Providing Quality Drilling Fluids and Leading Down Hole Instrumentation to the World
2010 Annual Report
Imdex Limited (Imdex)
ABN 78 008 947 813 Imdex was listed on the Australian
Securities Exchange on 24 September 1987.
Registered Office address
8 Pitino Court
OSBORNE PARK, WA, AUSTRALIA, 6017
Head Office address
8 Pitino Court
OSBORNE PARK, WA, AUSTRALIA, 6017
Directors
Mr. Ross Kelly (Chairman)
Mr. Bernie Ridgeway (Managing Director)
Mr. Kevin Dundo (Non Executive Director)
Mr. Magnus Lemmel (Non Executive Director)
Ms. Elizabeth Donaghey (Non Executive Director)
2010 Annual General Meeting
Imdex’s Annual General Meeting will be held at the Celtic
Club, 48 Ord Street, West Perth, Western Australia 6005
commencing at 11:00am on Thursday 14 October 2010.
Contents
Imdex Group at a Glance
FY10 Snapshot
FY10 Comparative Financial Performance
Imdex’s Board of Directors
Chairman’s Report
Managing Director’s Report
3
7
8
10
12
15
FY10 Growth Initiatives
Global Business
Imdex’s Management & Team
Quality, Health, Safety & Environment
Managing Risk
FY10 Financial Report
19
22
23
25
27
29
Well
established
global
operations
Imdex Group at a glance
KEY DATA AS AT 30 JUNE 2010
Market Capitalisation
$142,384,403
Shares on Issue
195,047,128
Shareholders
3,598
Employees
305
Imdex Limited (Imdex) is a ASX listed company providing drilling
fluids and leading down hole instrumentation to the mining, oil and
gas, water well, and civil engineering industries world wide.
The Company has well established operations in all key mineral
exploration and mining regions of the world, including Asia Pacific, the
Americas and Africa, and has revenue generating activities in others.
An illustration of Imdex’s global presence is set out on page 22.
Imdex operates two clearly defined and distinct divisions, the
Drilling Fluids and Chemicals Division (DFC), and the Down Hole
Instrumentation Division (DHI). The Company is focused on two
principal end markets, the mineral exploration and mining industry,
and the oil and gas industry.
Imdex’s DFC Division includes the following trading brands:
AMC Minerals and AMC Oil and Gas. These business units
service the global mineral exploration / mining and niche
onshore oil and gas industries.
Imdex’s DHI Division includes Reflex, which focuses on the mineral
exploration / mining industry, and Flexit, which markets exclusively
to the oil and gas industry.
Group Structure
IMDEX LIMITED
IMDEX LIMITED
DIVISIONS
TRADING COMPANIES
RESEARCH & DEVELOPMENT
OIL & GAS
DRILLING FLUIDS &
CHEMICALS DIVISION
MINERALS
SAMCHEM
FLEXIT
AUSTRALIAN
MUD
COMPANY
AMC
POLY-DRILL
REFLEX
SUAY
ENERGY
AMC
SOUTHERN-
LAND
FLEXIT
(OIL & GAS)
REFLEX
(MINERALS)
IMDEX TECH
UK
IMDEX TECH
GERMANY
IMDEX TECH
SWEDEN
IMDEX TECH
UK
IMDEX TECH
SWEDEN
IMDEX TECH
AUSTRALIA
Imdex 2010 Annual Report | 3
On site
technical
support
DRILLING FLUIDS &
CHEMICALS (DFC)
DIVISION
Imdex’s DFC Division provides complete
drilling fluid solutions by utilising its
extensive range of drilling fluids and treating
chemicals, fluid transfer and containment
equipment and on site technical support to
service customers globally.
What are drilling fluids & treating
chemicals?
Drilling fluids, or mud, as it is known in the
drilling industry, are a key part of the drilling
process in mining, oil and gas, and civil
applications. Imdex offers a broad range of
drilling fluids, all with unique properties and
uses, however, their principal application
is 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. Fluid is
pumped down the drill pipe, through the
drill bit, and returns via the cavity between
the drill pipe and borehole carrying the drill
cuttings to the surface. Traditionally the fluid
then circulates through a shale shaker or
mud pits to remove the cuttings from the
fluid for reuse.
What is fluid transfer and
containment equipment?
AMC has developed surface and
underground solids control units that
provide an economical and environmentally
acceptable alternative to the conventional
mud pits used in the drilling process
referred to above.
DOWN HOLE
INSTRUMENTAION
(DHI) DIVISION
Imdex’s DHI Division develops,
manufactures and markets advanced down
hole survey and core orientation instruments
to the mineral exploration and oil and gas
industries globally.
Imdex’s range of instruments for the
mineral exploration industry marketed
by Reflex includes the following core
orientation and survey instruments:
• Reflex ACT - A digital core orientation
instrument;
• Reflex ACT II RD - A rapid decent core
orientation instrument;
• Reflex EZ-Shot - A single shot magnetic
survey instrument;
• Reflex EZ-AQ - A magnetic survey
instrument specifically designed for AQ
sized boreholes;
• Reflex EZ-Trac - A multi shot magnetic
survey instrument;
• Reflex Maxibor II - An optical non-
magnetic survey instrument;
• Reflex Gyro - A gyroscopic survey
instrument; and
• Customised directional motors.
Imdex’s range for the oil and gas industry
marketed by Flexit includes the following
advanced instruments:
• Flexit Target INS - North seeking high
speed continuous gyro;
• Flexit HTMS - High temperature Multi
Shot survey instrument; and
• Flexit HTGS - High temperature MEMS
gyroscopic survey instrument.
Fig 1. The drilling process generates chips of rock
known as cuttings
Fig 2. Fluid is pumped down the drill pipe
lubricating the drill bit and returning
cuttings to the surface
Fig 3. Fluids stabilize and keep the bore hole open
Fig 4. Traditional mud pits leave environmental
footprint and require site rehabilitation
Fig 5. Solids Control Units minimise
environmental impact caused by mud pits
1
2
3
4
5
Imdex 2010 Annual Report | 5
Increased
global mineral
exploration
generation Solids Control Units;
FINANCIAL PERFORMANCE IN FY10
FY10 Snapshot
Strategy to increase shareholder value
• Continue to grow Imdex’s global business;
• Expansion in the oil and gas market;
• Maintain product leadership through
continued investment in research and
product development;
• Increase rental based revenue; and
• Achieve operational efficiencies.
Platform for growth
• Improve global customer relationships;
• Maximise global reach; and
• Optimise Imdex’s product portfolio.
Operational achievements in FY10
• Marketing of Reflex Gyro, ACT II and
Reflex EZ-Com II to customers globally;
• Retained market leadership in the coal
bed methane sector;
• Successful relocation of manufacturing
facilities from the UK to Australia;
• New manufacturing facility at Osborne
Park (Western Australia) commissioned
and operating well;
• Move to a new regional and reporting
structure (effective from 1 July 2010);
• Rationalisation of drilling fluid brands to
AMC Mining and AMC Oil and Gas;
• Drilling fluid product development
utilising new laboratory at Osborne Park;
• Further development of the new
IMPERATIVES, ENTERPRISE STRATEGY & GOALS
• Successful operation of the Flexit HTGS
survey instrument in the USA;
• Significant progress with Flexit Target; and
• Progress with Sensonor and the
development of north seeking MEMS gyro.
Market review
• Improved trading activity in the Asia
Pacific Region, slower recovery in Africa,
Canada and Latin America;
• Increased drilling activity towards the end
of the first half of FY10 with significant
improvement in the second half of FY10;
• Stronger commodity prices, improving
from the significant lows experienced in
the second half of FY09;
• Increased global mineral exploration
expenditure relative to lows of second
half of FY09;
• Increased global oil and gas exploration
and production expenditure from the
lows of second half of FY09;
• Higher rig utilisation levels, a trend major
customers forecast to continue in FY11;
• Greater activity in onshore oil and gas
drilling in USA; and
• Activity within the coal bed methane
sector in Australia remained strong and is
forecast to continue in FY11.
INCREASED
SHARE AND
LONG TERM
PROFITABLE GROWTH
BUILD
GLOBAL
CAPACITIES
DEPLOY
CUSTOMISED,
LOCAL
SOLUTIONS
IMPROVE
CUSTOMER
INTIMACY
ACHIEVE
OPERATIONAL
EFFICIENCIES
OPTIMISE
PRODUCT
PORTFOLIO
GOAL
ENTERPRISE
STRATEGY
IMPERATIVES
Revenue from continuing
operations (excluding interest revenue)
$134.3m
Normalised EBITA from
continuing operations
(excluding non-operational items)
$20.7m
Normalised net profit after tax
from continuing operations
(excluding non operational items)
$9.8m
Cash flow from operations
$5.7m
Gearing levels net debt / net debt + equity
19.6%
Net assets
$94.5m
Imdex 2010 Annual Report | 7
FY10 Comparative Financial Performance
Consolidated
2008
$’000
2009
$’000
2010
$’000
09-10 Var
%
Revenue from continuing operations (excluding interest income)
142,009
136,968
134,253
Operating Profit before Interest, Tax, Depreciation & Amortisation
Depreciation
42,068
(3,266)
27,817
(3,318)
24,893
(4,182)
Earnings before Interest, Tax & Amortisation (EBITA)
38,802
24,499
20,711
EBITA margin
Amortisation
Earnings before Interest & Tax (EBIT)
Net interest expense
Net profit before tax
Income tax expense
27%
18%
15%
(6,055)
(6,535)
(6,363)
32,747
(862)
31,885
(10,804)
17,964
14,348
(826)
17,138
(5,811)
(771)
13,577
(3,781)
Net Profit after Tax (before non-operational items)
21,081
11,327
9,796
Net trading result of Surtron after tax
1,001
-
-
Non-operational items
Forex gain / (loss) on loan to SEH
Impairment of SEH investment
Impairment of operations
Profit on sale of Surtron business
Tax effect of non-operational items
-
-
-
12,139
(2,219)
1,057
-
-
-
(317)
(677)
(10,440)
(23,531)
-
3,304
Net Profit (Loss) for the Year after Tax
32,002
12,067
(21,548)
(2%)
(11%)
26%
(15%)
(17%)
(3%)
(20%)
(7%)
(21%)
(35%)
(14%)
-
-
-
-
-
-
-
Basic earnings (loss) per share from continuing operations (cents)
11.22 ¢
6.37 ¢
(11.05 ¢)
(273%)
Net Cash provided by Operating Activities
Cash on hand
Net Assets
Total Borrowings
Net Tangible Assets per Share
10,257
13,276
16,175
11,975
105,643
116,198
35,552
14.02 ¢
34,039
19.10 ¢
5,700
9,007
94,495
32,018
22.83 ¢
(65%)
(25%)
(19%)
(6%)
20%
8 | Imdex 2010 Annual Report
By the second half of FY10 global trading conditions improved
significantly allowing Imdex’s revenue and margin levels to return
towards those experienced prior to the global financial crisis.
1H06
2H06
1H07
2H07
1H08
2H08
1H09
2H09
1H10
2H10
1H06
2H06
1H07
2H07
1H08
2H08
1H09
2H09
1H10
2H10
Normalised* Revenue by Division
18.351 / 4.76 total 23.111
23.349 / 6.44 total 29.789
29.073 / 16.857 total 45.93
33.327 / 24.543 total 57.87
42.302 / 26.837 total 69.139
43.398 / 29.463 total 72.861
50.506 / 29.768 total 80.274
41.194 / 15.532 total 56.726
40.996 / 17.398 total 58.394
48,601 / 27,258 total 75,859
* Excludes discontinued operations and non operational items
Normalised* EBITA
2.0
5.4
10.1
12.2
4.5
7.5
13.0
* Excludes discontinued operations and non operational items
19.8
20.0
20.0
Imdex 2010 Annual Report | 9
Mr. Kevin Dundo
B.Com, LLB
Non Executive Director
Appointed to the Board
14 January 2004.
Mr. Bernard Ridgeway
B.Bus (ACCTG) ACA
Managing Director
Appointed to the Board
23 May 2000.
Mr. Ross Kelly
BE (HONS) FAICD
Non Executive Chairman
Appointed to the Board
14 January 2004.
Ms. Betsy Donaghey,
B.S. Civil Engineering,
M.S. Operations Research
Non Executive Director
Appointed to the Board
28 October 2009.
Mr. Magnus Lemmel B.A.
Non Executive Director
Appointed to the Board
19 October 2006.
Imdex's Board of Directors
Imdex’s Board members have between them extensive professional expertise, business experience and
technical knowledge of the mineral exploration / mining and oil and gas industries.
In 2007 the Board set down a robust strategy for global growth that has been successfully maintained,
despite periods of unprecedented economic volatility. Imdex has developed into a company with world
class expertise, research and development capabilities, global operations and a loyal customer base.
In September 2009, Imdex’s Chairman, Mr. Ian Burston, announced his decision to retire from the
position following the Company Annual General Meeting held on 15 October 2009. At that meeting,
fellow Board member Mr. Ross Kelly was appointed Chairman. Ms. Betsy Donaghey was welcomed to
Imdex’s Board on 28 October 2009 with the view to enhancing its oil and gas expertise.
10 | Imdex 2010 Annual Report
Mr. Ross Kelly BE (HONS) FAICD
Non Executive Chairman. Age: 72 years
• Appointed to the Board 14 January 2004.
• Appointed as Chairman 15 October 2009.
• Bachelor of Electrical Engineering with Honours, Fellow Australian Institute of
Company Directors.
• Previously Chairman and Non Executive Director of Clough Limited, Sumich Group Limited,
Orbital Corporation Limited, Beltreco Limited, Fraser Range Granite NL and Director of
Aurora Gold Limited, PA Consulting Services Ltd and the Fremantle Football Club Ltd.
• Advisor to the Western Australian Government on water policy and water reform.
• Consultant to a number of major Australian companies within the mining, offshore gas, oil
refining, steel, construction and heavy process industries.
• Councillor of the Australian Institute of Company Directors and Member of the Advisory
Board of the Curtin University Graduate School of Business.
Mr. Bernard Ridgeway B.Bus (ACCTG)
ACA
Managing Director. Age: 56 years
• Appointed to the Board 23 May 2000.
• Over 25 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.
• Director of Sino Gas and Energy Holdings Limited.
Mr. Magnus Lemmel B.A.
Non Executive Director. Age 71 years
• Appointed to the Board 19 October 2006.
• Management Consultant based in Brussels, Belgium.
Mr. Kevin Dundo B.Com, LLB
Non Executive Director. Age: 58 years
• Involved in small business development in Sweden. Chairman of Fiberform Vindic
Holding AB, Imdex’s largest shareholder, and member of the board of Norfram S.A.,
Luxemburg and Xinix AB.
• Previously Senior Vice President of Ericsson Telecommunications, Chief Executive Officer
of the Federation of Swedish Industries and Director General for Enterprise Policy of the
European Commission.
• Appointed to the Board 14 January 2004.
• Practising 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 Red 5 Limited and Synergy Plus Limited.
• Previously a director of St Barbara Mines Limited, Intrepid Mines Limited, and Defiance
Mining Corporation.
• 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.
Ms. Betsy Donaghey, B.S. Civil
Engineering, M.S. Operations Research
Non Executive Director. Age: 52 years
• Appointed to the Board 28 October 2009.
• Bachelor’s degree in civil engineering from Texas A & M University and a Master’s degree
in operations research from the University of Houston.
• Extensive experience within the energy sector, including 19 years working with BHP Billiton
and 9 years with Woodside Energy.
Imdex 2010 Annual Report | 11
Throughout FY10
Imdex’s mining tool
rental fleet utilisation
improved 160%
from the low level
experienced in
April 2009. This is
an excellent result
for the Company.
Chairman's Report
On behalf of Imdex Limited’s Board I am pleased to present the
2010 Annual Report; my first as Chairman of your Company. The
2010 financial year was a tale of two halves - slow global trading
activity in the first half, followed by a recovery in the second.
