
AASB 2005-10 ‘Amendments to Australian Accounting Standards’; and
Changes in disclosures around financial instruments and the objectives, policies and processes for managing capital
Adoption of New and Revised Accounting Standards
Adoption of New and Revised Accounting Standards
IMDEX LIMITED
and its controlled entities
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
NOTES TO THE FINANCIAL REPORT
1
1
In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting
Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period. The adoption of
these new and revised Standards and Interpretations has resulted in a change to the Company’s and the Group’s disclosures in the
In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting
following areas:
Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period. The adoption of
these new and revised Standards and Interpretations has resulted in a change to the Company’s and the Group’s disclosures in the
(cid:120)
AASB 7 ‘Financial Instruments: Disclosures’ and consequential amendments to other accounting standards resulting from
following areas:
its issue;
AASB 7 ‘Financial Instruments: Disclosures’ and consequential amendments to other accounting standards resulting from
AASB 2005-10 ‘Amendments to Australian Accounting Standards’; and
its issue;
IMDEX LIMITED
and its controlled entities
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
NOTES TO THE FINANCIAL REPORT
1 Adoption of New and Revised Accounting Standards
1 Adoption of New and Revised Accounting Standards
Standards and Interpretations in issue but not yet effective
At the date of authorisation of the financial report, the following Standards and Interpretations were in issue but not yet effective:
Standards and Interpretations in issue but not yet effective
At the date of authorisation of the financial report, the following Standards and Interpretations were in issue but not yet effective:
Standard / Interpretation
Effective Date
AASB 101 ‘Presentation of Financial Statements’ (revised September 2007)
Standard / Interpretation
AASB 101 ‘Presentation of Financial Statements’ (revised September 2007)
AASB 8 ‘Operating Segments’ and consequential amendments to other
accounting standards resulting from its issue
AASB 8 ‘Operating Segments’ and consequential amendments to other
accounting standards resulting from its issue
AASB 123 ‘Borrowing Costs’ revised
AASB 123 ‘Borrowing Costs’ revised
Interpretation 12 ‘Service Concession Arrangements’
Interpretation 12 ‘Service Concession Arrangements’
Interpretation 13 ‘Customer Loyalty Programmes’
Interpretation 13 ‘Customer Loyalty Programmes’
Interpretation 14 ‘Limit on a defined benefit asset, Minimum Funding
Requirements and their Interaction’
Effective for annual reporting periods beginning
Effective Date
on or after 1 January 2009
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 January 2009
on or after 1 January 2009
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 January 2009
on or after 1 January 2009
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 January 2009
on or after 1 January 2008
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 January 2008
on or after 1 July 2008
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 July 2008
on or after 1 January 2008
Interpretation 14 ‘Limit on a defined benefit asset, Minimum Funding
AASB 2008-1 ‘Amendments to Australian Accounting Standard – Share-based
Requirements and their Interaction’
Payments: Vesting Conditions and Cancellations’
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 January 2008
on or after 1 January 2009
AASB 2008-1 ‘Amendments to Australian Accounting Standard – Share-based
AASB 2008-2 ‘Amendments to Australian Accounting Standards – Puttable
Payments: Vesting Conditions and Cancellations’
Financial Instruments and Obligations arising on Liquidation’
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 January 2009
on or after 1 January 2009
AASB 2008-2 ‘Amendments to Australian Accounting Standards – Puttable
AASB 2008-3 ‘Amendments to Australian Accounting Standards arising from
Financial Instruments and Obligations arising on Liquidation’
AASB 3 and AASB 127’
AASB 2008-3 ‘Amendments to Australian Accounting Standards arising from
AASB 3 and AASB 127’
IFRS 3 ‘Business Combinations’
IFRS 3 ‘Business Combinations’
IAS 27 ‘Separate and Consolidated Financial Statements’
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 January 2009
on or after 1 July 2009
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 July 2009
on or after 1 July 2009
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 July 2009
on or after 1 July 2009
Effective for annual reporting periods beginning
IAS 27 ‘Separate and Consolidated Financial Statements’
The application of AASB 8, AASB 123, IFRS 3, IAS 27, AASB 101, AASB 2008-1 and AASB 2008-3 are not expected to have a material
on or after 1 July 2009
effect on any of the amounts recognised in the financial statements, but may change the disclosures presently made in relation to the
Company’s and the Group’s assets, liabilities and segments. The circumstances addressed by Interpretations 12, 13, 14 and AASB
The application of AASB 8, AASB 123, IFRS 3, IAS 27, AASB 101, AASB 2008-1 and AASB 2008-3 are not expected to have a material
2008-2 do not have application to the business of the Company or Group. These Standards and Interpretations will be first applied in the
effect on any of the amounts recognised in the financial statements, but may change the disclosures presently made in relation to the
financial report of the Group that relates to the annual reporting period beginning after the effective date of each pronouncement.
Company’s and the Group’s assets, liabilities and segments. The circumstances addressed by Interpretations 12, 13, 14 and AASB
2008-2 do not have application to the business of the Company or Group. These Standards and Interpretations will be first applied in the
The initial application of the expected issue of an Australian equivalent accounting standard to the following standard is not expected to
financial report of the Group that relates to the annual reporting period beginning after the effective date of each pronouncement.
have a material impact on the financial report of the Group and the Company:
The initial application of the expected issue of an Australian equivalent accounting standard to the following standard is not expected to
have a material impact on the financial report of the Group and the Company:
Expected Standard / Interpretation
Effective Date
Improvements to IFRS’s (2008)
Expected Standard / Interpretation
Improvements to IFRS’s (2008)
Amendments to IFRS 1 ‘First-time Adoption of International Financial Reporting
Standards’ and IAS 27 ‘Consolidated and Separate Financial Statements – Cost
of Investment in a subsidiary, Jointly Controlled Entity or Associate’
Amendments to IFRS 1 ‘First-time Adoption of International Financial Reporting
Standards’ and IAS 27 ‘Consolidated and Separate Financial Statements – Cost
of Investment in a subsidiary, Jointly Controlled Entity or Associate’
IFRIC 15 ‘Agreements for the Construction of Real Estate’
IFRIC 15 ‘Agreements for the Construction of Real Estate’
IFRIC 16 ‘Hedges of a Net Investment in a Foreign Operation’
IFRIC 16 ‘Hedges of a Net Investment in a Foreign Operation’
Effective for annual reporting periods beginning
Effective Date
on or after 1 January 2009
Effective for annual reporting periods beginning
on or after 1 January 2009
Effective for annual reporting periods beginning
on or after 1 January 2009
Effective for annual reporting periods beginning
on or after 1 January 2009
Effective for annual reporting periods beginning
on or after 1 January 2009
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 January 2009
on or after 1 October 2008
Effective for annual reporting periods beginning
on or after 1 October 2008
The Australian Accounting Standards Board first released AASB 7 ‘Amendments to Australian Accounting Standards’ in August 2005.
Changes in disclosures around financial instruments and the objectives, policies and processes for managing capital
AASB 7 was represented in October 2007 to take into account amendments made to this standard by other standards since its original
issue in August 2005. Changes made to this standard expand the disclosures required in relation to the Company’s and the Group’s
The Australian Accounting Standards Board first released AASB 7 ‘Amendments to Australian Accounting Standards’ in August 2005.
financial instruments and the objectives, policies and processes for managing capital.
AASB 7 was represented in October 2007 to take into account amendments made to this standard by other standards since its original
issue in August 2005. Changes made to this standard expand the disclosures required in relation to the Company’s and the Group’s
The Australian Accounting Standards Board released AASB 2005-10 ‘Amendments to Australian Accounting Standards’ in September
financial instruments and the objectives, policies and processes for managing capital.
2005. These amendments arise from the release in August 2005 of AASB 7 ‘Financial Instruments: Disclosures’.
The Australian Accounting Standards Board released AASB 2005-10 ‘Amendments to Australian Accounting Standards’ in September
The changes introduced by AASB 7 and AASB 2005-10 are applied by the Company and the Group with effect from the beginning of
2005. These amendments arise from the release in August 2005 of AASB 7 ‘Financial Instruments: Disclosures’.
the comparative reporting period presented in this financial report (i.e. with effect from 1 July 2006). The application of this represented
standard only affects disclosures made and has no impact on the financial results presented in these financial statements.
The changes introduced by AASB 7 and AASB 2005-10 are applied by the Company and the Group with effect from the beginning of
the comparative reporting period presented in this financial report (i.e. with effect from 1 July 2006). The application of this represented
standard only affects disclosures made and has no impact on the financial results presented in these financial statements.
Interim Financial Reporting and Impairment
The Australian Accounting Standards Board released Interpretation 10 ‘Interim Financial Reporting and Impairment’ in September 2006.
Interim Financial Reporting and Impairment
This interpretation clarifies the period end accounting treatment of impairment losses that were recognised in interim periods.
The Australian Accounting Standards Board released Interpretation 10 ‘Interim Financial Reporting and Impairment’ in September 2006.
Interpretation 10 is applicable to annual reporting periods beginning on or after 1 November 2006. The adoption of this Interpretation
This interpretation clarifies the period end accounting treatment of impairment losses that were recognised in interim periods.
has had no impact on these financial statements.
Interpretation 10 is applicable to annual reporting periods beginning on or after 1 November 2006. The adoption of this Interpretation
has had no impact on these financial statements.
Imdex 2008 Annual Report | 60
Page 27 of 87
Page 27 of 87
Page 28 of 87
Page 28 of 87
IMDEX LIMITED
and its controlled entities
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
NOTES TO THE FINANCIAL REPORT
its issue;
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
1
Adoption of New and Revised Accounting Standards
1
In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting
Adoption of New and Revised Accounting Standards
Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period. The adoption of
these new and revised Standards and Interpretations has resulted in a change to the Company’s and the Group’s disclosures in the
In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting
following areas:
Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period. The adoption of
these new and revised Standards and Interpretations has resulted in a change to the Company’s and the Group’s disclosures in the
AASB 7 ‘Financial Instruments: Disclosures’ and consequential amendments to other accounting standards resulting from
following areas:
AASB 7 ‘Financial Instruments: Disclosures’ and consequential amendments to other accounting standards resulting from
AASB 2005-10 ‘Amendments to Australian Accounting Standards’; and
its issue;
Interpretation 10 ‘Interim Financial Reporting and Impairment’
AASB 2005-10 ‘Amendments to Australian Accounting Standards’; and
Changes in disclosures around financial instruments and the objectives, policies and processes for managing capital
Interpretation 10 ‘Interim Financial Reporting and Impairment’
The Australian Accounting Standards Board first released AASB 7 ‘Amendments to Australian Accounting Standards’ in August 2005.
Changes in disclosures around financial instruments and the objectives, policies and processes for managing capital
AASB 7 was represented in October 2007 to take into account amendments made to this standard by other standards since its original
issue in August 2005. Changes made to this standard expand the disclosures required in relation to the Company’s and the Group’s
The Australian Accounting Standards Board first released AASB 7 ‘Amendments to Australian Accounting Standards’ in August 2005.
financial instruments and the objectives, policies and processes for managing capital.
AASB 7 was represented in October 2007 to take into account amendments made to this standard by other standards since its original
issue in August 2005. Changes made to this standard expand the disclosures required in relation to the Company’s and the Group’s
The Australian Accounting Standards Board released AASB 2005-10 ‘Amendments to Australian Accounting Standards’ in September
financial instruments and the objectives, policies and processes for managing capital.
2005. These amendments arise from the release in August 2005 of AASB 7 ‘Financial Instruments: Disclosures’.
The Australian Accounting Standards Board released AASB 2005-10 ‘Amendments to Australian Accounting Standards’ in September
The changes introduced by AASB 7 and AASB 2005-10 are applied by the Company and the Group with effect from the beginning of
2005. These amendments arise from the release in August 2005 of AASB 7 ‘Financial Instruments: Disclosures’.
the comparative reporting period presented in this financial report (i.e. with effect from 1 July 2006). The application of this represented
standard only affects disclosures made and has no impact on the financial results presented in these financial statements.
The changes introduced by AASB 7 and AASB 2005-10 are applied by the Company and the Group with effect from the beginning of
the comparative reporting period presented in this financial report (i.e. with effect from 1 July 2006). The application of this represented
standard only affects disclosures made and has no impact on the financial results presented in these financial statements.
Interim Financial Reporting and Impairment
The Australian Accounting Standards Board released Interpretation 10 ‘Interim Financial Reporting and Impairment’ in September 2006.
Interim Financial Reporting and Impairment
This interpretation clarifies the period end accounting treatment of impairment losses that were recognised in interim periods.
The Australian Accounting Standards Board released Interpretation 10 ‘Interim Financial Reporting and Impairment’ in September 2006.
Interpretation 10 is applicable to annual reporting periods beginning on or after 1 November 2006. The adoption of this Interpretation
This interpretation clarifies the period end accounting treatment of impairment losses that were recognised in interim periods.
has had no impact on these financial statements.
has had no impact on these financial statements.
Interpretation 10 is applicable to annual reporting periods beginning on or after 1 November 2006. The adoption of this Interpretation
IMDEX LIMITED
and its controlled entities
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
NOTES TO THE FINANCIAL REPORT
1 Adoption of New and Revised Accounting Standards
1 Adoption of New and Revised Accounting Standards
Standards and Interpretations in issue but not yet effective
At the date of authorisation of the financial report, the following Standards and Interpretations were in issue but not yet effective:
Standards and Interpretations in issue but not yet effective
At the date of authorisation of the financial report, the following Standards and Interpretations were in issue but not yet effective:
Standard / Interpretation
Effective Date
AASB 101 ‘Presentation of Financial Statements’ (revised September 2007)
Standard / Interpretation
AASB 101 ‘Presentation of Financial Statements’ (revised September 2007)
AASB 8 ‘Operating Segments’ and consequential amendments to other
accounting standards resulting from its issue
AASB 8 ‘Operating Segments’ and consequential amendments to other
accounting standards resulting from its issue
AASB 123 ‘Borrowing Costs’ revised
AASB 123 ‘Borrowing Costs’ revised
Interpretation 12 ‘Service Concession Arrangements’
Interpretation 12 ‘Service Concession Arrangements’
Interpretation 13 ‘Customer Loyalty Programmes’
Interpretation 13 ‘Customer Loyalty Programmes’
Interpretation 14 ‘Limit on a defined benefit asset, Minimum Funding
Requirements and their Interaction’
Interpretation 14 ‘Limit on a defined benefit asset, Minimum Funding
AASB 2008-1 ‘Amendments to Australian Accounting Standard – Share-based
Requirements and their Interaction’
Payments: Vesting Conditions and Cancellations’
AASB 2008-1 ‘Amendments to Australian Accounting Standard – Share-based
AASB 2008-2 ‘Amendments to Australian Accounting Standards – Puttable
Payments: Vesting Conditions and Cancellations’
Financial Instruments and Obligations arising on Liquidation’
AASB 2008-2 ‘Amendments to Australian Accounting Standards – Puttable
AASB 2008-3 ‘Amendments to Australian Accounting Standards arising from
Financial Instruments and Obligations arising on Liquidation’
AASB 3 and AASB 127’
AASB 2008-3 ‘Amendments to Australian Accounting Standards arising from
AASB 3 and AASB 127’
IFRS 3 ‘Business Combinations’
IFRS 3 ‘Business Combinations’
IAS 27 ‘Separate and Consolidated Financial Statements’
Effective Date
Effective for annual reporting periods beginning
on or after 1 January 2009
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 January 2009
on or after 1 January 2009
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 January 2009
on or after 1 January 2009
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 January 2009
on or after 1 January 2008
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 January 2008
on or after 1 July 2008
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 July 2008
on or after 1 January 2008
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 January 2008
on or after 1 January 2009
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 January 2009
on or after 1 January 2009
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 January 2009
on or after 1 July 2009
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 July 2009
on or after 1 July 2009
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 July 2009
on or after 1 July 2009
Effective for annual reporting periods beginning
on or after 1 July 2009
IAS 27 ‘Separate and Consolidated Financial Statements’
The application of AASB 8, AASB 123, IFRS 3, IAS 27, AASB 101, AASB 2008-1 and AASB 2008-3 are not expected to have a material
effect on any of the amounts recognised in the financial statements, but may change the disclosures presently made in relation to the
Company’s and the Group’s assets, liabilities and segments. The circumstances addressed by Interpretations 12, 13, 14 and AASB
The application of AASB 8, AASB 123, IFRS 3, IAS 27, AASB 101, AASB 2008-1 and AASB 2008-3 are not expected to have a material
2008-2 do not have application to the business of the Company or Group. These Standards and Interpretations will be first applied in the
effect on any of the amounts recognised in the financial statements, but may change the disclosures presently made in relation to the
financial report of the Group that relates to the annual reporting period beginning after the effective date of each pronouncement.
Company’s and the Group’s assets, liabilities and segments. The circumstances addressed by Interpretations 12, 13, 14 and AASB
2008-2 do not have application to the business of the Company or Group. These Standards and Interpretations will be first applied in the
The initial application of the expected issue of an Australian equivalent accounting standard to the following standard is not expected to
financial report of the Group that relates to the annual reporting period beginning after the effective date of each pronouncement.
have a material impact on the financial report of the Group and the Company:
The initial application of the expected issue of an Australian equivalent accounting standard to the following standard is not expected to
have a material impact on the financial report of the Group and the Company:
Expected Standard / Interpretation
Effective Date
Improvements to IFRS’s (2008)
Expected Standard / Interpretation
Improvements to IFRS’s (2008)
Amendments to IFRS 1 ‘First-time Adoption of International Financial Reporting
Standards’ and IAS 27 ‘Consolidated and Separate Financial Statements – Cost
of Investment in a subsidiary, Jointly Controlled Entity or Associate’
Amendments to IFRS 1 ‘First-time Adoption of International Financial Reporting
Standards’ and IAS 27 ‘Consolidated and Separate Financial Statements – Cost
of Investment in a subsidiary, Jointly Controlled Entity or Associate’
IFRIC 15 ‘Agreements for the Construction of Real Estate’
IFRIC 15 ‘Agreements for the Construction of Real Estate’
IFRIC 16 ‘Hedges of a Net Investment in a Foreign Operation’
IFRIC 16 ‘Hedges of a Net Investment in a Foreign Operation’
Effective Date
Effective for annual reporting periods beginning
on or after 1 January 2009
Effective for annual reporting periods beginning
on or after 1 January 2009
Effective for annual reporting periods beginning
on or after 1 January 2009
Effective for annual reporting periods beginning
on or after 1 January 2009
Effective for annual reporting periods beginning
on or after 1 January 2009
Effective for annual reporting periods beginning
Effective for annual reporting periods beginning
on or after 1 January 2009
on or after 1 October 2008
Effective for annual reporting periods beginning
on or after 1 October 2008
Page 27 of 87
Page 27 of 87
Imdex 2008 Annual Report | 61
Page 28 of 87
Page 28 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
Summary of Significant Accounting Policies
The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001 and
Accounting Standards and Interpretations and complies with other requirements of the law. Accounting Standards include Australian
equivalents to International Financial Reporting Standards (‘A-IFRS’). Compliance with the A-IFRS ensures that the consolidated
financial statements and notes of the Company and the Group comply with International Financial Reporting Standards (‘IFRS’).
The financial report includes the separate financial statements of the Company and the consolidated financial statements of the Group.
The financial statements were authorised for issue by the directors on 15 August 2008.
(a)
Basis of preparation
The Financial Report has been prepared on the basis of historical cost except for the revaluation of certain non-current assets and
financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in
Australian dollars, unless otherwise noted.
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 financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.
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 following significant accounting policies have been adopted in the preparation and presentation of the Financial Report:
(b)
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, cash in banks and investments in money market instruments, net of outstanding
bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
(c)
Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
(i)
(ii)
where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of
acquisition of an asset or as part of an item of expense; or
for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows
are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing
activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.
(d)
Goodwill
Goodwill acquired in a business combination is initially measured at its cost, being the excess of the cost of the business combination
over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. Goodwill is
subsequently measured at its cost less any impairment losses.
For the purpose of impairment testing goodwill is allocated to each of the Group’s cash-generating units (CGU’s), or groups of CGU’s,
expected to benefit from the synergies of the business combination. CGU’s (or groups of CGU’s) to which goodwill has been allocated
are tested for impairment annually, or more frequently if events or changes in circumstances indicate that goodwill might be impaired.
If the recoverable amount of the CGU (or group of CGU’s) is less than the carrying amount of the CGU (or groups of CGU’s), the
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU (or groups of CGU’s) and then to
the other assets of the CGU (or groups of CGU’s) pro-rata on the basis of the carrying amount of each asset in the CGU (or groups of
CGU’s). An impairment loss recognised for goodwill is recognised immediately in profit or loss and is not reversed in a subsequent
period
On disposal of an operation within a CGU, the attributable amount of goodwill is included in the determination of the profit or loss on
disposal of the operation.
Imdex 2008 Annual Report | 62
Page 29 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
Summary of Significant Accounting Policies
The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001 and
Accounting Standards and Interpretations and complies with other requirements of the law. Accounting Standards include Australian
equivalents to International Financial Reporting Standards (‘A-IFRS’). Compliance with the A-IFRS ensures that the consolidated
financial statements and notes of the Company and the Group comply with International Financial Reporting Standards (‘IFRS’).
The financial report includes the separate financial statements of the Company and the consolidated financial statements of the Group.
The financial statements were authorised for issue by the directors on 15 August 2008.
(a)
Basis of preparation
The Financial Report has been prepared on the basis of historical cost except for the revaluation of certain non-current assets and
financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in
Australian dollars, unless otherwise noted.
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 financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.
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 following significant accounting policies have been adopted in the preparation and presentation of the Financial Report:
Cash and cash equivalents comprise cash on hand, cash in banks and investments in money market instruments, net of outstanding
bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
(b)
Cash and cash equivalents
(c)
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 taxation authority, it is recognised as part of the cost of
(i)
(ii)
acquisition of an asset or as part of an item of expense; or
for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows
are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing
activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.
(d)
Goodwill
Goodwill acquired in a business combination is initially measured at its cost, being the excess of the cost of the business combination
over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. Goodwill is
subsequently measured at its cost less any impairment losses.
For the purpose of impairment testing goodwill is allocated to each of the Group’s cash-generating units (CGU’s), or groups of CGU’s,
expected to benefit from the synergies of the business combination. CGU’s (or groups of CGU’s) to which goodwill has been allocated
are tested for impairment annually, or more frequently if events or changes in circumstances indicate that goodwill might be impaired.
If the recoverable amount of the CGU (or group of CGU’s) is less than the carrying amount of the CGU (or groups of CGU’s), the
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU (or groups of CGU’s) and then to
the other assets of the CGU (or groups of CGU’s) pro-rata on the basis of the carrying amount of each asset in the CGU (or groups of
CGU’s). An impairment loss recognised for goodwill is recognised immediately in profit or loss and is not reversed in a subsequent
On disposal of an operation within a CGU, the attributable amount of goodwill is included in the determination of the profit or loss on
period
disposal of the operation.
2
(e)
Summary of Significant Accounting Policies (continued)
Inventories
Inventories are valued at the lower of cost and net realisable value. Costs, including an appropriate portion of fixed and variable
overhead expenses, are assigned to inventory on hand by the method most appropriate to each particular class of inventory, with the
majority being valued on a first in first out basis. Net realisable value represents the estimated selling price less all estimated costs of
completion and costs necessary to make the sale.
(f)
Property, plant and equipment
Plant and equipment, leasehold improvements and equipment under finance lease are stated at cost less accumulated depreciation and
impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or part
of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as
at the date of acquisition.
Depreciation is calculated on a straight line basis in order to write off the net cost of each asset over its expected useful life to its
estimated residual value. Leasehold improvements and assets held under finance lease are depreciated over the period of the lease or
estimated useful life, whichever is the shorter, using the straight line method. The estimated useful lives, residual values and
depreciation method is reviewed at the end of each annual reporting period, with the effect of any changes recognised on a prospective
basis.
The gain or loss arising on disposal of retirement of an item of property, plant and equipment is determined as the difference between
the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
The annual depreciation rates used for each class of assets are as follows:
Plant and equipment:
10% to 40%
Equipment rented to third parties:
10% to 40%
Equipment under finance lease:
13% to 22.5%
(g)
Share-based payments
Equity-settled share-based payments with employees and others providing similar services are measured at the fair value of the equity
instrument at the grant date. Fair value is measured by the use of the Black-Scholes Model. The expected life used in the model has
been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural
considerations. Further details on how the fair value of equity-settled share-based transactions has been determined can be found in
note 33.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the
vesting period, based on the Group’s estimate of shares that will eventually vest.
At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision
of the original estimates, if any, is recognised in profit or loss over the remaining vesting period, with a corresponding adjustment to the
employee equity-settled benefits reserve.
(h)
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its
subsidiaries) (referred to as ‘the Group’ in these financial statements). Control is achieved where the Company has the power to govern
the financial and operating policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective
date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those
used by other members of the Group.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
Page 29 of 87
Imdex 2008 Annual Report | 63
Page 30 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
(i)
Summary of Significant Accounting Policies (continued)
Business combinations
Acquisitions of subsidiaries and businesses are accounted for using the purchase method. The cost of the business combination is
measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under AASB 3 ‘Business
Combinations’ are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are
classified as held for sale in accordance with AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’, which are
recognised and measured at fair value less costs to sell.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business
combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If,
after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities
exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.
The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets,
liabilities and contingent liabilities recognised.
(j)
Borrowing costs
Borrowing costs are expensed as incurred.
(k)
Foreign currency
The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the
entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of
each entity are expressed in Australian dollars, which is the functional currency of the Group, and the presentation currency for the
consolidated financial statements.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency
(foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date,
monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date. Non-monetary
items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair
value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which they arise except for exchange differences on monetary
items receivable from or payable to a foreign operation for which settlement is neither planned or likely to occur, which form part of the
net investment in a foreign operation, and which are recognised in the foreign currency translation reserve and recognised in profit or
loss on disposal of the net investment.
On consolidation, the assets and liabilities of the Group’s foreign operations (including comparatives) are translated into Australian
dollars at exchange rates prevailing on the balance sheet date. Income and expense items (including comparatives) are translated at
the average exchanges rates for the period, unless exchange rates fluctuated significantly during that period, in which case the
exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are classified as equity and transferred to
the Group’s translation reserve. Such exchange differences are recognised in profit or loss in the period in which the foreign operation is
disposed.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity on or after the date of transition to A-IFRS are treated
as assets and liabilities of the foreign entity and translated at exchange rates prevailing at the reporting date. Goodwill arising on
acquisitions before the date of transition to A-IFRS is treated as an Australian dollar denominated asset.
(l)
Derivative financial instruments
The Group enters into derivative financial instruments to manage its exposure to interest rate risk. This risk is primarily managed
through the use of an interest rate cap. Further details of derivative financial instruments are disclosed in note 31 to the financial
statements.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their
fair value at each reporting date. The resulting gain or loss is recognised in the profit or loss immediately. The Group has not designated
any financial instruments as being hedge accounted.
(i)
Embedded derivatives
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and
characteristics are not closely related to those of host contracts and the host contracts are not measured at fair value with changes in
fair value recognised in profit or loss.
2
Summary of Significant Accounting Policies (continued)
(m)
Financial assets
Investments are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whose terms
require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net
of transaction costs except for those financial assets classified as ‘at fair value through the profit or loss’ which are initially measured at
fair value. Subsequent to initial recognition, investments in subsidiaries are measured at cost.
Other financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’, ‘held-to-
maturity’ investments, ‘available-for-sale’ financial assets, and ‘loans and receivables’. The classification depends on the nature and
purpose of the financial assets and is determined at the time of initial recognition.
(i)
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of
the financial asset, or, where appropriate, a shorter period.
Income is recognised on an effective interest rate basis for debt instruments other than those financial assets ‘at fair value through profit
or loss’.
(ii)
Held-to-maturity investments
(cid:120)
(cid:120)
(cid:120)
Bills of exchange and debentures with fixed or determinable payments and fixed maturity dates where the Group has the positive intent
and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortised cost
using the effective interest method less impairment, with revenue recognised on an effective yield basis.
(iii)
Financial assets at fair value through profit or loss
Financial assets are classified as financial assets at fair value through profit or loss where the financial asset:
Has been acquired principally for the purpose of selling in the near future;
Is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern
of short-term profit-taking; or
Is a derivative that is not designated and effective as a hedging instrument.
Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. The
net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset.
(iv)
Available-for-sale financial assets
Available-for-sale assets are stated at fair value. Gains and losses arising from changes in fair value are recognised directly in the
investments revaluation reserve with the exception of impairment losses, interest calculated using the effective interest rate method and
foreign exchange gains and losses on monetary assets which are recognised directly in profit or loss. Where the investment is disposed
of or is determined to be impaired, the cumulative gain or loss previously recognised in the investments revaluation reserve is included
in profit or loss for the period.
The fair value of available-for-sale monetary assets held in a foreign currency is determined in that foreign currency and translated at
the spot rate at reporting date. The change in fair value attributable to translation differences that results from a change in amortised
cost of the asset is recognised in profit or loss, and other changes are recognised in equity.
(v)
Loans and receivables
(vi)
Impairment of financial assets
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are
classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest rate method
less impairment. Interest is recognised by applying the effective interest rate.
Financial assets other than those at fair value through profit or loss, are assessed for indicators of impairment at each balance sheet
date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the
initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets
carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest rate.
The carrying value of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade
receivables where the carrying value is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is
written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance
account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and
the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised
impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is
reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
In respect of available-for-sale instruments, any subsequent increase in fair value after an impairment loss is recognised directly in
equity.
Imdex 2008 Annual Report | 64
Page 31 of 87
Page 32 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
Summary of Significant Accounting Policies (continued)
2
(i)
Business combinations
Acquisitions of subsidiaries and businesses are accounted for using the purchase method. The cost of the business combination is
measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under AASB 3 ‘Business
Combinations’ are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are
classified as held for sale in accordance with AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’, which are
recognised and measured at fair value less costs to sell.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business
combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If,
after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities
exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.
The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets,
liabilities and contingent liabilities recognised.