Despite these challenging trading conditions,
Imdex performed well and maintained its
strategy for growth, emerging as a stronger
company well positioned to capitalise on the
positive outlook for our industry.
A very satisfactory performance in
challenging markets
A total revenue of $135.6 million was
achieved for the 12 months ended 30
June 2010 (FY10). While marginally less
than FY09, this was a good result given the
exceptional growth in revenue and profits
generated in the first half of FY09 and the
slow recovery from the global financial crisis
(GFC) experienced in the first half of FY10.
It is also significant that despite the volatile
market, Imdex was able to roughly maintain
its percentage of revenue obtained from the
oil and gas sector.
from
continuing
EBITA
operations
decreased 15% to $20.7 million (FY09 $24.5
million). This decline was due to the slower
recovery in mineral exploration activity
in Canada, Latin America and Africa. As a
result, net profit after tax from continuing
operations decreased to $9.8 million (FY09
$11.3 million).
Gearing levels increased slightly to 19.6%
(16.0% in FY09). Again this increase is due to
the impairment and the reduction in equity
that resulted from it. Importantly, Imdex’s
absolute debt decreased by $2 million over
the financial year.
Reinvesting in growth
As the impact of the GFC continues to
moderate, exploration expenditure within
the mineral and energy sectors is increasing.
Imdex is in a strong position to capitalise
on these improved market conditions and
embark upon a new and exciting growth
phase. This, together with the need for
continued investment in targeted research
and development, has caused the Board not
to declare a dividend this financial year.
A resilient business
Imdex’s sound performance, given the
challenging conditions which prevailed in the
first half of the year, is attributable to four
key elements of the Company’s strategy:
• An established global presence;
• A focus on core business;
• Commitment to a proven growth plan; and
• A strong management team.
An established global presence
Imdex has a well established presence in
eleven countries and generates revenue in
many more. Our global footprint provides
opportunities to grow in underpenetrated
regions and broadens our exposure to
different markets, thereby mitigating risk.
Focus on core business
Over the past three years, Imdex has
streamlined its operations in order to focus
on its core business in two distinct markets.
This has enabled the Company to provide
its global mining and oil and gas customers
with quality drilling fluids, leading down hole
instrumentation and optimal support.
An impairment loss of $34.0 million was also
incurred - resulting in a final reported loss
after tax for the year of $21.5 million. $10.4
million of the impairment resulted from the
market revaluation of Imdex’s investment
in Sino Gas and Energy Holdings Limited.
The remaining $23.6 million was the result
of writing off goodwill and intangible assets
at the half year - a direct consequence of
the GFC and the reduction in forecast
cash flows expected to result from it. Since
making the impairment (31st December
2009) the global financial environment and
hence our expected future cash flows have
improved considerably.
12 | Imdex 2010 Annual Report
In February of this year, the decision was
taken to improve Imdex’s operations by
implementing a global structure incorporating
four operating regions - Asia Pacific, Africa,
Europe and the Americas. The new structure
allows the Company to focus on its total
business within a region, (as opposed to
having each of our specific businesses
operate separately within it) and facilitates
better customer service and the ability to
cross sell Imdex’s range of products. The
new operational structure which will generate
cost savings has already generated increased
market share in Asia Pacific and the Americas.
A proven growth plan
Imdex has adhered to its growth strategy
and remains committed to:
• Growing its global business;
• Expanding into new markets (particularly
oil and gas);
• Maintaining product leadership through
investment in research and development;
• Increasing rental based revenue; and
• Achieving operational efficiencies.
A number of notable achievements during
FY10 demonstrate the success of this strategy.
to
invest
We continue
in product
development and research to ensure that
the Company remains capable of satisfying
our customers’ demands for the premium
quality drilling fluids and state of the art
instrumentation that they need to operate
in remote regions and in conditions that are
becoming increasingly difficult.
improvements were made
Positive
to
Imdex’s range of survey instrumentation for
both the mining and oil and gas industries
(refer to pages 19 and 21 of this report).
Significant progress was also made on
the development of Imdex’s surface and
underground Solids Control Units (refer
to pages 19 and 21 of this report). These
units are expected to generate additional
revenue in FY11.
Despite a depressed market in the first
half of FY10, Imdex continued to achieve
strong cash flows from rentals. This is a
clear endorsement of our strategy of renting
rather than selling survey instrumentation
equipment. During FY11 we will continue
to apply this strategy to our instrumentation
and extend its application to include surface
and underground solids control equipment.
thank the management team and all of
Imdex’s employees and contractors for
their innovative approach, hard work, and
team spirit.
During the year we said farewell to Mr
Ian Burston who served as Chairman of
Imdex for some nine years. Ian made an
outstanding contribution to the success of
the Company. I thank him sincerely for his
leadership and for helping place Imdex in the
strong position that it occupies today.
In October 2009, we welcomed Betsy
Donaghey to the Board. Betsy brings with
her a wealth of experience and knowledge
of our industry, particularly within the oil
and gas sector and her contributions to the
deliberations of the board will continue to
be invaluable.
I would also like to thank my fellow Board
Members for their hard work and significant
contributions over the year and
look
forward to working with them again in the
coming year.
Finally, on behalf of Imdex’s Board of
Directors and employees, I thank all of our
valued customers for their loyalty and our
shareholders for their ongoing support and
belief in the Company.
Ross Kelly
Chairman
Looking to FY11
A number of the fundamentals that impact
Imdex’s core markets now appear favourable.
• Metals prices have recovered significantly
from their 2009 lows and many are trading
above their long term averages;
• Gold traditionally accounts
for some
50% of worldwide non-ferrous mineral
exploration expenditure and the gold
price remains strong; and
• The Chinese and
Indian economies,
fuelled by investment in infrastructure and
urbanisation, are experiencing high growth.
These factors are likely to promote higher
demand
in turn
for commodities and
stimulate increased exploration expenditure.
Respected worldwide minerals information
and consultancy; Metals Economics Group,
has estimated
that 2010 exploration
expenditure will exceed that of 2009
by 35%-40%. Similarly, industry data for
the oil and gas sector predicts that 2010
exploration and production expenditure will
increase beyond that experienced in 2009.
There have been very few recent world
class discoveries in either the minerals or oil
and gas sectors. This means that for many
commodities, the imbalance between supply
and demand will continue and commodity
prices are
further
increase;
to
stimulating exploration expenditure.
likely
The outlook for our industry is positive
and importantly, drilling contractors are
reporting stronger demand from both major
and intermediate sized mining companies
and rig utilisation rates are well up.
A strong management team
The importance of strong leadership and
a team of capable employees dedicated
to the success of our Company cannot be
over emphasised. I would like to express
my gratitude to Managing Director, Bernie
Ridgeway and General Manager, Gary
Weston, for their dedication and leadership
throughout the year. I would also like to
Imdex 2010 Annual Report | 13
Application
of new
technology
Managing Director's Report
The past year provided many challenges for both our business
and the markets we operate in. I am delighted to report,
however, that the Company performed well in FY10, a
testament to our focused strategy, global operations, and the
commitment and hard work of the entire Imdex team.
Imdex maintained its
strategy of building
its business and
relationships with
global customers
and expanding into
new markets.
The Company’s performance over FY10
needs to be set against the backdrop of
FY09. Imdex produced unprecedented
revenues and profitability in the first half
of FY09; however, like the majority of
companies within the mining services
sector, the severity and speed of the global
financial crisis and subsequent economic
downturn negatively affected the Company’s
performance in the second half of FY09.
I am pleased to report that following the
low point in the second half of FY09,
Imdex returned to growth in FY10. While
trading activity in the first half was strong
in the Asia Pacific region, it was slower
to recover in Canada, Africa and Latin
America which impacted on margins and
operational cash flows.
By the second half of FY10 global trading
conditions had improved significantly
allowing Imdex’s revenue and margin levels
to return towards those experienced prior
to the global financial crisis.
Solid financial performance in FY10
The principal financial results for the FY10
full year are as follows:
• Revenue from continuing operations
(excluding interest revenue) of $134.3
million (FY09 $137.0 million);
• Normalised EBITA from continuing
operations (excluding non-operational
items) of $20.7 million (FY09 $24.5 million);
• Normalised net profit after tax from
continuing operations $9.8 million (after
excluding impairment charges);
• Cash flow from operations $5.7 million;
• Gearing levels (net debt / net debt +
equity) at 19.6%; and
• Net assets of $94.5 million.
Despite the challenging conditions which
conditioned the first half of FY10, Imdex
maintained its strategy of building its
business and relationships with global
customers; expanding into new markets,
particularly the oil and gas sector; investing
in targeted research and development to
maintain product leadership; increasing
its rental based revenue; and achieving
operational efficiencies. The Company’s
commitment to this strategy has seen it
emerge from the downturn a stronger
company and well positioned to capitalise
on future opportunities.
FY10 Divisional Performance
Drilling Fluids and Chemicals (DFC) Division
In FY10 Imdex’s DFC Division generated
$89.6 million in revenue (FY09 $91.7
million) which represented 67% of Imdex’s
revenue for the full year. While the
Division’s full year revenue was marginally
lower than the previous year given the
unprecedented results of the first half of
FY09, it is important to note that significant
gains were experienced in the second half
of FY10 and I expect this upward trend to
continue in FY11.
22% of the DFC Division’s revenue was
generated from the oil and gas market. This
market remains an important focus area for
FY11 and beyond.
Operational achievements for the DFC Division
during FY10 included:
• AMC’s ability to maintain market
leadership within the coal bed methane
sector. Activity within this sector in
Australia continues to build and is forecast
to present significant revenue generating
opportunities for Imdex for many years;
Imdex 2010 Annual Report | 15
Excellent
results
for the
Company
Managing Director's Report continued
• Further development of Imdex’s surface
and underground Solids Control Units
(SCUs) including capacity and design
enhancements to meet the demands of
large international mining companies which
will increase the marketability of the SCUs;
• Completion of the drilling fluids research
laboratory at Imdex’s premises in Osborne
Park. The laboratory has specialised
analytical equipment to test and develop
fluids used in the oilfield, mining, water
well and specialised drilling sectors. The
ability to offer these services gives Imdex a
significant competitive advantage within the
drilling fluids market;
• Implementing a regional reporting and
operational structure (effective from
1 July 2010) to maximise cross selling
opportunities between Imdex’s two
Divisions; and
• The decision to rationalise Imdex’s DFC
brands from six individual brands to two
global AMC brands - AMC Mining and
AMC Oil and Gas.
Down Hole Instrumentation (DHI)
Division
As with Imdex’s DFC Division, the DHI
Division also focused on supporting its
global customers and alliances, and yielded
revenue of $44.7 million for the full year
which represented 33% of Imdex’s revenue.
Revenue for the first half of FY10 was 12%
higher than the second half of FY09 and
this upward trend continued in the second
half, resulting in FY10 revenue being only
marginally lower than the previous year
(FY09 $45.3 million). In light of market
conditions, this result reinforces the strength
of the Division’s business model and range
of instrumentation.
MINING TOOLS ON HIRE
June
2010
high
e
r
i
H
n
o
s
l
o
o
T
April
2009
low
July 2008
previous
peak
Oct
07
Dec
07
Feb
08
Apr
08
Jun
08
Aug
08
Oct
08
Dec
08
Feb
09
Apr
09
Jun
09
Aug
09
Oct
09
Dec
09
Feb
10
Apr
10
Jun
10
160% growth from April 2009 low to June 2010 high.
Throughout FY10 Imdex’s mining tool rental
fleet utilisation improved 160% from the low
level experienced in April 2009, and as at 30
June 2010, mining tool rental fleet utilisation
had exceeded the previous peak at July
2008 by 6%. This is an excellent result for
the Company.
Operational highlights for the DHI Division
during FY10 included:
• Completion of the relocation of
manufacturing facilities from the UK
to Australia. The relocation, which
commenced in the second half of FY09
to take advantage of the downturn and
minimise disruption to operations, is
working well. The newly renovated facility
at Imdex’s premises in Osborne Park, has
been designed to maximise production
efficiencies and cater for forecast tool
requirements;
• Further marketing of Reflex’s products, the
Reflex Gyro, ACT II and Reflex EZ-Com
II. These new products were launched to
the mineral exploration / mining market in
early FY10, and are being well received by
customers globally. The introduction of the
new gyro technology broadens Reflex’s
product suite to include a full range of
magnetic, gyroscopic and optical survey
instruments;
• Successful results with the Flexit HTGS
MEMS gyro system in onshore oil and gas
operations as part of an exclusive customer
agreement in the United States. Marketing
of the Flexit HTGS will be expanded to
other customers and geographical regions
in FY11;
• Significant improvements in the production,
capabilities and reliability of Flexit’s Target
INS north seeking mechanical gyro system.
The Flexit Target INS system is being
successfully utilised in diverse regions and
countries around the world including the
United Arab Emirates, Malaysia, Egypt,
Nigeria, the Caspian Sea, and Canada.
Imdex continues to refine the instrument’s
capabilities to ensure that it becomes the
benchmark of superior down hole survey
technology;
• Further progress with the development
of a north seeking MEMS gyro for
down hole survey applications within
the mineral exploration / mining and oil
and gas industries. Flexit is developing
this pioneering survey instrument with
Sensonor, a Norwegian company which
has specialised in MEMS technology for the
past 25 years; and
• Continued investment in engineering and
product development to maintain Imdex’s
position as a leader and innovator in
advanced down hole survey technology.
Imdex’s commitment to safety
I am proud to say that Imdex has always
maintained an excellent health and safety
record and is committed to the safety and
wellbeing of its people, customers and
others with whom it interacts. During FY10,
Imdex demonstrated this commitment by
implementing a number of additional safety
initiatives and quality certifications. These
achievements are detailed on page 25 in
the quality, health, safety and environment
section of this report.
Growth opportunities for FY11
As the Chairman has reported, the
underlying fundamentals for Imdex’s core
markets are attractive given improved
economic conditions and forecast demand
for commodities.
Imdex’s management team remains
committed to the Company’s focused
strategy of:
• Providing exceptional customer support
and out servicing competitors in order to
maintain and grow existing markets;
• Further penetration of the oil and gas
and coal bed methane markets with
both drilling fluids and down hole
instrumentation;
• Increasing Imdex’s exposure to the
underpenetrated geographical markets of
Canada, Africa and Latin America;
• Controlling costs and growing the down
hole instrumentation rental business; and
• Continuing to invest in research and
development to expand and diversify
product ranges to maintain and extend
Imdex’s technology leadership position.
Imdex has emerged from the global
financial crisis and subsequent downturn
in drilling activity a stronger Company
with an enhanced global structure,
additional expertise, and a superior suite
of technologies due to the strategy of
maintaining the Company’s expenditure
on research and product development
throughout the business cycle.
I remain confident in Imdex’s strategy, its
initiatives for growth and the Company’s
ability to deliver strong shareholder returns.
I would like to thank all of my Imdex
colleagues for their dedication and hard
work throughout the year, and Imdex’s
customers for their ongoing support.
Bernie Ridgeway
Managing Director
Imdex 2010 Annual Report | 17
Exceptional
support
for global
customers
In FY11 a similar process is planned for
Imdex’s European production, research
and development functions. Imdex has
commenced work at its Osborne Park
facility to accommodate these units and
facilitate ongoing research, development
and future growth.
Rationalisation of Drilling Fluid brands
In recent years, Imdex has acquired and
successfully integrated five drilling fluid
companies in key mining regions around
the world to increase its global presence,
product offerings and expertise.
The majority of these strategic acquisitions
do not have established global brands.
Imdex has taken this opportunity to
rationalise its six trading brands within its
DFC Division to one global AMC brand.
AMC will trade as AMC Minerals and AMC
Oil and Gas and support the minerals and
oil and gas industries respectively.
Rationalisation of the DFC brands aligns
with Imdex’s new regional structure
for its minerals business, and serves to
strengthen the AMC brand as one offering
a total drilling fluid solution to its global
customers. Another key benefit is the
reduction in costs associated with product
marketing and packaging.
Introduction of a regional operating
structure for Minerals business
In FY10 Imdex made the decision to
implement a regional structure that divides
the business into four operational regions -
Asia Pacific, Africa, Europe and the Americas.
The regional structure became effective on
1 July 2010 and will facilitate cross selling
opportunities for Imdex as its trading
companies in this sector largely share the
same customer base. Significant opportunities
for market penetration for both Imdex’s
drilling fluids and down hole instrumentation
products have been identified, particularly in
Canada and South America.
Regional managers are now based in each
of the four regions to ensure efficient
operations, exceptional support for global
customers, and opportunities to gain
market share are realised.
Relocation of European and UK
production and R&D facilities
During FY10, the relocation of Reflex’s
manufacturing facility at Imdex Technology
in the United Kingdom to Imdex’s existing
facility at Osborne Park, Western Australia,
was successfully completed.
The relocation was undertaken to enhance
operational efficiencies, generate cost
saving benefits, and allow greater control
over the manufacturing and research and
development functions.
3
FY10
Initiatives
Fig 1. Advanced testing equipment
Fig 2. Upgraded Osborne Park Facility
Fig 3. Advanced Electronics of the Flexit HTGS
1
2
Imdex 2010 Annual Report | 19
FY10 Initiatives continued
Successful results with Flexit HTGS
Following successful results with Flexit’s
High Temperature Gyro Smart instrument
(Flexit HTGS) in shallow to medium
onshore oilfield drilling applications, MS
Energy Services’ survey division (based in
Houston, USA) trialed the instrument in
deeper and more challenging wellbores, as
part of an exclusive customer agreement.
The trials produced positive results and
Imdex will now market the Flexit HTGS
to other customers and geographical
regions in FY11.
The Flexit HTGS is based on unique
MEMS solid state gyro technology utilising
digital microgyros which consist of silicon
sensor chips and advanced integrated
circuits assembled together in a ceramic
package. This digital micro-gyro has
world class performance, is compact and
light weight and is thereby very rugged
and shock tolerant. The Flexit HTGS is
designed to be the simplest to use, yet
the most technically advanced, miniature
memory digital gyro system available.
Sensonor project
Throughout FY10 further progress was
made with the development of a north
seeking MEMS gyro for down hole survey
applications within the mineral exploration /
mining and oil and gas industries.
Flexit is developing this pioneering survey
instrument with Sensonor, a Norwegian
company which has specialised in MEMS
technology for the past 25 years.
It is anticipated that Flexit will be the first
company globally to have north seeking
MEMS capability in down hole survey
applications for the mining and oil and
gas industries.
Successful launch of Reflex ACT II
The Reflex ACT (Advanced Core Tool)
is the market leader in core orientation
instruments within the mineral industry
and has become the preferred system for
many drillers and geologists worldwide.
The instrument’s innovative use of digital
technology reduces the time taken for
the orientation process and improves the
quantity and quality of data.
In February 2010, Imdex launched the
ACT II Rapid Decent tool at the Mining
Indaba 2010 Expo held in South Africa.
This new version retains the quality and
consistency of the ACT and offers a
number of additional benefits including
rapid decent, time stamping and infra-red
technologies, making the tool faster, more
robust and accurate.
1
2
Solids Control Unit MKII and
Underground Solids Control Unit
In March 2009, Imdex introduced a unique
Solids Control Unit (MK1) to the global
diamond drilling industry. The original MK1
version was designed to eliminate excavation
of conventional mud pits and limit the
environmental impact and disturbance on site.
The launch of the Surface Solid Control
Unit (MK1) established that there was
strong demand for a product that provided
economical and environmental alternatives to
current operations.
Extensive consultation and trials with
customers identified a number of
enhancements to reduce labour intensity,
improve mobility when the unit was full of
fluid, and improve the safety of operation
which led to the MKII design.
The design and manufacturing of the MKII
has reduced labour intensity and provided
a safer product that includes 360° walkway
platforms enabling easy access and product
management from one location. The MKII
unit also includes hydraulic power sources
to support operations and an independent
hydraulic platform to enable mobilisation
when full of fluid. Another new feature is
the MKII’s advanced screw classifier that
allows solids and cuttings removal on an
ongoing basis and provides a two stage
separation process.
3
4
The MKII is a unique product that enables
flexible operations for customers and new
technology to be adopted without incurring
significant modification costs.
The MKII Solids Control Unit has achieved
the industry’s highest safety requirements
and has been recognised as one of the few
products to be designed, engineered and
manufactured in Western Australia.
In addition to the MKII unit, Imdex designed
an Underground Solids Control Unit
(USCU) based on operational reviews and
client feedback. The USCU was designed to:
• Lower water consumption;
• Reduce drilling additive costs; and
• Increase the standard of site organisation
and tidiness.
The USCU was designed with the following
principal objectives:
• Maintenance of a limited footprint for
underground operations;
• Suitable fluid volume to support general
operations;
• Robust structure to manage the harsh
working environment; and
• Flexibility to accommodate different
power sources, such as air or electrical.
The USCU is in still in its infancy; however,
customers have reported significant
improvement in drilling additives and
water management.
5
Customers have also identified the
opportunity for larger USCUs to be
placed on site to better manage water in
underground services. This is achieved by
placing the same system at each mining
level removing the necessity of pumps,
service lines and personnel to manage the
mines water supply for other mine services.
The design of the USCU can also
accommodate small exploration operations
that utilise helicopter services in areas
with limited access where conventional
earthmoving equipment cannot provide
drill sumps.
Customers that have trialed, or are
utilising the Imdex’s Solids Control units
include BHP Billiton, Rio Tinto, Xstrata,
Mincor, Cameco, Boart Longyear, Foraco
/ Mosslake, Lucas Mitchell and Australian
Drilling Services.
Demand for these units is expected to
continue as requirements increase for drilling
contractors and mining companies to utilise
environmentally acceptable alternatives.
Advanced Drilling Fluids Laboratory
This year Imdex completed a modern
fully serviced research and development
laboratory at its facility in Osborne Park,
Western Australia, to test and develop
fluids used in the oilfield, mining, water well
and specialised drilling sectors.
The Company employs two industrial
chemists at this facility and continually
invests in ongoing research and
development in order to provide effective
drilling fluid products for diverse drilling
applications and environments.
The Osborne Park laboratory has been
custom designed and utilises state of
the art equipment including FANN iX77
HPHT rheometers that enables AMC
to measure drilling fluid characteristics
at temperatures of up to 316°C and
pressures of 30,000 psi. Such rheometers
are only available in two locations in
Australia and allow extreme HPHT fluids
to be tested at the highest requirements
for geothermal wells.
In addition to the FANN iX77 HPHT
rheometers, AMC’s laboratory has
sophisticated fluid testing apparatus
including: a Silversen L4RT shear mixer;
lubricity tester; linear swell metre; and
comprehensive oilfield testing equipment.
Fig 1. Advanced design of the EZ-Trac
Fig 2. Upgraded Research Facility
Fig 3. Underground Solids Control Unit
Fig 4. Surface Solids Control Unit Deployed at a
Drilling Site
Fig 5. Surface Solids Control Unit Mk11
Imdex 2010 Annual Report | 21
Global Business
Imdex has successfully established itself as a global company with operations in all key mineral
exploration and mining regions of the world, including Asia Pacific, the Americas, Africa, Europe
and revenue generating activities in others.
Riegel - Germany
East Sussex - UK
Aktau - Kazakhstan
europe
Vallentuna - Sweden
asia pacific
Kalgoorlie - WA
Perth - WA
Brisbane - QLD
Johannesburg - SA
africa
22 | Imdex 2010 Annual Report
Imdex’s Management & Team
Imdex has a strong and stable management team with extensive technical and product knowledge and
hands on experience. The Company has managers based in the Asia Pacific region, Africa, Europe and
the Americas, and prides itself in offering on site technical support to customers.
The Company also has excellent research and development capabilities within both the Drilling Fluids
and Chemicals Division, and Down Hole Instrumentation Division. Imdex differentiates itself by its ability
to provide advanced analytical services, innovative drilling fluids and leading down hole instrumentation.
Timmins - Canada
Calgary - Canada
Santiago - Chile
americas
EMPLOYEES
BY LOCATION
as at
30TH JUNE 2010
AUSTRALIA
ASIA
CANADA
GERMANY
INDONESIA
KAZAKHSTAN
CENTRAL AMERICA
SOUTH AMERICA
SOUTH AFRICA
SWEDEN
THE NETHERLANDS
UNITED KINGDOM
Imdex 2010 Annual Report | 23
Excellent
safety
performance
record
Quality,
Health,
Safety &
Environment
WorkSafe Benchmark
LTIFR = 13.4
Imdex Group
LTIFR = 1.76
Imdex has a dedicated quality department
that oversees the Company’s commitment
to continuous improvement, and the safety
and wellbeing of its people, customers and
others with whom it interacts.
Key achievements for FY10
• Imdex Limited, AMC, Reflex Asia Pacific,
Imdex Technology and Samchem
successfully maintained certification to
ISO9001:2007;
• Wildcat and Reflex Canada achieved
ISO9001 certification;
• Workflow and risk management
prioritisation was included in Imdex’s
new internal benchmark system for
managing customer satisfaction, HS&E
and continual improvement within the
organisation;
• ISO9001 implementation commenced
in May 2010 for Imdex Chile, including
AMC Chile and Reflex South America.
Certification is expected November 2010;
• Objectives to implement OH&S
certification Australia wide to international
safety management system standard
OHSAS18001:2007. This will provide a
OH&S due-diligence framework, for the
management of legislative issues, support
and enhance the tendering process, and
importantly, provide a safer environment
for employees. Additional QHSE
Coordinators were appointed to ensure
the success of the OH&S certification
program, together with adoption of
customer Risk Management Software.
Key statistics for FY10
SAFEWORK Loss Time Incident
Frequency Rate Benchmark (number of
lost time injuries / diseases for each one
million hours worked).
Imdex enjoyed an excellent safety
performance record across its global
operations having one lost time injury
(LTI) during FY10, resulting in only 5 days
lost time.
Imdex Group Lost Time Injury Frequency Rate (LTIFR)
June 2010 = 1.76 (incidents per million hours worked)
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
n
o
i
l
l
i
m
15.00
10.00
5.00
0.00
r
e
p
s
t
n
e
d
c
n
i
I
(
R
T
L
I
)
s
r
e
k
r
o
W
d
e
r
d
n
u
H
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
Imdex Group Lost Time Injury Rate (LTIR)
June 2010 = 0.35 (incidents per hundred workers)
The Imdex Group reports against the WorkSafe Benchmark on a monthly basis, using a 12 month rolling snapshot.
Imdex uses the stringent Western Australia LTIFR & LTIR WorkSafe benchmark, to measure global injury performance.
Imdex 2010 Annual Report | 25
Enhancing
the value of
shareholders
investments
environments within the Company;
• A review of all internal and external audit
management letters and audit reports;
• Development of a central risk register to
record and assess risks, evaluate existing
controls and record recommendations to
reduce risk exposure; and
• Identification of risk areas where
additional work is required by Internal
Audit and/or the business itself to reduce
exposure of the business to risks.
The principal aim of the Group’s risk
management governance structure and
system of internal control is to manage
business risks, with a view to enhancing
the value of shareholders’ investments and
safeguarding assets.
Management has put in place a
number of key policies, processes
and independent controls to provide
assurance to the Board and the ACC
as to the integrity of the Company’s
reporting and effectiveness of its systems
of internal control and risk management.
Corporate governance
Imdex’s Board of Directors has delegated
the oversight of risk management to the
Audit and Compliance Committee (ACC).
The ACC monitors the Group’s obligations
in relation to financial reporting, internal
control structure, risk management systems
and the internal and external audit functions.
The ACC is supported by an Internal Audit
function which regularly conducts reviews
and location based internal audits.
Risk management framework
Imdex operates within a risk management
framework that provides an over-arching and
consistent mechanism for the assessment
and management of risks. Risks are ranked
using a common methodology. Where a
risk is assessed as material, it is reported and
reviewed by senior management.
Imdex’s risk management framework
incorporates the following factors:
• Consideration of other ASX listed risk
frameworks;
• Consultation with Senior Management in
identifying business risk areas;
• Consideration of the Imdex Quality
Assurance risk assessment system to
ensure that the same risk language is used
across both operational and commercial
3
Managing
Risk
Fig 1. On site support mixing muds
Fig 2. Underground drilling
Fig 3. Strong leadership and committed
management
1
2
Imdex 2010 Annual Report | 27
Positive
outlook
for FY11
Financial Report 2010
Directors’ Report
Auditors’ Independence Declaration
Independent Audit Report
Directors’ Declaration
Corporate Governance Statement
Income Statement
Statement of Financial Position
Statement of Changes in Equity
Cash Flow Statement
Notes to the Financial Report
30
43
44
46
47
51
52
53
55
56
Additional Stock Exchange Information
110
Imdex 2010 Annual Report | 29
Imdex 2010 Annual Report | 29
Imdex 2008 Annual Report | 29
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2010
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 2010.
In order to comply with the provisions of the Corporations Act 2001, the Directors’ report as follows:
(a) Directors
The names and particulars of the Directors of the Company during or since the end of the financial year are:
Name
Role
Age Particulars
Mr R W Kelly
Mr I F Burston
72
Independent, Non
Executive Director
from 1 July 09 to
14 October 2009
Chairman from 15
October 2009 to
current
Independent, Non
Executive
Chairman
75
Retired 15 October
2009
Mr B W Ridgeway
Managing Director
56
Mr K A Dundo
Independent, Non
Executive Director
57
Mr M Lemmel
Independent, Non
Executive Director
71
Ms E Donaghey
Independent, Non
Executive Director
52
(cid:131) Engineer
(cid:131) Member of the Audit and Compliance Committee
(cid:131) Chairman of the Remuneration Committee until 14 December 2009
(cid:131) Director since 14 January 2004
(cid:131) 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.
(cid:131) Appointed as Chairman on 15 October 2009
(cid:131) Mechanical Engineer
(cid:131) Member of the Audit and Compliance & Remuneration Committees
(cid:131) Director and Chairman since 22 November 2000
(cid:131) 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 and
various other listed companies
(cid:131) Extensive experience leading publicly listed and private companies
(cid:131) Retired on 15 October 2009
(cid:131) Chartered Accountant
(cid:131) Director since 23 May 2000
(cid:131) Over 20 years experience with public and private companies as owner,
director and manager
(cid:131) Member of the Institute of Chartered Accountants in Australia and Australian
Institute of Company Directors
(cid:131) Lawyer
(cid:131) Chairman of the Audit and Compliance Committee
(cid:131) Member of the Remuneration Committee
(cid:131) Director since 14 January 2004
(cid:131) Director of Red 5 Limited and Synergy Plus Limited
(cid:131) Previously Director of Intrepid Mines Ltd, St Barbara Mines Ltd and Defiance
Mining Corporation
(cid:131) Management Consultant
(cid:131) Director since 19 October 2006
(cid:131) Chairman of the Remuneration Committee from 14 December 2009
(cid:131) Chairman of Fiberform Vindic AB
(cid:131) Previously Senior Vice President of Ericsson Telecommunications, Chief
Executive Officer of the Federation of Swedish Industries and Director
General for Enterprise Policy of the European Commission
(cid:131) Civil Engineer
(cid:131) Director since 28 October 2009
(cid:131) Member of the Audit and Compliance Committee from 14 December 2009
(cid:131) Member of the Remuneration Committee from 14 December 2009
(cid:131) Previously held a range of technical and senior management positions in
Woodside Petroleum and BHP Petroleum
30 | Imdex 2010 Annual Report
Page 1 of 83
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2010
(b) Directorships of other listed companies
Directorships of other listed companies held by the Directors in the 3 years immediately before the end of the financial year are:
Name
Company
Position
Period of Directorship
Mr R W Kelly
Clough Limited
Non Executive Director
1996 – 2008
Mr I F Burston
Mr K A Dundo
Condor Nickel Ltd
Fortescue Metals Group Ltd
NRW Holdings Ltd
Kansai Mining Corporation
Mincor Resources NL
Cape Lambert Iron Ore Ltd
Red 5 Limited
Synergy Plus Limited
(previously Computercorp
Limited)
Intrepid Mines Ltd
(c) Company Secretary
Mr P A Evans
Non Executive Director
Non Executive Director
Non Executive Chairman
Non Executive Director
Non Executive Director
Non Executive Chairman
Non Executive Director
Non Executive Director
2010 – Current at date of retirement
2008 – Current at date of retirement
2007 – Current at date of retirement
2006 – Current at date of retirement
2003 – Current at date of retirement
2006 – 2008
2010 – Current
2006 – Current
Non Executive Director
2002 – 2009
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 Fellow 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, eight Board meetings, three Audit and Compliance Committee meetings and three Remuneration Committee meetings were held.