(j)
Borrowing costs
Borrowing costs are expensed as incurred.
(k)
Foreign currency
The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the
entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of
each entity are expressed in Australian dollars, which is the functional currency of the Group, and the presentation currency for the
consolidated financial statements.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency
(foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date,
monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date. Non-monetary
items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair
value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which they arise except for exchange differences on monetary
items receivable from or payable to a foreign operation for which settlement is neither planned or likely to occur, which form part of the
net investment in a foreign operation, and which are recognised in the foreign currency translation reserve and recognised in profit or
loss on disposal of the net investment.
On consolidation, the assets and liabilities of the Group’s foreign operations (including comparatives) are translated into Australian
dollars at exchange rates prevailing on the balance sheet date. Income and expense items (including comparatives) are translated at
the average exchanges rates for the period, unless exchange rates fluctuated significantly during that period, in which case the
exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are classified as equity and transferred to
the Group’s translation reserve. Such exchange differences are recognised in profit or loss in the period in which the foreign operation is
Goodwill and fair value adjustments arising on the acquisition of a foreign entity on or after the date of transition to A-IFRS are treated
as assets and liabilities of the foreign entity and translated at exchange rates prevailing at the reporting date. Goodwill arising on
acquisitions before the date of transition to A-IFRS is treated as an Australian dollar denominated asset.
(l)
Derivative financial instruments
The Group enters into derivative financial instruments to manage its exposure to interest rate risk. This risk is primarily managed
through the use of an interest rate cap. Further details of derivative financial instruments are disclosed in note 31 to the financial
disposed.
statements.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their
fair value at each reporting date. The resulting gain or loss is recognised in the profit or loss immediately. The Group has not designated
any financial instruments as being hedge accounted.
(i)
Embedded derivatives
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and
characteristics are not closely related to those of host contracts and the host contracts are not measured at fair value with changes in
fair value recognised in profit or loss.
2
Summary of Significant Accounting Policies (continued)
(m)
Financial assets
Investments are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whose terms
require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net
of transaction costs except for those financial assets classified as ‘at fair value through the profit or loss’ which are initially measured at
fair value. Subsequent to initial recognition, investments in subsidiaries are measured at cost.
Other financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’, ‘held-to-
maturity’ investments, ‘available-for-sale’ financial assets, and ‘loans and receivables’. The classification depends on the nature and
purpose of the financial assets and is determined at the time of initial recognition.
(i)
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of
the financial asset, or, where appropriate, a shorter period.
Income is recognised on an effective interest rate basis for debt instruments other than those financial assets ‘at fair value through profit
or loss’.
(ii)
Held-to-maturity investments
Bills of exchange and debentures with fixed or determinable payments and fixed maturity dates where the Group has the positive intent
and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortised cost
using the effective interest method less impairment, with revenue recognised on an effective yield basis.
(iii)
Financial assets at fair value through profit or loss
Financial assets are classified as financial assets at fair value through profit or loss where the financial asset:
(cid:120)
(cid:120)
(cid:120)
Has been acquired principally for the purpose of selling in the near future;
Is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern
of short-term profit-taking; or
Is a derivative that is not designated and effective as a hedging instrument.
Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. The
net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset.
(iv)
Available-for-sale financial assets
Available-for-sale assets are stated at fair value. Gains and losses arising from changes in fair value are recognised directly in the
investments revaluation reserve with the exception of impairment losses, interest calculated using the effective interest rate method and
foreign exchange gains and losses on monetary assets which are recognised directly in profit or loss. Where the investment is disposed
of or is determined to be impaired, the cumulative gain or loss previously recognised in the investments revaluation reserve is included
in profit or loss for the period.
The fair value of available-for-sale monetary assets held in a foreign currency is determined in that foreign currency and translated at
the spot rate at reporting date. The change in fair value attributable to translation differences that results from a change in amortised
cost of the asset is recognised in profit or loss, and other changes are recognised in equity.
(v)
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are
classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest rate method
less impairment. Interest is recognised by applying the effective interest rate.
(vi)
Impairment of financial assets
Financial assets other than those at fair value through profit or loss, are assessed for indicators of impairment at each balance sheet
date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the
initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets
carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest rate.
The carrying value of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade
receivables where the carrying value is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is
written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance
account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and
the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised
impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is
reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
In respect of available-for-sale instruments, any subsequent increase in fair value after an impairment loss is recognised directly in
equity.
Page 31 of 87
Imdex 2008 Annual Report | 65
Page 32 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
(m)
(vi)
Summary of Significant Accounting Policies (continued)
Financial assets (continued)
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the
financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor
retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its
retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risk and
rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received.
(n)
(i)
Financial instruments issued by the Company
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. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
(ii)
Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ or other financial liabilities.
(iii)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss.
The net gain or loss recognised through profit or loss incorporates any interest paid on the financial liability.
A financial liability is held for trading if:
(cid:120)
(cid:120)
(cid:120)
it has been incurred principally for the purpose of repurchasing in the near future; or
it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern
of short-term profit-taking; or
it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading is designated as ‘at fair value through profit or loss’ upon initial
recognition if:
(cid:120)
(cid:120)
(cid:120)
such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
or
the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its
performance evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment
strategy, and information about the grouping is provided internally or on that basis; or
it forms part of a contract containing one or more embedded derivatives, and AASB139 ‘Financial Instruments: Recognition
and Measurement’ permits the entire combined contract (asset or liability) to be designated as ‘at fair value through profit or
loss’.
(iv)
Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method, with interest expense
recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest income over
the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected
life of the financial liability, or, where appropriate, a shorter period.
Imdex 2008 Annual Report | 66
Page 33 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
(o)
(i)
Summary of Significant Accounting Policies (continued)
Intangible assets
Intangible assets acquired in a business combination
All intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the
definition of an intangible asset and their value can be measured reliably. Identifiable intangible assets comprise intellectual property,
technology, contracts, customers, development costs and trade marks. These are recorded at cost less accumulated amortisation and
impairment. Amortisation is charged on a straight line basis over their estimated useful lives. The estimated useful life and amortisation
method is reviewed at the end of each annual reporting period.
Estimated useful lives are as follows:
Intellectual property
Technology
Contracts
Customers
Trade Marks and Brand Names
indefinite
5-10 years
5 years
5-6 years
5-6 years
Intellectual property recognised by the Company has an indefinite useful life and is not amortised. Each period, the useful life of this
asset is reviewed to determine whether events and circumstances continue to support an indefinite useful life assessment for the asset.
Such assets are tested for impairment in accordance with the policy stated in note 2(t).
(ii)
Research and development costs
Expenditure on research activities is recognised as an expense in the period in which it is incurred. Where no internally-generated
intangible asset can be recognised, development expenditure is recognised as an expense in the period as incurred. An intangible asset
arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following are
demonstrated:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
Capitalised development costs are stated at cost less accumulated amortisation and impairment, and are amortised on a straight-line
basis over their useful life of 5 years, commencing on commercialisation of the underlying projects.
(p)
(i)
Taxation
Current tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss
for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current
tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).
Imdex 2008 Annual Report | 67
Page 34 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
(p)
Summary of Significant Accounting Policies (continued)
Taxation (continued)
(ii)
Deferred tax
Deferred tax is accounted for using the balance sheet liability method. Temporary differences are differences between the tax base of
an asset or liability and its carrying amount in the balance sheet. The tax base of an asset or liability is the amount attributed to that
asset or liability for tax purposes.
In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent
that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses
and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to
them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) that affects neither
taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences
arising from goodwill.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, branches, associates and
joint ventures except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary
differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with
these investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against
which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability
giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by
reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner
in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax
assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company/Group intends
to settle its current tax assets and liabilities on a net basis.
(iii)
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or income in the income statement, except when it relates to items credited or
debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting
for a business combination, in which case it is taken into account in the determination of goodwill or excess.
(iv)
Tax consolidation
The Company and all its wholly-owned Australian resident entities are part of a tax-consolidated group under Australian taxation law.
Imdex Limited is the head entity in the tax-consolidated group. Tax expense/income, deferred tax liabilities and deferred tax assets
arising from temporary differences in the members of the tax-consolidated group are recognised in the separate financial statements of
the members of the tax-consolidated group using the ‘separate taxpayer within group’ approach by reference to the carrying amounts in
the separate financial statements of each entity and the tax values applying under tax consolidation. Current tax liabilities and assets
and deferred tax assets arising from unused tax losses and relevant tax credits of the members of the tax-consolidated group are
recognised by the Company (as head entity in the tax-consolidated group). Due to the existence of a tax funding arrangement between
the entities in the tax-consolidated group, amounts are recognised as payable to or receivable by the Company and each member of the
group in relation to the tax contribution amounts paid or payable between the parent entity and the other members of the tax-
consolidated group in accordance with the arrangement. Further information about the tax funding arrangement is detailed in note 5 to
the financial statements. Where the tax contribution amount recognised by each member of the tax-consolidated group for a particular
period is different to the aggregate of the current tax liability or asset and any deferred tax asset arising from unused tax losses and tax
credit in respect of that period, the difference is recognised as a contribution from (or distribution to) equity participants.
Imdex 2008 Annual Report | 68
Page 35 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
(q)
Summary of Significant Accounting Policies (continued)
Leased assets
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to
the lessee. All other leases are classified as operating leases.
(i)
Group as Lessor
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease.
(ii)
Group as Lessee
Assets held under finance leases are initially recognised at their fair value or, if lower, at amounts equal to the present value of the
minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the
balance sheet as a finance lease obligation.
Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of
interest on the remaining balance of the liability. Finance charges are charged directly against income, unless they are directly
attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy on borrowing costs.
Finance leased assets are amortised on a straight line basis over the estimated useful life of the asset.
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic
basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
(iii)
Lease incentives
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The
aggregate benefits of incentives are recognised as a reduction of rental expense on a straight-line basis, except where another
systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
(r)
Revenue
Revenue is measured at the fair value of the consideration received or receivable.
(i)
Sale of goods
Revenue from the sale of goods is recognised when all the following conditions are satisfied:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
the Group has transferred to the buyer the significant risks and rewards of ownerships of the goods;
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective
control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction will flow to the entity; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
(ii)
Rendering of services
Revenue from a contract to provide services is recognised by reference to the stage of completion of the contract.
(iii)
Royalties
Royalty revenue is recognised on an accrual basis in accordance with the substance of the relevant agreement.
(iv)
Dividend and interest revenue
Dividend revenue from investments is recognised when the shareholders right to receive payment has been established. Interest
revenue is accrued on a time basis, by reference to the principle outstanding and at the effective interest rate applicable, which is the
rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying
amount.
(v)
Operating lease income
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.
Imdex 2008 Annual Report | 69
Page 36 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
(s)
(i)
Summary of Significant Accounting Policies (continued)
Employee benefits
Provisions
Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave
when it is probable that settlement will be required and they are capable of being measured reliably.
Provisions made in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values using
the remuneration rate expected to apply at the time of settlement.
Provisions made in respect of employee benefits which are not expected to be settled within 12 months are measured as the present
value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to reporting date.
(ii)
Defined contribution plans
Contributions to defined contribution superannuation plans are expensed when incurred.
(t)
Impairment of other tangible and intangible assets
At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are
independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-
generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent
allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and
whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount
of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating
unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised
estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised in profit or loss immediately.
(u)
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive), as a result of a past event, it is probable that
the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
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.
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 virtually certain that recovery will be received and the amount of the receivable can be measured
reliably.
(v)
Non-current assets held for sale
Non-current assets (and disposal groups) classified as held for sale are measured, with certain exceptions, at the lower of carrying
amount and fair value less costs to sell.
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a
sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is
available for immediate sale in its present condition subject only to terms that are usual or customary for such a sale and the sale is
highly probable. The sale of the asset (or disposal group) must be expected to be completed within one year from the date of
classification, except in the circumstances where sale is delayed by events or circumstances outside the Group’s control and the Group
remains committed to a sale.
Imdex 2008 Annual Report | 70
Page 37 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
(s)
(i)
Employee benefits
Provisions
Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave
when it is probable that settlement will be required and they are capable of being measured reliably.
Provisions made in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values using
the remuneration rate expected to apply at the time of settlement.
Provisions made in respect of employee benefits which are not expected to be settled within 12 months are measured as the present
value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to reporting date.
(ii)
Defined contribution plans
Contributions to defined contribution superannuation plans are expensed when incurred.
(t)
Impairment of other tangible and intangible assets
At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are
independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-
generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent
allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and
whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount
of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating
unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised
estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised in profit or loss immediately.
(u)
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive), as a result of a past event, it is probable that
the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
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.
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 virtually certain that recovery will be received and the amount of the receivable can be measured
reliably.
(v)
Non-current assets held for sale
amount and fair value less costs to sell.
Non-current assets (and disposal groups) classified as held for sale are measured, with certain exceptions, at the lower of carrying
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a
sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is
available for immediate sale in its present condition subject only to terms that are usual or customary for such a sale and the sale is
highly probable. The sale of the asset (or disposal group) must be expected to be completed within one year from the date of
classification, except in the circumstances where sale is delayed by events or circumstances outside the Group’s control and the Group
remains committed to a sale.
Summary of Significant Accounting Policies (continued)
3
Critical Accounting Judgements and Key Sources of Estimation Uncertainty
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
In the application of the Group’s accounting policies, which are described in note 2, management is required to make judgements,
estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable
under the circumstance, the results of which form the basis of making the judgements. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
Critical judgements in applying the entity’s accounting policies
Management have not made any significant critical judgements in the process of applying the Group’s accounting policies.
Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date,
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year:
Value of Shares
Note 11 describes the investment held in Sino Gas & Energy Ltd (SGE). Australian Accounting Standards require this investment to be
held at the lower of carrying value and fair value less costs to sell. In making the assessment of which value is the lower, the Directors
have had to make estimates of the fair value of this investment and the expected costs to sell. The Directors have estimated this
investment to have a fair value in excess of its carrying value of $4,500,000 at 30 June 2008. (2007: $4,500,000)
The fair value of this listed investment has been determined using the Directors' best estimate. The Directors have estimated the fair
market value by having regard to share placements previously made by SGE, the results of exploration activity to date, discussions with
potential investors and having regard to the fact that SGE is an unlisted entity and the shares held in SGE can not be readily traded on
any share market.
Value of Intangibles
Notes 14 and 26 describe intangibles that have arisen on business combinations during the current year. The Directors have engaged
independent valuation professionals to identify and value such intangibles. The valuers have used industry accepted valuation
techniques such as the relief-from-royalty, multi-period excess earnings and replacement cost methodologies as appropriate to value
these assets. Data inputs into these models are derived largely from internal management budgets. Should actual financial results differ
from managements budgeted expectations, this would have a consequent effect on the value of intangibles.
Value of Goodwill
Notes 13 and 26 describe the goodwill that has arisen on business combinations in the current year. Goodwill acquired in a business
combination is initially measured at its cost, being the excess of the cost of the business combination over the acquirer’s interest in the
net fair value of the identifiable assets, liabilities and contingent liabilities recognised. Goodwill is subsequently measured at its cost less
any impairment losses.
Any change in the value of the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities
recognised would have had a consequent impact on the carrying value of goodwill at the time of initial recognition. Goodwill is
impairment tested annually.
Impairment of Goodwill and Intangibles
Determining whether goodwill and intangibles are impaired requires an estimation of the value in use of the cash-generating units to
which goodwill and intangibles are attributable. The value in use calculation requires the entity to estimate the future cash flows
expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. No impairment losses
have been booked in the current or prior years. Refer notes 13 and 14.
Page 37 of 87
Imdex 2008 Annual Report | 71
Page 38 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
4
Profit from Operations
(a) Revenue from operations
Revenue from continuing and discontinued operations consisted of
the following items:
Revenue from continuing operations
Revenue from the sale of goods
Revenue from the rendering of services
Operating rental income
Interest income - bank deposits
Interest income - other loans and receivables
Revenue from discontinuing operations
Revenue from the rendering of services
(b) Profit before income tax
Other than as disclosed on the face of the income statement, profit
before income tax has been arrived at after crediting / (charging) the
following gains and losses from continuing and discontinued
operations:
(Loss) / gain on disposal of property, plant and equipment (i)
Foreign exchange (loss)
(i) In the prior year the Company sold some items of plant and
equipment to a subsidiary company. This profit is eliminated on
consolidation.
Gains attributable to:
Continuing operations
Discontinued operations
Losses attributable to:
Continuing operations
Discontinued operations
Loans and receivables (including cash and cash equivalents)
Interest revenue
Exchange gain/(loss)
Financial liabilities at amortised cost
Interest expense
Exchange gain/(loss)
Consolidated
Company
2008
$’000
2007
$’000
2008
$’000
2007
$’000
118,109
-
23,900
451
1,449
143,909
82,244
2,059
19,546
267
633
104,749
6,584
14,591
-
-
-
211
3,127
3,338
-
10,002
-
12,501
217
2,632
25,352
-
150,493
119,340
3,338
25,352
91
(407)
(316)
76
(372)
(296)
-
(266)
(266)
2,200
(953)
1,247
91
-
91
(407)
-
(407)
(316)
1,900
(305)
1,595
2,822
(102)
2,720
4,315
76
-
76
(364)
(8)
(372)
(296)
900
(185)
715
2,868
(187)
2,681
3,396
-
-
-
(266)
-
(266)
(266)
3,338
(266)
3,072
1,575
-
1,575
4,647
2,200
-
2,200
(953)
-
(953)
1,247
2,849
(185)
2,664
1,532
(768)
764
3,428
Imdex 2008 Annual Report | 72
Page 39 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
4
Profit from Operations (continued)
Profit before income tax has been arrived at after charging the
following items of income and expense. The line items below
combine amounts attributable to both continuing and discontinued
operations:
Other income
Gain on disposal of property, plant and equipment
Gain on disposal of subsidiary
Management fees from Subsidiaries
Dividends from Subsidiaries
Amounts received from Rashid Trading Establishment (i)
Other revenue
(i) Prior year income of $1,121,000 comprises $812,000 in full
recovery of a loan considered to have been impaired at 30 June
2006 and $309,000 for the sale of the Company's remaining 20%
interest in Imdex Arabia previously carried in the Company's books
at nil. No further amounts remain outstanding from Rashid Trading
Establishment.
Depreciation and amortisation of Non Current Assets
Depreciation of property, plant and equipment (note 12)
Amortisation of intangible assets (note 14)
Depreciation and amortisation attributable to
Continuing operations
Discontinued operations
Finance costs
Interest on hire purchase liabilities
Interest on convertible note
Interest on deferred acquisition consideration
Interest on commercial bills
Interest on bank loan
Interest on overdraft
Other interest
Finance costs - attributable to
Continuing operations
Discontinued operations
Other expenses
Commissions
Consultancy fees
Legal and professional expenses (i)
Foreign exchange loss
Rent and premises costs
Repairs and maintenance
Travel and accommodation
Motor vehicle costs
Other expenses
(i) Includes legal, audit, accounting, share registry and corporate
secretarial fees.
Consolidated
Company
2008
$’000
2007
$’000
2008
$’000
2007
$’000
91
-
-
-
-
278
369
3,733
6,055
9,788
9,321
467
9,788
66
-
404
1,487
744
-
121
2,822
2,762
60
2,822
76
-
-
-
1,121
400
1,597
4,368
3,430
7,798
6,637
1,161
7,798
225
464
707
923
350
18
199
2,886
2,736
150
2,886
1,425 1,650
2,026 1,834
1,742 618
407 372
2,244 1,489
214 1,511
3,450 2,186
1,374 1,167
5,557 9,304
18,439
20,131
-
17,245
6,671
3,379
-
179
27,474
198
-
198
198
-
198
3
-
-
1,487
-
-
85
1,575
1,575
-
1,575
-
305
990
266
172
5
514
100
2,122
4,474
2,200
-
1,363
3,000
1,121
400
8,084
2,269
-
2,269
2,269
-
2,269
57
464
-
923
-
11
88
1,543
1,543
-
1,543
49
338
447
953
473
982
437
198
1,814
5,691
Imdex 2008 Annual Report | 73
Page 40 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
4
Profit from Operations (continued)
Employee benefits expense
Post-employment benefits:
Defined contribution superannuation costs
Share based payments:
Equity-settled share based payments
Other employee benefits
Employee benefits expense attributable to
Continuing operations
Discontinued operations
Cost of sales
Cost of sales attributable to
Continuing operations
Discontinued operations
Movement in provision for doubtful debts
Movement attributable to
Continuing operations
Discontinued operations
Consolidated
Company
2008
$’000
2007
$’000
2008
$’000
2007
$’000
807
2,025
20,768
23,600
22,996
604
23,600
63,119
59,589
3,530
63,119
198
198
-
198
426
728
14,938
16,092
10,950
5,142
16,092
53,618
51,403
2,215
53,618
173
173
-
173
204
2,025
3,491
5,720
5,720
-
5,720
-
-
-
-
(71)
(71)
-
(71)
178
178
-
178
74
728
2,844
3,646
3,646
-
3,646
7,202
7,202
-
7,202
(43)
(43)
-
(43)
478
478
-
478
Operating lease rental expense (minimum lease payments)
2,386
1,682
Operating lease rental expense attributable to
Continuing operations
Discontinued operations
2,203
183
2,386
1,571
111
1,682
5
Income Taxes
(a) Income tax recognised in the income statement
Tax expense comprises:
Current tax expense
Deferred tax expense relating to the origination and reversal
of temporary differences
(Over)/under provision per prior year
Total tax expense
Attributable to:
Continuing operations
Discontinued operations
Consolidated
Company
2008
$’000
2007
$’000
2008
$’000
2007
$’000
15,483
(1,690)
(563)
13,230
10,804
2,426
13,230
9,924
(2,727)
(303)
6,894
6,165
729
6,894
2,736
150
(366)
2,520
2,520
-
2,520
3,297
57
(135)
3,219
3,219
-
3,219
Imdex 2008 Annual Report | 74
Page 41 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
5
Income Taxes (continued)
The prima facie income tax expense on pre-tax accounting profit
from operations reconciles to the income tax expense in the
financial statements as follows:
Profit from continuing operations
Profit from discontinued operations
Profit from operations
Income tax expense calculated at 30%
Tax benefit of losses not previously brought to account
Intercompany dividends received
Non-deductible share based payments
Additional provincial tax arising in a foreign jurisdiction
Non-deductible interest on deferred payments
Other non-deductible expenses
Tax rate differential arising from foreign entities
Capital losses utilised
Non-assessable income from sale of foreign subsidiary
Adjustments in respect of prior year deferred tax balances
(Over) / under provision of prior year income tax
Consolidated
2008
$’000
2007
$’000
Company
2008
$’000
2007
$’000
31,885
13,347
45,232
13,570
-
-
986
230
121
480
(171)
(844)
(579)
-
(563)
13,230
18,115
2,297
20,412
6,124
(23)
-
218
142
212
232
38
-
-
254
(303)
6,894
18,845
-
18,845
5,654
-
(1,014)
986
-
-
214
-
(844)
(2,110)
-
(366)
2,520
13,085
-
13,085
3,926
-
(900)
218
-
-
10
-
-
-
100
(135)
3,219
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under
Australian law. There has been no change in the corporate tax rate when compared with the previous reporting period.
(b) Income tax recognised directly in equity
The following current and deferred amounts were charged
directly to equity during the period:
Current tax: Share issue expenses
Deferred tax: Share issue expenses deductible over five years
Deferred tax: Translation of foreign operations
Consolidated
2008
$’000
2007
$’000
Company
2008
$’000
2007
$’000
-
(54)
473
419
(53)
(165)
(71)
(289)
-
(54)
473
419
(53)
(165)
-
(218)
(c) Current tax assets and liabilities
Current tax payable
(d) Deferred tax balances
Deferred tax assets comprise:
Provisions
Inventory
Property, plant and equipment
Accruals
Foreign currency translation reserves
Share issue expenses
Deferred tax liabilities comprise:
Property, plant and equipment
Intangible assets
Non-current assets classified as held for sale
Net deferred tax balances
Unrecognised deferred tax assets:
The following have not been brought to account as assets:
Temporary differences relating to the translation of
investments in subsidiary undertakings
8,792
8,913
2,643
5,450
108
-
2,571
400
755
150
3,984
(4)
(7,744)
(1,260)
(9,008)
(5,024)
304
125
1,871
518
282
204
3,304
(4)
(7,521)
(1,260)
(8,785)
(5,481)
-
-
-
110
727
150
987
-
-
(1,260)
(1,260)
(273)
86
-
-
175
-
203
464
-
-
(1,260)
(1,260)
(796)
950
427
-
-
Imdex 2008 Annual Report | 75
Page 42 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
5
Income Taxes (continued)
Tax Consolidation
Relevance of tax consolidation to the Group
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 in the tax consolidated group for the purposes of the tax consolidation system is Imdex Limited.
Nature of tax funding arrangements and tax sharing agreements
Entities within the tax-consolidated group have entered into a tax funding and 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.
The tax sharing agreement entered into between members of the tax consolidated group provides for the determination of the allocation
of income tax liabilities between the entities should the head entity default on its tax payment obligations or if an entity should leave the
tax consolidated group. The effect of the tax sharing agreement is that each member's liability for tax payable by the tax consolidated
group is limited to the amount payable by the head entity under the tax funding arrangement.
The amount of contribution or distribution relating to tax consolidation in the current and prior year amounted to nil.
6
Remuneration of Auditors
Deloitte Touche Tohmatsu (Australia)
Audit or review of the financial report
Taxation services - mainly compliance work, transfer
pricing and global restructuring advice
Other non-audit services: Other consulting services
Other non-audit services: A-IFRS assistance
Deloitte Touche Tohmatsu (overseas affiliates)
Audit or review of the financial report
Taxation services - mainly compliance work, transfer
pricing and global restructuring advice
Other non-audit services: Other consulting services
Other non-audit services: A-IFRS assistance
Other auditors
Audit or review of the financial report
Other non-audit services: Accounting assistance and
taxation advice
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
164,443
175,715
164,443
175,715
251,549
-
-
427,264
287,356
34,650
-
486,449
251,549
-
-
427,264
287,356
34,650
-
486,449
88,674
3,391
79,461
-
171,526
-
-
-
-
-
178,438
356,471
112,315
290,753
78,814
435,285
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
948,728
862,549
486,449
427,264
Imdex 2008 Annual Report | 76
Page 43 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
7
Trade and Other Receivables
Current
Trade receivables
Allowance for doubtful debts
Other receivables
Notes
(i)
(ii)
Consolidated
2008
$’000
2007
$’000
Company
2008
$’000
2007
$’000
31,669
(677)
30,992
1,087
32,079
27,966
(479)
27,487
319
27,806
2,006
-
2,006
395
2,401
10,173
(71)
10,102
111
10,213
(i) The average credit period on sales of goods is 60 days. Trade receivables are interest free. An allowance has been made for estimated
irrecoverable amounts from the sale of goods and services, determined by reference to past default experience and specific knowledge of
individual debtors circumstances.
Ageing of past due but not impaired debtors
0 - 30 days past due
31 - 60 days past due
61 + days past due
3,006
2,636
879
6,521
2,798
1,561
1,082
5,441
128
-
1,138
1,266
27
-
37
64
The above analysis shows debtors that are past due at the end of the reporting date where no provision has been raised as the Group
believes that the amounts are still considered recoverable. The Group does not hold any collateral over these balances.
(ii) Movement in the allowance for doubtful debts
Balance at the beginning of the year
Amounts written off during the year
Increase/(decrease) in allowance recognised in profit
or loss
Balance at the end of the year
All impaired debtors are in excess of 90 days overdue.
479
-
198
677
306
-
173
479
71
-
(71)
-
114
-
(43)
71
In determining the recoverability of a trade receivable the Group considers any change in the credit quality of the trade receivable from the
date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and
unrelated. Accordingly, the directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.
8
Inventories
Current
Raw materials - at cost
Work in progress - at cost
Finished goods - at cost
Consolidated
Company
2008
$’000
2007
$’000
2008
$’000
2007
$’000
3,383
797
17,536
21,716
1,251
51
12,537
13,839
-
-
-
-
-
-
2,085
2,085
Imdex 2008 Annual Report | 77
Page 44 of 87
IMDEX LIMITED
IMDEX LIMITED
and its controlled entities
and its controlled entities
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
NOTES TO THE FINANCIAL REPORT
NOTES TO THE FINANCIAL REPORT
9
9
Other Financial Assets
Other Financial Assets
Other Financial Assets
9
Current
Current
Current
Derivatives at fair value
Derivatives at fair value
Derivatives at fair value
Interest rate cap
Interest rate cap
Interest rate cap
Loans carried at amortised cost
Loans carried at amortised cost
Loan to Sino Gas & Energy Limited
Loan to Sino Gas & Energy Limited
Loans carried at amortised cost
Loan to Sino Gas & Energy Limited
Notes
Notes
(i)
(i)
(ii)
(ii)
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
11
Non-Current Assets Classified as Held for Sale
2007
$’000
Consolidated
Company
Notes
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Consolidated
Consolidated
2008
$’000
Notes
2008
$’000
2008
2007
$’000
$’000
2007
$’000
Consolidated
2007
2008
$’000
$’000
2008
$’000
Company
Company
Company
2007
$’000
2008
2007
$’000
$’000
(i)
229
229
229
-
-
229
-
229
229
-
-
-
(i) The investment in SGE has been classified as a non-current asset held for sale as its carrying amount will be recovered principally
11,556
11,556
41,258
2,701
43,959
(ii)
13,008
13,237
13,008
13,237
13,008
13,237
11,556
11,556
11,556
11,556
11,556
11,556
13,008
13,237
13,008
13,237
13,008
13,237
11,556
11,556
11,556
11,556
Non-current
Non-current
Non-current
Loans carried at amortised cost
Loans carried at amortised cost
Loans to Subsidiaries
Loans to Subsidiaries
Loans to Subsidiaries
Loans carried at amortised cost
Investments carried at cost
Investments in Subsidiaries
Investments carried at cost
Investments in Subsidiaries
Investments carried at cost
Investments in Subsidiaries
(iii)
(iii)
(iii)
-
-
-
-
-
60,382
60,382
-
-
-
-
-
-
-
-
-
-
-
10,640
71,022
-
10,640
71,022
-
60,382
41,258
41,258
10,640
71,022
2,701
43,959
2,701
43,959
Shares held for sale
(i)
4,500
4,500
4,500
4,500
12
Property, Plant and Equipment
through a sale transaction.