Board of Directors
Audit and Compliance
Committee
Remuneration Committee
Held
Attended
Held
Attended
Held
Attended
8
4
8
8
8
4
8
4
8
8
7
4
3
1
-
3
-
2
3
1
-
3
-
2
2
1
-
3
1
1
2
1
-
3
1
1
R W Kelly
I F Burston
B W Ridgeway
K A Dundo
M Lemmel
E Donaghey
(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
R W Kelly
B W Ridgeway
K A Dundo
M Lemmel
E Donaghey
Shares Held
Directly
Shares Held
Indirectly
Options Held
Directly
-
-
-
500,000
110,000
380,000
-
3,500,000
2,000,000
300,000
403,909
-
-
-
-
Details of options on issue at the date of this report are disclosed at (g) below. Details of options on issue at the end of the financial year
are disclosed in note 33.
Page 2 of 83
Imdex 2010 Annual Report | 31
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2010
(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
and performance rights 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.
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 received a payment during the current or prior years as consideration for agreeing to hold the relevant position.
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 $371,657, including statutory
superannuation. The Board determines the apportionment of directors’ fees between each Director.
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 31% of his cash compensation package. Should the Company
perform above budget, additional amounts will become payable. This is not the case in the current financial year. Each year the
Remuneration Committee sets additional key performance indicators (KPIs) for the Managing Director to earn this short term incentive
bonus. These KPIs include financial, strategic and risk based 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 or performance rights may be issued to the Managing Director as a long term performance incentive. The
portion of the Managing Director’s compensation package that comprises options or performance rights is linked to the Company’s
performance. The number of options or performance rights granted are determined with regard to current market trends. The issue of
any such options or performance rights requires the approval of Shareholders in General Meeting.
The Managing Director is employed under a permanent contract that provides for a 12 month termination period. No additional benefits
above those already entitled to will become payable on termination.
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 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.
Each year the Remuneration Committee sets the KPIs for each key management person. These KPIs include people, customer,
system, financial, strategic and risk based 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.
From time to time options or performance rights may be issued to the Executives and staff as a long term performance incentive. The
portion of remuneration package that comprises options or performance rights is linked to the Company’s performance. The number of
options or performance rights granted are determined with regard to current market trends. The issue of any such options or
performance rights requires the approval of Shareholders in General Meeting.
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. Mr P J Mander’s
contract provides for a 3 month notice period. No additional benefits above those already entitled to will become payable on termination.
32 | Imdex 2010 Annual Report
Page 3 of 83
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2010
Director and Senior Management details
The Directors of Imdex Limited during the year were:
Mr R W Kelly (Non Executive Director from 1 July 2009 at 14 October 2009; Chairman from 15 October 2009);
Mr I F Burston (Non Executive Chairman; retired 15 October 2009);
Mr B W Ridgeway (Managing Director);
Mr K A Dundo (Non Executive Director);
Mr M Lemmel (Non Executive Director); and
(i)
(ii)
(ii)
(iii)
(iv)
(v) Ms E Donaghey (Non Executive Director; appointed 28 October 2009).
The term ‘Senior Management’ is used in this remuneration report to refer to the following persons:
Mr G E Weston (Group General Manager);
Mr D J Loughlin (General Manager: Down Hole Instrumentation Division);
Mr M L Quesnel (General Manager: Fluids and Chemicals (Oil & Gas) Division; appointed 15 October 2009);
(i)
(ii)
(iii)
(iv) Mr P J Mander (General Manager: Fluids and Chemicals (Minerals) Division) (ceased to be a member of Senior Management on
1 July 2010 when changed internal reporting structures came into effect) and
(v) Mr P A Evans (Company Secretary and Chief Financial Officer).
Except as noted above Directors and Senior Management held their current position for the whole of the financial year and since the
end of the financial year.
Elements of Director and Senior Management Remuneration
Remuneration packages contain the following key elements:
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;
(i)
(ii)
(iii) Equity – share options granted under the Staff Option Scheme (note 33) or performance rights granted under the Performance
Rights Plan (note 34) or any other equity related benefits 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 2010:
30 June 2010
30 June 2009
30 June 2008
30 June 2007
30 June 2006
Revenue – continuing and
discontinued operations ($000s)
Net (loss) / profit before tax from
continuing operations ($000s)
Net (loss) / 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 (loss) / earnings per share
(cents) – continuing operations
Diluted (loss) / earnings per share
(cents) – continuing operations
135,625
138,992
150,493
119,340
66,792
(21,071)
18,195
31,885
18,115
11,864
(21,548)
12,067
21,081
11,950
7,984
64.5
73.0
-
-
(11.05)
(11.05)
165
64.5
1.00
-
6.37
6.23
150
165
1.75
2.25
11.22
10.79
61
150
1.00
1.50
7.72
7.09
22
61
1.00
1.00
6.07
5.95
Page 4 of 83
Imdex 2010 Annual Report | 33
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Imdex 2010 Annual Report | 35
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2010
(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. If the contract is
terminated without notice, the notice period will become payable in cash. 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.
Mr Ridgeway earned a bonus of $10,000 in the current year on the achievement of operational targets. No short term bonus was earned
in the prior year as the required hurdles were not met.
No options were granted to Mr Ridgeway in the current year or in the prior year.
The grant of 234,375 performance rights to Mr Ridgeway in the current year was approved by the shareholders at the Annual General
Meeting on 15 October 2009. All of these performance rights expired in the current year due to the FY10 EBITA performance hurdles
not being met. No value was therefore received by Mr Ridgeway. Refer note 34 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 Limited from time to time.
Additionally, Mr Weston is party to a deed with Imdex Limited, granting Mr Weston the right of first refusal of Australian Mud Company
Pty Ltd, a 100% held subsidiary of Imdex Limited, in the event that an offer is received by the directors of Imdex Limited to purchase
100% of the Imdex Limited shares on issue. This ‘right’ lapses automatically should Mr Weston no longer be employed by Imdex
Limited.
No short term bonus was earned in the current or prior years as the required hurdles were not met.
No options were granted to Mr Weston in the current or 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 year vesting period. Refer note 33 for further details.
Mr Weston was granted 136,009 performance rights in the current period under the Performance Rights Plan. All of these performance
rights expired in the current year due to the FY10 EBITA performance hurdles not being met. No value was therefore received by Mr
Weston. Refer note 34 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.
No short term bonus was earned in the current or prior years as the required hurdles were not met.
No options were granted to Mr Loughlin in the current or 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 year vesting period. Refer note 33 for further details.
Mr Loughlin was granted 93,493 performance rights in the current period under the Performance Rights Plan. All of these performance
rights expired in the current year due to the FY10 EBITA performance hurdles not being met. No value was therefore received by Mr
Loughlin. Refer note 34 for further details.
(iv) Mr M L Quesnel was appointed to the position of General Manager: Fluids and Chemicals (Oil & Gas) Division on 15 October 2009.
Mr Quesnel is a party to a consulting contract with Imdex Limited, which sets out a fixed compensation package. This contract expires
on 31 July 2010 and is renewable for a further 12 months if agreed by both parties. The contract sets out a 30 day 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 Quesnel and Imdex Limited from time to time.
No short term bonus was earned in the current year as the required hurdles were not met.
No options were granted to Mr Quesnel in the current year.
Mr Quesnel was granted 68,751 performance rights in the current period under the Performance Rights Plan. All of these performance
rights expired in the current year due to the FY10 EBITA performance hurdles not being met. No value was therefore received by Mr
Loughlin. Refer note 34 for further details.
36 | Imdex 2010 Annual Report
Page 7 of 83
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2010
(v) Mr P J Mander was appointed to the position of General Manager: Fluids and Chemicals (Minerals) Division on 1 September 2008.
Mr Mander is a party to a service contract with Imdex Limited, which sets out a fixed compensation package reviewable annually. The
service contract specifies a three 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 Mander and Imdex Limited from time to time.
No short term bonus was earned in the current or prior years as the required hurdles were not met.
No options were granted to Mr Mander in the current or 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 year vesting period. Refer note 33 for further details.
Mr Mander was granted 73,437 performance rights in the current period under the Performance Rights Plan. All of these performance
rights expired in the current year due to the FY10 EBITA performance hurdles not being met. No value was therefore received by Mr
Mander. Refer note 34 for further details.
(vi) 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.
No short term bonus was earned in the current or prior years as the required hurdles were not met.
No options were granted to Mr Evans in the current or prior year. 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 year vesting period. Refer note 33 for further details.
Mr Evans was granted 112,110 performance rights in the current period under the Performance Rights Plan. All of these performance
rights expired in the current year due to the FY10 EBITA performance hurdles not being met. No value was therefore received by Mr
Evans. Refer note 34 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
10,000
$
G E Weston
D J Loughlin
M L Quesnel
P J Mander
P A Evans
-
-
-
-
-
%
7%
0%
0%
0%
0%
0%
%
93%
100%
100%
100%
100%
100%
%
2%
0%
0%
0%
0%
0%
Page 8 of 83
Imdex 2010 Annual Report | 37
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2010
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
Options
Exercised
Options
Lapsed
Value at
grant
date
Value at
exercise
date (i)
Value at
lapsing
date
Total value
of options
granted,
exercised
and lapsed
Number of
options
vested in
the current
year
(ii)
Options
granted
that have
vested in
current
year
Value of
options
included in
remuneration
during the
year (iii)
Percentage
of
remuneration
for the year
that
consisted of
options
$
$
$
$
Number
%
$
B W Ridgeway
G E Weston
D J Loughlin
M L Quesnel
P J Mander
P A Evans
-
-
-
-
-
-
-
450,000
-
-
-
-
-
-
-
-
-
-
-
-
450,000
166,666
-
-
-
-
166,667
-
50,000
166,667
-
33%
33%
-
33%
33%
-
72,458
20,704
-
21,738
39,672
%
-
16%
6%
0%
8%
11%
(i)
(ii)
(iii)
No amounts remain unpaid on these options
Represents 1/3 of each underlying tranche which vests annually
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 reflect the value of options issued in prior periods that are being expensed
in the current period to recognise progressive vesting conditions.
No share options were granted to Directors or Senior Managers during or since the end of the financial year.
Value of performance rights granted to Directors and Senior Managers
Performance rights are granted to Senior Managers at a fixed percentage of their base salaries depending on seniority. Percentages
range from 15% to 25%. Each performance right is to be satisfied by the issue of one fully paid Imdex Limited ordinary share for nil
consideration should specified EBITA targets be met. Shares issued in satisfaction of performance rights are done so in 1/3 lots on the
anniversary date of the satisfaction of the specified hurdles should employment tenure be ongoing. The following table discloses the
value of performance rights granted and expired during the year:
Granted
Satisfied by the
issue of shares
Expired (i)
19 Feb 10
Value at grant
date
Value at date of
share issue
Value included in
remuneration
during the year
Percentage of
remuneration for
the year that
consisted of
performance
rights
Number
$
$
Number
$
%
B W Ridgeway
234,375
160,547
G E Weston
136,009
D J Loughlin
M L Quesnel
P J Mander
93,493
68,751
73,437
P A Evans
112,110
93,166
64,043
47,094
50,304
76,795
-
-
-
-
-
-
234,375
136,009
93,493
68,751
73,437
112,110
-
-
-
-
-
-
-
-
-
-
-
-
(i)
100% of performance rights granted to Senior Managers expired on 30 June 2010 due to the FY10 EBITA hurdles to which they
relate not being achieved. No value was therefore received by the performance rights holder.
No performance rights were granted to Directors or Senior Managers since the end of the financial year. More details on the
Performance Rights Plan can be found in note 34.
Page 9 of 83
38 | Imdex 2010 Annual Report
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2010
Share options held by Directors and Senior Managers
2010
Balance at
1 July 2009
Granted as
compensation
Exercised
Inception /
(cessation) as key
management person
Balance at
30 June
2010
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
Ms E Donaghey ^
Mr G E Weston
Mr D J Loughlin
Mr M L Quesnel +
Mr P J Mander
Mr P A Evans
No.
1,000,000
2,000,000
-
-
-
-
2,500,000
500,000
-
150,000
500,000
6,650,000
No.
No.
-
-
-
-
-
-
(1,000,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
No.
(1,000,000)
-
-
-
-
-
-
-
-
-
-
No.
-
2,000,000
No.
-
-
-
-
1,500,000
500,000
-
150,000
500,000
4,650,000
-
-
-
-
-
-
-
-
-
-
-
-
No.
No.
-
2,000,000
-
-
-
-
-
-
-
-
-
-
1,333,332
500,000
-
100,000
433,333
4,366,665
166,666
166,667
-
50,000
166,667
550,000
(1,000,000)
(1,000,000)
2009
Balance at
1 July 2008
Granted as
compensation
Exercised
Inception /
(cessation) as key
management person
Balance at
30 June
2009
Vested but
not
exercisable
Vested and
exercisable
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 J Mander ~
Mr P A Evans
No.
1,000,000
2,000,000
-
-
-
2,500,000
500,000
-
500,000
6,500,000
No.
No.
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150,000
-
150,000
No.
1,000,000
2,000,000
No.
-
-
-
2,500,000
500,000
150,000
500,000
6,650,000
-
-
-
-
-
-
-
-
-
-
Options
vested
during year
No.
1,000,000
-
-
-
-
No.
1,000,000
2,000,000
-
-
-
2,166,666
333,333
50,000
266,667
5,816,666
500,000
166,667
50,000
166,667
1,883,334
* - Mr I Burston retired from the position of Chairman on 15 October 2009. Disclosures above relate only to the period when in office.
^ - Ms E Donaghey was appointed as a director on 28 October 2009. Disclosures above relate only to the period when in office.
+ - Mr Quesnel was appointed on 15 October 2009. Disclosures above relate only to the period when in office.
~ - Mr P J Mander became a Key Management Person when he was appointed to the position of General Manager: Fluids and Chemicals (Minerals)
Division on 1 September 2008. Disclosures above relate only to the period when in office.
No options were granted to key management personnel in the current or prior year.
A total of 1,000,000 options were exercised by key management personnel during the current year. The exercise price was 20c per share. No amounts
remain unpaid on the options exercised.
Page 10 of 83
Imdex 2010 Annual Report | 39
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2010
(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
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
Managing
Director Options
Former
Chairman’s
Options
Ordinary
300 cents
28 Mar 2008
27 Mar 2013
(aa)
4,368,327
Ordinary
180 cents
18 Oct 2007
17 Oct 2012
(aa)
500,000
Ordinary
180 cents
12 Jun 2007
11 Jun 2012
(aa)
275,000
Ordinary
100 cents
23 Feb 2007
22 Feb 2012
(aa)
3,014,001
Ordinary
75 cents
23 Feb 2007
22 Feb 2012
(aa)
700,000
Ordinary
35 cents
1 Feb 2006
31 Jan 2011
(aa)
1,579,536
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.
(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
Staff Share
Options
Staff Share
Options
Ordinary
20 cents
1 Aug 2004
31 July 2009
1,141,666
Ordinary
35 cents
1 Feb 2006
31 Jan 2011
96,669
No options were exercised by Directors in the current year.