Consolidated
Gross Carrying Value
Balance at 30 June 2006
Plant and
Equipment
Equipment under
Capital Works in
TOTAL
Equipment at
Rented to Third
Hire Purchase at
Progress at cost
cost
$’000
Parties at cost
$’000
cost
$’000
$’000
$’000
10,485 5,640 1,937 164 18,226
3,341 3,057 37 387 6,822
Additions
Disposals
Additions
Disposals
Transfer
Acquisitions through business combinations
654 2,726 77 - 3,457
(368) (1,634) (107) - (2,109)
Net foreign currency exchange differences
(109) (394) (4) (3) (510)
Balance at 30 June 2007
14,003 9,395 1,940 548 25,886
3,420 1,281 - 517 5,218
Acquisitions through business combinations
561 - - - 561
(242) (2,143) (43) (4) (2,432)
Disposal through sale of subsidiary
(10,739) - (1,584) (436) (12,759)
Net foreign currency exchange differences
(420) (201) (11) (36) (668)
425 (78) (282) (65) -
Balance at 30 June 2008
7,008 8,254 20 524 15,806
Accumulated Depreciation
Balance at 30 June 2006
Disposals
5,059 2,125 1,075 - 8,259
(298) (1,130) (47) - (1,475)
Acquisitions through business combinations
278 1,399 8 - 1,685
Depreciation expense
1,484 2,691 193 - 4,368
Net foreign currency exchange differences
(28) (129) (1) - (158)
Balance at 30 June 2007
Disposals
6,495 4,956 1,228 - 12,679
(96) (1,283) (6) - (1,385)
Disposal through sale of subsidiary
(5,149) - (1,085) - (6,234)
Acquisitions through business combinations
250 - - - 250
Depreciation expense
1,397 2,241 95 - 3,733
Net foreign currency exchange differences
(134) (239) (4) - (377)
Transfer
218 (4) (214) - -
Balance at 30 June 2008
2,981 5,671 14 - 8,666
Net Book Value
As at 30 June 2007
As at 30 June 2008
7,508 4,439 712 548 13,207
4,027 2,583 6 524 7,140
(i) Effective 1 January 2008 Imdex Limited entered into an interest rate cap. This instrument allows the interest paid on $10,000,000 of
debt to be capped at 7% per annum for a period of 3 years. Refer note 31 for further disclosures around this and other financial
instruments.
(i) Effective 1 January 2008 Imdex Limited entered into an interest rate cap. This instrument allows the interest paid on $10,000,000 of
debt to be capped at 7% per annum for a period of 3 years. Refer note 31 for further disclosures around this and other financial
instruments.
(i) Effective 1 January 2008 Imdex Limited entered into an interest rate cap. This instrument allows the interest paid on $10,000,000 of
debt to be capped at 7% per annum for a period of 3 years. Refer note 31 for further disclosures around this and other financial
instruments.
(ii) During the prior year the Group advanced A$5 million and US$5 million to SGE as a short term facility pending the finalisation of their
capital raising initiatives. Interest of $1.4 million was recognised in the profit and loss in the current year and $0.6 million in the prior
year. The funds advanced are secured by a fixed and floating charge over all the assets held by SGE. The loan bears interest at 13.5%
per annum and is repayable on the IPO of SGE. The loan carries the option for Imdex Limited to convert the loan balance into equity in
SGE at market price.
(ii) During the prior year the Group advanced A$5 million and US$5 million to SGE as a short term facility pending the finalisation of their
capital raising initiatives. Interest of $1.4 million was recognised in the profit and loss in the current year and $0.6 million in the prior
year. The funds advanced are secured by a fixed and floating charge over all the assets held by SGE. The loan bears interest at 13.5%
per annum and is repayable on the IPO of SGE. The loan carries the option for Imdex Limited to convert the loan balance into equity in
SGE at market price.
(ii) During the prior year the Group advanced A$5 million and US$5 million to SGE as a short term facility pending the finalisation of their
capital raising initiatives. Interest of $1.4 million was recognised in the profit and loss in the current year and $0.6 million in the prior
year. The funds advanced are secured by a fixed and floating charge over all the assets held by SGE. The loan bears interest at 13.5%
per annum and is repayable on the IPO of SGE. The loan carries the option for Imdex Limited to convert the loan balance into equity in
SGE at market price.
As a result of the above and Imdex’s holding of 13.6% (2007: 13.6%), the Company has determined that it has significant influence.
However, as the Company’s intention is to realise the value of the investment through sale and it meets the requirements of AASB 5:
‘Non-Current Assets Held for Sale and Discontinued Operations’ the investment is not within the scope of AASB 128: ‘Investments in
Associates’. Accordingly, the investment has been classified as a non-current asset held for sale. Refer to Note 11.
As a result of the above and Imdex’s holding of 13.6% (2007: 13.6%), the Company has determined that it has significant influence.
However, as the Company’s intention is to realise the value of the investment through sale and it meets the requirements of AASB 5:
‘Non-Current Assets Held for Sale and Discontinued Operations’ the investment is not within the scope of AASB 128: ‘Investments in
Associates’. Accordingly, the investment has been classified as a non-current asset held for sale. Refer to Note 11.
As a result of the above and Imdex’s holding of 13.6% (2007: 13.6%), the Company has determined that it has significant influence.
However, as the Company’s intention is to realise the value of the investment through sale and it meets the requirements of AASB 5:
‘Non-Current Assets Held for Sale and Discontinued Operations’ the investment is not within the scope of AASB 128: ‘Investments in
Associates’. Accordingly, the investment has been classified as a non-current asset held for sale. Refer to Note 11.
(iii) Loans to Subsidiaries are repayable on demand. These loans carry no interest other than the loan to Samchem Drilling Fluids and
Chemicals (Pty) Ltd and Imdex Sweden AB. The loan to Samchem carries interest at the South African prime overdraft rate (currently
15.5%) plus a 2% margin. The loan to Imdex Sweden carries interest at the Stockholm Interbank Offered Rate (currently 4.44%) plus a
weighted average margin of 0.75%.
(iii) Loans to Subsidiaries are repayable on demand. These loans carry no interest other than the loan to Samchem Drilling Fluids and
Chemicals (Pty) Ltd and Imdex Sweden AB. The loan to Samchem carries interest at the South African prime overdraft rate (currently
15.5%) plus a 2% margin. The loan to Imdex Sweden carries interest at the Stockholm Interbank Offered Rate (currently 4.44%) plus a
weighted average margin of 0.75%.
(iii) Loans to Subsidiaries are repayable on demand. These loans carry no interest other than the loan to Samchem Drilling Fluids and
Chemicals (Pty) Ltd and Imdex Sweden AB. The loan to Samchem carries interest at the South African prime overdraft rate (currently
15.5%) plus a 2% margin. The loan to Imdex Sweden carries interest at the Stockholm Interbank Offered Rate (currently 4.44%) plus a
weighted average margin of 0.75%.
10
10
Other Assets
10
Other Assets
Other Assets
Notes
Notes
Consolidated
Consolidated
Notes
2008
$’000
2008
$’000
2008
2007
$’000
$’000
2007
$’000
Consolidated
Company
Company
Company
2007
$’000
2008
2007
$’000
$’000
2007
2008
$’000
$’000
2008
$’000
Current
Current
Current
Prepayments
Prepayments
Prepayments
Non-current
Non-current
Non-current
1,200
1,200
1,200
1,200
1,200
1,200
224
224
224
224
224
224
20
20
20
20
20
20
49
49
49
49
Deferred acquisition costs
Deferred acquisition costs
Deferred acquisition costs
(i)
(i)
(i)
-
-
-
-
-
664
664
-
664
664
664
-
-
664
-
-
-
664
664
-
664
664
2007
$’000
49
49
664
664
(i) Comprises legal, consulting and other direct costs associated with acquisitions in progress at the period end. These costs were included in
the relevant cost of investment on settlement.
(i) Comprises legal, consulting and other direct costs associated with acquisitions in progress at the period end. These costs were included in
the relevant cost of investment on settlement.
(i) Comprises legal, consulting and other direct costs associated with acquisitions in progress at the period end. These costs were included in
the relevant cost of investment on settlement.
Imdex 2008 Annual Report | 78
Page 45 of 87
Page 45 of 87
Page 45 of 87
Page 46 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
11
Non-Current Assets Classified as Held for Sale
Consolidated
Company
Notes
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Shares held for sale
(i)
4,500
4,500
4,500
4,500
(i) The investment in SGE has been classified as a non-current asset held for sale as its carrying amount will be recovered principally
through a sale transaction.
12
Property, Plant and Equipment
Consolidated
Gross Carrying Value
Balance at 30 June 2006
Additions
Acquisitions through business combinations
Disposals
Net foreign currency exchange differences
Balance at 30 June 2007
Additions
Acquisitions through business combinations
Disposals
Disposal through sale of subsidiary
Net foreign currency exchange differences
Transfer
Balance at 30 June 2008
Accumulated Depreciation
Balance at 30 June 2006
Disposals
Acquisitions through business combinations
Depreciation expense
Net foreign currency exchange differences
Balance at 30 June 2007
Disposals
Disposal through sale of subsidiary
Acquisitions through business combinations
Depreciation expense
Net foreign currency exchange differences
Transfer
Balance at 30 June 2008
Net Book Value
As at 30 June 2007
As at 30 June 2008
Plant and
Equipment at
cost
$’000
Equipment
Rented to Third
Parties at cost
$’000
Equipment under
Hire Purchase at
cost
$’000
Capital Works in
Progress at cost
TOTAL
$’000
$’000
10,485 5,640 1,937 164 18,226
3,341 3,057 37 387 6,822
654 2,726 77 - 3,457
(368) (1,634) (107) - (2,109)
(109) (394) (4) (3) (510)
14,003 9,395 1,940 548 25,886
3,420 1,281 - 517 5,218
561 - - - 561
(242) (2,143) (43) (4) (2,432)
(10,739) - (1,584) (436) (12,759)
(420) (201) (11) (36) (668)
425 (78) (282) (65) -
7,008 8,254 20 524 15,806
5,059 2,125 1,075 - 8,259
(298) (1,130) (47) - (1,475)
278 1,399 8 - 1,685
1,484 2,691 193 - 4,368
(28) (129) (1) - (158)
6,495 4,956 1,228 - 12,679
(96) (1,283) (6) - (1,385)
(5,149) - (1,085) - (6,234)
250 - - - 250
1,397 2,241 95 - 3,733
(134) (239) (4) - (377)
218 (4) (214) - -
2,981 5,671 14 - 8,666
7,508 4,439 712 548 13,207
4,027 2,583 6 524 7,140
Imdex 2008 Annual Report | 79
Page 46 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
12
Property, Plant and Equipment (continued)
Company
Gross Carrying Value
Balance at 30 June 2006
Additions
Disposals
Balance at 30 June 2007
Additions
Transfer to subsidiary
Balance at 30 June 2008
Accumulated Depreciation
Balance at 30 June 2006
Disposals
Depreciation expense
Balance at 30 June 2007
Transfer to subsidiary
Depreciation expense
Balance at 30 June 2008
Net Book Value
As at 30 June 2007
As at 30 June 2008
Plant and
Equipment at
cost
$’000
Equipment
Rented to Third
Parties at cost
$’000
Equipment under
Hire Purchase at
cost
$’000
Capital Works in
Progress at cost
TOTAL
$’000
$’000
1,186 5,640 48 (2) 6,872
499 3,228 5 21 3,753
(55) (1,595) - - (1,650)
1,630 7,273 53 19 8,975
42 - - - 42
(381) (7,273) (53) (19) (7,726)
1,291 - - - 1,291
638 2,125 21 - 2,784
(44) (925) 5 - (964)
200 2,063 6 - 2,269
794 3,263 32 - 4,089
(223) (3,263) (32) - (3,518)
198 - - - 198
769 - - - 769
836 4,010 21 19 4,886
522 - - - 522
Consolidated
Company
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Aggregate depreciation allocated, whether recognised as an
expense or capitalised as part of the carrying amount of other
assets during the year:
Plant and equipment
Plant and equipment rented to third parties
Equipment under hire purchase
1,397 1,484 198 2,063
- 200
2,241 2,691
95 193
- 6
3,733 4,368 198 2,269
Imdex 2008 Annual Report | 80
Page 47 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
12
Property, Plant and Equipment (continued)
Company
Gross Carrying Value
Balance at 30 June 2006
Additions
Disposals
Additions
Balance at 30 June 2007
Transfer to subsidiary
Balance at 30 June 2008
Accumulated Depreciation
Balance at 30 June 2006
Disposals
Depreciation expense
Balance at 30 June 2007
Transfer to subsidiary
Depreciation expense
Balance at 30 June 2008
Net Book Value
As at 30 June 2007
As at 30 June 2008
Plant and
Equipment
Equipment under
Capital Works in
TOTAL
Equipment at
Rented to Third
Hire Purchase at
Progress at cost
cost
$’000
Parties at cost
$’000
cost
$’000
$’000
$’000
1,186 5,640 48 (2) 6,872
499 3,228 5 21 3,753
(55) (1,595) - - (1,650)
1,630 7,273 53 19 8,975
42 - - - 42
(381) (7,273) (53) (19) (7,726)
1,291 - - - 1,291
638 2,125 21 - 2,784
(44) (925) 5 - (964)
200 2,063 6 - 2,269
794 3,263 32 - 4,089
(223) (3,263) (32) - (3,518)
198 - - - 198
769 - - - 769
836 4,010 21 19 4,886
522 - - - 522
Consolidated
Company
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Aggregate depreciation allocated, whether recognised as an
expense or capitalised as part of the carrying amount of other
assets during the year:
Plant and equipment
Plant and equipment rented to third parties
Equipment under hire purchase
1,397 1,484 198 2,063
2,241 2,691
- 200
95 193
- 6
3,733 4,368 198 2,269
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
13
Goodwill
Consolidated
2008
$’000
2007
$’000
Company
2008
$’000
2007
$’000
Notes
(i)
(ii)
(iii)
(v)
(iv)
(iv)
(v)
Gross Carrying Amount
Balance at beginning of the financial year
Recognised on acquisition of Suay Energy Services LLP
Recognised on acquisition of Poly-Drill Drilling Systems
Ltd
Recognised on acquisition of Southernland S.A.
Recognised on acquisition of System Entwicklungs GmbH
Recognised on acquisition of Reflex Holding AB
Recognised on acquisition of Imdex Technology UK Ltd
Recognised on acquisition of Flexit AB
Effect of foreign exchange movements
Balance at end of the financial year
Accumulated Impairment Losses
Balance at beginning of the financial year
Impairment losses for the year
Balance at end of the financial year
Net Book Value
At the beginning of the financial year
At the end of the financial year
Goodwill is allocated to cash-generating units as follows:
Australian Mud Company
Samchem
Suay Energy Services
Poly-Drill Drilling Systems
Southernland
Reflex / Imdex Technology
Flexit / SEG
35,033
1,266
3,369
2,413
10,499
1,906
-
-
-
-
-
14,623
-
-
46
52,626
-
-
-
8,319
11,107
(922)
35,033
-
-
-
35,033
52,626
1,906
35,033
-
1,324
1,266
3,369
2,413
22,613
21,641
52,626
-
1,699
-
-
-
22,406
10,928
35,033
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(i) Goodwill arose during the year on the acquisition of 75% of the issued share capital of Suay Energy Services LLP (Suay) by Imdex
Limited effective 1 July 2007 and the remaining 25% of the issued share capital effective 30 June 2008. Refer notes 26(c) and 26(d).
Suay is considered to be a separate cash generating unit since it operates independently from other Imdex operations in a separate
geographical area being Kazakhstan and the surrounding Caspian Sea region. The recoverable amount of this goodwill has been
determined based on a value in use calculation which uses a 6 year discounted cash flow projection based on the 2009 budget. The
projection assumes no additional growth in the business beyond 2009. A discount rate of 12%, being the Imdex Group weighted
average cost of capital has been used. Management believe that any reasonably possible change in the key assumptions on which
recoverable amount is based would not cause the carrying amount to exceed its recoverable amount.
(ii) Goodwill arose during the year on the acquisition of Poly-Drill Drilling Systems Ltd (Poly-Drill) by Imdex Limited effective 1 July 2007.
Refer note 26(b). Poly-Drill is considered to be a separate cash generating unit since it manufactures and sells products independently
from other Imdex operations in a separate geographical area being Canada. The recoverable amount of this goodwill has been
determined based on a value in use calculation which uses a 6 year discounted cash flow projection based on the 2009 budget. The
projection assumes modest growth in revenue and cost of 10% and 5% per annum respectively for the first 3 years of the projection. A
discount rate of 12%, being the Imdex Group weighted average cost of capital has been used. Management believe that any reasonably
possible change in the key assumptions on which recoverable amount is based would not cause the carrying amount to exceed its
recoverable amount.
(iii) Goodwill arose during the year on the acquisition of Southernland S.A. (Southernland) by Imdex South America S.A., a newly
incorporated wholly owned subsidiary of Imdex Limited effective 1 July 2007. Refer note 26(d). Southernland is considered to be a
separate cash generating unit since it manufactures and sells products independently from other Imdex operations in a separate
geographical area being Latin America. The recoverable amount of this goodwill has been determined based on a value in use
calculation which uses a 6 year discounted cash flow projection based on the 2009 budget. The projection assumes modest growth in
revenue and costs of 10% and 5% per annum respectively for the first 2 years of the projection. A discount rate of 12%, being the Imdex
Group weighted average cost of capital has been used. Management believe that any reasonably possible change in the key
assumptions on which recoverable amount is based would not cause the carrying amount to exceed its recoverable amount.
Page 47 of 87
Imdex 2008 Annual Report | 81
Page 48 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
13
Goodwill
(iv) Goodwill arose during the prior year on the acquisition of 100% of the issued share capital of Reflex Holding AB (Reflex) (refer note
26(g)), and Imdex Technology UK Limited (ITU) (formerly Chardec Technology Ltd) (refer note 26(h)). These two operations are
considered to be a single cash generating unit as they were purchased in close succession to create a single vertically integrated
operation in the Down Hole Instrumentation division. They operate in the same business segment and geographical area and have the
same operational management and a high level of operational and financial interdependency. The recoverable amount of this goodwill
has been determined based on a value in use calculation which uses a 6 year discounted cash flow projection based on the 2009
budget. The projection assumes no additional growth in the business beyond 2009. A discount rate of 12%, being the Imdex Group
weighted average cost of capital has been used. Management believe that any reasonably possible change in the key assumptions on
which recoverable amount is based would not cause the carrying amount to exceed its recoverable amount.
(v) Goodwill arose during the current year on the acquisition of 100% of the issued share capital of System Entwicklungs GmbH (SEG)
(refer note 26(a)) and Flexit AB (Flexit) (refer note 26(f)) in the prior year. These two operations are considered to be a single cash
generating unit as they were purchased in close succession to create a single vertically integrated operation in the Down Hole
Instrumentation division. They operate in the same business segment and geographical area and have the same operational
management and a high level of operational and financial interdependency. The recoverable amount of this goodwill has been
determined based on a value in use calculation which uses a 6 year discounted cash flow projection based on the 2009 budget. The
projection assumes no additional growth in the business beyond 2009. A discount rate of 12%, being the Imdex Group weighted
average cost of capital has been used. Management believe that any reasonably possible change in the key assumptions on which
recoverable amount is based would not cause the carrying amount to exceed its recoverable amount.
The key assumptions used in the value in use calculations for the various significant cash generating units are as follows:
Budgeted sales growth
Budgeted net margins
Exchange rate fluctuations
Samchem CGU
Suay CGU
Poly-Drill CGU
Southernland CGU
Reflex / ITU CGU
Flexit / SEG CGU
Sales growth has been
budgeted in line with the
expected increase in activity in
the local industries serviced by
Samchem.
Sales growth has been
budgeted in line with the
expected increase in activity in
the local industries serviced by
Suay.
Sales growth has been
budgeted in line with the
expected increase in activity in
the local industries serviced by
Poly-Drill as well as growth
expected to arise from the
global alliances.
Sales growth has been
budgeted in line with the
expected increase in activity in
the local industries serviced by
Southernland as well as growth
expected to arise from the
global alliances.
Sales growth has been
budgeted based on the
expected activity levels in the
global down hole tool market
plus an increment for the market
share expected to be gained
from the release of new tools.
Sales growth has been
budgeted based on the
expected activity levels in the
global down hole tool market
plus an increment for the market
share expected to be gained
from the release of new tools
and the targeting of the oil & gas
market.
Net margins have been
budgeted using the prior year
actuals as a base on which
operational improvements and
economies of scale are
expected to be gained.
Net margins have been
budgeted using the prior year
actuals as a base on which
operational improvements and
economies of scale are
expected to be gained.
Net margins have been
budgeted using the prior year
actuals as a base on which
operational improvements and
economies of scale are
expected to be gained.
Net margins have been
budgeted using the prior year
actuals as a base on which
operational improvements and
economies of scale are
expected to be gained.
Net margins have been
budgeted using the prior year
actuals as a base. In addition an
increase is expected to arise
from the release of new tools
and the business model trend
away from sales towards
rentals.
Net margins have been
budgeted using the prior year
actuals as a base. In addition an
increase is expected to arise
from the release of new tools,
the accessing of new markets
and the business model trend
away from sales towards
rentals.
Exchange rate fluctuation
expectations have been built
into the budget numbers based
on standard forecast advice
received from major lending
institutions.
Imdex 2008 Annual Report | 82
Page 49 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
14
Other Intangible Assets
Consolidated
Patents
Intellectual
Property
Technology
Based
Contract
Based
Customer
Based
Development
Costs
Trade
Name
TOTAL
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
46
14,749
-
1,315
99
12,393
Gross Carrying Value
Balance at 30 June 2006
Additions through business
combinations
Capitalised during the year
Impact of exchange rate
changes
Balance at 30 June 2007
Additions through business
combinations
Capitalised during the year
Impact of exchange rate
changes
Balance at 30 June 2008
Accumulated Amortisation
and Impairment
Balance at 30 June 2006
Amortisation expense
Impact of exchange rate
changes
Impairment losses
Balance at 30 June 2007
Amortisation expense
Impact of exchange rate
changes
Impairment losses
Balance at 30 June 2008
Net Book Value
As at 30 June 2007
As at 30 June 2008
Company
Gross Carrying Value
Balance at 30 June 2006
Additions through business
combinations
Capitalised during the year
Impact of exchange rate
changes
Balance at 30 June 2007
Transferred to subsidiary entity
Balance at 30 June 2008
Accumulated Amortisation
and Impairment
Balance at 30 June 2006
Amortisation expense
Impairment losses
Balance at 30 June 2007
Amortisation expense
Impairment losses
Balance at 30 June 2008
Net Book Value
As at 30 June 2007
As at 30 June 2008
-
755
-
-
755
6
-
-
761
-
25
-
-
25
152
-
-
177
730
584
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,313
-
-
-
(143)
1,170
1,505
-
(258)
2,417
-
-
-
-
-
75
-
-
75
14,937
-
(234)
14,703
-
-
-
1,501
(41)
-
1,460
2,382
(10)
-
3,832
1,170
2,342
13,243
10,917
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
425
-
-
425
890
-
-
9,781
-
(483)
9,298
2,996
-
-
78
-
-
78
530
-
-
608
347
707
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,491
(71)
-
1,420
1,883
(2)
-
3,301
7,878
9,092
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
429
-
429
-
-
-
429
-
-
-
-
-
86
-
-
86
-
1,313
4,470
-
(202)
4,268
251
-
42
4,561
-
335
(16)
-
319
947
(9)
-
1,257
30,368
429
(1,062)
31,048
5,648
-
(71)
36,625
-
3,430
(128)
-
3,302
6,055
(21)
-
9,336
429
343
3,949
3,304
27,746
27,289
-
-
429
-
429
(429)
-
-
-
-
-
-
-
-
429
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
429
-
429
(429)
-
-
-
-
-
-
-
-
429
-
Imdex 2008 Annual Report | 83
Page 50 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
14
Other Intangible Assets (continued)
Intellectual Property
Intellectual Property arose on the acquisition by Samchem Drilling Fluids & Chemicals (Pty) Ltd, a wholly owned subsidiary of Imdex
Limited, of the business of SA Mud Services (Pty) Ltd and a range of clay and cement chemical additive inventory items effective 1
August 2005.
Intellectual Property has an indefinite life due to the uniqueness of the manufacturing processes and products, high cost barriers to entry
and the dominant market share held. Intellectual Property is therefore subjected to annual impairment testing.
The recoverable amount has been determined based on a value in use calculation which uses a 6 year discounted cash flow projection
based on the 2009 budget. The projection assumes no additional growth in the business beyond 2009. A discount rate of 12% has been
used. Management believe that any reasonably possible change in the key assumptions on which recoverable amount is based would
not cause the carrying amount to exceed its recoverable amount.
15
Trade and Other Payables
Trade payables
Accruals and other payables
Due to the vendors of System Entwicklungs GmbH
Due to the vendors of Suay Energy Services LLC
Notes
(i)
26(a)
26(d)
Consolidated
Company
2008
$’000
2007
$’000
2008
$’000
2007
$’000
9,836
5,252
656
778
16,522
12,290
4,451
-
-
16,741
207
826
-
778
1,811
3,562
2,008
-
-
5,570
(i) Trade payables are interest free for periods ranging from 30 to 180 days. Thereafter interest is charged at commercial rates. The
consolidated entity has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.
16
Borrowings
Current borrowings
Secured
At amortised cost
Commercial bill
Bank loan
Hire purchase liabilities
Other
Unsecured
At amortised cost
Deferred acquisition payments
Non-current borrowings
Secured
At amortised cost
Commercial bills
Bank loan
Hire purchase liabilities
Other
Unsecured
At amortised cost
Deferred acquisition payments
Consolidated
Company
Notes
2008
$’000
2007
$’000
2008
$’000
2007
$’000
(i)
(ii)
(iii) 24
(iv)
(v) 34
(i)
(ii)
(iii) 24
(iv)
(v) 34
9,000
4,016
-
-
2,300
2,430
1,443
335
2,687
15,703
5,373
11,881
8,000
9,132
-
-
10,000
12,710
964
167
2,717
19,849
4,715
28,556
9,000
-
-
-
-
9,000
8,000
-
-
-
-
8,000
2,300
-
385
-
-
2,685
10,000
-
64
-
-
10,064
Imdex 2008 Annual Report | 84
Page 51 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
16
Borrowings (continued)
(i) Commercial bills bear interest at 9.7% per annum. The Group has an interest rate cap in operation that caps the maximum interest
payable on $10,000,000 of this debt at 7% per annum, thereby reducing the effective interest rate on this debt to 8.1%. Refer note 31(g)
for further details. On 31 December 2008 a bill of $7,000,000 is repayable. The remaining bills are repayable in quarterly instalments of
$500,000 each with the final payment due in June 2013. The bills are secured by a Mortgage Debenture over all the assets and
liabilities of Imdex Limited, Australian Mud Company Pty Ltd, Reflex Asia Pacific Pty Ltd, Imdex International Pty Ltd, Imdex Technology
UK Limited and Samchem Drilling Fluids and Chemicals (Pty) Ltd.
(ii) This comprises of a loan of SEK 75,625,000 raised in the prior year. This loan bears interest at the 7 day Stockholm Interbank
Offered Rate ('STIBOR'), currently 4.4% plus a weighted average margin of 1.96% per annum. The loan is repayable in quarterly
instalments of SEK 5,775,000 until December 2009 when the instalments drop to SEK 4,400,000 per quarter. From December 2011
they drop further to SEK 1,650,000 per quarter until the loan is fully repaid in June 2013. The interest rate applicable at 30 June 2008
was 6.36% per annum. This loan is secured over the assets of the Reflex and Flexit companies that are domiciled in Sweden.
(iii) Hire purchase liabilities are secured over the assets to which they relate, the carrying value of which exceeds the value of the hire
purchase liability. The Group does not hold title to the equipment under hire purchase pledged as security. The weighted average
interest rate applicable to these liabilities in the prior year was 7.6%.
(iv) Other current and non-current loans comprise sundry advances from third party lenders.
(v) Deferred acquisition payments are those portions of the purchase price of recent acquisitions that are due in future periods. The
cash components of these deferred amounts have been discounted to their present values using an interest rate of 8% per annum. For
further details refer to notes 26(g) and (h).
(vi) A convertible note with a face value of $10,400,000 was issued on 1 August 2006 and carried interest at the rate of 8% per annum
payable in arrears. The note carried the right to convert into 20.8 million fully paid ordinary Imdex shares at any time up to 1 August
2008. Conversion would be automatically triggered upon the Imdex share price reaching $1 per share. This condition was satisfied on
15 February 2007. Refer note 18 for details of shares issued. These shares were held in voluntary escrow until 1 August 2008.
17
Provisions
Current provisions
Employee entitlements
Non-current provisions
Employee entitlements
Consolidated
2008
$’000
2007
$’000
Company
2008
$’000
2007
$’000
Notes
(i)
972
1,212
245
265
558
448
128
116
(i) The majority of these entitlements are expected to be taken during the coming year. (2007: same)
Imdex 2008 Annual Report | 85
Page 52 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
18
Contributed Capital
Issued and Paid Up Capital - Fully paid ordinary shares
Mandatory convertible capital
Notes
(i)
(ii)
Consolidated
Company
2008
$’000
2007
$’000
2008
$’000
2007
$’000
58,183
6,700
64,883
54,282
6,700
60,982
58,183
6,700
64,883
54,282
6,700
60,982
(i) Fully paid ordinary shares carry one vote per share and the right to dividends.
(ii) Mandatory Convertible Capital relates to the future issue of 5 million fully paid ordinary shares as consideration for the acquisition of Flexit
AB. Refer to Note 26(f)
Ordinary shares
Balance at beginning of the financial year
Issue of shares as part consideration for the acquisition of
Poly-Drill
Issue of shares as part consideration for the acquisition of
Southernland
Issued on conversion of debt instrument
Issue of equity securities as part of working capital raising
Issue of shares as part consideration for the acquisition of
patent
Tax effect of share issue costs / Share issue costs (net of
tax)
Issue of shares under staff option plan
Closing balance at end of the financial year
Consolidated and Company
2008
2007
Notes
Number
$'000
Number
$'000
179,949,003
54,282
139,466,037
26,490
-
-
26(b)
1,212,751
26(e)
16(vi)
723,679
-
-
-
1,750
1,387
-
-
-
-
20,800,000
15,000,000
155,039
-
1,605,499
183,490,932
(113)
877
58,183
-
4,527,927
179,949,003
-
10,400
16,500
200
(510)
1,202
54,282
Changes to the Corporations Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998.
Therefore, the Company does not have a limited amount of authorised capital and issued shares do not have a par value.
Share options granted under the staff option scheme
In accordance with the provisions of the staff option scheme, as at 30 June 2008, executives, directors and staff have options over
16,194,872 ordinary shares (5,019,872 of which had vested), in aggregate. These options expire over a range of dates up to March 2013. As
at 30 June 2007, executives, directors and staff have options over 13,080,406 ordinary shares (1,423,739 of which had vested), in aggregate.
These options expire over a range of dates up to June 2012. Share options granted under the employee share option plan carry no rights to
dividends and no voting rights.
Details of the Staff Option Plan can be found in note 33.
Imdex 2008 Annual Report | 86
Page 53 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
19
Reserves
Consolidated
2008
$’000
2007
$’000
Notes
Company
2008
$’000
2007
$’000
Foreign Currency Translation Reserve
Balance at beginning of the financial year
Translation of foreign operations after taxation
Balance at the end of the financial year
(2,137)
(2,726)
(4,863)
(494)
(1,643)
(2,137)
-
-
-
-
-
-
Exchange differences relating to the translation from the functional currencies of the Group's foreign controlled entities into Australian dollars
are brought to account by entries made directly to the foreign currency translation reserve. This reserve is shown net of deferred tax.
Employee Equity-Settled Benefits Reserve
Balance at beginning of the financial year
Options issued
Options exercised during the financial year
Balance at the end of the financial year
4
751
2,025
(203)
2,573
105
728
(82)
751
751
2,025
(203)
2,573
105
728
(82)
751
The employee equity-settled benefits reserve arises on the grant of share options to Directors and employees. Amounts are transferred out of
the reserve and into issued capital when the options are exercised. Further information regarding the Staff Option Plan is contained in note
33.
20
Earnings Per Share
Basic earnings per share
From continuing operations
From discontinued operations
Total basic earnings per share
Diluted earnings per share
From continuing operations
From discontinued operations
Total diluted earnings per share
(a) Basic earnings per share
The earnings and weighted average number of ordinary shares used in the
calculation of basic earnings per share are as follows:
Earnings (i)
Earnings from continuing operations (i)
Weighted average number of ordinary shares for the purposes of basic
earnings per share
(i) Earnings used in the calculation of total basic earnings per share and basic
earnings per share from continuing operations reconciles to net profit in the
income statement as follows:
Net profit
Earnings used in the calculation of basic EPS
Adjustments to exclude profit for the period from discontinued operations
Earnings used in the calculation of basic EPS from continuing operations
Consolidated
2008
Cents per share
2007
Cents per share
11.22
5.82
17.04
10.79
5.59
16.38
7.72
1.02
8.74
7.09
0.91
8.00
$'000s
$'000s
31,966
21,045
13,518
11,950
Shares
Shares
187,578,226
154,717,072
$'000s
$'000s
31,966
31,966
(10,921)
21,045
13,518
13,518
(1,568)
11,950
Imdex 2008 Annual Report | 87
Page 54 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
20
Earnings Per Share (continued)
(b) Diluted earnings per share
The earnings and weighted average number of ordinary shares used in the
calculation of diluted earnings per share are as follows:
Earnings (ii)
Earnings from continuing operations (ii)
Weighted average number of ordinary shares for the purposes of diluted
earnings per share (iii)
(ii) Earnings used in the calculation of total diluted earnings per share and
diluted earnings per share from continuing operations reconciles to net profit in
the income statement as follows:
Net profit
Adjustment to exclude the impact of interest expense on convertible note
Earnings used in the calculation of diluted EPS
Adjustments to exclude profit for the period from discontinued operations
Earnings used in the calculation of diluted EPS from continuing operations
(iii) The weighted average number of ordinary shares for the purposes 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
Potential ordinary shares arising on the conversion of convertible note
Shares deemed to be issued for no consideration in respect of employee and
Director options
Weighted average number of ordinary shares used in the calculation of diluted
EPS
(iv) The following potential ordinary shares are not dilutive and are therefore
excluded from the weighted average number of ordinary shares for the
purposes of diluted earnings per share:
Employees share options tranche 4
Employees share options tranche 5
Employees share options tranche 6
Employees share options tranche 7
Consolidated
2008
Cents per share
2007
Cents per share
$'000s
$'000s
31,966
21,045
13,836
12,268
Shares
Shares
195,112,068
172,920,311
$'000s
$'000s
31,966
-
31,966
(10,921)
21,045
13,518
318
13,836
(1,568)
12,268
Shares
Shares
187,578,226
-
154,717,072
11,340,274
7,533,842
6,862,965
195,112,068
172,920,311
Shares
Shares
-
625,000
500,000
4,815,000
5,940,000
4,425,000
675,000
-
-
5,100,000
Imdex 2008 Annual Report | 88
Page 55 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
21
Dividends
Recognised amounts
Notes
2008
Cents per
share
2008
Total
$’000
2007
Cents per
share
2007
Total
$’000
Fully paid ordinary shares - interim dividend franked to 30%
Fully paid ordinary shares - final dividend franked to 30%
(i)
(ii)
1.75
1.50
3.25
3,212
2,722
5,934
1.00
1.00
2.00
1,641
1,411
3,052
Unrecognised amounts
Fully paid ordinary shares - final dividend franked to 30%
(iii)
2.25
4,129
1.50
2,722
(i) The interim, fully franked dividend was paid on 25 March 2008 (2007: 26 March 2007). The record date for determining the entitlement to
the interim dividend was 7 March 2008 (2007: 13 March 2007). There are no dividend reinvestment plans in operation.
(ii) The final, fully franked dividend was paid on 2 November 2007 (2007: 13 October 2006). The record date for determining the entitlement
to the final dividend was 15 October 2007 (2007: 10 October 2006). There are no dividend reinvestment plans in operation.
(iii) The final, fully franked dividend was declared on 15 August 2008 with an entitlement date of 17 October 2008 and a payment date of 31
October 2008. The financial effect of this dividend has not been recognised in the financial statements at 30 June 2008.
Consolidated
2008
$'000
2007
$'000
13,521
(1,770)
-
7,062
(1,157)
-
Adjusted franking account balance
Impact on franking account of dividends not recognised
Income tax consequences of unrecognised dividends
22
Commitments for Expenditure
(a) Capital expenditure commitments
At 30 June 2008 the Group had a capital expenditure commitments amounting to $927,000. This commitment comprised $475,000
relating to the construction of a PHPA plant at Samchem and $452,000 representing gyro purchase commitments in SEG. The
Company had no capital expenditure commitments.
At 30 June 2007 the Company and Group had no capital expenditure commitments.
(b) Lease commitments
Hire purchase liabilities and non-cancellable operating lease commitments are disclosed in note 24.
23
Contingent Liabilities and Contingent Assets
Contingent Liabilities
Rental bond
Contingent Assets
Consolidated
2008
$’000
2007
$’000
Company
2008
$’000
2007
$’000
-
-
-
119
119
-
-
-
-
100
100
-
Imdex 2008 Annual Report | 89
Page 56 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
24
Leases
(a) Hire Purchases
Hire purchase arrangements
Hire purchase arrangements relate to plant and equipment with terms of up to 5 years. The Group has options to purchase the equipment for
a nominal amount at the conclusion of the arrangements.
Hire purchase commitments
Hire purchase commitments are payable as
follows. Due:
Within one year
Between one and five years
Later than five years
Minimum lease payments
Less: future finance charges
Minimum future lease payments
Present value of minimum future lease
payments
Consolidated
2008
$’000
2007
$’000
Company
2008
$’000
2007
$’000
Consolidated
2008
$’000
2007
$’000
Company
2008
$’000
2007
$’000
- 1,580 - 467 - 1,443 - 449
- 760 - - - 728 - -
- 248 - - - 236 - -
- 2,588 - 467 - 2,407 - 449
- (181) - (18) - - - -
- 2,407 - 449 - 2,407 - 449
Hire purchase liabilities provided for in the Financial Report
Current – Note 16
Non current – Note 16
(b) Operating Leases
Operating leasing arrangements
- 1,443 - 385
- 964 - 64
- 2,407 - 449
Operating leases relate to premises and equipment (including motor vehicles) used by the Group 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.
Non-cancellable operating lease payments
Within one year
Between one and five years
Later than five years
Consolidated
2008
$’000
2007
$’000
Company
2008
$’000
2007
$’000
1,838
3,785
1,139
6,762
1,062
1,911
686
3,659
162
365
-
527
162
352
-
514
IMDEX LIMITED
IMDEX LIMITED
and its controlled entities
and its controlled entities
NOTES TO THE FINANCIAL REPORT
NOTES TO THE FINANCIAL REPORT
25
25
Subsidiaries
Subsidiaries
Parent Entity
Parent Entity
Imdex Limited
Imdex Limited
Controlled Entities
Controlled Entities
Australian Mud Company Pty Ltd
Australian Mud Company Pty Ltd
Samchem Drilling Fluids & Chemicals (Pty) Ltd
Samchem Drilling Fluids & Chemicals (Pty) Ltd
Imdex International Pty Ltd
Imdex International Pty Ltd
Imdex Sweden AB
Imdex Sweden AB
Reflex Instruments Asia Pacific Pty Ltd
Reflex Instruments Asia Pacific Pty Ltd
Imdex Technology UK Ltd (formerly Chardec Technology Ltd)
Imdex Technology UK Ltd (formerly Chardec Technology Ltd)
Reflex Holding AB
Reflex Holding AB
Reflex Instrument AB
Reflex Instrument AB
Reflex Instrument North America
Reflex Instrument North America
Reflex Instrument South America Ltda
Reflex Instrument South America Ltda
Reflex Instruments Europe Ltd
Reflex Instruments Europe Ltd
Drill Hole Surveys (Pty) Ltd
Drill Hole Surveys (Pty) Ltd
Flexit AB
Flexit AB
Flexit Navigation AB
Flexit Navigation AB
Flexit Australia Pty Ltd
Flexit Australia Pty Ltd
Nudge Geotechnical Instrumentation Inc
Nudge Geotechnical Instrumentation Inc
Suay Energy Services LLP
Suay Energy Services LLP
Poly-Drill Drilling Systems Ltd
Poly-Drill Drilling Systems Ltd
Imdex South America S.A.
Imdex South America S.A.
Southernland S.A.
Southernland S.A.
System Entwicklungs GmbH
System Entwicklungs GmbH
Surtron Technologies Pty Ltd
Surtron Technologies Pty Ltd
Surtron Technologies UK Ltd
Surtron Technologies UK Ltd
Surtron Technologies US Inc
Surtron Technologies US Inc
Notes
Notes
Country of
Country of
Incorporation
Incorporation
Ownership Interest
Ownership Interest
2008
2007
2007
%
%
2008
%
%
(i), (ii)
(i), (ii)
Australia
Australia
(ii), (iii)
(ii), (iii)
(ii), (iii), (iv)
(ii), (iii), (iv)
(v)
(v)
(ii), (iii), (vi)
(ii), (iii), (vi)
(vii), 26(g)
(vii), 26(g)
26(h)
26(h)
26(g)
26(g)
26(g)
26(g)
26(g)
26(g)
(xii)
(xii)
26(g)
26(g)
26(f)
26(f)
(viii), 26(f)
(viii), 26(f)
(ii), (ix)
(ii), (ix)
(x)
(x)
26(c) (d)
26(c) (d)
26(b)
26(b)
26(e)
26(e)
26(e)
26(e)
26(a)
26(a)
(ii), (iii), 28
(ii), (iii), 28
28
28
Australia
Australia
South Africa
South Africa
Australia
Australia
Sweden
Sweden
Australia
Australia
United Kingdom
United Kingdom
Sweden
Sweden
Sweden
Sweden
Canada
Canada
Chile
Chile
United Kingdom
United Kingdom
South Africa
South Africa
Sweden
Sweden
Sweden
Sweden
Australia
Australia
Canada
Canada
Kazakhstan
Kazakhstan
Canada
Canada
Chile
Chile
Chile
Chile
Germany
Germany
Australia
Australia
(xi), 28
(xi), 28
United States of America
United States of America
United Kingdom
United Kingdom
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
-
-
-
-
-
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
100
100
100
100
100
100
100
100
100
100
-
-
-
-
-
-
-
-
-
-
100
100
100
100
100
100
(i) Imdex Limited is the ultimate parent company and is the head entity within the tax consolidated group.
(i) Imdex Limited is the ultimate parent company and is the head entity within the tax consolidated group.
(ii) These companies are part of the tax consolidated group. Surtron Technologies Pty Ltd was part of the tax consolidated group until sold on 31
(ii) These companies are part of the tax consolidated group. Surtron Technologies Pty Ltd was part of the tax consolidated group until sold on 31
October 2007.
October 2007.
(iii) These wholly-owned subsidiaries have entered into a deed of cross guarantee with Imdex Limited pursuant to ASIC Class Order 98/1418
(iii) These wholly-owned subsidiaries have entered into a deed of cross guarantee with Imdex Limited pursuant to ASIC Class Order 98/1418
and are relieved from the requirement to prepare and lodge an audited financial report. Australian Mud Company Pty Ltd became a party to the
and are relieved from the requirement to prepare and lodge an audited financial report. Australian Mud Company Pty Ltd became a party to the
deed on 29 June 2006, Imdex International Pty Ltd on 20 October 2006 and Reflex Instruments Asia Pacific Pty Ltd on 14 September 2007.
deed on 29 June 2006, Imdex International Pty Ltd on 20 October 2006 and Reflex Instruments Asia Pacific Pty Ltd on 14 September 2007.
Surtron Technologies Pty Ltd became a party to this deed on 29 June 2006 and ceased to be a party on 31 October 2007 when Imdex Limited
Surtron Technologies Pty Ltd became a party to this deed on 29 June 2006 and ceased to be a party on 31 October 2007 when Imdex Limited
sold 100% of its shares in this entity.
sold 100% of its shares in this entity.
(iv) This entity was incorporated on 4 July 2006
(iv) This entity was incorporated on 4 July 2006
(v) This entity was incorporated on 5 July 2006
(v) This entity was incorporated on 5 July 2006
(vi) This entity was incorporated on 26 March 2007
(vi) This entity was incorporated on 26 March 2007
(vii) This entity was merged with Reflex Holding AB on 1 October 2007.
(vii) This entity was merged with Reflex Holding AB on 1 October 2007.
(viii) This entity was merged with Flexit AB on 29 April 2008.
(viii) This entity was merged with Flexit AB on 29 April 2008.
(ix) This entity was incorporated on 11 May 2007
(ix) This entity was incorporated on 11 May 2007
Instrument North America on 1 January 2008.
Instrument North America on 1 January 2008.
(xi) This entity was incorporated on 16 November 2006
(xi) This entity was incorporated on 16 November 2006
(xii) This entity was incorporated on 28 April 2008
(xii) This entity was incorporated on 28 April 2008
(x) 100% of the issued share capital of this entity was acquired on 1 May 2007. As this entity is non-trading and holds one asset being a patent,
(x) 100% of the issued share capital of this entity was acquired on 1 May 2007. As this entity is non-trading and holds one asset being a patent,
this purchase transaction was accounted for as an acquisition of an asset, not a business combination. This entity was amalgamated with Reflex
this purchase transaction was accounted for as an acquisition of an asset, not a business combination. This entity was amalgamated with Reflex
Imdex 2008 Annual Report | 90
Page 57 of 87
Page 58 of 87
Page 58 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
24
Leases
(a) Hire Purchases
Hire purchase arrangements
Hire purchase arrangements relate to plant and equipment with terms of up to 5 years. The Group has options to purchase the equipment for
a nominal amount at the conclusion of the arrangements.
Minimum future lease payments
Present value of minimum future lease
payments
Consolidated
2008
$’000
2007
$’000
Company
Consolidated
Company
2008
2007
2008
$’000
$’000
$’000
2007
$’000
2008
$’000
2007
$’000
- 1,580 - 467 - 1,443 - 449
- 760 - - - 728 - -
- 248 - - - 236 - -
- 2,588 - 467 - 2,407 - 449
- (181) - (18) - - - -
- 2,407 - 449 - 2,407 - 449
- 1,443 - 385
- 964 - 64
- 2,407 - 449
Hire purchase commitments
Hire purchase commitments are payable as
follows. Due:
Within one year
Between one and five years
Later than five years
Minimum lease payments
Less: future finance charges
Hire purchase liabilities provided for in the Financial Report
Current – Note 16
Non current – Note 16
(b) Operating Leases
Operating leasing arrangements
Operating leases relate to premises and equipment (including motor vehicles) used by the Group 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.
Non-cancellable operating lease payments
Within one year
Between one and five years
Later than five years
Consolidated
2008
$’000
2007
$’000
Company
2008
2007
$’000
$’000
1,838
3,785
1,139
6,762
1,062
1,911
686
3,659
162
365
-
527
162
352
-
514
Page 57 of 87
IMDEX LIMITED
IMDEX LIMITED
and its controlled entities
and its controlled entities
NOTES TO THE FINANCIAL REPORT
NOTES TO THE FINANCIAL REPORT
25
25
Subsidiaries
Subsidiaries
Parent Entity
Parent Entity
Imdex Limited
Imdex Limited
Controlled Entities
Controlled Entities
Notes
Notes
Country of
Country of
Incorporation
Incorporation
(i), (ii)
(i), (ii)
Australia
Australia
Ownership Interest
Ownership Interest
2008
2007
%
2007
%
2008
%
%
Australian Mud Company Pty Ltd
Australian Mud Company Pty Ltd
Samchem Drilling Fluids & Chemicals (Pty) Ltd
Samchem Drilling Fluids & Chemicals (Pty) Ltd
Imdex International Pty Ltd
Imdex International Pty Ltd
Imdex Sweden AB
Imdex Sweden AB
Reflex Instruments Asia Pacific Pty Ltd
Reflex Instruments Asia Pacific Pty Ltd
Imdex Technology UK Ltd (formerly Chardec Technology Ltd)
Imdex Technology UK Ltd (formerly Chardec Technology Ltd)
Reflex Holding AB
Reflex Holding AB
Reflex Instrument AB
Reflex Instrument AB
Reflex Instrument North America
Reflex Instrument North America
Reflex Instrument South America Ltda
Reflex Instrument South America Ltda
Reflex Instruments Europe Ltd
Reflex Instruments Europe Ltd
Drill Hole Surveys (Pty) Ltd
Drill Hole Surveys (Pty) Ltd
Flexit AB
Flexit AB
Flexit Navigation AB
Flexit Navigation AB
Flexit Australia Pty Ltd
Flexit Australia Pty Ltd
Nudge Geotechnical Instrumentation Inc
Nudge Geotechnical Instrumentation Inc
Suay Energy Services LLP
Suay Energy Services LLP
Poly-Drill Drilling Systems Ltd
Poly-Drill Drilling Systems Ltd
Imdex South America S.A.
Imdex South America S.A.
Southernland S.A.
Southernland S.A.
System Entwicklungs GmbH
System Entwicklungs GmbH
Surtron Technologies Pty Ltd
Surtron Technologies Pty Ltd
Surtron Technologies UK Ltd
Surtron Technologies UK Ltd
Surtron Technologies US Inc
Surtron Technologies US Inc
(ii), (iii)
(ii), (iii)
(ii), (iii), (iv)
(ii), (iii), (iv)
(v)
(v)
(ii), (iii), (vi)
(ii), (iii), (vi)
26(h)
26(h)
26(g)
26(g)
(vii), 26(g)
(vii), 26(g)
26(g)
26(g)
26(g)
26(g)
(xii)
(xii)
26(g)
26(g)
26(f)
26(f)
(viii), 26(f)
(viii), 26(f)
(ii), (ix)
(ii), (ix)
(x)
(x)
26(c) (d)
26(c) (d)
26(b)
26(b)
26(e)
26(e)
26(e)
26(e)
26(a)
26(a)
(ii), (iii), 28
(ii), (iii), 28
28
28
(xi), 28
(xi), 28
Australia
Australia
South Africa
South Africa
Australia
Australia
Sweden
Sweden
Australia
Australia
United Kingdom
United Kingdom
Sweden
Sweden
Sweden
Sweden
Canada
Canada
Chile
Chile
United Kingdom
United Kingdom
South Africa
South Africa
Sweden
Sweden
Sweden
Sweden
Australia
Australia
Canada
Canada
Kazakhstan
Kazakhstan
Canada
Canada
Chile
Chile
Chile
Chile
Germany
Germany
Australia
Australia
United Kingdom
United Kingdom
United States of America
United States of America
100
100
100
100
100
100
100
-
100
100
100
100
100
-
100
-
100
100
100
100
100
-
-
-
100
100
100
100
100
100
100
-
100
100
100
100
100
-
100
-
100
100
100
100
100
-
-
-
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
-
-
-
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
-
-
-
-
-
100
100
100
(i) Imdex Limited is the ultimate parent company and is the head entity within the tax consolidated group.
(i) Imdex Limited is the ultimate parent company and is the head entity within the tax consolidated group.
(ii) These companies are part of the tax consolidated group. Surtron Technologies Pty Ltd was part of the tax consolidated group until sold on 31
(ii) These companies are part of the tax consolidated group. Surtron Technologies Pty Ltd was part of the tax consolidated group until sold on 31
October 2007.
October 2007.
(iii) These wholly-owned subsidiaries have entered into a deed of cross guarantee with Imdex Limited pursuant to ASIC Class Order 98/1418
(iii) These wholly-owned subsidiaries have entered into a deed of cross guarantee with Imdex Limited pursuant to ASIC Class Order 98/1418
and are relieved from the requirement to prepare and lodge an audited financial report. Australian Mud Company Pty Ltd became a party to the
and are relieved from the requirement to prepare and lodge an audited financial report. Australian Mud Company Pty Ltd became a party to the
deed on 29 June 2006, Imdex International Pty Ltd on 20 October 2006 and Reflex Instruments Asia Pacific Pty Ltd on 14 September 2007.
deed on 29 June 2006, Imdex International Pty Ltd on 20 October 2006 and Reflex Instruments Asia Pacific Pty Ltd on 14 September 2007.
Surtron Technologies Pty Ltd became a party to this deed on 29 June 2006 and ceased to be a party on 31 October 2007 when Imdex Limited
Surtron Technologies Pty Ltd became a party to this deed on 29 June 2006 and ceased to be a party on 31 October 2007 when Imdex Limited
sold 100% of its shares in this entity.
sold 100% of its shares in this entity.
(iv) This entity was incorporated on 4 July 2006
(iv) This entity was incorporated on 4 July 2006
(v) This entity was incorporated on 5 July 2006
(v) This entity was incorporated on 5 July 2006
(vi) This entity was incorporated on 26 March 2007
(vi) This entity was incorporated on 26 March 2007
(vii) This entity was merged with Reflex Holding AB on 1 October 2007.
(vii) This entity was merged with Reflex Holding AB on 1 October 2007.
(viii) This entity was merged with Flexit AB on 29 April 2008.
(viii) This entity was merged with Flexit AB on 29 April 2008.
(ix) This entity was incorporated on 11 May 2007
(ix) This entity was incorporated on 11 May 2007
(x) 100% of the issued share capital of this entity was acquired on 1 May 2007. As this entity is non-trading and holds one asset being a patent,
(x) 100% of the issued share capital of this entity was acquired on 1 May 2007. As this entity is non-trading and holds one asset being a patent,
this purchase transaction was accounted for as an acquisition of an asset, not a business combination. This entity was amalgamated with Reflex
this purchase transaction was accounted for as an acquisition of an asset, not a business combination. This entity was amalgamated with Reflex
Instrument North America on 1 January 2008.
Instrument North America on 1 January 2008.
(xi) This entity was incorporated on 16 November 2006
(xi) This entity was incorporated on 16 November 2006
(xii) This entity was incorporated on 28 April 2008
(xii) This entity was incorporated on 28 April 2008
Imdex 2008 Annual Report | 91
Page 58 of 87
Page 58 of 87
IMDEX LIMITED
IMDEX LIMITED
and its controlled entities
and its controlled entities
NOTES TO THE FINANCIAL REPORT
NOTES TO THE FINANCIAL REPORT
25
25
Subsidiaries (continued)
Subsidiaries (continued)
The consolidated income statement of entities which are party to the deed of cross guarantee are:
The consolidated income statement of entities which are party to the deed of cross guarantee are:
Income Statement
Income Statement
Revenue from sale of goods, rendering of services and operating lease rental
Other revenue from operations
Total revenue
Revenue from sale of goods, rendering of services and operating lease rental
Other revenue from operations
Total revenue
Other income
Other income
Raw materials and consumables used
Raw materials and consumables used
Employee benefit expenses
Employee benefit expenses
Depreciation and amortisation expense
Depreciation and amortisation expense
Finance costs
Finance costs
Commissions
Commissions
Consultancy fees
Consultancy fees
Legal and professional expenses
Legal and professional expenses
Rent and premises costs
Rent and premises costs
Repairs and maintenance
Repairs and maintenance
Travel and accommodation
Travel and accommodation
Motor vehicle costs
Motor vehicle costs
Foreign exchange gain/(loss)
Foreign exchange gain/(loss)
Other expenses
Other expenses
Profit before income tax expense
Profit before income tax expense
Income tax expense
Income tax expense
Profit for the year from continuing operations
Profit for the year from continuing operations
Profit for the year from discontinued operations
Profit for the year from discontinued operations
Profit for the year
Profit for the year
2008
$’000
2008
$’000
2007
$’000
2007
$’000
91,161
3,356
94,517
91,161
3,356
94,517
9,615
9,615
(42,784)
(42,784)
(11,888)
(11,888)
(3,243)
(3,243)
(1,998)
(1,998)
(1,259)
(1,259)
(1,834)
(1,834)
(1,330)
(1,330)
(1,242)
(1,242)
(37)
(37)
(2,012)
(2,012)
(655)
(655)
(1,018)
(1,018)
(10,283)
(10,283)
24,549
24,549
(9,127)
(9,127)
15,422
15,422
15,855
15,855
31,277
31,277
66,909
2,866
69,775
66,909
2,866
69,775
4,814
(34,280)
(6,451)
(2,372)
(2,252)
(1,170)
(1,384)
(449)
(1,017)
(554)
(1,244)
(493)
(950)
(3,440)
18,533
(5,928)
12,605
1,568
14,173
4,814
(34,280)
(6,451)
(2,372)
(2,252)
(1,170)
(1,384)
(449)
(1,017)
(554)
(1,244)
(493)
(950)
(3,440)
18,533
(5,928)
12,605
1,568
14,173
Imdex 2008 Annual Report | 92
Page 59 of 87
Page 59 of 87
IMDEX LIMITED
and its controlled entities
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
NOTES TO THE FINANCIAL REPORT
25
25
Subsidiaries (continued)
Subsidiaries (continued)
The consolidated balance sheet of entities which are party to the deed of cross guarantee are:
The consolidated balance sheet of entities which are party to the deed of cross guarantee are:
Balance Sheet
Balance Sheet
Current Assets
Cash and Cash Equivalents
Trade and Other Receivables
Inventories
Other Financial Assets
Other
Total Current Assets
Current Assets
Cash and Cash Equivalents
Trade and Other Receivables
Inventories
Other Financial Assets
Other
Total Current Assets
Non Current Assets
Non Current Assets
Other Financial Assets
Other Financial Assets
Property, Plant and Equipment
Property, Plant and Equipment
Other Intangible Assets
Other Intangible Assets
Other
Other
Total Non Current Assets
Total Non Current Assets
Total Assets
Total Assets
Current Liabilities
Current Liabilities
Trade and Other Payables
Trade and Other Payables
Borrowings
Borrowings
Current Tax Payables
Current Tax Payables
Provisions
Provisions
Total Current Liabilities
Total Current Liabilities
Non Current Liabilities
Non Current Liabilities
Borrowings
Borrowings
Deferred Tax Liabilities
Deferred Tax Liabilities
Provisions
Provisions
Total Non Current Liabilities
Total Non Current Liabilities
Total Liabilities
Total Liabilities
Net Assets
Net Assets
Equity
Equity
Contributed Capital
Contributed Capital
Employee Equity-Settled Benefits Reserve
Employee Equity-Settled Benefits Reserve
Retained Profits *
Retained Profits *
Total Equity
Total Equity
* Retained Profit at the beginning of the financial year
* Retained Profit at the beginning of the financial year
Net Profit
Dividend provided for or paid
Retained Profit at the end of the financial year
Net Profit
Dividend provided for or paid
Retained Profit at the end of the financial year
2008
$’000
2008
$’000
2007
$’000
2007
$’000
7,341
7,341
31,946
31,946
14,214
14,214
51,243
51,243
30
30
104,774
104,774
40,752
40,752
7,216
7,216
1,543
1,543
-
-
49,511
49,511
154,285
154,285
12,980
11,687
8,071
800
33,538
12,980
11,687
8,071
800
33,538
10,717
(130)
558
11,145
44,683
109,602
10,717
(130)
558
11,145
44,683
109,602
64,883
2,573
42,146
109,602
64,883
2,573
42,146
109,602
16,803
31,277
(5,934)
42,146
16,803
31,277
(5,934)
42,146
7,171
7,171
24,861
24,861
11,085
11,085
60,871
60,871
56
56
104,044
104,044
8,492
11,768
429
664
21,353
125,397
8,492
11,768
429
664
21,353
125,397
14,871
9,060
5,358
1,475
30,764
14,871
9,060
5,358
1,475
30,764
15,678
303
116
16,097
46,861
78,536
15,678
303
116
16,097
46,861
78,536
60,982
751
16,803
78,536
60,982
751
16,803
78,536
5,682
14,173
(3,052)
16,803
5,682
14,173
(3,052)
16,803
Imdex 2008 Annual Report | 93
Page 60 of 87
Page 60 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26
Acquisition of Businesses
(a) Acquisition of entity - System Entwicklungs GmbH
With effect from 1 January 2008, Imdex Limited, acquired 100% of the issued share capital of System Entwicklungs GmbH (SEG), a company
incorporated in Germany. SEG manufacture and sell technologically advanced down hole instrumentation for use in the drilling industry from their
facility located in Riegel, Germany. The numbers presented below have been accounted for using the acquisition method of accounting.