40 | Imdex 2010 Annual Report
Page 11 of 83
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2010
(h) Performance Rights
(i)
Performance rights on issue at the date of this report
Issuing
Entity
Class
Class of
shares
Exercise
price
Issue date
Expiry date
Key terms
Number of
shares under
performance
right
Imdex
Limited
Performance
Rights
Ordinary
Nil
19 Feb 2010
Aug 2015
(aa)
458,779
(aa) To be satisfied by the issue of fully paid ordinary shares in Imdex Limited in equal 1/3 lots annually with the anniversary date being
the day after signature of the FY10 independent audit report.
(i)
Principal Activities
The Group’s principal continuing activities during the course of the financial year were manufacturing and sale and rental of a range of
drilling fluids and chemicals and down hole instrumentation.
(j)
Review of Operations
During the current financial year the Imdex Group continued to sell drilling fluids and chemicals as well as rent and sell technologically
advanced down hole instrumentation to the mining and oil & gas industries. The Group earned revenue from continuing operations
including interest of $135.6 million (2009: $139.0 million) and loss after tax of $21.5 million (2009: profit $12.1 million).
(k) Dividends
In the current year no dividends were declared or paid.
In the prior year a fully franked interim dividend of 1.00 cent per ordinary share was paid on 24 March 2009 to shareholders registered
on 6 March 2009. A fully franked final dividend of 2.25 cents per ordinary share was paid on 31 October 2008 to shareholders registered
on 17 October 2008.
(l)
Changes in State Of Affairs
There were no significant changes in the state of affairs of the Group.
(m) Subsequent Events
There have been no material events subsequent to the end of the financial year requiring disclosure in this report.
(n)
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.
(o) 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.
Page 12 of 83
Imdex 2010 Annual Report | 41
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2010
(p) 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:
•
•
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.
(q) Auditor’s Independence Declaration
The auditor’s independence declaration is included in the Annual Report immediately prior to the Audit Report.
(r)
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.
(s) 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 unless otherwise
indicated.
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 Ross Kelly
Chairman
PERTH, Western Australia, 13 August 2010.
42 | Imdex 2010 Annual Report
Page 13 of 83
Imdex 2010 Annual Report | 43
44 | Imdex 2010 Annual Report
Imdex 2010 Annual Report | 45
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;
(c)
in the Directors’ opinion, the financial statements and notes thereto are in accordance with International Financial Reporting
Standards issued by the International Accounting Standards Board; and
(d)
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 26 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) of the Corporations Act 2001.
Dated at Perth, 13 August 2010.
Ross Kelly
Chairman
46 | Imdex 2010 Annual Report
Page 17 of 83
IMDEX LIMITED
and its controlled entities
CORPORATE GOVERNANCE STATEMENT
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 2010. In addition,
the Company has a Corporate Governance section on its website: www.imdexlimited.com (under the “Investors” 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 2010, and the main corporate
governance practices in place are set out below.
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.
The performance of Senior Executives is measured against prescribed criteria as set by the Remuneration Committee. These criteria
are set annually and individual performance is assessed annually.
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:
rotceriD
Mr R W Kelly,
Non Executive Chairman
Mr B W Ridgeway,
Managing Director
Mr K A Dundo,
Non Executive Director
Mr M Lemmel,
Non Executive Director
Ms E Donaghey,
Non Executive Director
tnemssessA
Existence of any matters contained in
ASX Recommendation 2.1 affecting Independence
Independent
Nil
Not Independent
Managing Director
Independent
Independent
Independent
Nil
Nil
Nil
Page 18 of 83
Imdex 2010 Annual Report | 47
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:
•
•
•
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.
(v) Process for evaluating the performance of the Board, its committees and individual Directors
Board performance is measured primarily by means of monitoring Group profitability and share price performance in the market.
Individual Director performance is also measured by way of monitoring meeting attendance and individual contributions made at these
meetings.
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.
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 2010 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.
48 | Imdex 2010 Annual Report
Page 19 of 83
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 and Compliance Committee during the year and at the date of this Statement were:
Mr K A Dundo (Chairman);
Mr R W Kelly;
Ms E Donaghey (appointed 14 December 2009); and
Mr I F Burston (retired 14 December 2009).
The experience and qualifications of each committee member is set out in the Directors’ Profiles in the first section of the Annual Report.
The Company Secretary acts as secretary of this Committee.
The external auditors, the Managing Director and the Chief Financial Officer are invited to Audit and Compliance Committee meetings at
the discretion of the Committee. Details of meetings held by the Audit and Compliance Committee during the year are 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 required to attend the Annual General Meeting of the Company and be available to answer questions from
Shareholders.
(iv) Internal Audit
The Group has an 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.
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.
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:
•
•
•
•
the Annual Report is made available to all Shareholders. 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;
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 made available to all Shareholders;
regular reports released through the ASX and the media;
proposed major changes in the Group, which may impact on share ownership rights are submitted to a vote of Shareholders;
and
Page 20 of 83
Imdex 2010 Annual Report | 49
IMDEX LIMITED
and its controlled entities
CORPORATE GOVERNANCE STATEMENT
•
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.
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.
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.
In addition to receiving Internal Audit Reports, the Audit and Compliance Committee also receives regular reports from the External
Audit function.
(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.
Principle 8: Remunerate fairly and responsibly
(i) Company’s remuneration policies
Details on the remuneration of Directors and Executives as well as the Company’s remuneration policies are set out in the
Remuneration Report that is contained in the Directors Report.
(ii) Remuneration Committee
The Remuneration Committee consists of three Non Executive Directors and assists the Board in determining executive remuneration
policy, determining the remuneration of Executive Directors and reviewing and approving the remuneration of senior management.
The members of the Committee during the year and at the date of this Statement were:
Mr M Lemmel (Chairman) (appointed 14 December 2009);
Mr K Dundo;
Ms E Donaghey (appointed 14 December 2009);
Mr I Burston (retired 15 October 2009); and
Mr R Kelly (resigned 14 December 2009).
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 operates under a written Charter that is published on the Company’s website.
(iii) Structure of 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. From time to time additional benefits may be agreed with Directors with
due regard to market conditions.
50 | Imdex 2010 Annual Report
Page 21 of 83
IMDEX LIMITED
and its controlled entities
INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2010
Revenue from sale of goods 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
Impairment charges
Other expenses
(Loss) / profit before tax
Income tax (expense) / benefit
(Loss) / profit for the year
Attributable to:
Owners of the Company
Non-controlling interests
(Loss) / earnings per share
Consolidated
Company
Year Ended Year Ended Year Ended Year Ended
30 June 2010 30 June 2009 30 June 2010 30 June 2009
Notes
$’000
$’000
$’000
$’000
4
4
4
4
4
4
4
4
4
5
134,253
1,372
135,625
136,968
2,024
138,992
-
3,153
3,153
-
3,822
3,822
297
253
10,255
16,902
(58,140)
(27,068)
(4,182)
(6,363)
(2,143)
(33,971)
(25,126)
(21,071)
(477)
(21,548)
(21,548)
-
(21,548)
(61,700)
(28,467)
(3,318)
(6,535)
(2,850)
-
(18,180)
18,195
(6,128)
12,067
12,067
-
12,067
-
(7,500)
(236)
-
(1,629)
(3,434)
(5,034)
(4,425)
1,027
(3,398)
(3,398)
-
(3,398)
-
(7,443)
(187)
-
(2,170)
-
(1,351)
9,573
(1,057)
8,516
8,516
-
8,516
Basic (loss) / earnings per share (cents)
Diluted (loss) / earnings per share (cents)
21
21
(11.05)
(11.05)
6.37
6.23
The Income Statement should be read in conjunction with the accompanying notes.
IMDEX LIMITED
and its controlled entities
IMDEX LIMITED
and its controlled entities
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2010
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2010
Consolidated
Consolidated
Year Ended Year Ended
Year Ended Year Ended
30 June 2010 30 June 2009 30 June 2010 30 June 2009
$’000
Company
Year Ended Year Ended
Year Ended Year Ended
30 June 2010 30 June 2009 30 June 2010 30 June 2009
$’000
Company
$’000
$’000
$’000
$’000
$’000
$’000
(Loss) / profit for the period
(Loss) / profit for the period
(21,548)
(21,548)
12,067
12,067
(3,398)
(3,398)
8,516
8,516
Other comprehensive (loss) / income
Exchange differences arising on the translation of foreign operations
Other comprehensive income for the period (net of tax)
Other comprehensive (loss) / income
Exchange differences arising on the translation of foreign operations
Other comprehensive income for the period (net of tax)
(1,517)
(1,517)
(1,517)
(1,517)
758
758
758
758
-
-
-
-
-
-
-
-
Total comprehensive (loss) / income for the period
Total comprehensive (loss) / income for the period
(23,065)
(23,065)
12,825
12,825
(3,398)
(3,398)
8,516
8,516
Total comprehensive (loss) / income attributable to:
Owners of the parent
Non-controlling interests
Total comprehensive (loss) / income attributable to:
Owners of the parent
Non-controlling interests
(23,065)
-
(23,065)
-
12,825
-
12,825
-
(3,398)
-
(3,398)
-
8,516
-
8,516
-
The Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
The Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
Page 22 of 83
Imdex 2010 Annual Report | 51
Page 23 of 83
Page 23 of 83
IMDEX LIMITED
and its controlled entities
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2010
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
Deferred Tax Assets
Goodwill
Other Intangible Assets
Total Non Current Assets
Total Assets
Current Liabilities
Trade and Other Payables
Borrowings
Current Tax Liabilities
Provisions
Other Current Liabilities
Total Current Liabilities
Non Current Liabilities
Borrowings
Deferred Tax Liabilities
Provisions
Total Non Current Liabilities
Total Liabilities
Net Assets
Equity
Issued Capital
Foreign Currency Translation Reserve
Employee Equity-Settled Benefits Reserve
Retained Earnings
Total Equity
Consolidated
Company
30 June 2010 30 June 2009 30 June 2010 30 June 2009
Notes
$’000
$’000
$’000
$’000
30
7
8
9
10
11
9
12
5
13
14
15
16
5
17
18
16
5
17
19
20
20
9,007
41,210
28,600
-
3,496
82,313
-
82,313
6,802
13,604
10,703
30,706
19,269
81,084
163,397
25,689
19,092
8,768
1,706
-
55,255
12,926
-
721
13,647
68,902
94,495
67,415
(5,622)
5,107
27,595
94,495
11,975
23,367
26,535
12,340
1,507
75,724
8,130
83,854
-
10,781
-
55,268
23,915
89,964
173,818
12,769
13,514
5,268
1,317
2,492
35,360
18,033
3,674
553
22,260
57,620
116,198
67,136
(4,105)
4,024
49,143
116,198
7,644
1,775
-
-
24
9,443
-
9,443
90,443
619
2,490
-
-
93,552
102,995
1,579
11,019
6,261
500
-
19,359
8,572
-
383
8,955
28,314
74,681
67,415
-
5,107
2,159
74,681
1,455
5,836
-
12,340
22
19,653
8,130
27,783
74,772
541
-
-
-
75,313
103,096
1,166
10,000
2,249
422
-
13,837
11,500
732
310
12,542
26,379
76,717
67,136
-
4,024
5,557
76,717
The Statement of Financial Position should be read in conjunction with the accompanying notes.
52 | Imdex 2010 Annual Report
Page 24 of 83
IMDEX LIMITED
and its controlled entities
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2010
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
58,183
6,700
(4,863)
2,573
43,050
105,643
-
-
-
-
-
-
-
-
-
-
278
6,700
-
(6,700)
Balance at 1 July 2008
Exchange differences on translation
of foreign operations after taxation
Profit for the period
Total comprehensive income for the
period
Dividend paid
Share based payments
Issue of shares as part consideration
for the acquisition of Suay
Conversion of capital
Issue of shares as part consideration
for the acquisition of Imdex
Technology Sweden AB (formerly
Flexit AB)
Tax effect of prior period share issue
costs
Issue of shares under staff option
plan
Balance at 30 June 2009
Exchange differences on translation
of foreign operations after taxation
Loss for the period
Total comprehensive income for the
period
Dividend paid
Share based payments - options
Share based payments -
performance rights
Issue of shares under staff option
plan
Balance at 30 June 2010
20
22
20
19
19
19
19
19, 20
20
22
20
20
1,900
(54)
129
67,136
-
-
-
-
-
-
19, 20
279
67,415
758
-
758
-
-
-
-
-
-
-
(4,105)
(1,517)
-
(1,517)
-
-
-
-
(5,622)
-
-
-
-
1,487
-
-
-
-
-
12,067
12,067
(5,974)
-
-
-
-
-
758
12,067
12,825
(5,974)
1,487
278
-
1,900
(54)
(36)
4,024
-
49,143
93
116,198
-
-
-
-
995
104
-
(21,548)
(21,548)
-
-
(1,517)
(21,548)
(23,065)
-
995
-
104
(16)
5,107
-
27,595
263
94,495
-
-
-
-
-
-
-
-
-
-
-
-
The Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Page 25 of 83
Imdex 2010 Annual Report | 53
IMDEX LIMITED
and its controlled entities
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2010
Fully Paid
Ordinary
Shares
Mandatory
Convertible
Capital
Foreign
Currency
Translation
Reserve
Employee
Equity-
Settled
Benefits
Reserve
Retained
Earnings
COMPANY
Notes
$'000
$'000
$'000
$'000
$'000
Total
Attributable to
Equity
Holders of the
Entity
$'000
58,183
-
6,700
-
-
-
-
-
-
-
278
6,700
-
(6,700)
Balance at 1 July 2008
Profit for the period
Total comprehensive income for the
period
Dividend paid
Share based payments
Issue of shares as part consideration
for the acquisition of Suay
Conversion of capital
Issue of shares as part consideration
for the acquisition of Imdex
Technology Sweden AB (formerly
Flexit AB)
Tax effect of prior period share issue
costs
Issue of shares under staff option
plan
Balance at 30 June 2009
Loss for the period
Total comprehensive income for the
period
Dividend paid
Share based payments - options
Share based payments -
performance rights
Issue of shares under staff option
plan
Balance at 30 June 2010
22
20
19
19
19
19
19, 20
22
20
20
1,900
(54)
129
67,136
-
-
-
-
-
19, 20
279
67,415
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,573
-
-
-
1,487
-
-
-
-
(36)
4,024
-
-
-
995
104
(16)
5,107
3,015
8,516
8,516
(5,974)
-
-
-
-
-
-
5,557
(3,398)
(3,398)
-
-
-
-
2,159
70,471
8,516
8,516
(5,974)
1,487
278
-
1,900
(54)
93
76,717
(3,398)
(3,398)
-
995
104
263
74,681
The Statement of Changes in Equity should be read in conjunction with the accompanying notes.