Details of the assets, liabilities and goodwill:
Book value
Notes
$’000
Fair value
adjustments
$’000
Fair value on
acquisition
$’000
Receivables
Inventory
Property, plant and equipment
Technology and customer based intangibles
Trade and other payables
Deferred tax
Fair value of net identifiable assets acquired (other than cash and cash
equivalents)
Goodwill on acquisition
Total purchase consideration
Total purchase consideration comprises
Consideration in cash and cash equivalents
Less: Cash and cash equivalents acquired
Direct costs relating to the acquisition
(i)
(i)
(ii)
(iii)
446
838
35
-
(1,914)
-
(595)
-
-
-
5,642
-
(1,693)
3,949
Operating results of SEG included in the Consolidated Income Statement of Imdex Limited from acquisition on 1 January 2008
to 30 June 2008:
Revenue
Total expenses
Profit after tax for the period
(iv)
446
838
35
5,642
(1,914)
(1,693)
3,354
10,499
13,853
14,100
(637)
390
13,853
Results since
acquisition
$’000
2,418
(2,130)
288
(i) Intangible assets of $5.6 million comprise technical knowledge and other know-how as well as customer relationships in existence at the time of
acquisition. Deferred tax of $1.7 million was raised on these balances. These intangibles have been valued by independent valuation
professionals using the replacement cost and relief-from-royalty methods. Data inputs into the model were derived from internal management
budgets. Intangible assets are being amortised over their estimated useful lives of between 1 and 10 years.
(ii) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire SEG. In addition,
the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future
market development and the assembled workforce of SEG. These benefits are not recognised separately from goodwill as the future economic
benefits arising from them cannot be reliably measured. There were no acquisition provisions created, nor were there any contingent liabilities
assumed in the acquisition.
(iii) The Consolidated Cash Flow Statement for the year ended 30 June 2008 records the payment for the acquisition of SEG as $13.9 million
being the total consideration of $14.1 million above plus direct costs of $0.4 million and less $0.6 million of cash and cash equivalents acquired. A
dividend of $0.7 million representing profits up to the acquisition date is due to the vendors of SEG and was taken up at acquisition.
(iv) Had the acquisition of SEG been effected on 1 July 2007, the beginning of the financial year and assuming all units were sold and none
rented, the SEG financial results included in the Imdex consolidated results would have been revenue of approximately $4.8 million and profit of
approximately $0.6 million. The results of SEG are included in the Down Hole Instrumentation segment. The Board considers these 'pro-forma'
numbers to represent an approximate measure of the performance of the combined group on an annualised basis and to provide a reference point
for comparison in future periods.
Imdex 2008 Annual Report | 94
Page 61 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26
Acquisition of Businesses (continued)
(b) Acquisition of entity - Poly-Drill Drilling Systems Limited
With effect from 1 July 2007, Imdex Limited, acquired 100% of the issued share capital of Poly-Drill Drilling Systems Limited (Poly-Drill), a
company incorporated in Canada. Poly-Drill undertake the manufacture and sale of polymer based drilling fluids as well as various solids control
activities from Calgary, Canada. The numbers presented below have been accounted for using the acquisition method of accounting.
Details of the assets, liabilities and goodwill:
Book value
Notes
$’000
Fair value
adjustments
$’000
Fair value on
acquisition
$’000
Inventory
Property, plant and equipment
Trade and other payables
Fair value of net identifiable assets acquired (other than cash and cash
equivalents)
Goodwill on acquisition
Total purchase consideration
Total purchase consideration comprises
Consideration in cash and cash equivalents
Less: Cash and cash equivalents acquired
Issue of ordinary shares
Direct costs relating to the acquisition
(i)
(ii), 18
(iii)
178
150
(696)
(368)
-
-
-
-
Operating results of SEG included in the Consolidated Income Statement of Imdex Limited from acquisition on 1 January 2008
Operating results of Poly-Drill included in the Consolidated Income Statement of Imdex Limited from acquisition on 1 July 2007
to 30 June 2008:
Revenue
Total expenses
Profit after tax for the period
178
150
(696)
(368)
3,369
3,001
1,849
(673)
1,750
75
3,001
Results since
acquisition
$’000
2,727
(2,422)
305
(i) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire Poly-Drill. In
addition, the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth,
future market development and the assembled workforce of Poly-Drill. These benefits are not recognised separately from goodwill as the future
economic benefits arising from them cannot be reliably measured. There were no acquisition provisions created, nor were there any contingent
liabilities assumed in the acquisition.
(ii) Comprised the issue of 1,212,751 fully paid ordinary shares in Imdex Limited at $1.443 per share. The issue price of the shares was
determined using the closing weighted average share price over the 5 business days prior to 1 July 2007. These shares will be held in voluntary
escrow for a period of 12 months from 1 July 2007. The issue of shares was approved by shareholders at the Annual General Meeting on 19
October 2007.
(iii) The Consolidated Cash Flow Statement for the year ended 30 June 2008 records the payment for the acquisition of Poly-Drill as $0.9 million
being the total consideration of $3.0 million above less $1.8 million settled in shares and $0.3 million paid in the prior year.
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26
Acquisition of Businesses
(a) Acquisition of entity - System Entwicklungs GmbH
With effect from 1 January 2008, Imdex Limited, acquired 100% of the issued share capital of System Entwicklungs GmbH (SEG), a company
incorporated in Germany. SEG manufacture and sell technologically advanced down hole instrumentation for use in the drilling industry from their
facility located in Riegel, Germany. The numbers presented below have been accounted for using the acquisition method of accounting.
Details of the assets, liabilities and goodwill:
Book value
Fair value
Fair value on
adjustments
acquisition
Notes
$’000
$’000
$’000
Fair value of net identifiable assets acquired (other than cash and cash
Property, plant and equipment
Technology and customer based intangibles
Trade and other payables
Receivables
Inventory
Deferred tax
equivalents)
Goodwill on acquisition
Total purchase consideration
Total purchase consideration comprises
Consideration in cash and cash equivalents
Less: Cash and cash equivalents acquired
Direct costs relating to the acquisition
to 30 June 2008:
Revenue
Total expenses
Profit after tax for the period
446
838
35
-
(1,914)
-
(595)
-
-
-
-
5,642
(1,693)
3,949
446
838
35
5,642
(1,914)
(1,693)
3,354
10,499
13,853
14,100
(637)
390
13,853
2,418
(2,130)
288
Results since
acquisition
$’000
(i)
(i)
(ii)
(iii)
(iv)
(i) Intangible assets of $5.6 million comprise technical knowledge and other know-how as well as customer relationships in existence at the time of
acquisition. Deferred tax of $1.7 million was raised on these balances. These intangibles have been valued by independent valuation
professionals using the replacement cost and relief-from-royalty methods. Data inputs into the model were derived from internal management
budgets. Intangible assets are being amortised over their estimated useful lives of between 1 and 10 years.
(ii) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire SEG. In addition,
the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future
market development and the assembled workforce of SEG. These benefits are not recognised separately from goodwill as the future economic
benefits arising from them cannot be reliably measured. There were no acquisition provisions created, nor were there any contingent liabilities
assumed in the acquisition.
(iii) The Consolidated Cash Flow Statement for the year ended 30 June 2008 records the payment for the acquisition of SEG as $13.9 million
being the total consideration of $14.1 million above plus direct costs of $0.4 million and less $0.6 million of cash and cash equivalents acquired. A
dividend of $0.7 million representing profits up to the acquisition date is due to the vendors of SEG and was taken up at acquisition.
(iv) Had the acquisition of SEG been effected on 1 July 2007, the beginning of the financial year and assuming all units were sold and none
rented, the SEG financial results included in the Imdex consolidated results would have been revenue of approximately $4.8 million and profit of
approximately $0.6 million. The results of SEG are included in the Down Hole Instrumentation segment. The Board considers these 'pro-forma'
numbers to represent an approximate measure of the performance of the combined group on an annualised basis and to provide a reference point
for comparison in future periods.
Page 61 of 87
Page 62 of 87
Imdex 2008 Annual Report | 95
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26
Acquisition of Businesses (continued)
(c) Acquisition of initial 75% of entity - Suay Energy Services LLP
With effect from 1 July 2007 Imdex Limited acquired 75% of the issued share capital of Suay Energy Services LLP (Suay), a company
incorporated in Kazakhstan. The purchase of Suay is complementary to the existing drilling fluids and chemicals businesses of Imdex. Suay
provide drilling fluids and chemicals to the Kazakhstan oilfields in the Caspian Sea region. The numbers presented below have been accounted
for using the acquisition method of accounting.
Details of the assets, liabilities and goodwill:
Book value
Notes
$’000
Fair value
adjustments
$’000
Fair value on
acquisition
$’000
Trade and other receivables
Inventory
Property, plant and equipment
Trade and other payables
Fair value of net identifiable assets acquired (other than cash and cash
equivalents)
Goodwill on acquisition
Less: Minority interests
Total purchase consideration
Total purchase consideration comprises
Consideration in cash and cash equivalents
Direct costs relating to the acquisition
(i)
(ii)
123
317
43
(420)
63
-
-
-
-
-
Operating results of Suay included in the Consolidated Income Statement of Imdex Limited from acquisition on 1 July 2007 to
30 June 2008:
Revenue
Total expenses
Profit after tax for the period
123
317
43
(420)
63
505
(16)
552
473
79
552
Results since
acquisition
$’000
2,108
(1,963)
145
(i) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire a 75% interest in
Suay. In addition, the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue
growth, future market development and the assembled workforce of Suay. These benefits are not recognised separately from goodwill as the
future economic benefits arising from them cannot be reliably measured. There were no acquisition provisions created, nor were there any
contingent liabilities assumed in the acquisition.
(ii) The Consolidated Cash Flow Statement for the year ended 30 June 2008 records the payment for the acquisition of Suay as $0.2 million being
the total consideration of $0.6 million above less $0.4 million paid in the prior year.
Imdex 2008 Annual Report | 96
Page 63 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26
Acquisition of Businesses (continued)
(d) Acquisition of minority interest - Suay Energy Services LLP
With effect from 30 June 2008 Imdex Limited acquired the remaining 25% of the issued share capital of Suay Energy Services LLP (Suay) from
the minority shareholders. The original 75% of the issued share capital of Suay was purchased with effect from 1 July 2007, refer note 26(c). The
numbers presented below have been accounted for using the acquisition method of accounting. These numbers are provisional only as the
acquisition accounting is still in the process of being finalised.
Details of the assets, liabilities and goodwill:
Book value
Notes
$’000
Fair value
adjustments
$’000
Fair value on
acquisition
$’000
Cash and cash equivalents
Trade and other receivables
Inventory
Property, plant and equipment
Trade and other payables
Fair value of net identifiable assets acquired
25% thereof
Goodwill on acquisition
Total purchase consideration
Total purchase consideration comprises
Consideration in cash and cash equivalents
Issue of ordinary shares
Direct costs relating to the acquisition
10
494
572
212
(1,106)
182
-
-
-
-
-
-
10
494
572
212
(1,106)
182
46
761
807
500
278
29
807
(i)
(ii)
(iii)
(i) Although Imdex Limited already controlled Suay, an additional goodwill amount became payable on the acquisition of the remaining 25% due to
growth in the business and future prospects as well as a premium to obtain complete 100% control. These benefits are not recognised separately
from goodwill as the future economic benefits arising from them cannot be reliably measured. There were no acquisition provisions created, nor
were there any contingent liabilities assumed in the acquisition.
(ii) Comprised the issue of 168,530 fully paid ordinary shares in Imdex Limited. These shares had a fair value of $1.65 per share, being the closing
market price at 30 June 2008. These shares were issued on 1 July 2008 and are not subject to escrow. The issue of these shares is not required to
be formally approved by shareholders as they fall below the 15% threshold level.
(iii) The Consolidated Cash Flow Statement for the year ended 30 June 2008 records the payment for the acquisition of Suay as nil as the cash
consideration was paid on 1 July 2008. The purchase consideration of $0.8 million is accrued at note 15.
Page 64 of 87
Imdex 2008 Annual Report | 97
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26
Acquisition of Businesses (continued)
(e) Acquisition of entity - Southernland S.A.
On 1 November 2007 Imdex South America S.A., a newly incorporated wholly owned subsidiary of Imdex Limited, settled the purchase of 100%
of the issued share capital of Southernland S.A. (Southernland), a company incorporated in Chile. The acquisition was structured under a mandate
so as to entitle the Group to the profits from 1 July 2007 onwards. Southernland manufacture and supply drilling fluids and chemicals to the Latin
American market, complementing the existing fluids and chemicals businesses of Imdex and providing access to new geographic markets. The
numbers presented below have been accounted for using the acquisition method of accounting.
Details of the assets, liabilities and goodwill:
Book value
Notes
$’000
Fair value
adjustments
$’000
Fair value on
acquisition
$’000
Trade and other receivables
Inventory
Property, plant and equipment
Trade and other payables
Fair value of net identifiable assets acquired (other than cash and cash
equivalents)
Goodwill on acquisition
Total purchase consideration
Total purchase consideration comprises
Consideration in cash and cash equivalents
Less: Cash and cash equivalents acquired
Issue of ordinary shares
Direct costs relating to the acquisition
(i)
(ii), 18
(iii)
538
273
83
(474)
420
-
-
-
-
-
Operating results of Southernland included in the Consolidated Income Statement of Imdex Limited from 1 July 2007 to 30
June 2008:
Revenue
Total expenses
Profit after tax for the period
538
273
83
(474)
420
2,413
2,833
1,413
(87)
1,387
120
2,833
Results since
acquisition
$’000
3,062
(2,616)
446
(i) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire Southernland. In
addition, the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth,
future market development and the assembled workforce of Southernland. These benefits are not recognised separately from goodwill as the
future economic benefits arising from them cannot be reliably measured. There were no acquisition provisions created, nor were there any
contingent liabilities assumed in the acquisition.
(ii) Comprised the issue of 723,679 fully paid ordinary shares in Imdex Limited at $1.9163 per share. The issue price of the shares was determined
using the closing weighted average share price over the 5 business days prior to 1 November 2007. These shares will be held in voluntary escrow
for a period of 24 months from 1 November 2007. The issue of these shares is not required to be formally approved by shareholders as this issue
falls below the 15% threshold level.
(iii) The Consolidated Cash Flow Statement for the year ended 30 June 2008 records the payment for the acquisition of Southernland as $1.4
million being the total consideration of $2.8 million above less $1.4 million paid in shares.
Imdex 2008 Annual Report | 98
Page 65 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26
Acquisition of Businesses (continued)
(f) Acquisition of entity - Flexit AB
With effect from 1 May 2007, Imdex Sweden AB, wholly owned subsidiary of Imdex Limited, acquired 100% of the issued share capital of Flexit
AB (Flexit), a company incorporated in Sweden. Flexit AB has one Swedish wholly owned subsidiary, Flexit Navigation AB. Flexit are leading
developers and suppliers of borehole survey equipment to the exploration and mining industries globally. At the General Meeting of Shareholders
held on 30 April 2007, the shareholders of Imdex Limited approved this acquisition and the associated issue of shares. The numbers presented
below have been accounted for using the acquisition method of accounting.
Details of the assets, liabilities and goodwill are as follows:
Book value
Fair value
adjustments
Fair value on
acquisition
Notes
$’000
$’000
$’000
Trade and other receivables
Inventory
Deferred tax assets / (liabilities)
Property, plant and equipment
Technology based intangibles
Trade name based intangibles
Trade and other payables
Long term liabilities
Fair value of net identifiable assets acquired (other than cash and cash
equivalents)
Goodwill on acquisition
Total purchase consideration
Total purchase consideration comprises
Consideration in cash and cash equivalents
Less cash and cash equivalents acquired
Deferred consideration - Mandatory Convertible Capital
Direct costs relating to the acquisition
(i)
(i)
(i)
(ii)
(iv), 18
(iii)
896
557
-
207
-
-
(1,203)
(54)
403
-
-
(2,124)
-
4,672
2,916
-
-
5,464
Operating results of the Flexit consolidated group included in the Consolidated Income Statement of Imdex Limited from
acquisition on 1 May 2007 to 30 June 2007:
Operating revenue
Total expenses
Loss for the period after tax
(v)
896
557
(2,124)
207
4,672
2,916
(1,203)
(54)
5,867
11,107
16,974
12,000
(1,842)
6,700
116
16,974
Results since
acquisition
$’000
1,275
(1,315)
(40)
(i) Technology based intangible assets of $4.7 million comprise technical knowledge and other know-how in existence at the time of acquisition.
Trade name based intangibles of $2.9 million represents the value of the Flexit and GyroSmart trade names at acquisition. Deferred tax of $2.1
million was raised on these balances. These intangibles have been valued by independent valuation professionals using the replacement cost and
relief-from-royalty methods respectively. Data inputs into the model were derived from internal management budgets. Intangible assets are being
amortised over their estimated useful lives of 5 years.
(ii) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire Flexit. In addition,
the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future
market development and the assembled workforce of Flexit. These benefits are not recognised separately from goodwill as the future economic
benefits arising from them cannot be reliably measured. There were no acquisition provisions created, nor were there any contingent liabilities
assumed in the acquisition.
(iii) The Consolidated Cash Flow Statement for the year ended 30 June 2007 records the payment for the acquisition of Flexit as $10.3 million
being the total consideration of $20.3 million above less $10.0 million of deferred consideration.
(iv) The balance of the purchase price is due on 1 May 2009. This will be settled by way of the issue of 5 million fully paid ordinary shares in
Imdex Limited. Should the Imdex share price be below $2 per share at that time, an additional cash payment will be made to bring the total of
cash paid and shares issued at that time to $10 million. At the General Meeting of Shareholders held on 30 April 2007 the shareholders approved
the future issue of these shares to the vendors of Flexit. The deferred consideration has been recorded at $6,700,000 based on the Company's
analysis of the fair value of the consideration at acquisition date.
(v) Had the acquisition of Flexit been effected on 1 July 2006, the beginning of the prior financial year, the Flexit financial results included in the
Imdex consolidated results would have been revenue of approximately $9.2 million and profit of approximately $1.0 million. The results of Flexit
are included in the Down Hole Instrumentation segment. The Board considers these 'pro-forma' numbers to represent an approximate measure of
the performance of the combined group on an annualised basis and to provide a reference point for comparison in future periods.
Imdex 2008 Annual Report | 99
Page 66 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26
Acquisition of Businesses (continued)
(g) Acquisition of entity - Reflex Holding AB
With effect from 1 August 2006, Imdex Sweden AB, a wholly owned subsidiary of Imdex Limited, acquired 100% of the issued share capital of
Reflex Holding AB (Reflex), a company incorporated in Sweden. Reflex Holding AB is the parent of a group of companies operating in South
Africa, Europe, North and South America under the "Reflex Instrument" trading name. Reflex are leading developers and suppliers of borehole
survey equipment globally. At the General Meeting of Shareholders held on 8 August 2006, the shareholders of Imdex Limited approved this
acquisition and the associated issue of the convertible note. The numbers presented below have been accounted for using the acquisition method
of accounting.
Details of the assets, liabilities and goodwill are as follows:
Book value
Fair value
adjustments
Fair value on
acquisition
Notes
$’000
$’000
$’000
Trade and other receivables
Inventory
Deferred tax assets / (liabilities)
Property, plant and equipment
Goodwill
Intangibles
Other non-current assets
Trade and other payables
Fair value of net identifiable assets acquired (other than cash and cash
equivalents)
Goodwill on acquisition
Total purchase consideration
Total purchase consideration comprises
Consideration in cash and cash equivalents
Less cash and cash equivalents acquired
Convertible note raised
Bank loan raised
Deferred vendor finance - due and paid on 31 January 2007
Direct costs relating to the acquisition
(i)
(i)
(ii)
(iv)
16
(iii)
3,818
1,511
405
1,566
670
-
22
(4,966)
3,026
(14)
-
(3,174)
-
(670)
11,335
(19)
487
7,945
Operating results of the Reflex consolidated group included in the Consolidated Income Statement of Imdex Limited from
acquisition on 1 August 2006 to 30 June 2007:
Operating revenue
Total expenses
Profit for the period after tax
(v)
3,804
1,511
(2,769)
1,566
-
11,335
3
(4,479)
10,971
14,623
25,594
2,884
(111)
10,400
9,955
2,000
466
25,594
Results since
acquisition
$’000
18,492
(14,626)
3,866
(i) Customer based intangible assets of $9.8 million comprise customer lists and relationships at the time of acquisition. Trade name based
intangible assets of $1.5 million represent the value to the Group of the Reflex trading name in the markets in which they operate. Deferred tax of
$3.2 million was raised on these balances. These intangibles have been valued by independent valuation professionals using the multi period
excess earnings model. Data inputs into the model were derived from internal management budgets. These intangible assets are being amortised
over their estimated useful lives of 6 years each.
(ii) Goodwill arose because the cost of the combination included a control premium paid to acquire Reflex. In addition, the consideration paid for
the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the
assembled workforce of Reflex. These benefits are not recognised separately from goodwill as the future economic benefits arising from them
cannot be reliably measured. There were no acquisition provisions created, nor were there any contingent liabilities assumed in the acquisition.
(iii) The Consolidated Cash Flow Statement for the year ended 30 June 2007 records the payment for the acquisition of Reflex as $15.2 million
being the total consideration of $25.6 million above less the $10.4 million convertible note.
(iv) At the General Meeting of Shareholders held on 8 August 2006 the shareholders approved the issue of a convertible note with a face value of
$10.4 million. This convertible note converted into equity on 15 February 2007. Refer to notes 16 and 18.
(v) Had the acquisition of Reflex been effected on 1 July 2006, the beginning of the prior financial year, the Reflex financial results included in the
Imdex consolidated results would have been revenue of approximately $20.3 million and profit of approximately $4.6 million. The results of Reflex
are included in the Down Hole Instrumentation segment. The Board considers these 'pro-forma' numbers to represent an approximate measure of
the performance of the combined group on an annualised basis and to provide a reference point for comparison in future periods.
Imdex 2008 Annual Report | 100
Page 67 of 87
With effect from 1 August 2006, Imdex Sweden AB, a wholly owned subsidiary of Imdex Limited, acquired 100% of the issued share capital of
Reflex Holding AB (Reflex), a company incorporated in Sweden. Reflex Holding AB is the parent of a group of companies operating in South
Africa, Europe, North and South America under the "Reflex Instrument" trading name. Reflex are leading developers and suppliers of borehole
survey equipment globally. At the General Meeting of Shareholders held on 8 August 2006, the shareholders of Imdex Limited approved this
acquisition and the associated issue of the convertible note. The numbers presented below have been accounted for using the acquisition method
of accounting.
Details of the assets, liabilities and goodwill are as follows:
Book value
Fair value
Fair value on
Notes
$’000
$’000
$’000
adjustments
acquisition
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26
Acquisition of Businesses (continued)
(g) Acquisition of entity - Reflex Holding AB
Trade and other receivables
Inventory
Deferred tax assets / (liabilities)
Property, plant and equipment
Goodwill
Intangibles
Other non-current assets
Trade and other payables
equivalents)
Goodwill on acquisition
Total purchase consideration
Fair value of net identifiable assets acquired (other than cash and cash
Total purchase consideration comprises
Consideration in cash and cash equivalents
Less cash and cash equivalents acquired
Convertible note raised
Bank loan raised
Deferred vendor finance - due and paid on 31 January 2007
Direct costs relating to the acquisition
(i)
(i)
(ii)
(iv)
16
(iii)
(v)
3,818
1,511
405
1,566
670
-
22
(4,966)
3,026
(14)
-
-
(3,174)
(670)
11,335
(19)
487
7,945
3,804
1,511
(2,769)
1,566
-
3
11,335
(4,479)
10,971
14,623
25,594
2,884
(111)
10,400
9,955
2,000
466
25,594
Results since
acquisition
$’000
18,492
(14,626)
3,866
Operating results of the Reflex consolidated group included in the Consolidated Income Statement of Imdex Limited from
acquisition on 1 August 2006 to 30 June 2007:
Operating revenue
Total expenses
Profit for the period after tax
(i) Customer based intangible assets of $9.8 million comprise customer lists and relationships at the time of acquisition. Trade name based
intangible assets of $1.5 million represent the value to the Group of the Reflex trading name in the markets in which they operate. Deferred tax of
$3.2 million was raised on these balances. These intangibles have been valued by independent valuation professionals using the multi period
excess earnings model. Data inputs into the model were derived from internal management budgets. These intangible assets are being amortised
over their estimated useful lives of 6 years each.
(ii) Goodwill arose because the cost of the combination included a control premium paid to acquire Reflex. In addition, the consideration paid for
the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the
assembled workforce of Reflex. These benefits are not recognised separately from goodwill as the future economic benefits arising from them
cannot be reliably measured. There were no acquisition provisions created, nor were there any contingent liabilities assumed in the acquisition.
(iii) The Consolidated Cash Flow Statement for the year ended 30 June 2007 records the payment for the acquisition of Reflex as $15.2 million
being the total consideration of $25.6 million above less the $10.4 million convertible note.
(iv) At the General Meeting of Shareholders held on 8 August 2006 the shareholders approved the issue of a convertible note with a face value of
$10.4 million. This convertible note converted into equity on 15 February 2007. Refer to notes 16 and 18.
(v) Had the acquisition of Reflex been effected on 1 July 2006, the beginning of the prior financial year, the Reflex financial results included in the
Imdex consolidated results would have been revenue of approximately $20.3 million and profit of approximately $4.6 million. The results of Reflex
are included in the Down Hole Instrumentation segment. The Board considers these 'pro-forma' numbers to represent an approximate measure of
the performance of the combined group on an annualised basis and to provide a reference point for comparison in future periods.
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26
Acquisition of Businesses (continued)
(h) Acquisition of entity - Imdex Technology UK Ltd (previously Chardec Consultants Ltd)
With effect from 1 August 2006, Imdex International Pty Ltd, a newly incorporated, wholly owned subsidiary of Imdex Limited acquired 100% of
the issued share capital of Imdex Technology UK Ltd (Imdex Technology), a company incorporated in the United Kingdom. Imdex Technology is a
leading developer and supplier of borehole survey equipment globally. At the General Meeting of Shareholders held on 8 August 2006, the
shareholders of Imdex Limited approved this acquisition. The numbers presented below have been accounted for using the acquisition method of
accounting.
Details of the assets, liabilities and goodwill are as follows:
Book value
Notes
$’000
Fair value
adjustments
$’000
Fair value on
acquisition
$’000
Trade and other receivables
Inventory
Deferred tax assets / (liabilities)
Technology based intangibles
Contract based intangibles
Trade and other payables
Fair value of net identifiable assets acquired (other than cash and cash
equivalents)
Goodwill on acquisition
Total purchase consideration
Total purchase consideration comprises
Consideration in cash and cash equivalents
Less cash and cash equivalents acquired
Direct costs relating to the acquisition
Deferred vendor finance and earn out payments
(i)(ii)
(i)
(ii)
(iii)
(v)
(vi)
2,111
273
3
-
-
(2,456)
(69)
-
-
(3,207)
10,265
425
-
7,483
2,111
273
(3,204)
10,265
425
(2,456)
7,414
8,319
15,733
6,203
(175)
324
9,381
15,733
Results since
acquisition
$’000
6,685
(4,281)
2,404
Operating results of Imdex Technology included in the Consolidated Income Statement from 1 August 2006 to 30 June 2007:
Operating revenue
Total expenses
Profit for the period after tax
(vi)
(i) Technology based intangible assets of $10.3 million comprise intellectual property and technical expertise contained within the business of
Imdex Technology at the time of acquisition. Deferred tax of $3.1 million was raised on this balance. These intangibles have been valued by
independent valuation professionals using the multi period excess earnings model. Data inputs into the model were derived from internal
management budgets. Technology based intangible assets are being amortised over their estimated useful life of 7 years.
(ii) Contract based intangible assets of $0.4 million represent the value to the Group of the 5 year employment contract signed with the vendor
and now employee of Imdex Technology. Deferred tax of $0.1 million was raised on this balance. This contract has been valued by independent
valuation professionals using the multi period excess earnings model. Data inputs into the model were derived from internal management
budgets. Contract based intangible assets are being amortised over the term of the contract which is 5 years.
(iii) Goodwill arose in the business combination because the cost of
the combination included a control premium paid to acquire Imdex
Technology. In addition, the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies,
revenue growth, future market development and the assembled workforce of Imdex Technology. These benefits are not recognised separately
from goodwill as the future economic benefits arising from them cannot be reliably measured. There were no acquisition provisions created, nor
were there any contingent liabilities assumed in the acquisition.
(iv) The Consolidated Cash Flow Statement for the year ended 30 June 2007 records the payment for the acquisition of Imdex Technology as $6.4
million being the total consideration of $15.7 million above less deferred consideration of $9.4 million.
(v) Further purchase price instalments are due as follows: GBP 2.18 million on 31 July 2007 (paid); GBP 1.09 million on 31 July 2008 and GBP
1.045 million on 31 July 2009. In addition a revenue based earn-out may also become payable. The additional revenue based earn-out payments
have been estimated by management as totalling GBP 0.4 million over the three years. All expected future payments have been discounted to
their present values using a discount rate of 8% per annum.
(vi) Had the acquisition of Imdex Technology been effected on 1 July 2006, the beginning of the prior financial year, the Imdex Technology
financial results included in the Imdex consolidated results would have been revenue of approximately $7.3 million and profit of approximately
$2.8 million. The results of Imdex Technology are included in the Down Hole Instrumentation segment. The Board considers these 'pro-forma'
numbers to represent an approximate measure of the performance of the combined group on an annualised basis and to provide a reference point
for comparison in future periods.
Page 67 of 87
Imdex 2008 Annual Report | 101
Page 68 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
27
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 interest revenue, interest bearing loans, borrowings and expenses, and
corporate assets and expenses. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are
expected to be used for more than one period.
Business Segments
The Group comprises the following business segments which are based on the Group's internal management reporting system:
(i) Down Hole Instrumentation: This segment comprises the manufacture, sale and rental of down hole instrumentation. Until 31 October 2007
this division also provided down hole surveying, geophysical logging and directional drilling services through its Surtron business which was
sold on this date; and
(ii) Drilling Fluids and Chemicals: This segment comprises the manufacture and supply of drilling fluids and chemicals to the mining, mineral
exploration, oil and gas and water well drilling industries.
Geographical Segments
The Group operates in the following geographical segments which are based on the Group's internal management reporting system:
(i) Asia Pacific: Manufacture and sale of drilling fluids and chemicals; sale and rental of down hole instrumentation
(ii) Europe: Manufacture, sale and rental of down hole instrumentation
(iii) Africa: Manufacture and sale of drilling fluids and chemicals; sale and rental of down hole instrumentation
(iv) Americas: Manufacture and sale of drilling fluids and chemicals; sale and rental of down hole instrumentation
Primary reporting: Business Segments
(a) Segment Revenues
External revenue
2008
$'000
2007
$'000
Inter-segment
Other
Total
2008
$'000
2007
$'000
2008
$'000
2007
$'000
2008
$'000
2007
$'000
Secondary Reporting: Geographical Segments
Drilling Fluids and Chemicals
Down Hole Instrumentation
Total of all segments
Unallocated
Total revenue - continuing operations
Discontinued operation - Surtron (note 28)
Total revenue - all operations
85,711
56,298
142,009
(b) Segment Results
Continuing operations
Drilling Fluids and Chemicals *
Down Hole Instrumentation
Total of all segments
Eliminations
Unallocated
Profit before tax
Income tax expense
Profit for the year from continuing operations
Discontinued operations
Drilling Fluids and Chemicals
Down Hole Instrumentation
Total of all segments
Eliminations
Unallocated
Profit before tax
Income tax expense
Profit for the year from discontinued operations
62,337
41,512
103,849
-
-
-
-
-
-
-
-
-
16
36
52
85,711
56,298
142,009
1,900
143,909
6,584
150,493
62,353
41,548
103,901
848
104,749
14,591
119,340
13,981
21,221
35,202
-
(3,317)
31,885
(10,804)
21,081
-
13,347
13,347
-
-
13,347
(2,426)
10,921
11,570
11,858
23,428
-
(5,313)
18,115
(6,165)
11,950
-
2,297
2,297
-
-
2,297
(729)
1,568
Profit attributable to ordinary equity holders of Imdex Limited
32,002
13,518
* - Included in the prior period is a $1.1 million recovery from the RTE/Imdex Joint Venture
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
27
Segment Information (continued)
(c) Segment Assets and Liabilities
Drilling Fluids and Chemicals
Down Hole Instrumentation
Total of all segments
Unallocated
Consolidated
(d) Other segment information
Assets
Liabilities
2008
$'000
2007
2008
2007
$'000
$'000
$'000
54,194
101,361
155,555
17,508
173,063
33,997
101,837
135,834
14,012
149,846
12,895
18,973
31,868
35,552
67,420
10,580
34,795
45,375
27,857
73,232
Drilling Fluids and
Chemicals
2008
$'000
2007
$'000
Down Hole
Instrumentation
Unallocated
Total
2008
$'000
2007
$'000
2008
$'000
2007
$'000
2008
$'000
2007
$'000
Depreciation
Acquisition of segment assets
Significant non cash expenses other
than depreciation and amortisation
229
1,408
1,418
258
373
364
3,306
3,768
608
3,947
7,788
364
198
42
404
163
433
707
3,733
5,218
2,430
4,368
8,594
1,435
Asia Pacific
Europe
Africa
Americas
Total
Revenue from external
Segment assets
Acquisition of segment
customers
assets
2008
$'000
2007
$'000
2008
$'000
2007
$'000
2008
$'000
2007
$'000
94,513
8,207
28,710
19,063
77,858
5,057
22,858
13,567
112,298
42,380
10,615
7,770
99,199
37,501
4,783
8,363
150,493
119,340
173,063
149,846
1,405
862
1,729
1,222
5,218
6,302
1,334
293
665
8,594
Imdex 2008 Annual Report | 102
Page 69 of 87
Page 70 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
27
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 interest revenue, interest bearing loans, borrowings and expenses, and
corporate assets and expenses. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are
expected to be used for more than one period.
Business Segments
The Group comprises the following business segments which are based on the Group's internal management reporting system:
(i) Down Hole Instrumentation: This segment comprises the manufacture, sale and rental of down hole instrumentation. Until 31 October 2007
this division also provided down hole surveying, geophysical logging and directional drilling services through its Surtron business which was
(ii) Drilling Fluids and Chemicals: This segment comprises the manufacture and supply of drilling fluids and chemicals to the mining, mineral
exploration, oil and gas and water well drilling industries.
sold on this date; and
Geographical Segments
The Group operates in the following geographical segments which are based on the Group's internal management reporting system:
(i) Asia Pacific: Manufacture and sale of drilling fluids and chemicals; sale and rental of down hole instrumentation
(ii) Europe: Manufacture, sale and rental of down hole instrumentation
(iii) Africa: Manufacture and sale of drilling fluids and chemicals; sale and rental of down hole instrumentation
(iv) Americas: Manufacture and sale of drilling fluids and chemicals; sale and rental of down hole instrumentation
External revenue
Inter-segment
Other
Total
2008
$'000
2007
$'000
2008
$'000
2007
$'000
2008
$'000
2007
$'000
2008
$'000
2007
$'000
85,711
56,298
142,009
62,337
41,512
103,849
-
-
-
-
-
-
-
-
-
16
36
52
Primary reporting: Business Segments
(a) Segment Revenues
Drilling Fluids and Chemicals
Down Hole Instrumentation
Total of all segments
Unallocated
Total revenue - continuing operations
Discontinued operation - Surtron (note 28)
Total revenue - all operations
(b) Segment Results
Continuing operations
Drilling Fluids and Chemicals *
Down Hole Instrumentation
Total of all segments
Eliminations
Unallocated
Profit before tax
Income tax expense
Discontinued operations
Drilling Fluids and Chemicals
Down Hole Instrumentation
Total of all segments
Eliminations
Unallocated
Profit before tax
Income tax expense
Profit for the year from continuing operations
Profit for the year from discontinued operations
Profit attributable to ordinary equity holders of Imdex Limited
32,002
13,518
* - Included in the prior period is a $1.1 million recovery from the RTE/Imdex Joint Venture
85,711
56,298
142,009
1,900
143,909
6,584
150,493
62,353
41,548
103,901
848
104,749
14,591
119,340
13,981
21,221
35,202
-
(3,317)
31,885
(10,804)
21,081
13,347
13,347
-
-
-
13,347
(2,426)
10,921
11,570
11,858
23,428
-
(5,313)
18,115
(6,165)
11,950
2,297
2,297
-
-
-
2,297
(729)
1,568
Page 69 of 87
IMDEX LIMITED
IMDEX LIMITED
IMDEX LIMITED
IMDEX LIMITED
and its controlled entities
and its controlled entities
and its controlled entities
and its controlled entities
NOTES TO THE FINANCIAL REPORT
NOTES TO THE FINANCIAL REPORT
NOTES TO THE FINANCIAL REPORT
NOTES TO THE FINANCIAL REPORT
27
27
27
27
Segment Information (continued)
Segment Information (continued)
Segment Information (continued)
Segment Information (continued)
(c) Segment Assets and Liabilities
(c) Segment Assets and Liabilities
(c) Segment Assets and Liabilities
(c) Segment Assets and Liabilities
Drilling Fluids and Chemicals
Drilling Fluids and Chemicals
Drilling Fluids and Chemicals
Drilling Fluids and Chemicals
Down Hole Instrumentation
Down Hole Instrumentation
Down Hole Instrumentation
Down Hole Instrumentation
Total of all segments
Total of all segments
Total of all segments
Total of all segments
Unallocated
Unallocated
Unallocated
Unallocated
Consolidated
Consolidated
Consolidated
Consolidated
(d) Other segment information
(d) Other segment information
(d) Other segment information
(d) Other segment information
Assets
Assets
Assets
Assets
Liabilities
Liabilities
Liabilities
Liabilities
2008
2008
2008
$'000
$'000
$'000
2008
$'000
2007
2007
2007
2007
$'000
$'000
$'000
$'000
2008
2008
2008
2008
$'000
$'000
$'000
$'000
2007
2007
2007
2007
$'000
$'000
$'000
$'000
54,194
54,194
54,194
101,361
101,361
101,361
155,555
155,555
155,555
17,508
17,508
17,508
173,063
173,063
173,063
54,194
101,361
155,555
17,508
173,063
33,997
33,997
33,997
101,837
101,837
101,837
135,834
135,834
135,834
14,012
14,012
14,012
149,846
149,846
149,846
33,997
101,837
135,834
14,012
149,846
12,895
12,895
12,895
18,973
18,973
18,973
31,868
31,868
31,868
35,552
35,552
35,552
67,420
67,420
67,420
12,895
18,973
31,868
35,552
67,420
10,580
10,580
10,580
34,795
34,795
34,795
45,375
45,375
45,375
27,857
27,857
27,857
73,232
73,232
73,232
10,580
34,795
45,375
27,857
73,232
Drilling Fluids and
Drilling Fluids and
Drilling Fluids and
Chemicals
Chemicals
Chemicals
Drilling Fluids and
Chemicals
2008
2008
2008
2008
$'000
$'000
$'000
$'000
2007
2007
2007
$'000
$'000
$'000
2007
$'000
Down Hole
Down Hole
Down Hole
Down Hole
Instrumentation
Instrumentation
Instrumentation
Instrumentation
2007
2008
2007
2008
2007
2008
2008
2007
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Unallocated
Unallocated
Unallocated
Unallocated
Total
Total
Total
Total
2008
2008
2008
$'000
$'000
$'000
2008
$'000
2007
2007
2007
2007
$'000
$'000
$'000
$'000
2008
2008
2008
2008
$'000
$'000
$'000
$'000
2007
2007
2007
2007
$'000
$'000
$'000
$'000
Depreciation
Depreciation
Depreciation
Depreciation
Acquisition of segment assets
Acquisition of segment assets
Acquisition of segment assets
Acquisition of segment assets
Significant non cash expenses other
Significant non cash expenses other
Significant non cash expenses other
Significant non cash expenses other
than depreciation and amortisation
than depreciation and amortisation
than depreciation and amortisation
than depreciation and amortisation
229
229
229
229
1,408
1,408
1,408
1,408
258
258
258
373
373
373
258
373
3,306
3,306
3,306
3,768
3,768
3,768
3,306
3,768
3,947
3,947
3,947
7,788
7,788
7,788
3,947
7,788
198
198
198
42
42
42
198
42
163
163
163
433
433
433
163
433
3,733
3,733
3,733
5,218
5,218
5,218
3,733
5,218
4,368
4,368
4,368
8,594
8,594
8,594
4,368
8,594
1,418
1,418
1,418
1,418
364
364
364
364
608
608
608
608
364
364
364
364
404
404
404
404
707
707
707
707
2,430
2,430
2,430
2,430
1,435
1,435
1,435
1,435
Secondary Reporting: Geographical Segments
Secondary Reporting: Geographical Segments
Secondary Reporting: Geographical Segments
Secondary Reporting: Geographical Segments
Asia Pacific
Asia Pacific
Asia Pacific
Asia Pacific
Europe
Europe
Europe
Europe
Africa
Africa
Africa
Africa
Americas
Americas
Americas
Americas
Total
Total
Total
Total
Revenue from external
Revenue from external
Revenue from external
customers
customers
customers
Revenue from external
customers
Segment assets
Segment assets
Segment assets
Segment assets
Acquisition of segment
Acquisition of segment
Acquisition of segment
assets
assets
assets
Acquisition of segment
assets
2008
2008
2008
2008
$'000
$'000
$'000
$'000
2007
2007
2007
2007
$'000
$'000
$'000
$'000
2008
2008
2008
$'000
$'000
$'000
2008
$'000
2007
2007
2007
2007
$'000
$'000
$'000
$'000
2008
2008
2008
2008
$'000
$'000
$'000
$'000
2007
2007
2007
2007
$'000
$'000
$'000
$'000
94,513
94,513
94,513
8,207
8,207
8,207
28,710
28,710
28,710
19,063
19,063
19,063
150,493
150,493
150,493
94,513
8,207
28,710
19,063
150,493
77,858
77,858
77,858
5,057
5,057
5,057
22,858
22,858
22,858
13,567
13,567
13,567
119,340
119,340
119,340
77,858
5,057
22,858
13,567
119,340
112,298
112,298
112,298
112,298
42,380
42,380
42,380
42,380
10,615
10,615
10,615
10,615
7,770
7,770
7,770
7,770
173,063
173,063
173,063
173,063
99,199
99,199
99,199
99,199
37,501
37,501
37,501
37,501
4,783
4,783
4,783
4,783
8,363
8,363
8,363
8,363
149,846
149,846
149,846
149,846
1,405
1,405
1,405
1,405
862
862
862
862
1,729
1,729
1,729
1,729
1,222
1,222
1,222
1,222
5,218
5,218
5,218
5,218
6,302
6,302
6,302
6,302
1,334
1,334
1,334
1,334
293
293
293
293
665
665
665
665
8,594
8,594
8,594
8,594
Imdex 2008 Annual Report | 103
Page 70 of 87
Page 70 of 87
Page 70 of 87
Page 70 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
28
Discontinued Operations
Effective 31 October 2007, the Group disposed of 100% of its shares in Surtron Technologies Pty Ltd, Surtron Technologies UK Ltd and
Surtron Technologies US Inc, collectively known as the Surtron business. The disposal was part of the Group's decision to focus its efforts on
the core competencies of selling drilling fluids and selling and renting down hole instrumentation. The financial results of the Surtron business
up to the date of disposal included in the Group results are summarised below.
Profit from discontinued operations
Revenue
Expenses
Profit before income tax
Income tax expense
Profit after income tax of discontinued operations
Gain on sale of the entities before income tax
Income tax expense
Gain on sale of the entities after income tax
Profit from discontinued operations
Cash flows from discontinued operations
Net cash (outflow)/inflow from ordinary activities
Net cash inflow from investing activities (including the proceeds from the sale of
the entities)
Net cash inflow from financing
Consolidated
4 months ended
31 Oct 2007
12 months ended
30 Jun 2007
$’000
$’000
6,584
(5,376)
1,208
(207)
1,001
12,139
(2,219)
9,920
10,921
(1,737)
20,002
1,121
19,386
14,591
(12,294)
2,297
(729)
1,568
-
-
-
1,568
84
210
-
294
The assets and liabilities of Surtron at the date of disposal were as follows:
Consolidated
31 Oct 2007
$’000
Carrying amounts of assets and liabilities
Cash and cash equivalents
Trade and other debtors
Inventories
Deferred tax asset
Property, plant and equipment
Total assets
Intercompany balances
Trade and other creditors
Hire purchase liabilities
Employee entitlements
Total liabilities
Net assets
Details of the sale of the entities
Consideration received:
Cash received
Carrying amount of net assets sold (net of intercompany balances)
Costs of disposal
Gain/(loss) on sale before income tax
Income tax expense
Gain/(loss) on sale after income tax
1,873
4,382
306
221
6,528
13,310
(2,612)
(2,590)
(2,300)
(686)
(8,188)
5,122
Consolidated
4 months ended
31 Oct 2007
12 months ended
30 Jun 2007
$’000
$’000
20,002
(7,734)
(129)
12,139
(2,219)
9,920
-
-
-
-
-
-
Imdex 2008 Annual Report | 104
Page 71 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
29
Related Party Disclosures
(a) Equity interests in related parties
Details of the percentage ownership of subsidiaries and the wholly owned Group is set out in Note 25. The wholly owned Group consists of
Imdex Limited and its wholly owned subsidiaries.
(b) Transactions with key management personnel
(i) Key management personnel compensation
Details of key management personnel compensation is set out in Note 32.
(ii) Loans to key management personnel
No loans were made during the current or prior years to key management personnel or their related parties.
(iii) Key management personnel equity holdings
2008
Balance at 1
July 2007
Granted as
compensation
Received on
exercise of
options
Inception as key
management
person
Net other
change
Balance at 30
June 2008
Balance held
nominally
Mr I F Burston
Mr B W Ridgeway
Mr R W Kelly
Mr K A Dundo
Mr M Lemmel
Mr G E Weston
Mr D J Loughlin
Mr P A Evans
No.
260,000
3,500,000
265,000
300,000
400,000
-
10,000
5,000
4,740,000
No.
No.
No.
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
-
-
500,000
-
-
-
-
-
-
-
-
-
83,786
-
25,000
-
47,347
(500,000)
(10,000)
5,000
(348,867)
No.
343,786
3,500,000
290,000
300,000
447,347
-
-
10,000
4,891,133
No.
-
-
-
-
-
-
-
-
-
2007
Balance at 1
July 2006
Granted as
compensation
Received on
exercise of
options
Cession as key
management
person
Net other
change
Balance at 30
June 2007
Balance held
nominally
Mr I F Burston
Mr B W Ridgeway
Mr H H Al-Merry
Mr R W Kelly
Mr K A Dundo
Mr I R Freeman
Mr M Lemmel *
Mr G E Weston
Mr D J Loughlin
Mr S J Lyons
Mr P A Evans
Mr D L Kinley
Mr C S Munyard
No.
200,000
5,000,000
755,000
265,000
300,000
16,059,002
-
-
-
50,000
-
120,000
25,000
22,774,002
No.
No.
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
-
-
-
-
-
500,000
-
-
-
-
-
-
-
-
-
(50,000)
-
(120,000)
(25,000)
(195,000)
No.
60,000
(1,500,000)
(755,000)
-
-
(16,059,002)
400,000
(500,000)
10,000
-
5,000
-
-
(18,339,002)
No.
260,000
3,500,000
-
265,000
300,000
-
400,000
-
10,000
-
5,000
-
-
4,740,000
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
* - Represent on market transactions after appointment as a director. Mr M Lemmel's shareholding at the date of becoming a director was
nil.
Mr S J Lyons resigned on 17 October 2006, Mr D L Kinley ceased to be a key management person on 17 October 2006 and Mr C S
Munyard ceased to be a key management person on 1 September 2006. Accordingly, the movement in equity holdings disclosed reflects
only those movements which took place during the period that these persons were key management persons. The balance of securities held
as at 30 June 2007 is nil as they are no longer key management personnel and therefore the net change shown in the table above is not as
a result of the sale of any securities whilst being a key management person.
Imdex 2008 Annual Report | 105
Page 72 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
29
Related Party Disclosures (continued)
(iv) Share options issued by Imdex Limited
2008
Balance at 1
July 2007
Granted as
compensation
Exercised Cession as key
management
person
Balance at
30 June
2008
Vested but
not
exercisable
Vested and
exercisable
Options
vested
during year
Mr I F Burston
Mr B W Ridgeway
Mr R W Kelly
Mr K A Dundo
Mr M Lemmel
Mr G E Weston
Mr D J Loughlin
Mr P A Evans
No.
1,000,000
2,000,000
-
-
-
2,500,000
500,000
300,000
6,300,000
No.
No.
No.
-
-
-
-
-
-
-
-
-
-
500,000
(500,000)
-
200,000
700,000
-
-
(500,000)
No.
1,000,000
2,000,000
No.
-
-
-
2,500,000
500,000
500,000
6,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
No.
-
No.
-
2,000,000
2,000,000
-
-
-
-
-
-
1,666,667
166,667
100,000
3,933,334
1,000,000
166,667
100,000
3,266,667
Options granted to G E Weston and P A Evans during the financial year were made in accordance with the Staff Option Plan, as further
described in Note 33. 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 issued to G E Weston and P A Evans are exercisable in one third lots at the end of each of the first three
years during their life.
A total of 500,000 options were exercised by key management personnel during the year. The exercise price was 20c per share. No amounts
remain unpaid on the options exercised during the financial year at year end.
2007
Balance at 1
July 2006
Granted as
compensation
Exercised Cession as key
management
person
Balance at
30 June
2007
Vested but
not
exercisable
Vested and
exercisable
Options
vested
during year
Mr I F Burston
Mr B W Ridgeway
Mr H H Al-Merry
Mr R W Kelly
Mr K A Dundo
Mr I R Freeman
Mr M Lemmel
Mr G E Weston
Mr D J Loughlin
Mr S J Lyons
Mr P A Evans
Mr D L Kinley
Mr C S Munyard
No.
-
2,000,000
-
-
-
-
-
3,000,000
-
200,000
-
200,000
125,000
5,525,000
No.
No.
No.
1,000,000
-
-
-
-
-
-
-
500,000
-
300,000
-
-
-
-
-
-
-
-
-
(500,000)
-
-
-
-
-
1,800,000
(500,000)
No.
1,000,000
2,000,000
-
-
-
-
-
2,500,000
500,000
-
-
-
-
-
-
-
-
-
(200,000)
-
-
300,000
(200,000)
(125,000)
(525,000)
-
-
6,300,000
No.
No.
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,166,667
-
-
-
-
-
1,166,667
1,000,000
-
16,667
-
33,333
25,000
1,075,000
Mr S J Lyons resigned on 17 October 2006, Mr D L Kinley ceased to be a key management person on 17 October 2006 and Mr C S Munyard
ceased to be a key management person on 1 September 2006. Accordingly, the movement in share options disclosed reflects only those
movements which took place during the period that these persons were key management persons. The balance of options held as at 30 June
2007 is nil as they are no longer key management personnel and therefore the net change shown in the table above is not as a result of the any
transaction whilst being a key management person.
Imdex 2008 Annual Report | 106
Page 73 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
29
Related Party Disclosures (continued)
(v) Other transactions with key management personnel (and their related parties) of Imdex Limited
(a) The premises on which the administration and factory buildings of Samchem Drilling Fluids & Chemicals (Pty) Ltd are located in Alrode,
Alberton, South Africa are leased on normal commercial terms and conditions from PTS Investments (Pty) Ltd and Basalt Properties (Pty)
Ltd, companies in which Mr I R Freeman has an interest. Mr I R Freeman was a non-executive director of Imdex Limited from the beginning
of the prior financial year until his resignation on 10 April 2007. The total lease cost arising from this arrangement during the prior year until
the date of his resignation on 10 April 2007 was $129,460.
(b) Mr K A Dundo is a Partner of the legal firm QLegal, that provided legal services to the Imdex Group on normal commercial terms and
conditions. Total legal costs arising from QLegal were $216,202 (2007: $208,785)
(c) Transactions with Directors
Note
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
Profit from ordinary activities before income tax
includes the following items of income and expenses
relating to transactions, other than compensation, with
Directors or their related entities:
Operating lease rental expense
Legal services expense
Total assets arising from transactions, other than
compensation, with Directors or their related entities:
Goodwill and intercompany loans (parent: acquisition
costs)
Total assets and liabilities arising from transactions,
other than compensation, with Directors or their related
entities:
Current Assets
Current Liabilities
(c) Transactions with other related parties
(i) Transactions within the wholly-owned Group
v(a)
v(b)
- 129,460
- -
134,314 31,281 134,314 31,281
v(b)
81,888 177,504 81,888 177,504
v(a) v(b)
- - - -
-
- 3,573
3,573
Details of dividend revenue received by the ultimate parent entity is disclosed in Note 4. Amounts receivable from entities in the wholly-
owned Group are disclosed in Note 9. During the financial year Imdex Limited provided management services amounting to $6,671,293
(2007: $1,363,000) to entities in the wholly-owned Group as disclosed in Note 4.
(d) Parent entity
The ultimate parent entity in the Group is Imdex Limited, a Company incorporated in Western Australia.
Imdex 2008 Annual Report | 107
Page 74 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
30
Notes to the Cash Flow Statement
(a) Reconciliation of cash and cash equivalents
For the purposes of the Cash Flow Statement, cash and cash equivalents includes cash on hand and in banks and investment in money
market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the year as shown in the Cash Flow
Statement is reconciled to the related items in the balance sheet as follows:
Cash and cash equivalents
Bank overdraft
Consolidated
2008
$’000
2007
$’000
Company
2008
$’000
2007
$’000
13,276
-
13,276
15,271
-
15,271
869
-
869
962
-
962
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates. The fair value of cash and cash equivalents is
$13,275,763 (2007: $15,271,482)
(b) Non cash financing and investing activities
During the year the Group acquired equipment under a finance lease of $0.7 million (2007: $1.1 million). This acquisition will be reflected in
the prior period cash flow cash flow statement over the term of the finance lease via lease repayments.
(c) Reconciliation from the Profit for the Year to Net Cash Provided by Operating Activities
Profit for the year
32,002
13,518
16,325
9,866
Consolidated
2008
$’000
2007
$’000
Company
2008
$’000
2007
$’000
Adjustments for non-cash and non-operational items
Depreciation of non-current assets
Amortisation of intangible assets
Non-cash interest on deferred payments
Interest earned on intercompany accounts
Interest received disclosed as investing activities
Share options expensed
Profit on sale of non-current assets
Interest on hire purchase liabilities
Fair value adjustment on interest rate cap
Proceeds from Rashid Trading Establishment shown as
investing activities
Profit on sale of Surtron before tax
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
Increase / (decrease) in current tax liability
Increase in deferred tax balances
3,733
6,055
404
-
(451)
2,025
(91)
66
10
-
(12,139)
(10,096)
(6,577)
(976)
(2,132)
556
(121)
(2,011)
4,368
3,430
707
-
(267)
728
(76)
225
-
(1,121)
-
(3,169)
(1,791)
(212)
(2,187)
604
4,584
(3,082)
Net Cash Provided by / (used in) Operating Activities
10,257
16,259
198
-
-
(1,677)
(212)
2,025
-
3
10
-
(17,245)
(3,455)
-
23
258
143
(5,797)
(590)
(9,991)
2,269
-
-
(1,999)
(217)
728
(2,200)
57
-
(1,121)
-
(6,876)
(1,004)
(45)
2,577
152
3,477
(23)
5,641
Imdex 2008 Annual Report | 108
Page 75 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
30
Notes to the Cash Flow Statement (continued)
(d) Financing facilities
Total facilities available
Bank loan
Commercial bills
Equipment finance facility
Multi option facility (including bank overdraft)
Facilities utilised at balance sheet date
Bank loan
Commercial bills
Equipment finance facility
Multi option facility (including bank overdraft)
Facilities not utilised at balance sheet date
Bank loan
Commercial bills
Equipment finance facility
Multi option facility (including bank overdraft)
31
Financial Instruments
(a) Capital Risk Management
13,148
17,000
76
2,020
32,244
13,148
17,000
-
-
30,148
-
-
76
2,020
2,096
15,484
12,300
2,591
2,522
32,897
15,140
12,300
2,407
-
29,847
344
-
184
2,522
3,050
-
17,000
76
2,020
19,096
-
17,000
-
-
17,000
-
-
76
2,020
2,096
-
12,300
633
2,020
14,953
-
12,300
449
-
12,749
-
-
184
2,020
2,204
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the
return to stakeholders through the optimisation of the debt and equity balance.
The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 16, cash and cash equivalents and
equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in notes 18
and 19. Management and the Board review the capital structure quarterly when the treasury function present an update to the Board. As
a part of these reviews management considers the cost of capital and the risks associated with each class of capital. Based on the
outcome of these reviews the Group will balance its overall capital structure through payment of dividends and issue of new shares as
well as the issue of new debt or repayment of existing debt. The Board does not have a specific optimum gearing target other than to
maintain a competitive weighted average cost of capital.
The Group’s overall capital management strategy remains unchanged from 2007.
(b) Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and
the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity
instrument are disclosed in note 2 to the financial statements.
(c) Categories of financial instruments
Financial Assets
Cash and cash equivalents
Loans and receivables
At fair value through profit and loss
Financial Liabilities
Amortised cost
Consolidated
2007
$ 000s
2008
$ 000s
Company
2008
$ 000s
2007
$ 000s
13,276
45,087
229
15,271
39,362
-
869
75,791
229
962
63,027
-
52,074
57,178
18,811
18,319
Imdex 2008 Annual Report | 109
Page 76 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
31
Financial Instruments (continued)
(d) Financial risk management objectives
The Group’s treasury function provides services to the business, co-ordinates access to domestic and international financial markets,
monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyse exposures
by degree and magnitude of risks. These risks include market risk (including currency risk and fair value interest rate risk), credit risk,
liquidity risk and cash flow interest rate risk.
The Group seeks to minimise the effects of these risks by using natural hedges where possible and derivative financial instruments to
hedge remaining risk exposures where the benefit of the hedge outweighs the cost. The use of financial derivatives is governed by the
Group’s treasury policies which are approved by the Board of Directors. These policies describe the Group’s policies with respect to
foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the
investment of excess liquidity. The Group does not enter into or trade financial instruments, including derivative financial instruments for
speculative purposes. The only derivative instrument in operation at 30 June 2008 is an interest rate cap as described in note (g) below.
The corporate treasury function reports quarterly to the Board of Directors.
(e) Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates (note (f) below) and
interest rates (note (g) below). The Group monitors its exposure to these risks on a quarterly basis and enters into derivative financial
instruments to manage these risks where appropriate. The only derivative financial instrument currently being used is an interest rate
cap. At a Group and at a company level market risk exposures are measured by sensitivity analyses and scenario modelling.
There has been no change to the Group’s exposure to market risks or the manner in which it manages and measures the risk.
(f) Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to foreign exchange rate fluctuations
arise. Exchange rate exposures are managed with the use of natural hedges where possible and with the use of financial instruments
where benefit outweighs cost within approved policy parameters. During the current and prior year no financial instruments were used to
manage foreign exchange risk.