54 | Imdex 2010 Annual Report
Page 26 of 83
IMDEX LIMITED
and its controlled entities
STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2010
Cash Flows From Operating Activities
Receipts from customers
Payments to suppliers and employees
Intercompany management fees received
Interest and other costs of finance paid
Income tax paid
Net cash provided by / (used in) Operating Activities
Cash Flows From Investing Activities
Interest received
Dividend received
Payment for property, plant and equipment
Proceeds from sale of property, plant and equipment
Payment for Investment in AMC India
Payment for development costs capitalised
Payment for shares of Wildcat net of cash acquired
Payment for shares of Imdex Technology UK net of cash
acquired
Repayment of loan from Sino Gas and Energy Holdings Ltd net
of sub underwriting commitments
Payment for shares of Suay net of cash acquired
Net cash (used in) / provided by Investing Activities
Cash Flows From Financing Activities
Advances from Controlled Entities
Cash received on exercise of options
Dividend paid to owners of the Company
Hire purchase debt raised
Hire purchase and lease payments
Proceeds from borrowings
Repayment of borrowings
Net cash provided by / (used in) Financing Activities
Net (Decrease) / Increase in Cash and Cash Equivalents
Held
Cash and Cash Equivalents At The Beginning Of The Financial
Year
Effects of exchange rate changes on the balance of cash and
cash equivalents held in foreign currencies
Cash and Cash Equivalents At The End Of The Financial
Year
Consolidated
Company
Year Ended Year Ended Year Ended Year Ended
30 June 2010 30 June 2009 30 June 2010 30 June 2009
Notes
$’000
$’000
$’000
$’000
30(c)
12
14
27(a)
27(b)
9
22
127,775
(110,193)
-
(1,569)
(10,313)
5,700
161,981
(132,564)
-
(1,963)
(11,279)
16,175
87
-
(7,546)
300
-
(3,322)
-
(2,101)
4,115
-
(8,467)
-
263
-
3,163
(1,137)
7,846
(9,832)
303
119
-
(7,741)
2,113
-
(3,650)
(1,902)
(3,106)
-
(500)
(14,667)
-
93
(5,974)
1,838
(227)
7,000
(6,593)
(3,863)
-
(11,483)
3,782
(1,620)
(7,794)
(17,115)
41
-
(314)
-
(62)
-
-
-
4,115
-
3,780
21,179
263
-
107
(25)
1,000
(3,000)
19,524
(2,464)
(2,355)
6,189
30(a)
11,975
13,276
1,455
(504)
1,054
-
-
(8,285)
7,481
(1,530)
(1,046)
(3,380)
56
7,500
(236)
71
-
-
(1,902)
-
-
(500)
4,989
358
93
(5,974)
-
-
7,000
(2,500)
(1,023)
586
869
-
30(a)
9,007
11,975
7,644
1,455
The Statement of Cash Flows should be read in conjunction with the accompanying notes.
Page 27 of 83
Imdex 2010 Annual Report | 55
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
1
Adoption of New and Revised Accounting Standards
1.1
Standards and Interpretations affecting amounts reported in the current period (and/or prior periods)
The following new and revised Standards and Interpretations have been adopted in the current period and have affected the amounts
reported in these financial statements. Details of other Standards and Interpretations adopted in these financial statements but that have
had no effect on the amounts reported are set out in note 1.2.
Standard or Interpretation
Nature of Change
AASB 101 Presentation of Financial
Statements (as revised in September 2007),
AASB 2007-8 Amendments to Australian
Accounting Standards arising from AASB
101 and AASB 2007-10 Further
Amendments to Australian Accounting
Standards arising
from AASB 101
Amendments to AASB 5 Noncurrent
Assets Held for Sale and Discontinued
Operations (adopted in advance of effective
date of 1 January 2010)
AASB 8 Operating Segments
AASB 101(September 2007) has introduced terminology changes (including revised titles
for the financial statements) and changes in the format and content of the financial
statements.
Disclosures in these financial statements have been modified to reflect the clarification in
AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the
Annual Improvements Project that the disclosure requirements in Standards other than
AASB 5 do not generally apply to noncurrent assets classified as held for sale and
discontinued operations.
AASB 8 is a disclosure Standard that has resulted in a redesignation of the Group’s
reportable segments. The adoption of this standard has minor impact on the financial
statement disclosures in the current or prior financial periods.
AASB 2009-2 Amendments to Australian
Accounting Standards – Improving
Disclosures about Financial Instruments
The amendments to AASB 7 expand the disclosures required in respect of fair value
measurements and liquidity risk. The Group has elected not to provide comparative
information for these expanded disclosures in the current year in accordance with the
transitional reliefs offered in these amendments.
Amendments to AASB 107 Statement of
Cash Flows (adopted in advance of
effective date of 1 January 2010)
The amendments (part of AASB 2009-5 Further Amendments to Australian Accounting
Standards arising from the Annual Improvements Project ) specify that only expenditures
that result in a recognised asset in the statement of financial position can be classified as
investing activities in the statement of cash flows. Consequently, cash flows in respect of
development costs that do not meet the criteria in AASB 138 Intangible Assets for
capitalisation as part of an internally generated intangible asset (and, therefore, are
recognised in profit or loss as incurred) have been reclassified from investing to operating
activities in the statement of cash flows. Prior year amounts have been restated for
consistent presentation.
56 | Imdex 2010 Annual Report
Page 28 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
1.
Adoption of New and Revised Accounting Standards (continued)
1.2
Standards and Interpretations adopted with no effect on financial statements
The following new and revised Standards and Interpretations have also been adopted in these financial statements. Their adoption has
not had any significant impact on the amounts reported in these financial statements but may affect the accounting for future
transactions or arrangements.
Standard or Interpretation
Nature of Change
AASB 2008-7Amendments to Australian
Accounting Standards – Cost of an
Investment in a Subsidiary, Jointly
Controlled Entity or Associate
The amendments deal with the measurement of the cost of investments in subsidiaries,
jointly controlled entities and associates when adopting A-IFRS for the first time and with
the recognition of dividend income from subsidiaries in a parent’s separate financial
statements.
AASB 2008-1 Amendments to Australian
Accounting Standard - Share-based
Payments: Vesting Conditions and
Cancellations
The amendments clarify the definition of vesting conditions for the purposes of AASB 2,
introduce the concept of ‘non-vesting’ conditions, and clarify the accounting treatment for
cancellations.
AASB 123 Borrowing Costs (as revised in
2007) and AASB 2007-6 Amendments to
Australian Accounting Standards arising
from AASB 123
The principal change to AASB 123 was to eliminate the option to expense all borrowing
costs when incurred. This change has had no impact on these financial statements
because it has always been the Group’s accounting policy to capitalise borrowing costs
incurred on qualifying assets.
AASB 2008-2 Amendments to Australian
Accounting Standards – Puttable Financial
Instruments and Obligations Arising on
Liquidation
The revisions to AASB 132 Financial Instruments: Presentation amend the criteria for
debt/equity classification by permitting certain puttable financial instruments and
instruments (or components of instruments) that impose on an entity an obligation to
deliver to another party a pro-rata share of the net assets of the entity only on liquidation,
to be classified as equity, subject to specified criteria being met.
AASB 2008-8 Amendments to Australian
Accounting Standards–Eligible Hedged
Items
The amendments provide clarification on two aspects of hedge accounting: identifying
inflation as a hedged risk or portion, and hedging with options.
Interpretation 16 Hedges of a Net
Investment in a Foreign Operation
The Interpretation provides guidance on the detailed requirements for net investment
hedging for certain hedge accounting designations.
The Interpretation provides guidance on the appropriate accounting treatment when an
entity distributes assets other than cash as dividends to its shareholders.
In addition to the changes affecting amounts reported in the financial statements described
at 1.1 above, the amendments have led to a number of changes in the detail of the
Group’s accounting policies – some of which are changes in terminology only, and some of
which are substantive but have had no material effect on amounts reported.
Interpretation 17 Distributions of Non-cash
Assets to Owners and AASB 2008-13
Amendments to Australian Accounting
Standards arising from AASB Interpretation
17 Distributions of Non-cash Assets to
Owners
AASB 2008-5 Amendments to Australian
Accounting Standards arising from the
Annual Improvements Project and AASB
2008-6 Further Amendments to Australian
Accounting Standards arising from the
Annual Improvements Project AASB 2009-4
Amendments to Australian Accounting
Standards arising from the Annual
Improvements Project and AASB 2009-5
Further Amendments to Australian
Accounting Standards arising from the
Annual Improvements Project
Page 29 of 83
Imdex 2010 Annual Report | 57
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
1.
Adoption of New and Revised Accounting Standards (continued)
1.3
Standards and Interpretations in issue not yet adopted
At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not yet effective.
Standard / Interpretation
Effective for annual
reporting periods
beginning on or
after
Expected to be initially
applied in the financial
year ending
AASB 2009-5 Further Amendments to Australian Accounting Standards
arising from the Annual Improvements Project *
1 January 2010
30 June 2011
AASB 2009-8 Amendments to Australian Accounting Standards –
Group Cash-Settled Share-based Payment Transactions
AASB 2009-10 Amendments to Australian Accounting Standards –
Classification of Rights Issues
1 January 2010
30 June 2011
1 February 2010
30 June 2011
AASB 124 Related Party Disclosures (revised December 2009), AASB
2009-12 Amendments to Australian Accounting Standards
1 January 2011
30 June 2012
AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian
Accounting Standards arising from AASB 9
1 January 2013
30 June 2014
AASB 2009-14 Amendments to Australian Interpretation – Prepayments of a
Minimum Funding Requirement
1 January 2011
30 June 2012
Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments
1 July 2010
AASB 1053 Application of Tiers of Australian Accounting Standards
1 July 2013
30 June 2011
30 June 2014
AASB 2010-3 Amendments to Australian Accounting Standards arising from
the Annual Improvements Project
1 July 2010
30 June 2011
AASB 2010-4 Further Amendments to Australian Accounting Standards
arising from the Annual Improvements Project
1 January 2011
30 June 2012
* AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project specify
amendments resulting from the IASB’s annual improvement project to various Australian accounting standards and interpretations. As
permitted, the group has early adopted most of the amendments in AASB 2009-5 (refer note 1.2). However, the amendments to AASB
117 Leases have not been early adopted. Adoption of these amendments will potentially result in the reclassification of several leases
over land as finance leases. The amendments, which apply retrospectively to unexpired leases from 1 July 2010, remove the guidance
from AASB 117 which effectively prohibited the classification of leases over land as finance leases. It is not practical to provide a
reasonable estimate of the impact of this amendment until a detailed review of existing leases has been completed.
58 | Imdex 2010 Annual Report
Page 30 of 83
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 13 August 2010.
(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 arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill
is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and
the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the
identifiable assets acquired and the liabilities assumed.
If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the
consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held
equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to
each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which
goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be
impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to
reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the
carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Page 31 of 83
Imdex 2010 Annual Report | 59
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2.
Summary of Significant Accounting Policies (continued)
(e)
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 or 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 50%
Equipment rented to third parties:
10% to 50%
Equipment under finance lease:
10% to 50%
(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.
The fair value determined at the grant date of the equity-settled share-based payments is expensed 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.
60 | Imdex 2010 Annual Report
Page 32 of 83
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 acquisition method. The consideration for each acquisition is
measured at 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. Acquisition-related costs are recognised in profit or loss as
incurred.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration
arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of
acquisition where they qualify as measurement period adjustments (see below). All other subsequent changes in the fair value of
contingent consideration classified as an asset or liability are accounted for in accordance with relevant Standards. Changes in the fair
value of contingent consideration classified as equity are not recognised.
Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured to fair
value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss.
Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive
income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under AASB 3(2008) are
recognised at their fair value at the acquisition date, except that:
•
•
•
deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and
measured in accordance with AASB 112 Income Taxes and AASB 119 Employee Benefits respectively;
liabilities or equity instruments related to the replacement by the Group of an acquiree’s share based payment awards are
measured in accordance with AASB 2 Share-based Payment; and
assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 Noncurrent Assets Held for Sale
and Discontinued Operations are measured in accordance with that Standard.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the
Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during
the measurement period (see below), or additional assets or liabilities are recognised, to reflect new information obtained about facts
and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.
The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and
circumstances that existed as of the acquisition date – and is subject to a maximum of one year.
(j)
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily
take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the
assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Page 33 of 83
Imdex 2010 Annual Report | 61
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
Summary of Significant Accounting Policies (continued)
(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 Imdex Limited, 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 are translated into Australian dollars at exchange rates
prevailing on the balance sheet date. Income and expense items are translated at the average exchange 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 the financial instruments note
in 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.
62 | Imdex 2010 Annual Report
Page 34 of 83
IMDEX LIMITED
IMDEX LIMITED
and its controlled entities
and its controlled entities
NOTES TO THE FINANCIAL REPORT
NOTES TO THE FINANCIAL REPORT
2
2
Summary of Significant Accounting Policies (continued)
Summary of Significant Accounting Policies (continued)
(m)
Financial assets
Financial assets
(m)
All financial assets are recognised and derecognised on trade date where purchase or sale of a financial asset is under a contract
whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured
All financial assets are recognised and derecognised on trade date where purchase or sale of a financial asset is under a contract
at fair value, net of transaction costs except for those financial assets classified as ‘at fair value through the profit or loss’ which are
whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured
initially measured at fair value.
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.
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
Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’, ‘held-to-
purpose of the financial assets and is determined at the time of initial recognition.
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
Effective interest method
(i)
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 effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the
the financial asset, or, where appropriate, a shorter period.
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’.
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
Held-to-maturity investments
(ii)
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
Bills of exchange and debentures with fixed or determinable payments and fixed maturity dates where the Group has the positive intent
using the effective interest method less impairment, with revenue recognised on an effective yield basis.
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
(iii)
Financial assets are classified as financial assets at fair value through profit or loss where the financial asset:
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
Has been acquired principally for the purpose of selling in the near future;
of short-term profit-taking; or
Is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern
Is a derivative that is not designated and effective as a hedging instrument.
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.
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 financial assets
(iv)
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
Available-for-sale assets are stated at fair value. Gains and losses arising from changes in fair value are recognised directly in the
foreign exchange gains and losses on monetary assets which are recognised directly in profit or loss. Where the investment is disposed
investments revaluation reserve with the exception of impairment losses, interest calculated using the effective interest rate method and
of or is determined to be impaired, the cumulative gain or loss previously recognised in the investments revaluation reserve is included
foreign exchange gains and losses on monetary assets which are recognised directly in profit or loss. Where the investment is disposed
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
of or is determined to be impaired, the cumulative gain or loss previously recognised in the investments revaluation reserve is included
currency and translated at the spot rate at reporting date. The change in fair value attributable to translation differences that results from
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
a change in amortised cost of the asset is recognised in profit or loss, and other changes are recognised in equity. Available-for-sale
currency and translated at the spot rate at reporting date. The change in fair value attributable to translation differences that results from
financial assets include investments where shareholding is greater than 20% but significant influence is not exerted over the invested
a change in amortised cost of the asset is recognised in profit or loss, and other changes are recognised in equity. Available-for-sale
company.
financial assets include investments where shareholding is greater than 20% but significant influence is not exerted over the invested
company.
(v)
Loans and receivables
Loans and receivables
(v)
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
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are
less impairment. Interest is recognised by applying the effective interest rate.
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
Impairment of financial assets
(vi)
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
Financial assets other than those at fair value through profit or loss, are assessed for indicators of impairment at each balance sheet
initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets
date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the
carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of
initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets
estimated future cash flows, discounted at the original effective interest rate.
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
The carrying value of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade
written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance
receivables where the carrying value is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is
account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
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
With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and
impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is
the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised
reversed does not exceed what the amortised cost would have been had the impairment not been 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.
In respect of available-for-sale instruments, any subsequent increase in fair value after an impairment loss is recognised directly in
equity.
Page 35 of 83
Page 35 of 83
Imdex 2010 Annual Report | 63
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 liabilities and equity instruments issued by the Group
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:
•
•
•
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:
•
•
•
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.
64 | Imdex 2010 Annual Report
Page 36 of 83
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 Names and Patents
10 years
5-7 years
1-5 years (term of contract)
5-6 years
1-6 years
Intellectual property of Samchem 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:
•
•
•
•
•
•
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 between 3 and 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).
Page 37 of 83
Imdex 2010 Annual Report | 65
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
Summary of Significant Accounting Policies (continued)
(p)
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.
66 | Imdex 2010 Annual Report
Page 38 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
Summary of Significant Accounting Policies (continued)
(q)
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:
•
•
•
•
•
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.
Page 39 of 83
Imdex 2010 Annual Report | 67
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 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.
68 | Imdex 2010 Annual Report
Page 40 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
3
Critical Accounting Judgements and Key Sources of Estimation Uncertainty
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:
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. A
forward looking estimation of this nature is inherently uncertain. Impairment losses booked in the current year are detailed in
note 13 (Intangibles) and note 14 (Goodwill). No impairment losses were booked in the prior year.