The carrying amount of the Group’s foreign currency denominated monetary assets and liabilities at the reporting date is as follows:
United States Dollars
South African Rand
Canadian Dollars
Swedish Kroner
British pounds
Other - mostly Euros and Chilean Pesos
Foreign currency sensitivity
Liabilities
Assets
2008
$ 000s
2007
$ 000s
2008
$ 000s
2007
$ 000s
487
1,770
44
13,564
4,953
3,554
930
1,820
714
17,381
13,700
66
14,045
3,782
4,222
3,975
401
3,620
9,920
5,132
3,197
4,446
2,416
130
The Group is mainly exposed to United States Dollars, Swedish Kroner, Canadian Dollars and South African Rand.
The following table details the Group’s sensitivity to a 2% increase and decrease in the Australian Dollar against the relevant foreign
currencies. The sensitivity rate of 2% is the rate used when performing the quarterly reporting on foreign currency risk internally. Foreign
exchange risk is reported quarterly to key management personnel and the Board. The estimated movement of 2% represents
management’s assessment of the possible change in foreign currency exchange rates which is based on regular forecasts received
from major lending institutions. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and
adjust their translation at the period end for a 2% change in foreign currency rates. The sensitivity analysis includes external loans as
well as loans to foreign operations within the Group where the denomination of the loan is in a currency other than the currency of the
lender or the borrower. A positive number indicates an increase in profit or loss and other equity where the Australian Dollar strengthens
against the respective currency. For a weakening of the Australian Dollar against the respective currency there would be an equal and
opposite impact on the profit and other equity, and the balances below would carry the opposite sign.
Imdex 2008 Annual Report | 110
Page 77 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
31
Financial Instruments (continued)
(f) Foreign currency risk management (continued)
United States Dollar Impact
Consolidated
Company
2008
$ 000's
2007
$ 000's
2008
$ 000's
2007
$ 000's
South African Rand Impact
Consolidated
2008
$ 000's
2007
$ 000's
Company
2008
$ 000's
2007
$ 000's
Profit or (loss)
Other equity
(271)
-
(180)
-
-
-
-
-
(i)
(ii)
(40)
-
(66)
-
-
-
-
-
(i)
(ii)
Swedish Kroner Impact
Canadian Dollar Impact
Consolidated
Company
2008
$ 000's
2007
$ 000's
2008
$ 000's
2007
$ 000's
Consolidated
2008
$ 000's
2007
$ 000's
Company
2008
$ 000's
2007
$ 000's
Profit or (loss)
Other equity
192
-
259
-
-
-
-
-
(i)
(ii)
(84)
-
(50)
-
-
-
-
-
(i)
(ii)
(i) Profit and loss impacts are mainly attributable to exposure on outstanding receivables and payables at year end denominated in the
applicable foreign currency
(ii) Equity movements are attributable to the net investment in a foreign operation denominated in the applicable foreign currency
(g) Interest rate risk management
The Company and the Group are exposed to interest rate risk as entities in the Group borrow funds at floating interest rates. Interest
rate risk is managed within defined policy guidelines. This is achieved by the Group by maintaining an appropriate mix between fixed
and floating rate borrowings and by the use of an interest rate cap to limit the maximum exposure to interest rate rises on part of Group
debt.
The Company and the Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk
management section of this note.
Interest rate sensitivity
The sensitivity analyses below have been determined based on the exposure to interest rates for both derivative and non-derivative
instruments at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant
throughout the reporting period. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key
management personnel and represents management’s assessment of the possible changes in interest rates based on consultation with
appropriately qualified financial professionals.
Group sensitivity
At reporting date, if interest rates had been 100 basis points higher and all other variables were held constant, the Group’s net profit
would decrease by $0.2 million (2007: 0.3 million). There would be a nil impact on equity. A 100 basis point decrease in interest rates,
holding all other variables constant would yield an increase in the Group’s net profit of $0.3 million (2007: $0.3 million). This is mainly
attributable to the Group’s exposure to interest rates on its variable rate borrowings. The profit increase / decrease effect is not
symmetrical due to the presence of an interest rate cap which limits the Group’s maximum exposure to interest rates on $10 million of
its debt.
The Group’s sensitivity to interest rates decreased during the current period due to the introduction of an interest rate cap to limit the
maximum amount of interest rate impact on $10 million of its debt.
Imdex 2008 Annual Report | 111
Page 78 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
31
Financial Instruments (continued)
(g) Interest rate risk management (continued)
Company sensitivity
At reporting date, if interest rates had been 100 basis points higher and all other variables were held constant, the Company’s net profit
would decrease by $0.1 million (2007: $0.1 million). There would be a nil impact on equity. A 100 basis point decrease in interest rates,
holding all other variables constant would yield an increase in the Company’s net profit of $0.2 million (2007: $0.1 million). This is mainly
attributable to the Company’s exposure to interest rates on its variable rate borrowings. The profit increase / decrease effect is not
symmetrical due to the presence of an interest rate cap which limits the Group’s maximum exposure to interest rates on $10 million of
its debt.
The Company’s sensitivity to interest rates decreased during the current period due to the introduction of an interest rate cap to limit the
maximum amount of interest rate impact on $10 million of its debt.
Interest rate cap
On 1 January 2008 the Company entered into an interest rate cap arrangement for a 3 year period. This interest rate cap, costing $0.2
million, enabled the Company to limit the maximum exposure to interest rate movements on $10 million of its debt to 7% per annum. At
30 June 2008 this interest rate cap had a fair value of $0.2 million. (Note 9) This fair value has been determined by seeking market
valuations at 30 June 2008 for an interest rate cap with identical terms that terminates on 31 December 2011.
(h) Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The
Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a
means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are
continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure
is controlled by counterparty limits that are reviewed regularly by management.
Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit
evaluation is performed on the financial condition of accounts receivable.
The Group does not have any significant credit risk exposure to any single counterparty or group of counterparties having similar
characteristics. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with
high credit-ratings assigned by international credit-rating agencies.
The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Group’s
maximum exposure to credit risk without taking account of the value of collateral obtained. At 30 June 2008 no such collateral had been
obtained. (30 June 2007 : nil)
(i) Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, who monitor short, medium and long term liquidity
requirements through the use of financial models. The treasury function reports quarterly to key management personnel and the Board
on matters affecting liquidity risk. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve
borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and
liabilities. Included in note 30(d) is a listing of additional undrawn facilities that the Company/Group has at its disposal to further reduce
liquidity risk.
Imdex 2008 Annual Report | 112
Page 79 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
31
Financial Instruments (continued)
31
Financial Instruments (continued)
(g) Interest rate risk management (continued)
Company sensitivity
(i) Liquidity risk management (continued)
Liquidity and interest risk tables
At reporting date, if interest rates had been 100 basis points higher and all other variables were held constant, the Company’s net profit
would decrease by $0.1 million (2007: $0.1 million). There would be a nil impact on equity. A 100 basis point decrease in interest rates,
holding all other variables constant would yield an increase in the Company’s net profit of $0.2 million (2007: $0.1 million). This is mainly
attributable to the Company’s exposure to interest rates on its variable rate borrowings. The profit increase / decrease effect is not
symmetrical due to the presence of an interest rate cap which limits the Group’s maximum exposure to interest rates on $10 million of
The following tables detail the Company’s and the Group’s remaining contractual maturity for its non–derivative financial liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group
can be required to pay. The table includes both interest and principal cash flows. The adjustment column represents the possible future
cash flows attributable to the instrument included in the maturity analysis which are not included in the carrying amount of the financial
liability on the balance sheet.
its debt.
Interest rate cap
The Company’s sensitivity to interest rates decreased during the current period due to the introduction of an interest rate cap to limit the
maximum amount of interest rate impact on $10 million of its debt.
On 1 January 2008 the Company entered into an interest rate cap arrangement for a 3 year period. This interest rate cap, costing $0.2
million, enabled the Company to limit the maximum exposure to interest rate movements on $10 million of its debt to 7% per annum. At
30 June 2008 this interest rate cap had a fair value of $0.2 million. (Note 9) This fair value has been determined by seeking market
valuations at 30 June 2008 for an interest rate cap with identical terms that terminates on 31 December 2011.
(h) Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The
Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a
means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are
continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure
is controlled by counterparty limits that are reviewed regularly by management.
Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit
evaluation is performed on the financial condition of accounts receivable.
The Group does not have any significant credit risk exposure to any single counterparty or group of counterparties having similar
characteristics. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with
high credit-ratings assigned by international credit-rating agencies.
The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Group’s
maximum exposure to credit risk without taking account of the value of collateral obtained. At 30 June 2008 no such collateral had been
obtained. (30 June 2007 : nil)
(i) Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, who monitor short, medium and long term liquidity
requirements through the use of financial models. The treasury function reports quarterly to key management personnel and the Board
on matters affecting liquidity risk. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve
borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and
liabilities. Included in note 30(d) is a listing of additional undrawn facilities that the Company/Group has at its disposal to further reduce
liquidity risk.
Consolidated
2008
Non-interest bearing
Finance lease liability
Variable interest rate
instruments
2007
Non-interest bearing
Finance lease liability
Variable interest rate
instruments
Company
2008
Non-interest bearing
Finance lease liability
Variable interest rate
instruments
2007
Non-interest bearing
Finance lease liability
Variable interest rate
instruments
Weighted
average
effective
interest rate
%
-
8.20%
-
7.60%
6.26%
Weighted
average
effective
interest rate
%
-
-
9.70%
-
7.65%
8.54%
0-3 months 3 months
to 1 year
1-5 years
5+ years
Adjustment
Total
$’000
$’000
$’000
$’000
$’000
$’000
10,948
-
2,101
13,049
13,744
395
1,359
15,498
8,261
-
12,788
21,049
8,371
1,185
5,437
14,993
2,717
-
19,606
22,323
4,715
760
23,086
28,561
-
-
-
-
-
248
3,240
3,488
-
-
(4,347)
(4,347)
-
(181)
(5,181)
(5,362)
21,926
-
30,148
52,074
26,830
2,407
27,941
57,178
0-3 months 3 months
to 1 year
1-5 years
5+ years
Adjustment
Total
$’000
$’000
$’000
$’000
$’000
$’000
906
-
908
1,814
2,785
117
1,071
3,973
905
-
-
-
9,256
10,161
9,584
9,584
-
-
2,785
350
2,564
5,699
-
-
-
-
-
-
-
-
1,811
-
(2,748)
(2,748)
17,000
18,811
-
(18)
5,570
449
10,327
10,327
2,093
2,093
(3,755)
(3,773)
12,300
18,319
Page 79 of 87
Imdex 2008 Annual Report | 113
Page 80 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
31
Financial Instruments (continued)
(i) Liquidity risk management (continued)
The following tables detail the Company’s and the Group’s remaining contractual maturity for its non–derivative financial assets. The
tables have been drawn up based on the undiscounted cash flows of financial assets including interest that will be earned on those
assets except where the Company/Group anticipates that the cash flow will occur in a different period. The adjustment column
represents the possible future cash flows attributable to the instrument included in the maturity analysis which are not included in the
carrying amount of the financial asset on the balance sheet.
Consolidated
2008
Non-interest bearing
Variable interest rate
instruments
Fixed interest rate
instruments
2007
Non-interest bearing
Variable interest rate
instruments
Fixed interest rate
instruments
Company
2008
Non-interest bearing
Variable interest rate
instruments
Fixed interest rate
instruments
2007
Non-interest bearing
Variable interest rate
instruments
Fixed interest rate
instruments
Weighted
average
effective
interest rate
%
-
4.40%
13.50%
-
2.50%
13.50%
Weighted
average
effective
interest rate
%
-
4.40%
13.50%
-
4.40%
13.50%
0-3 months 3 months
to 1 year
1-5 years
5+ years
Adjustment
Total
$’000
$’000
$’000
$’000
$’000
$’000
32,079
13,276
-
45,355
27,806
15,271
-
43,077
-
-
13,008
13,008
-
-
-
-
-
-
-
-
-
-
13,116
13,116
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,560)
(1,560)
32,079
13,276
13,008
58,363
27,806
15,271
11,556
54,633
0-3 months 3 months
to 1 year
1-5 years
5+ years
Adjustment
Total
$’000
$’000
$’000
$’000
$’000
$’000
2,401
869
-
3,270
10,213
962
-
11,175
-
-
13,008
13,008
-
-
-
-
-
-
-
-
-
-
60,382
-
-
60,382
41,258
-
-
-
-
-
-
-
62,783
869
13,008
76,660
51,471
962
13,116
13,116
-
41,258
(1,560)
(1,560)
11,556
63,989
The following table details the Company’s and Group’s liquidity analysis for its derivative financial instrument. The table has been drawn
up based on the undiscounted gross cash inflows / (outflows) since derivative financial instrument, being the interest rate cap, settles on
a gross basis. Since the amounts payable and receivable are not fixed, the amount disclosed has been determined by reference to the
projected interest rates as illustrated by the yield curves existing at the reporting date. There were no derivative financial instruments in
the Company or Group in 2007.
2008
Interest rate cap
0-3 months 3 months
to 1 year
$’000
$’000
1-5 years
5+ years
$’000
$’000
20
60
200
-
Imdex 2008 Annual Report | 114
Page 81 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
31
Financial Instruments (continued)
(j) Fair value of financial instruments
The fair values of financial assets and financial liabilities are determined as follows:
(cid:120)
(cid:120)
the fair value of financial assets and financial liabilities (excluding derivative financial instruments) are determined in accordance
with generally accepted pricing models based on discounted cash flow analysis using pricing models based on observable current
market transactions; and
the fair value of derivative financial instruments are calculated using quoted market prices
The financial statements include holdings in unlisted shares which are measured at cost due to them being held for disposal (note 11).
The Directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial
statements approximates their fair values.
32
Key Management Personnel Compensation
The aggregate compensation of the key management personnel of the Group and the Company is set out below:
Consolidated
Company
2008
$
2007
$
2008
$
2007
$
1,656,713
112,836
116,291
-
419,325
2,305,165
1,455,441
93,068
34,785
-
242,751
1,826,045
1,301,545
88,225
39,790
-
399,119
1,828,679
1,150,003
72,022
20,020
-
208,952
1,450,997
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
33
Staff Option Scheme
(a) Share Based Payment Arrangements
Staff Option Plan
The Group has in place a Staff Option Scheme (Scheme) to reward employees (including Key Management Personnel) for their past
services as well as to 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. Each employee share option converts to one ordinary share of Imdex Limited on
exercise. No amounts are paid or payable by the recipient on receipt of the option. Options may be exercised at any time from the date
of vesting to the date of expiry. 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 normally only eligible to receive options when they have been with the
Company in excess of 12 months. Options expire when the option holder ceases to be employed by the Group.
Chairman’s Options
During the prior year options were issued to the Chairman as a reward for past performance and as an incentive for the future. These
options 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 when ceasing to be a Director and may be exercised after 2 years at any time to their expiry date. As at 30
June 2008 none of these options had vested.
Managing Director’s Options
Options were issued to the Managing Director as a reward for past performance and as an incentive for the future. The options carry no
rights to dividends and no voting rights. As at 30 June 2008 all of these options had vested.
Imdex 2008 Annual Report | 115
Page 82 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
33
Staff Option Scheme (continued)
(b) The following share based payment arrangements were in existence during the current and comparative periods:
2008
Issue Date
Expiry
Date
Exercise
Price
Fair Value
at Grant
$
Date
Opening
balance
Number of Options
Exercised
current year
Lapsed
current year
Closing
balance
Issued
current
year
Staff Options
Tranche 1 (i)
Tranche 2 (i)
Tranche 3 (i)
Tranche 4 (i)
Tranche 5 (i)
Tranche 6 (i)
Tranche 7 (i)
31-Jul-09 0.20
1-Aug-04
31-Jan-11 0.35
1-Feb-06
23-Feb-07 22-Feb-12 0.75
23-Feb-07 22-Feb-12 1.00
12-Jun-07 11-Jun-12 1.80
17-Oct-12 1.80
18-Oct-07
28-Mar-08 27-Mar-13 3.00
$
0.01
0.02
0.56
0.48
0.51
0.81
0.42
2,090,501
2,189,905
700,000
4,425,000
675,000
- 500,000
- 4,875,000
- (912,168)
- 1,178,333
- (306,998) (70,035) 1,812,872
- - - 700,000
- (386,333) (475,000) 3,563,667
- - (50,000) 625,000
- - 500,000
- (60,000) 4,815,000
Chairman's Options
Tranche 1 (ii)
19-Oct-06
18-Oct-11 0.75
0.35
1,000,000
- - - 1,000,000
Managing Directors' Options
Tranche 1 (iii)
15-Sep-05 14-Sep-10 0.30
0.01
2,000,000
13,080,406 5,375,000 (1,605,499) (655,035)
- - - 2,000,000
16,194,872
2007
Issue Date
Expiry
Date
Exercise
Price
Fair Value
at Grant
$
Date
Opening
balance
Number of Options
Exercised
current year
Lapsed
current year
Closing
balance
Issued
current
year
Staff Options
Tranche 1 (i)
Tranche 2 (i)
Tranche 3 (i)
Tranche 4 (i)
Tranche 5 (i)
31-Jul-09 0.20
1-Aug-04
31-Jan-11 0.35
1-Feb-06
23-Feb-07 22-Feb-12 0.75
23-Feb-07 22-Feb-12 1.00
12-Jun-07 11-Jun-12 1.80
$
0.01
0.02
0.56
0.48
0.51
3,048,333
2,660,000
- 700,000
- 4,575,000
- 675,000
- (937,832) (20,000) 2,090,501
- (428,428) (41,667) 2,189,905
- - 700,000
- (150,000) 4,425,000
- - 675,000
Chairman's Options
Tranche 1 (ii)
19-Oct-06
18-Oct-11 0.75
0.35
- 1,000,000
- - 1,000,000
Managing Directors' Options
Tranche 1 (iii)
15-Sep-05 14-Sep-10 0.30
0.01
2,000,000
- - - 2,000,000
Corporate Advisors Options
Tranche 1 (iv)
Tranche 2 (v)
Tranche 3 (iv)
23-Dec-04
31-Jul-09 0.20
23-Dec-04 31-Oct-07 0.20
23-Dec-04 31-Oct-07 0.35
0.03
0.02
0.01
- (100,000)
100,000
- (2,000,000)
2,000,000
1,000,000
- (1,000,000)
10,808,333 6,950,000 (4,466,260) (211,667)
- -
- -
- -
13,080,406
(i) Exercisable in one third lots in each year commencing one year after issue.
(ii) Expire on their expiry date or when ceasing to be a Director, and may be exercised after 2 years at any time to their expiry date.
(iii) Expire on their expiry date or 3 months after ceasing to be a Director, and may be exercised after 2 years at any time to their expiry
(iv) Exercisable at any time up to expiry.
(v) Exercisable at any time after Imdex shares trade at 30 cents for 5 consecutive trading days. This condition has been satisfied.
Imdex 2008 Annual Report | 116
Page 83 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
33
Staff Option Scheme (continued)
(c) Fair value of options granted during the financial year
The weighted average fair value of the share options granted during the financial year is $0.45 (2007: $0.47). Options were priced using
a Black-Scholes option pricing model. Where relevant, the expected life used in the model has been adjusted based on management’s
best estimate for the effects of non-transferability, exercise restrictions (including the probability of meeting market conditions attached
to the option), and behavioural considerations. Expected volatility is based on the historical share price volatility trends.
2008
Inputs into the model
Grant date share price ($)
Exercise price ($)
Expected volatility
Option life (years)
Risk-free interest rate
Dividend yield
2007
Inputs into the model
Grant date share price ($)
Exercise price ($)
Expected volatility
Option life (years)
Risk-free interest rate
Dividend yield
Staff Options
Tranche 6
Staff Options
Tranche 7
1.87
1.80
45%
5.00
6.47%
1.66%
1.79
3.00
50%
5.00
6.18%
1.96%
Chairman's Options
Tranche 1
Staff Options
Tranche 3
Staff Options
Tranche 4
Staff Options
Tranche 5
0.80
0.75
50%
5.00
5.89%
2.30%
1.08
0.75
50%
5.00
6.00%
2.30%
1.08
1.00
50%
5.00
6.00%
2.30%
1.40
1.80
50%
5.00
6.38%
2.30%
(d) Exercised during the financial year
2008
Option Series
Staff Options Tranche 1
Staff Options Tranche 2
Staff Options Tranche 3
2007
Option Series
Staff Options Tranche 1
Staff Options Tranche 2
Corp Advisor Tranche 1
Corp Advisor Tranche 2
Corp Advisor Tranche 3
Number
Exercised
Exercise
Date
Weighted Average
Share Price at Exercise
Date
912,168
306,998
386,333
1,605,499
Various
Various
Various
1.86
1.86
1.86
Number
Exercised
Exercise
Date
Weighted Average
Share Price at Exercise
Date
937,832
428,428
100,000
2,000,000
1,000,000
4,466,260
Various
Various
24-Nov-06
Various
Various
0.97
0.97
0.78
0.74
0.77
(e) Balance at end of the financial year
The share options outstanding at the end of the financial year had a weighted average exercise price of $0.33 (2007: $0.25), and a
weighted average remaining contractual life of 1582 days (2007: 1398 days)
Imdex 2008 Annual Report | 117
Page 84 of 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
33
Staff Option Scheme (continued)
(f) Reconciliation of movements in share options during the year
The following reconciles the outstanding share options granted under the Staff Option Scheme at the beginning and end of the financial
year
2008
2007
Weighted
Average
Exercise
Price
Weighted
Average
Exercise
Price
Number of
Options
Number of
Options
Balance at beginning of the financial year
Granted during the financial year
Forfeited during the financial year
Exercised during the financial year
Expired during the financial year
Balance at end of the financial year
Exercisable at end of the financial year
34
Subsequent Events
10,808,333 0.02
13,080,406 0.25
6,950,000 0.47
5,375,000 0.45
- -
- -
(1,605,499) 0.13 (4,466,260) 0.02
0.34
13,080,406 0.25
0.42
16,194,872 0.33
(655,035)
(211,667)
5,019,872
2,493,739
On 1 July 2008, $500,000 cash was paid and 168,530 fully paid Imdex Limited ordinary shares were issued to acquire the remaining
25% of the issued share capital of Suay Energy Services LLP. Refer note 26(d).
On 31 July 2008 Imdex Limited paid the next deferred settlement instalment of GBP 1,090,000 (A$2,271,000) due to the vendors of
Imdex Technology UK Limited (formerly Chardec Technology Limited).
Subsequent to year end the Directors declared a 2.25 cent per share fully franked dividend with an entitlement date of 17 October 2008
and a payment date of 31 October 2008. The effect of this dividend has not been reflected in this financial report.
Imdex 2008 Annual Report | 118
Page 85 of 87
IMDEX LIMITED
and its controlled entities
ADDITIONAL STOCK EXCHANGE INFORMATION
AS AT 2 SEPTEMBER 2008
(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
Fiberform Vindic Holding AB
National Nominees Ltd
HSBC Custody Nominees (Australia) Ltd
Number of Fully
Paid Ordinary
Shareholders
Number of
Option holders
353
1,258
797
1,148
126
3,682
54
-
7
41
213
18
279
-
Fully Paid
Number
Percentage
20,800,000
15,744,776
14,294,842
11.32%
8.57%
7.78%
(c)
Twenty Largest Holders of Quoted Equity Securities
Ordinary Shareholders
Fiberform Vindic Holding AB
National Nominees Ltd
HSBC Custody Nominees (Australia) Ltd
Citicorp Nominees Pty Ltd
ANZ Nominees Ltd
J P Morgan Nominees Australia Ltd
RBC Dexia Investor Services Australia Nominees Pty
Ltd (PIIC Account)
UBS Nominees Pty Ltd
Telic Alcatel (Australia) Pty Ltd
RBC Dexia Investor Services Australia Nominees Pty
Ltd (PIPooled Account)
Queensland Investment Corporation
Wear Services Pty Ltd
Bond Street Custodians Ltd
RBC Dexia Investor Services Australia Nominees Pty
Ltd (BKCust Account)
Citicorp Nominees Pty Ltd
Mr Petrus Cornelius Nicolaas Middendorp
Primbee Investments Pty Ltd
Fortis Clearing Nominees Pty Ltd
Longo Pty Ltd
Mr B Conway and Mrs R Conway
Fully Paid
Number
Percentage
20,800,000
15,744,776
14,294,842
11,119,760
8,989,877
6,153,846
4,417,516
3,806,337
3,603,152
3,078,118
2,895,929
2,725,547
2,667,449
2,631,648
2,331,802
1,882,500
1,737,171
1,668,534
1,572,826
1,100,000
11.32%
8.57%
7.78%
6.05%
4.89%
3.35%
2.40%
2.07%
1.96%
1.68%
1.58%
1.48%
1.45%
1.43%
1.27%
1.02%
0.95%
0.91%
0.86%
0.60%
113,221,630
61.62%
Imdex 2008 Annual Report | 119
IMDEX LIMITED
and its controlled entities
ADDITIONAL STOCK EXCHANGE INFORMATION
AS AT 2 SEPTEMBER 2008
(d)
Director and Company Secretary Shareholdings
Number of
Shares
3,500,000
393,786
290,000
300,000
457,347
10,000
4,891,133
Number of
Options
2,000,000
1,000,000
-
-
-
500,000
3,500,000
Name
Mr B W Ridgeway
Mr I F Burston
Mr R W Kelly
Mr K A Dundo
Mr M Lemmel
Mr P A Evans
(e)
Company Secretary
Mr Paul Anthony Evans
(f)
Registered Office
Level 1, Canute House
15 Rheola Street
West Perth
Western Australia
Phone: (08) 9481 5777
(g)
Share Registry
Computershare Investory Services
Level 2
45 St Georges Terrace
Perth WA 6000
Phone: (08) 9323 2000
Imdex 2008 Annual Report | 120
Contents
Imdex Group at a Glance
FY08 Highlights
Comparative Financial Performance
Board of Directors
Chairman’s Report
Managing Director’s Report
Imdex’s Operations
Supporting Operations for Future Growth
Financial Report 2008
1
3
4
6
9
10
14
26
33
Contact Details
Imdex Limited
Level 1, 15 Rheola Street
West Perth 6005 Western Australia
PO Box 1325 West Perth 6872
Western Australia
Telephone: +61 8 9481 5777
Fax: +61 8 9481 6527
Email: imdex@imdexlimited.com
I
m
d
e
x
2
0
0
8
A
n
n
u
a
l
R
e
p
o
r
t
www.imdexlimited.com
Providing Drilling Fluids and Leading Down Hole Instrumentation to the World
Annual Report
ABN 78 008 947 813
2008 Annual General Meeting
Meeting Documents
Notice of Annual General Meeting & Explanatory Memorandum
Proxy Form for Annual General Meeting
Corporate Representative Certificate for Annual General Meeting
To be held on Thursday, 16 October 2008 at the Celtic Club,
48 Ord Street, West Perth, Western Australia commencing at
11.00am WST
ABN 78 008 947 813
NOTICE OF ANNUAL GENERAL MEETING
Notice is given that the 2008 Annual General Meeting of Shareholders of Imdex Limited will be
held at The Celtic Club, 48 Ord Street, West Perth, Western Australia, on 16 October 2008
commencing at 11.00am WST
Agenda
Ordinary Business
1
2
To receive and consider the Annual Financial Report, together with the Directors’ and Auditor’s
reports for the year ended 30 June 2008.
To consider and, if thought fit, pass the following Resolution as an Ordinary Resolution:
That, for all purposes, Mr Ian Burston, who retires from the office of Director by rotation, and being
eligible, offers himself for re-election, is re-elected as a Director.
3
To consider and, if thought fit, pass the following resolution as an Ordinary Resolution:
That, for the purposes of Chapter 2E of the Corporations Act, ASX Listing Rule 10.11 and for all
other purposes, the Company approves the grant of 2,000,000 Options to acquire ordinary fully
paid shares in the Company to Mr B W Ridgeway, the Managing Director of the Company, on the
terms set out in the accompanying Explanatory Memorandum.
Voting Exclusion: The Company will disregard any votes cast on Resolution 3 by Mr Ridgeway or any of his
associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is
entitled to vote, in accordance with the direction on the proxy form, or it is cast by the person chairing the Meeting as
a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy
decides.
4
To consider and, if thought fit, pass, with or without amendment, the following resolution as an
Ordinary Resolution:
That, for the purposes of ASX Listing Rule 7.4 and for all other purposes, the Company ratifies the
allotment and issue of 723,769 fully paid ordinary shares in the capital of the Company on the
terms set out in the accompanying Explanatory Memorandum.
Voting Exclusion: The Company will disregard any votes cast on Resolution 4 by Christian Rolando Dockendorff
Catalán, Christian Alexander Dockendorff Rioseco and Fernando Ivan Dockendorff Catalán or any person who
participated in the issue and any associate of such person. However, the Company need not disregard a vote if it is
cast by a person as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy form,
or it is cast by the person chairing the Meeting as a proxy for a person who is entitled to vote, in accordance with a
direction on the proxy form to vote as the proxy decides.
5
To consider and, if thought fit, pass, with or without amendment, the following resolution as an
Ordinary Resolution:
That, for the purposes of ASX Listing Rule 7.4 and for all other purposes, the Company ratifies the
allotment and issue of 168,530 fully paid ordinary shares in the capital of the Company on the
terms set out in the accompanying Explanatory Memorandum.
NOTICE OF ANNUAL GENERAL MEETING
Voting Exclusion: The Company will disregard any votes cast on Resolution 5 by Elvira Zhubaniyazov or any person
who participated in the issue and any associate of such person. However, the Company need not disregard a vote if
it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy
form, or it is cast by the person chairing the Meeting as a proxy for a person who is entitled to vote, in accordance
with a direction on the proxy form to vote as the proxy decides.
6
To consider and, if thought fit, pass, with or without amendment, the following resolution as an
Ordinary Resolution:
That, for the purposes of ASX Listing Rule 7.4 and for all other purposes, the Company ratifies the
allotment and issue of 1,605,499 fully paid ordinary shares in the capital of the Company issued
upon the exercise of Staff Options on the terms and conditions set out in the accompanying
Explanatory Memorandum.
Voting Exclusion: The Company will disregard any votes cast on Resolution 6 by any person who participated in the
issue and any associate of such person. However, the Company need not disregard a vote if it is cast by a person
as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy form, or it is cast by the
person chairing the Meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the
proxy form to vote as the proxy decides.
7
To consider and, if thought fit, pass the following resolution as an Advisory Resolution:
That, for all purposes, the Directors’ and Executives’ Remuneration Report, included within the
Directors’ Report, for the year ended 30 June 2008 be approved.
8
To consider any other business that may be brought before the Meeting in accordance with the
Company’s Constitution.
Explanatory Memorandum
Shareholders are referred to the Explanatory Memorandum accompanying and forming part of this Notice
of Annual General Meeting.
Snap Shot Time
Regulation 7.11.37 of the Corporations Regulations 2001 permits the Company to specify a time, not
more than 48 hours before the meeting, at which a “snap shot” of Shareholders will be taken for the
purposes of determining Shareholder entitlements to vote at the Meeting.
The Company’s Directors have determined that all Shares of the Company that are quoted on ASX at
5pm WST, 14 October 2008 shall, for the purposes of determining voting entitlements at the Annual
General Meeting, be taken to be held by the persons registered as holding the Shares at that time.
Proxies
Please note that:
(a) a member of the Company entitled to attend and vote at the Annual General Meeting is entitled to
appoint a Proxy;
(b) a Proxy need not be a member of the Company; and
(c) a member of the Company entitled to cast two or more votes may appoint two proxies and may
specify the proportion or number of votes each Proxy is appointed to exercise, but where the
proportion or number is not specified, each Proxy may exercise half of the votes.
The enclosed Proxy Form for the Annual General Meeting provides further details on appointing Proxies
and lodging the Proxy Form. Proxies must be returned by 11.00am WST on 14 October 2008.
NOTICE OF ANNUAL GENERAL MEETING
Corporate Representative
If a representative of a Shareholder corporation is to attend the meeting the attached “Appointment of
Corporate Representative” form should be completed and produced prior to admission.
Dated: 8 September 2008
By Order of the Board of Directors
Imdex Limited
Paul Evans
Company Secretary
EXPLANATORY MEMORANDUM
1 Purpose of this Document
This Explanatory Memorandum has been prepared to assist Shareholders with their consideration of the
Resolutions in the accompanying Notice of Annual General Meeting.
2 Resolution 2 – Re-election of Director
In accordance with ASX Listing Rule 14.4 and Article 17.4 of the Constitution, at every Annual General
Meeting, one third of the Directors for the time being must retire from office and are eligible for re-election.
The Directors to retire are to be those who have been longest in office since their appointment or last re-
appointment or, if the Directors have been in office for an equal length of time and unless mutually
agreed, by lot.
Mr Ian Burston, a Director of the Company since 22 November 2000, seeks re-election by reason of his
retirement by rotation pursuant to Resolution 2 of the Notice of Meeting. A record of Mr Ian Burston’s
attendances at Board meetings over the 12 month period to 30 June 2008 is set out in the 2008 Annual
Report as are further details concerning his qualifications and experience.
The Directors recommend that Shareholders vote in favour of Resolution 2 to appoint Mr Ian Burston.
3 Resolution 3 – Issue of options to Mr B W Ridgeway
In accordance with ASX Listing Rule 10.11, and Chapter 2E of the Corporations Act, Resolution 3 of the
Notice of Meeting deals with the consideration by Shareholders of the proposed issue to Mr Bernie
Ridgeway, Imdex’s Managing Director, or his nominee of 2,000,000 five year Options to acquire ordinary
shares in the Company, exercisable at $3.00 per Option, which are subject to the general terms and
conditions set out below.
The purpose of the grant of the Options is to provide a performance incentive to Mr Ridgeway. The
Options will be granted and issued no later than one month after this meeting if the resolution is passed,
for no consideration.
If the Options are fully exercised by Mr Ridgeway $6 million will be received by the Company. This
money will be used by the Company for general working capital purposes. The dilution effect if all
Options are exercised by Mr Ridgeway would amount to approximately 1.1%, based on the Company’s
current issued share capital. No material opportunity cost is considered to arise to the Company in
respect of the proposed grant of Options to Mr Ridgeway.
Requirements of the Listing Rules
Listing Rule 10.11 provides that a listed entity must not issue equity securities to a related party without
Shareholder approval. The proposed grant of Options to Mr Ridgeway requires approval by Shareholders
under the Listing Rules.
If approval is given under Listing Rule 10.11, the Listing Rules specify that approval is not required under
Listing Rule 7.1 (which limits the number of equity securities the Company may issue within a 12 month
period to not more than 15% of the total number of ordinary securities on issue without the requirement
for Shareholder approval).
Page 1
EXPLANATORY MEMORANDUM
Requirement of the Corporations Act
Chapter 2E of the Corporations Act prohibits a public company from giving a “financial benefit” to a
“related party” unless the giving of that benefit is approved by a resolution passed at a General Meeting of
the Company.
Mr Ridgeway is a related party of the Company within the meaning of Chapter 2E of the Corporations Act
and the Options to be granted to him to acquire fully paid ordinary shares in the Company will constitute a
financial benefit for the purposes of Chapter 2E of the Corporations Act. The grant will, therefore, involve
the giving of a financial benefit to a related party of the Company. Accordingly, the Company is required
to seek Shareholder approval of the grant of the Options to Mr Ridgeway prior to making that grant.
Specific Disclosure of Information as Required by the Corporations Act and the Listing Rules
In accordance with Section 219 of the Corporations Act, and for the purposes of Listing Rule 10.11, the
following information is provided:
a) The related party to whom this Resolution would permit financial benefits to be given is Mr Bernie
Ridgeway;
b) The financial benefit to Mr Bernie Ridgeway consists of the grant to him of 2,000,000 Options
exercisable at $3.00 per Option which are subject to the general terms and conditions set out below;
c) The Directors of the Company other than Mr Ridgeway recommend to Shareholders that this
Resolution be passed as they believe it is in the Company’s best interests to provide Mr Ridgeway
with performance incentives. Mr Ridgeway makes no recommendation;
d) None of the Directors of the Company other than Mr Ridgeway has a direct interest in the outcome of
the Resolution. Mr Ridgeway has a direct interest in the outcome of the Resolution as he is the
recipient of the Options;
e) ASIC requires that a dollar value be placed on the Options to be granted and has indicated the Black
and Scholes Option valuation method is acceptable for calculating such value. The Black and
Scholes Option Valuation method is designed to value listed securities that are freely tradeable. A
range of values for the Options has been estimated using this valuation method. On this basis, the
Options currently have a value of approximately 60 cents each. Therefore, the implied “value” being
received by Mr Ridgeway is assessed at approximately $1.2 million. The key assumptions used in
this calculation are:
• risk free rate of 7.00% based on the Commonwealth Government securities rate with a maturity
date approximating that of the expiration period of the options (source: Reserve Bank of Australia);
• strike price of the Option of $3.00, being the exercise price on or before 5 years from the date of
issue of the Options;
• time to expiry of 5 years;
• current share price of $1.85, based on the closing share price on 4 September 2008; and
• share volatility of 50%, being the annualised standard deviation of returns.
f) The highest and lowest price on the ASX for the Company’s shares in the past 12 months was $2.69
on 13 December 2007 and $1.04 on 17 August 2007. The closing share price of the Company's
shares on 4 September 2008, being the latest practicable date before the date of this Notice of
Meeting was $1.85;
g) The dilution effect if the Options granted to Mr Ridgeway are exercised would amount to
approximately 1.1% based on the Company’s current issued share capital;
Page 2
EXPLANATORY MEMORANDUM
h) Mr Ridgeway currently holds 3.5 million ordinary fully paid shares and 2 million options in Imdex
Limited through Wear Services Pty Ltd and Keeble Nominees Pty Ltd, companies of which he is a
director. As at the date of this Explanatory Memorandum and as set out in further detail in Imdex’s
2008 Annual Report that accompanies this Notice of Meeting, Mr Ridgeway’s total remuneration for
the year ended 30 June 2008 was $562,509 and it is anticipated that Mr Ridgeway's salary for the
current financial year will be substantially the same as for the previous financial year, however this
will be the subject of review by the Company’s Remuneration Committee on, or about, 31 December
2008. Mr Ridgeway does not currently receive any other remuneration or emoluments from the
Company;
i) The primary purpose of the grant of Options is to provide a performance incentive to Mr Ridgeway.
Given these purposes, the Directors do not consider that there is any material opportunity cost or
benefit foregone to the Company in granting the Options. The Board determined the number and
value of the Options to be issued to Mr Ridgeway based on Mr Ridgeway's historical level of
participation and assistance to the Company and also the Board's perception of Mr Ridgeway’s likely
future involvement, commitment and loyalty to the Company; and
j) Other than the information set out in this Explanatory Memorandum, neither the Directors nor the
Company are aware of any additional information that would be reasonably required by the
Shareholders to enable them to make a decision in relation to whether the grant to Mr Ridgeway is in
the Company’s interests.
General Terms and Conditions
a) The Options shall be exercisable by the option holder by notice in writing to the Company together
with a payment of the exercise price of the Options, provided that Mr Ridgeway is employed by or on
behalf of the Company at the time the Options are exercised or he may exercise the Options or part
thereof within three calendar months of ceasing such employment;
b) An option holder may exercise one third of the Options granted to him at any time within the period
beginning one year after the date of issue of the Options and ending five years of the date of issue of
the Options. A further one third of the Options may be granted to him at any time within the period
beginning two years after the date of issue of the Options and ending five years of the date of issue of
the Options. The remaining one third of the Options may be granted to him at any time within the
period beginning three years after the date of issue of the Options and ending five years of the date of
issue of the Options;
c) Any notice of exercise of an Option received by the Company shall be deemed to be a notice of the
exercise of the Option on the first business day after the date of receipt of the notice;
d) No Option will entitle the option holder to:
(i)
(ii)
distributions or bonus issues made by the Company to its Shareholders; or
the right to participate in any new offers of securities which may be made to the existing
Shareholders of the Company without first exercising that option and the option holder
has no rights to a change in the exercise price, or a change in the number of shares over
which the Option may be exercised;
e)
In the event of any re-organisation (including reconstruction, consolidation, subdivision, share buy-
back, reduction or return) of the issued capital of the Company, the rights of the Option holder shall
be reorganised (as appropriate) in accordance with the Listing Rules of the ASX and (subject to the
provisions with respect to rounding of entitlements) in all other respects the terms of the Options shall
remain unchanged;
f) Shares issued pursuant to the exercise of the Options will be granted following the receipt of all
relevant documentation and payments;
g) Any shares granted on exercise of Options will be credited as fully paid and will rank pari passu in all
respects with other shares on issue as at the exercise date;
Page 3
EXPLANATORY MEMORANDUM
h) During Mr Ridgeway's employment with the Company or any of its subsidiaries, the holder may
transfer the Options to an associate or related party of the holder;
i)
In the event of the holder dying whilst an employee of the Company or any of its subsidiaries prior to
the expiry of the Options, the right of the holder to exercise the Options shall vest in his executor
and/or administrator and they shall have the same rights to exercise the Options as such deceased
holder would have had during the option period but for his death;
j) The Options will not be quoted on the ASX; and
k) The Company will not make an application to the ASX for the quotation of shares issued on exercise
of Options. The Company will not be under any obligation to ensure that such shares will be quoted.
Voting Restrictions
The Company will disregard any votes cast on this Resolution by Mr Ridgeway or his associates.
However, the Company need not disregard a vote if:
a)
b)
It is cast by a person as proxy for a person who is entitled to vote in accordance with the directions on
the proxy form; or
It is cast by the Chairperson of the meeting as proxy for a person who is entitled to vote as the proxy
decides.
4 Resolution 4 – Ratification of the issue of 723,679 Shares
Resolution 4 seeks Shareholder ratification for the issue and allotment of 723,679 Shares issued to
Christian Rolando Dockendorff Catalán, Christian Alexander Dockendorff Rioseco and Fernando Ivan
Dockendorff Catalán (collectively the Vendors) as part consideration for the purchase of all of the shares
of Southernland S.A. (Southernland).
4.1 Southernland S.A.
Southernland is, a South American based company which specialises in the manufacture and supply of
drilling fluids for the Latin American market. The business of Southernland is complementary to the
existing drilling fluids businesses of Imdex. The total consideration for the purchase of all of the shares of
Southernland was $2,920,000, consisting of a cash payment of $1,533,000 (including on-costs) and the
issue of 723,769 Shares at a deemed issue price of $1.92 per share.
4.2 ASX Listing Rule 7.4
ASX Listing Rule 7.1 provides that a company must not, subject to specified exceptions, issue or agree to
issue during any 12 month period any equity securities, or other securities with rights to conversion to
equity (such as an option), if the number of those securities exceeds 15% of the number of securities in
the same class on issue at the commencement of that 12 month period.
ASX Listing Rule 7.4 sets out an exception to ASX Listing Rule 7.1. It provides that where a company in
general meeting ratifies the previous issue of securities made pursuant to ASX Listing Rule 7.1 (and
provided that the previous issue did not breach Listing Rule 7.1) those securities will be deemed to have
been made with shareholder approval for the purpose of ASX Listing Rule 7.1.
Ratification by the shareholders of the Company is now sought pursuant to ASX Listing Rule 7.4 in order
to reinstate the Company’s capacity to issue up to 15% of its issued capital, if required, in the next 12
months without shareholder approval.
Page 4
EXPLANATORY MEMORANDUM
ASX Listing Rule 7.5 requires that the following information be provided to shareholders in relation to the
Shares the subject of Resolution 4:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
the total number of Shares issued by the Company on 1 November 2007 was 723,679 Shares;
the Shares are subject to voluntary escrow for 24 months from 1 November 2007;
the Shares were issued at a deemed price of $1.92 per Share, being the closing weighted
average share price of the Company's Shares on ASX on the five business days prior to 1
November 2007;
the Shares were allotted to Christian Rolando Dockendorff Catalán, Christian Alexander
Dockendorff Rioseco and Fernando Ivan Dockendorff Catalán (collectively the Vendors) as part
consideration for the purchase by the Company of Southernland S.A.
all of the Shares allotted and issued rank equally in all respects with the Company’s existing
Shares on issue;
no Shares were issued to any related party of the Company; and
no monies were raised by the issue as the issue was in part consideration for the purchase by
the Company of all of the shares in Southernland S.A..
The Directors recommend that Shareholders vote in favour of Resolution 4.
5 Resolution 5 – Ratification of the issue of 168,530 Shares
Resolution 5 seeks Shareholder ratification for the issue and allotment of 168,530 Shares issued to Elvira
Zhubaniyazov as part consideration for the purchase of the remaining 25% of Shares in Suay Energy
Services LLP (Suay).
5.1 Suay
Suay provides drilling fluids to customers in the Caspian Sea region. The total consideration for the
purchase of the remaining 25% of the shares in Suay was $778,075 comprising a cash payment of
$500,000 and the issue of 168,530 Shares at a deemed issue price of $1.65 per Share being the price of
the Company’s shares at 30 June 2008.
5.2 ASX Listing Rule 7.4
ASX Listing Rule 7.1 provides that a company must not, subject to specified exceptions, issue or agree to
issue during any 12 month period any equity securities, or other securities with rights to conversion to
equity (such as an option), if the number of those securities exceeds 15% of the number of securities in
the same class on issue at the commencement of that 12 month period.
ASX Listing Rule 7.4 sets out an exception to ASX Listing Rule 7.1. It provides that where a company in
general meeting ratifies the previous issue of securities made pursuant to ASX Listing Rule 7.1 (and
provided that the previous issue did not breach Listing Rule 7.1) those securities will be deemed to have
been made with shareholder approval for the purpose of ASX Listing Rule 7.1.
Page 5
EXPLANATORY MEMORANDUM
Ratification by the shareholders of the Company is now sought pursuant to ASX Listing Rule 7.4 in order
to reinstate the Company’s capacity to issue up to 15% of its issued capital, if required, in the next 12
months without shareholder approval.
ASX Listing Rule 7.5 requires that the following information be provided to shareholders in relation to the
Shares the subject of Resolution 5:
(h)
(i)
(j)
(k)
(l)
(m)
the total number of Shares issued by the Company on 1 July 2008 was 168,530 Shares;
the Shares were issued at a deemed price of $1.65 per Share, being the price of the Company's
shares on the ASX on 30 June 2008;
the Shares were allotted to Elvira Zhubaniyazov as part consideration for the purchase by the
Company of 25% of Suay Energy Services LLP;
the Shares allotted and issued rank equally in all respects with the Company’s existing Shares
on issue;
no Shares were issued to any related party of the Company; and
no monies were raised by the issue as the issue was in part consideration for the purchase by
the Company of 25% of the shares in Suay Energy Services LLP.
The Directors recommend that Shareholders vote in favour of Resolution 5.
6 Resolution 6 – Ratification of the issue of Staff Shares
Resolution 6 seeks Shareholder ratification for the issue and allotment of 1,605,499 Shares which were
issued to employees and consultants of the Company (Staff Shares).
6.1 Staff Shares
1,605,499 Staff Shares were issued to various employees of the Company on the exercise of employee
options previously granted by the Board in accordance with the Company's Staff Option Plan as
incentives and rewards for staff loyalty and performance. The Company notes that the Staff Option Plan
has since been superseded by an Employee Option Plan approved by Shareholders at a general meeting
held on 30 April 2007.
The full details of all the Staff Shares issued are provided at Annexure A, however by way of summary:
(a)
(b)
(c)
912,168 Shares were issued at a price of $0.20;
306,998 Shares were issued at a price of $0.35; and
386,333 Shares were issued at a price of $1.00.
Page 6
EXPLANATORY MEMORANDUM
6.2 ASX Listing Rule 7.4
ASX Listing Rule 7.1 provides that a company must not, subject to specified exceptions, issue or agree to
issue during any 12 month period any equity securities, or other securities with rights to conversion to
equity (such as an option), if the number of those securities exceeds 15% of the number of securities in
the same class on issue at the commencement of that 12 month period.
ASX Listing Rule 7.4 sets out an exception to ASX Listing Rule 7.1. It provides that where a company in
general meeting ratifies the previous issue of securities made pursuant to ASX Listing Rule 7.1 (and
provided that the previous issue did not breach Listing Rule 7.1) those securities will be deemed to have
been made with shareholder approval for the purpose of ASX Listing Rule 7.1.
Ratification by the shareholders of the Company is now sought pursuant to ASX Listing Rule 7.4 in order
to reinstate the Company’s capacity to issue up to 15% of its issued capital, if required in the next 12
months without shareholder approval.
ASX Listing Rule 7.5 requires that the following information be provided to shareholders in relation to the
Shares the subject of Resolution 6:
(a)
(b)
(c)
(d)
(e)
(f)
The total number of Shares issued by the Company was 1,605,499 Shares;
912,168 Shares were issued at a price of $0.20 per Share, 306,998 Shares were issued at a
price of $0.35 per Share and 386,333 Shares were issued at a price of $1.00 per Share. The
Shares were issued on the dates detailed in the table in Annexure A, which dates are between
1 July 2007 and 30 June 2008;
The Shares were allotted to employees of the Company by the exercise of Staff Options held by
the employees, which Staff Options had been issued by way of incentive and reward for
performance and loyalty pursuant to the Company's Staff Option Plan;
The Shares allotted and issued rank equally in all respects with the Company’s existing Shares
on issue;
No Shares were issued to any related party of the Company; and
$676,216 in total was raised by the issue, which was used as general working capital.
The Directors recommend that Shareholders vote in favour of Resolution 6.
7 Resolution 7 – Remuneration Report
Included in the Directors' Report contained within the 2008 Annual Report is a Remuneration Report that
sets out the details of the remuneration of all Directors and the highest paid group executives. In addition,
it describes the Board’s remuneration policy.
The Board submits the Remuneration Report to Shareholders for their consideration and adoption by way
of a non-binding resolution as required by the Corporations Act.
The Directors recommend that Shareholders vote in favour of Resolution 7.
Page 7
EXPLANATORY MEMORANDUM
8 Glossary
In this Explanatory Memorandum, the following terms have the following meanings unless the context
otherwise requires:
AGM
ASIC
ASX
means the 2008 Annual General Meeting of the Company to be held at 11.00am
on 16 October 2008.
means the Australian Securities & Investments Commission.
means the Australian Securities Exchange operated by ASX Limited ABN 98 008
624 691.
means the Board of Directors.
Board
means Imdex Limited ABN 78 008 947 813.
Company
means the Constitution of the Company.
Constitution
Corporations Act means the Corporations Act 2001 (Cth).
Director
Share
Shareholder
Staff Options
means a Director of the Company.
means a fully paid ordinary share in the capital of the Company.
means a holder of a Share.
means the options issued to employees and/or consultants of the Company
pursuant to the Staff Option Plan.
Staff Option Plan means the previous option plan for employees and consultants of the Company.
Staff Shares
Southernland
Suay
WST
means the Shares issued on the exercise of the Staff Options.
means Southernland S.A.
means Suay Energy Services LLP.
means Australian Western Standard Time.
Page 8
ANNEXURE A – STAFF SHARES
Date of exercise of options Number of Staff
Issue Price ($)
Shares issued
1/07/2007
18/07/2007
18/07/2007
18/07/2007
23/07/2007
23/07/2007
01/08/2007
01/08/2007
03/09/2007
07/09/2007
12/09/2007
24/09/2007
26/09/2007
26/09/2007
27/09/2007
27/09/2007
22/10/2007
22/10/2007
22/10/2007
23/10/2007
26/10/2007
26/10/2007
05/11/2007
05/11/2007
05/11/2007
29/11/2007
04/12/2007
04/12/2007
17/12/2007
18/12/2007
19/12/2007
09/01/2008
09/01/2008
8,333
8,334
25,000
50,000
25,000
10,000
10,000
5,000
20,000
25,000
16,667
33,500
22,000
16,667
25,000
8,333
50,000
25,000
5,000
250,000
16,667
250,000
16,666
30,000
3,333
8,333
25,000
15,000
16,666
10,000
25,000
10,000
25,000
$0.35
$0.20
$0.35
$1.00
$1.00
$0.35
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.35
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.35
$0.20
$0.35
$0.35
$1.00
$0.35
$0.20
$0.35
$1.00
$0.35
$1.00
Page 9
ANNEXURE A – STAFF SHARES
(continued)
09/01/2008
18/01/2008
22/01/2008
22/01/2008
23/01/2008
25/01/2008
30/01/2008
04/02/2008
20/02/2008
20/02/2008
27/02/2008
29/02/2008
29/02/2009
04/03/2008
04/03/2008
05/03/2008
07/03/2008
07/03/2008
10/03/2008
01/04/2008
04/04/2008
11/04/2008
11/04/2008
16/04/2008
17/04/2008
28/04/2008
01/05/2008
27/05/2008
16/06/2008
16/06/2008
19/06/2008
Total
20,000
16,667
20,000
6,667
25,000
16,666
20,000
25,000
8,333
25,000
33,000
16,667
16,667
25,000
5,000
34,000
10,000
26,667
10,000
10,000
8,333
5,000
3,000
30,000
8,333
5,000
15,000
4,000
16,000
10,000
40,000
1,605,499
$0.35
$0.20
$1.00
$0.35
$1.00
$0.35
$0.20
$0.35
$0.35
$1.00
$1.00
$1.00
$0.35
$1.00
$0.35
$0.35
$0.20
$0.35
$0.35
$0.35
$1.00
$1.00
$0.35
$1.00
$1.00
$1.00
$1.00
$1.00
$1.00
$0.35
$0.20
Page 10
CORPORATE REPRESENTATIVE
CERTIFICATE
(Company)
(Authorised corporate representative)
Shareholder Details
This is to certify that by a resolution of the Directors of:
(Insert name of shareholder company)
The Company has appointed:
(Insert name of corporate representative)
in accordance with the provisions of section 250D of the Corporations Act 2001, to act as the body corporate representative of
that Company at the Annual General Meeting of Imdex Limited to be held on 16 October 2008 and at any adjournments of that
meeting.
DATED
………………………………………………………………………………………………………………………………..2008
Please sign here
Executed by the Company
in accordance with its constituent documents
Signed by authorised representative
Signed by authorised representative
Name of authorised representative (print)
Name of authorised representative (print)
Position of authorised representative (print)
Position of authorised representative (print)
Instructions for Completion
1. Insert name of appointor Company and the name or position of the appointee (eg “John Smith” or “each Director of the
Company”).
2. Execute the Certificate following the procedure required by your Constitution or other constituent documents.
3. Print the name and position (eg Director) of each Company officer who signs this Certificate on behalf of the Company.
4. Insert the date of execution where indicated.
5. The certificate must be produced prior to admission to the Meeting. You may send or deliver the Certificate to Imdex
Limited, Level 1, 15 Rheola Street, West Perth WA 6005 or fax to (08) 9481 6527.
Page 11
CORPORATE REPRESENTATIVE
CERTIFICATE
THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY
Page 12
Imdex Limited
ABN 78 008 947 813
000001 000 IMD
MR SAM SAMPLE
FLAT 123
123 SAMPLE STREET
THE SAMPLE HILL
SAMPLE ESTATE
SAMPLEVILLE VIC 3030
Proxy Form
Lodge your vote:
By Mail:
Computershare Investor Services Pty Limited
GPO Box 242 Melbourne
Victoria 3001 Australia
Alternatively you can fax your form to
+61 8 9323 2033
For all enquiries call:
(within Australia) 1300 850 505
(outside Australia) +61 3 9415 4000
For your vote to be effective it must be received by 11.00am (WST) Tuesday 14 October 2008
How to Vote on Items of Business
All your securities will be voted in accordance with your directions.
Appointment of Proxy
Voting 100% of your holding: Direct your proxy how to vote by
marking one of the boxes opposite each item of business. If you do
not mark a box your proxy may vote as they choose. If you mark
more than one box on an item your vote will be invalid on that item.
Voting a portion of your holding: Indicate a portion of your
voting rights by inserting the percentage or number of securities
you wish to vote in the For, Against or Abstain box or boxes. The
sum of the votes cast must not exceed your voting entitlement or
100%.
Appointing a second proxy: You are entitled to appoint up to two
proxies to attend the meeting and vote on a poll. If you appoint two
proxies you must specify the percentage of votes or number of
securities for each proxy, otherwise each proxy may exercise half of
the votes. When appointing a second proxy write both names and
the percentage of votes or number of securities for each in Step 1
overleaf.
A proxy need not be a securityholder of the Company.
View the annual report:
www.imdexlimited.com
Signing Instructions
Individual: Where the holding is in one name, the securityholder
must sign.
Joint Holding: Where the holding is in more than one name, all of
the securityholders should sign.
Power of Attorney: If you have not already lodged the Power of
Attorney with the registry, please attach a certified photocopy of the
Power of Attorney to this form when you return it.
Companies: Where the company has a Sole Director who is also
the Sole Company Secretary, this form must be signed by that
person. If the company (pursuant to section 204A of the
Corporations Act 2001) does not have a Company Secretary, a
Sole Director can also sign alone. Otherwise this form must be
signed by a Director jointly with either another Director or a
Company Secretary. Please sign in the appropriate place to
indicate the office held.
Attending the Meeting
Bring this form to assist registration. If a representative of a corporate
securityholder or proxy is to attend the meeting you will need to
provide the appropriate ''Certificate of Appointment of Corporate
Representative'' prior to admission. A form of the certificate may be
obtained from Computershare or online at www.computershare.com.
Comments & Questions: If you have any comments or questions for
the company, please write them on a separate sheet of paper and
return with this form.
Turn over to complete the form
PLEASE NOTE: For security reasons it is important that you
keep your SRN/HIN confidential.
999999_SAMPLE_0_0_PROXY/000001/000001/i
MR SAM SAMPLE
FLAT 123
123 SAMPLE STREET
THE SAMPLE HILL
SAMPLE ESTATE
SAMPLEVILLE VIC 3030
Proxy Form
Change of address. If incorrect,
mark this box and make the
correction in the space to the left.
Securityholders sponsored by a
broker (reference number
commences with 'X') should advise
your broker of any changes.
*I9999999999*
I 9999999999
I ND
Please mark
to indicate your directions
Appoint a Proxy to Vote on Your Behalf
I/We being a member/s of Imdex Limited hereby appoint
the Chairman
of the Meeting OR
XX
PLEASE NOTE: Leave this box
blank if you have selected the
Chairman of the Meeting. Do not
insert your own name(s).
or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy
to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as
the proxy sees fit) at the Annual General Meeting of Imdex Limited to be held at the Celtic Club, 48 Ord Street, West Perth, Western Australia
on Thursday, 16/10/2008 at 11.00am and at any adjournment of that meeting.
Important for Resolutions 3, 4, 5 and 6: If the Chairman of the Meeting is your proxy and you have not directed him/her how to vote on
Resolutions 3 to 6 below, please mark the box in this section. If you do not mark this box and you have not directed your proxy how to vote, the
Chairman of the Meeting will not cast your votes on Resolutions 3 to 6 and your votes will not be counted in computing the required majority if a
poll is called on these resolutions. The Chairman of the Meeting intends to vote undirected proxies in favour of Resolutions 3 to 6.
I/We acknowledge that the Chairman of the Meeting may exercise my proxy even if he/she has an interest in the outcome of that Item
and that votes cast by him/her, other than as proxy holder, would be disregarded because of that interest.
Items of Business
PLEASE NOTE: If you mark the Abstain box for an item, you are directing your proxy not to vote on your
behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.
Resolution 2
Re-election of Mr Ian Burston as a Director
Resolution 3
Issue of options to Mr B W Ridgeway
Resolution 4
Ratification of issue of 723,679 Shares
Resolution 5
Ratification of issue of 168,530 Shares
Resolution 6
Ratification of issue of Shares - Staff Options
Resolution 7
Approval of Remuneration Report
The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.
Signature of Securityholder(s) This section must be completed.
Individual or Securityholder 1
Securityholder 2
Securityholder 3
Sole Director and Sole Company Secretary
Director
Director/Company Secretary
Contact
Name
I M D
Contact
Daytime
Telephone
Date
/ /
0 5 5 3 5 4 A