Page 41 of 83
Imdex 2010 Annual Report | 69
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
4
Profit from Operations
(a) Revenue from operations
Revenue
Revenue from the sale of goods
Operating rental income
Interest income - bank deposits
Interest income - other loans and receivables
(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:
Consolidated
Company
2010
$’000
2009
$’000
2010
$’000
2009
$’000
100,576
33,677
87
1,285
135,625
103,055
33,914
118
1,905
138,992
-
-
41
3,112
3,153
-
-
56
3,766
3,822
41
2,352
Gain / (loss) on disposal of property, plant and equipment
12
(91)
-
Foreign exchange (loss) / gain
(1,511)
2,334
(1,319)
Loans and receivables (including cash and cash equivalents)
Interest revenue
1,372
2,024
3,153
3,822
Financial liabilities at amortised cost
Interest expense
Profit before income tax has been arrived at after charging the
following items of income and expense:
Other income
Gain on disposal of property, plant and equipment
Management fees from subsidiaries
Dividends from subsidiaries
Other revenue
Depreciation and amortisation of Non Current Assets
Depreciation of property, plant and equipment (note 12)
Amortisation of intangible assets (note 14)
(2,143)
(2,850)
(1,629)
(2,170)
12
-
-
285
297
4,182
6,363
10,545
-
-
-
253
253
3,318
6,535
9,853
-
10,188
-
67
10,255
236
-
236
41
9,361
7,500
-
16,902
187
-
187
70 | Imdex 2010 Annual Report
Page 42 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
4
Profit from Operations (continued)
Impairment Charges
Impairment of Financial Asset (note 9)
Impairment of Goodwill (note 13)
Impairment of Intangible Asset (note 14)
Finance costs
Interest on hire purchase liabilities
Interest on deferred acquisition consideration
Interest on commercial bills
Interest on bank loan - Canada
Interest on bank loan - Sweden
Interest on overdraft
Interest rate cap expense
Other interest
Other expenses
Commissions
Consultancy fees
Legal and professional expenses (i)
Foreign exchange loss / (gain)
Rent and premises costs
Travel and accommodation
Motor vehicle costs
Other expenses
Employee benefits expense
Post-employment benefits:
Defined contribution superannuation costs
Share based payments:
Equity-settled share based payments - share options
Equity-settled share based payments - performance rights
Other employee benefits
Cost of sales
Movement in provision for doubtful debts
Operating lease rental (minimum lease payments)
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
(i) Includes legal, audit, accounting, share registry and corporate secretarial fees.
Consolidated
Company
2010
$’000
2009
$’000
2010
$’000
2009
$’000
10,440
22,498
1,033
33,971
249
15
1,274
114
128
43
-
320
2,143
463
2,300
2,636
1,511
3,175
3,242
1,395
10,404
25,126
1,367
995
104
24,602
27,068
58,140
1,037
3,466
-
-
-
-
53
194
1,315
-
421
195
229
443
2,850
974
1,257
2,020
(2,334)
2,847
3,840
1,629
7,947
18,180
1,399
1,487
-
25,581
28,467
61,700
(68)
3,306
3,434
-
-
3,434
9
-
1,274
-
-
13
-
333
1,629
-
318
835
1,319
285
662
31
1,584
5,034
410
995
104
5,991
7,500
-
-
-
-
-
-
-
-
1,315
-
-
193
229
433
2,170
-
306
1,012
(2,352)
239
780
85
1,281
1,351
375
1,487
-
5,581
7,443
-
-
301
273
Consolidated
Company
2010
$’000
2009
$’000
2010
$’000
2009
$’000
13,885
(12,683)
(725)
477
6,740
(552)
(60)
6,128
2,025
(3,015)
(37)
(1,027)
371
616
70
1,057
Page 43 of 83
Imdex 2010 Annual Report | 71
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
5
Income Taxes (continued)
Consolidated
Company
2010
$’000
2009
$’000
2010
$’000
2009
$’000
Prima facie income tax expense on pre-tax accounting (loss) /
profit from operations reconciles to income tax in the financial
statements as follows:
(Loss) / profit from operations
(21,071)
18,195
Income tax (benefit) / expense calculated at 30%
Intercompany dividends received
Non-deductible share based payments
Additional provincial tax arising in a foreign jurisdiction
Non-deductible interest on deferred payments
Non-deductible impairment charges
Other non-deductible and non-assessable items
Tax rate differential arising from foreign entities
Carry forward losses not brought to account
(Over) / under provision of prior year income tax
(6,321)
-
330
-
4
7,090
182
(84)
-
(724)
477
5,459
-
446
201
58
-
(224)
223
25
(60)
6,128
(4,425)
(1,328)
-
330
-
-
-
8
-
-
(37)
(1,027)
9,573
2,872
(2,250)
446
-
-
-
(81)
-
-
70
1,057
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:
Deferred tax: Share issue expenses deductible over five years
Deferred tax: Translation of foreign operations
Consolidated
Company
2010
$’000
2009
$’000
2010
$’000
2009
$’000
-
1,351
1,351
(53)
(223)
(276)
-
-
-
(53)
-
(53)
(c) Current tax assets and liabilities
Current tax payable
(d) Deferred tax balances
Deferred tax assets comprise:
Provisions
Inventory
Property, plant and equipment
Carry forward tax losses in subsidiary companies
Accruals
Available-for-sale non-current assets
Foreign currency translation reserves
Share issue expenses
Deferred tax liabilities comprise:
Accruals
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
8,768
5,268
6,261
2,249
392
1,217
8,073
2,333
598
1,872
1,883
44
16,412
-
-
(5,709)
-
(5,709)
10,703
167
862
2,114
776
-
-
532
97
4,548
(111)
-
(6,617)
(1,494)
(8,222)
(3,674)
75
-
-
-
615
1,030
726
44
2,490
-
-
-
-
-
2,490
-
-
-
-
-
-
727
97
824
(62)
-
-
(1,494)
(1,556)
(732)
652
426
-
-
72 | Imdex 2010 Annual Report
Page 44 of 83
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
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 auditors
Audit or review of the financial report
Other non-audit services: Accounting assistance and
taxation advice
Consolidated
Company
2010
$
2009
$
2010
$
2009
$
246,130
219,208
246,130
219,208
136,395
-
382,525
229,184
30,812
479,204
136,395
-
382,525
229,184
30,812
479,204
81,006
143,210
11,558
5,072
97,636
99,871
66,663
166,534
11,166
64,138
218,514
69,335
448
69,783
-
-
-
-
-
-
-
-
-
-
-
-
-
-
646,695
767,501
382,525
479,204
Page 45 of 83
Imdex 2010 Annual Report | 73
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
Company
2010
$’000
2009
$’000
2010
$’000
2009
$’000
41,843
(1,646)
40,197
1,013
41,210
22,290
(609)
21,681
1,686
23,367
1,618
-
1,618
157
1,775
701
-
701
5,135
5,836
(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
2,897
6,070
2,023
10,990
1,455
4,362
1,454
7,271
-
-
1,618
1,618
-
-
701
701
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.
609
-
1,037
1,646
677
-
(68)
609
-
-
-
-
-
-
-
-
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
2010
$’000
2009
$’000
2010
$’000
2009
$’000
4,286
562
23,752
28,600
4,052
1,527
20,956
26,535
-
-
-
-
-
-
-
-
74 | Imdex 2010 Annual Report
Page 46 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
9
Other Financial Assets
Consolidated
Company
Notes
2010
$’000
2009
$’000
2010
$’000
2009
$’000
Current
Loans carried at amortised cost
Loan to Sino Gas and Energy Holdings Limited
(i)
-
-
12,340
12,340
-
-
12,340
12,340
Non-Current
Available for sale financial asset at fair value
Investment in Sino Gas and Energy Holdings Ltd
Loans carried at amortised cost
Loans to Subsidiaries
Investments carried at cost
Investments in Subsidiaries
(ii)
(iii)
6,802
-
-
6,802
-
-
-
-
196
-
77,643
62,230
12,604
90,443
12,542
74,772
(i) In the current year interest earned of $1.3 million and a foreign exchange loss of $0.4 million was recognised in the income statement
in connection with this loan. On 21 June 2010 capitalised interest of $1.8 million was converted into fully paid Sino Gas and Energy
Holdings Ltd (SEH) ordinary shares at $0.20 per share. On 28 June 2010 $7.3 million was converted into 220,470,096 fully paid SEH
ordinary shares as part of the sub-underwriting agreement described below and the balance of $4.1 million was repaid.
The prior year balance comprised a loan from the Imdex Group to SEH in two tranches, one of A$5 million and one of US$5 million,
both inclusive of capitalised interest and exclusive of amounts converted to equity in SEH. Interest of $1.9 million was recognised in the
profit and loss in the prior year. The funds advanced were secured by a fixed and floating charge over the assets of SEH. The loan
carried interest at 13.5% per annum until 15 September 2009 and 10% per annum thereafter. The loan was repayable on 30 September
2010. The loan carried the option for Imdex Limited to convert the loan balance into equity in SEH at market price. During the prior year
$3.63 million of capitalised interest was also converted into shares in SEH at $0.50 per share.
(ii) Comprises 251,908,446 fully paid ordinary shares in SEH held at fair value. This amounts to 26.95% of the issued share capital of
SEH. 243,448,446 of these shares are subject to escrow until 15 September 2011.
Despite holding more than 20% of the issued share capital of SEH, the Company does not have significant influence over SEH due to
its limited Board representation and minimal involvement in strategic planning and day to day management. The shareholding in excess
of 20% is a consequence of partially sub-underwriting SEH’s recent capital raising. The partial sub-underwriting was undertaken to
facilitate the Company’s exit from the convertible note. As the Company’s intention remains to realise the value of the investment
through sale, subject to escrow arrangements, this investment has been classified, as an available-for-sale non-current asset and
carried at fair value.
Balance at beginning of financial year (classified as 'Held for Sale')
Uptake of sub-underwriting commitment
Conversion of loan interest
Impairment adjustment
Balance at end of financial year
Note
11
(i)
2010
Shares
22,260,000
220,470,096
9,178,350
-
251,908,446
$000's
8,130
7,276
1,836
(10,440)
6,802
Page 47 of 83
Imdex 2010 Annual Report | 75
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
9
Other Financial Assets (continued)
During the current year SEH undertook a capital raising which was partially sub-underwritten by Imdex Limited. There was a shortfall on
the capital raising and Imdex Limited was called upon to subscribe for 220,470,096 shares at $0.033 per share.
The impairment adjustment of $10.4 million arose on the write down of SEH shares to their market value per the Australian Stock
Exchange of $0.027 per share at 30 June 2010.
As part of the SEH capital raising described above, Imdex also received for no consideration 96,263,092 SEH options exercisable at
$0.125 each before 31 December 2012. These options have been valued at nil.
(iii) Loans to Subsidiaries are repayable on demand and carry interest at market related rates. These loans are classified as non-current
as there is no intention for them to be repaid in the next 12 months.
10
Other Assets
Current
Prepayments
Consolidated
Company
2010
$’000
2009
$’000
2010
$’000
2009
$’000
3,496
3,496
1,507
1,507
24
24
22
22
11
Non-Current Assets Classified as Held for Sale
Consolidated
Company
Notes
2010
$’000
2009
$’000
2010
$’000
2009
$’000
Shares held for sale
(i)
-
8,130
-
8,130
(i) In the prior year 22,260,000 shares were held in Sino Gas and Energy Holdings Limited (SEH). This amounted to 19% of the issued
share capital of SEH. As the Company’s intention was to realise the value of the investment through sale it meets the requirements of
AASB 5: ‘Non-Current Assets Held for Sale and Discontinued Operations’ and has been disclosed as a non-current asset held for sale.
During the current year, this investment has been reclassified as an ‘Available for Sale’ financial asset – refer note 9.
76 | Imdex 2010 Annual Report
Page 48 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
12
Property, Plant and Equipment
Consolidated
Gross Carrying Value
Balance at 30 June 2008
Additions
Acquisitions through business combinations
Disposals
Net foreign currency exchange differences
Transfer
Balance at 30 June 2009
Additions
Disposals
Net foreign currency exchange differences
Transfer
Balance at 30 June 2010
Accumulated Depreciation
Balance at 30 June 2008
Disposals
Depreciation expense
Net foreign currency exchange differences
Transfer
Balance at 30 June 2009
Disposals
Depreciation expense
Net foreign currency exchange differences
Transfer
Balance at 30 June 2010
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
7,008
4,633
266
(2,953)
267
1,062
10,283
2,264
(754)
(485)
(502)
10,806
8,254
1,418
-
(4,506)
1,129
(283)
6,012
2,435
(2,004)
16
555
7,014
20
491
-
-
4
(23)
492
2,770
-
-
(33)
3,229
524 15,806
1,199 7,741
- 266
- (7,459)
23 1,423
(756) -
990 17,777
77 7,546
(179) (2,937)
(63) (532)
(20) -
805 21,854
2,981
(1,295)
1,580
71
97
3,434
(508)
1,872
(175)
(284)
4,339
5,671
(3,965)
1,613
199
(81)
3,437
(2,141)
2,142
(104)
294
3,628
14
-
125
2
(16)
125
-
168
-
(10)
283
- 8,666
- (5,260)
- 3,318
- 272
- -
- 6,996
- (2,649)
- 4,182
- (279)
- -
- 8,250
Net Book Value
As at 30 June 2009
As at 30 June 2010
Company
Gross Carrying Value
Balance at 30 June 2008
Additions
Disposals
Balance at 30 June 2009
Additions
Transfer
Balance at 30 June 2010
Accumulated Depreciation
Balance at 30 June 2008
Dispoals
Depreciation expense
Balance at 30 June 2009
Depreciation expense
Balance at 30 June 2010
Net Book Value
As at 30 June 2009
As at 30 June 2010
6,849
6,467
2,575
3,386
367
2,946
990 10,781
805 13,604
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
1,291
207
(488)
1,010
207
19
1,236
-
-
-
-
-
-
-
-
-
-
-
107
-
107
- 1,291
29 236
- (488)
29 1,039
- 314
(19) -
10 1,353
769
(458)
187
498
216
714
-
-
-
-
-
-
-
-
-
-
20
20
- 769
- (458)
- 187
- 498
- 236
- 734
512
522
-
-
-
87
29 541
10 619
Page 49 of 83
Imdex 2010 Annual Report | 77
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
12
Property, Plant and Equipment (continued)
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
Consolidated
Company
2010
$’000
2009
$’000
2010
$’000
2009
$’000
1,872
2,142
168
4,182
1,580 216 187
- -
1,613
125 20
-
3,318 236 187
13
Goodwill
Consolidated
Company
Notes
2010
$’000
2009
$’000
2010
$’000
2009
$’000
Gross Carrying Amount
Balance at beginning of the financial year
Recognised on acquisition of Wildcat Chemicals Australia
Pty Ltd
Recognised on acquisition of Imdex Technology Sweden
AB (formerly 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
(i)
(ii)
(iii)
Goodwill is allocated to cash-generating units as follows:
Samchem
Wildcat
Suay Energy Services
AMC North America (formerly Poly-Drill Drilling Systems)
Southernland
Reflex / Imdex Technology UK
Flexit / Imdex Technology Germany
55,268
-
-
(2,064)
53,204
-
(22,498)
(22,498)
52,626
1,501
1,900
(759)
55,268
-
-
-
55,268
30,706
52,626
55,268
-
-
-
-
-
19,933
10,773
30,706
1,568
1,501
1,266
3,369
2,537
21,397
23,630
55,268
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(i) Goodwill arose during the prior year on the acquisition of Wildcat Chemicals Australia Pty Ltd (Wildcat) by Imdex Limited effective 1
September 2008. (Refer note 27(a)). Wildcat is considered to be a separate cash generating unit since it operates independently from
other Imdex operations in a separate geographical area being the Queensland area and in a separate market, being the manufacture of
production and completion chemicals for oilfield operations.
(ii) Imdex Technology Sweden AB (formerly Flexit AB) was acquired on 1 May 2007. On 13 February 2009, a Deed of Variation was
signed to alter the original purchase agreement. The signing of this Deed gave rise to an additional amount of goodwill. For more details
refer to note19(ii).
78 | Imdex 2010 Annual Report
Page 50 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
13
Goodwill (continued)
(iii) During the current period impairment losses were booked to the following cash generating units:
Impairment losses per cash-generating unit
Samchem
Wildcat
Suay Energy Services
AMC North America (formerly Poly-Drill Drilling Systems)
Southernland
Reflex / Imdex Technology UK
Flexit / Imdex Technology Germany
Impairment losses by segment
Drilling Fluids and Chemicals
Down Hole Instrumentation
Unallocated
Goodwill
$’000
Intangibles
$’000
Total
$’000
1,499
1,501
1,266
3,369
2,363
-
12,500
22,498
1,033
-
-
-
-
-
-
1,033
2,532
1,501
1,266
3,369
2,363
-
12,500
23,531
Goodwill
$’000
Intangibles
$’000
Total
$’000
9,998
12,500
-
22,498
1,033
-
-
1,033
11,031
12,500
-
23,531
The major mining regions were hit hard by the global financial crisis and have been slow to recover. In particular this was true for the
mining regions of Africa, Canada and Latin America. This caused the financial performance of all cash-generating units to fall below
expected levels which was the trigger for performing impairment reviews of the Drilling Fluids and Chemicals cash-generating units. In
addition Imdex took the opportunity to restructure these businesses along regional lines and re-branding all entities to the “AMC” brand.
The lower performance and technical difficulties experienced in commercialising the oil and gas down hole instrumentation tool suite
and penetrating that market was the trigger for the impairment adjustment within the Down Hole Instrumentation segment.
The recoverable amount of goodwill has been determined based on a value in use calculation which uses a 5 year discounted cash flow
projection based on the 2011 forecast plus a terminal value. Future cash flows have been discounted to present values using region
specific, real, pre-tax discount rates per the table below. 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.
There has been no change in the identification of cash-generating units or the aggregation thereof when compared to the prior period.
The key assumptions used in the value in use calculations for the various significant cash generating units are as follows:
CGU
Forecasted revenue growth
Discount Rate
Forecasted net margins
Samchem
Revenue growth has been forecast
in line with the expected rate of
recovery of the mining and mineral
exploration industry in South Africa
and the other African regions
serviced by Samchem.
25.25%
Net margins have been
forecasted using current
period actuals as a base on
which operational
improvements and
economies of scale are
expected to be gained,
particularly from the
introduction of a regionalised
reporting structure.
Expected exchange
rate fluctuations
Exchange rate
fluctuation expectations
have been built into the
forecasted numbers
based on FY11
forecasted exchange
rates published by major
local and international
lending institutions.
Discounted cash flow
outcomes using these
rates are not materially
different from having
used current spot rates.
Page 51 of 83
Imdex 2010 Annual Report | 79
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
13 Goodwill (continued)
CGU
Forecasted revenue growth
Discount
Rate
Forecasted net margins
Expected
exchange rate
fluctuations
Wildcat
Suay
AMC North
America
(formerly
Poly-Drill)
Southern-
Land
Flexit / Imdex
Technology
Germany
Revenue growth has been forecast in
line with the expected activity levels of
local oil and gas industries serviced by
Wildcat and potential new on and
offshore opportunities, some of which
have been brought about by the
integration into the broader Imdex
Group.
Revenue growth has been forecast in
line with the expected rate of recovery
of the oil and gas industry in
Kazakhstan and the broader Caspian
Sea region. This has been overlaid with
risk adjusted additional revenues
expected to be gained by the winning of
new contracts and tenders.
Revenue growth has been forecast in
line with the expected rate of recovery
of the mining and mineral exploration
market in Canada as well as growth
expected to arise from the recent
creation of regionalised warehousing
and sales structures.
Revenue growth has been forecast in
line with the expected rate of recovery
of the mining and mineral exploration
market in South and Latin America as
well as growth expected to arise from
the global alliances and recent
managerial function changes.
Revenue growth has been forecasted
based on the expected rate of recovery
of oil and gas activity levels on a global
scale. An increment has been added for
the expected gain in market share as
this business begins to become
established on a global scale.
18.83%
22.86%
18.38%
12.30%
11.96%
Exchange rate
fluctuation
expectations
have been built
into the
forecasted
numbers based
on FY11
forecasted
exchange rates
published by
major local and
international
lending
institutions.
Discounted cash
flow outcomes
using these rates
are not
materially
different from
having used
current spot
rates.
Net margins have been forecasted
using current period actuals as a
base on which operational
improvements and economies of
scale are expected to be gained,
particularly from the introduction of a
regionalised reporting structure.
Net margins have been forecast
using the current year actuals as a
base. Margin increases are expected
in future years as tool volumes
increase and economies of scale are
achieved.
80 | Imdex 2010 Annual Report
Page 52 of 83
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
Gross Carrying Value
Balance at 30 June 2008
Capitalised during the year
Impact of exchange rate changes
Balance at 30 June 2009
Capitalised during the year
Impairment losses
Impact of exchange rate changes
Balance at 30 June 2010
Accumulated Amortisation and
Impairment
Balance at 30 June 2008
Amortisation expense
Impact of exchange rate changes
Impairment losses
Balance at 30 June 2009
Amortisation expense
Impact of exchange rate changes
Balance at 30 June 2010
Net Book Value
As at 30 June 2009
As at 30 June 2010
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
761
-
-
761
-
-
-
761
177
152
-
-
329
153
-
482
432
279
2,417
-
169
2,586
-
(1,033)
(48)
1,505
75
151
-
-
226
150
-
376
14,749
-
(337)
14,412
-
-
(332)
14,080
3,832
2,398
(156)
-
6,074
2,289
(204)
8,159
2,360
1,129
8,338
5,921
1,315
-
-
1,315
-
-
-
1,315
608
530
-
-
1,138
85
-
1,223
177
92
12,393
-
(772)
11,621
-
-
(690)
10,931
3,301
2,255
(464)
-
5,092
2,009
(423)
6,678
6,529
4,253
429
3,650
-
4,079
3,322
-
-
7,401
86
86
-
-
172
945
-
1,117
3,907
6,284
4,561
-
(351)
4,210
-
-
(317)
3,893
1,257
963
(182)
-
2,038
732
(188)
2,582
36,625
3,650
(1,291)
38,984
3,322
(1,033)
(1,387)
39,886
9,336
6,535
(802)
-
15,069
6,363
(815)
20,617
2,172
1,311
23,915
19,269
During the current period the full value of intellectual property associated with the clay brick manufacture process in Samchem Drilling
Fluids and Chemicals (Pty) Ltd in South Africa (within the Samchem CGU) amounting to $1.0 million was considered to be impaired.
This line of business is non-core to the Imdex Group and sales and growth in this industry will not be actively pursued. Refer to note 13
above for discussion on how intangibles are allocated to cash generating units.
15
Trade and Other Payables
Trade payables
Accruals and other payables
Notes
(i)
Consolidated
Company
2010
$’000
2009
$’000
2010
$’000
2009
$’000
20,392
5,297
25,689
7,921
4,848
12,769
70
1,509
1,579
179
987
1,166
(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.
Page 53 of 83
Imdex 2010 Annual Report | 81
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
16
Borrowings
Current borrowings
Secured
At amortised cost
Commercial bill
Bank loan - Sweden
Bank loan - Canada
Hire purchase liabilities
Non-current borrowings
Secured
At amortised cost
Commercial bills
Bank loan - Sweden
Hire purchase liabilities
Consolidated
Company
Notes
2010
$’000
2009
$’000
2010
$’000
2009
$’000
(i)
(ii)
(iii)
(iv) 25
(i)
(ii)
(iv) 25
11,000
969
5,673
1,450
19,092
8,500
1,938
2,488
12,926
10,000
3,029
-
485
13,514
11,500
5,354
1,179
18,033
11,000
-
-
19
11,019
8,500
-
72
8,572
10,000
-
-
-
10,000
11,500
-
-
11,500
(i) Commercial bills bear interest at a floating rate of 6.65% per annum. Bills totalling $8.0 million are repayable on demand. The balance of
bills are repayable in 15 instalments of $0.75 million due at the end of each calendar quarter and ending with a final instalment of $0.25
million on 30 June 2014. An interest rate cap of 7% per annum is in place over $10,000,000 of this debt until December 2011. The interest
rate cap does not operate where the variable interest rate on bills is below 7%. 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, Wildcat
Chemicals Australia Pty Ltd, Flexit Australia Pty Ltd, Imdex Sweden AB, Imdex Technology Sweden AB (formerly Flexit AB), Reflex
Instruments AB and Samchem Drilling Fluids and Chemicals (Pty) Ltd.
(ii) Comprises of a loan of SEK 19.8 million and bears interest at the 7 day Stockholm Interbank Offered Rate ('STIBOR'), currently 0.38%
plus a margin of 3.5% per annum. The loan is repayable in quarterly instalments of SEK 1.65 million with the next installment due on 30
September 2010. This loan is secured over the assets of the Reflex and Flexit companies that are domiciled in Sweden. The repayment
terms of this loan were varied after year end. Refer note 35 for details.
(iii) Comprises a loan of CAD 5.1 million at an interest rate of 5.12%. This loan is repayable in 5 quarterly instalments of CAD 0.4 million
each (next instalment due 1 September 2010) and 53 monthly instalments of CAD 0.06 million due on the first day of each month. The loan
is disclosed as a current liability since the bank retains the option to have these loans repaid on demand. No such demand has been made
at the date of signing this report and the Directors do not expect such a demand to be made in the foreseeable future.
(iv) 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 the hire purchase pledged as security. The weighted average
interest rate applicable to these liabilities is 9.38% (2009: 7.89%).
17 Provisions
Current provisions
Employee entitlements
Non-current provisions
Employee entitlements
Consolidated
Company
Notes
2010
$’000
2009
$’000
2010
$’000
2009
$’000
(i)
1,706
1,317
500
422
721
553
383
310
(i) The majority of these entitlements are expected to be taken during the coming year. (2009: same)
82 | Imdex 2010 Annual Report
Page 54 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
18 Other Liabilities
Consolidated
Company
Notes
2010
$’000
2009
$’000
2010
$’000
2009
$’000
Other Current Liabilities
Unsecured
At amortised cost
Deferred acquisition payments
(i) 27(b)
-
-
2,492
2,492
-
-
-
-
(i) Deferred acquisition payments relate to the purchase of Imdex Technology UK Ltd effective 1 August 2006. The final installment of
GBP 1.045 million was paid on 31 July 2009 in accordance with the purchase agreement. No further liabilities remain in connection with
this acquisition.
19
Issued Capital
Consolidated
Company
Notes
2010
$’000
2009
$’000
2010
$’000
2009
$’000
Issued and Paid Up Capital - Fully paid ordinary shares
(i)
67,415
67,415
67,136
67,136
67,415
67,415
67,136
67,136
(i) Fully paid ordinary shares carry one vote per share and the right to dividends.
Consolidated and Company
2010
2009
Notes
Number
$'000
Number
$'000
Ordinary shares
Balance at beginning of the financial year
Issue of shares as part consideration for the acquisition of
Suay
Conversion of capital
Issue of shares as part consideration for the acquisition of
Imdex Technology Sweden AB (formerly Flexit AB)
Tax effect of share issue costs
Issue of shares under staff option plan
Closing balance at end of the financial year
(ii)
(ii)
(iii)
193,808,793
67,136
183,490,932
58,183
-
-
-
-
168,530
5,000,000
-
-
1,238,335
195,047,128
-
-
279
67,415
5,000,000
-
149,331
193,808,793
278
6,700
1,900
(54)
129
67,136
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.
(ii) Conversion of capital and issue of shares to acquire Imdex Technology Sweden AB (formerly Flexit AB)
On 11 May 2009 10,000,000 Imdex Limited fully paid ordinary shares were issued to the previous owners of Imdex Technology Sweden
AB (formerly Flexit AB). These shares were issued pursuant to the purchase agreement effective 1 May 2007 as modified by a Deed of
Variation dated 13 February 2009. The original agreement provided for the conversion of 5,000,000 fully paid Imdex Limited shares in
May 2009, the fair value of which at the time of signing the agreement on 1 May 2007 was $6.7 million. The Deed of Variation provided
for the issue of 5,000,000 additional fully paid Imdex Limited shares at May 2009, the fair value of which at the time of signing the
agreement on 13 February 2009 was $1.9 million. An additional cash payment may become payable by Imdex Limited on 1 May 2012
should the Imdex Limited share price not have reached $1.00 per share at any time between 11 May 2009 and 1 May 2012. The
payment will be calculated as the difference between $1 and the Imdex Limited share price on 1 May 2012 multiplied by 10,000,000. At
30 June 2010 it is estimated that the liability at 1 May 2012 will be nil.
Page 55 of 83
Imdex 2010 Annual Report | 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
19
Issued Capital (continued)
(iii) Share options granted under the staff option plan
No options were granted under the staff option plan in the current or prior year.
In accordance with the provisions of the staff option plan, as at 30 June 2010, executives, directors and staff have options over
13,436,864 ordinary shares (11,814,088 of which had vested), in aggregate. These options expire over a range of dates up to March
2013. As at 30 June 2009, executives, directors and staff have options over 15,580,539 ordinary shares (10,468,862 of which had
vested), in aggregate. These options expire over a range of dates up to March 2013. 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.
20 Reserves
Foreign Currency Translation Reserve
Balance at beginning of the financial year
Translation of foreign operations
Tax thereon
Balance at the end of the financial year
Consolidated
Company
Notes
2010
$’000
2009
$’000
2010
$’000
2009
$’000
(4,105)
(2,167)
650
(5,622)
(4,863)
1,083
(325)
(4,105)
-
-
-
-
-
-
-
-
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 expensed
Performance rights expensed
Options exercised during the financial year
Balance at the end of the financial year
4
4
4,024
995
104
(16)
5,107
2,573
1,487
-
(36)
4,024
4,024
995
104
(16)
5,107
2,573
1,487
-
(36)
4,024
The employee equity-settled benefits reserve arises on the grant of share options and Performance Rights to Directors and employees.
Amounts are transferred out of the reserve and into issued capital when options are exercised or shares are issued in satisfaction of
Performance Rights. Further information regarding the Staff Option Plan is contained in note 33. Further information regarding the
Performance Rights Plan is contained in note 34.
84 | Imdex 2010 Annual Report
Page 56 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
21
(Loss) / Earnings Per Share
Basic (loss) / earnings per share
Diluted (loss) / earnings per share
Consolidated
2010
Cents per share
2009
Cents per share
(11.05)
(11.05)
6.37
6.23
(a) Basic (loss) / earnings per share
2010
2009
The earnings and weighted average number of ordinary shares used in the
calculation of basic (loss) / earnings per share are as follows:
(Loss) / Earnings
Weighted average number of ordinary shares for the purposes of basic (loss) /
earnings per share
(b) Diluted (loss) / earnings per share
The earnings and weighted average number of ordinary shares used in the
calculation of diluted (loss) / earnings per share are as follows:
(Loss) / Earnings
Weighted average number of ordinary shares for the purposes of diluted (loss)
/ earnings per share (ii)
(ii) The weighted average number of ordinary shares for the purposes of
diluted (loss) / earnings per share reconciles to the weighted average number
of ordinary shares used in the calculation of basic (loss) / earnings per share as
follows:
Weighted average number of ordinary shares used in the calculation of basic
(loss) / earnings per share
Shares deemed to be issued for no consideration in respect of options and
performance rights
Weighted average number of ordinary shares used in the calculation of diluted
(loss) / earnings per share
(iii) 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 (loss) / earnings per share:
Chairman's options
Managing Director's options
Employees share options tranche 2
Employees share options tranche 3
Employees share options tranche 4
Employees share options tranche 5
Employees share options tranche 6
Employees share options tranche 7
$'000s
$'000s
(21,548)
12,067
Shares
Shares
194,960,972
189,479,588
2010
2009
$'000s
$'000s
(21,548)
12,067
Shares
Shares
194,960,972
193,625,987
Shares
Shares
194,960,972
189,479,588
-
4,146,399
194,960,972
193,625,987
Shares
Shares
1,000,000
2,000,000
1,579,536
700,000
3,014,001
275,000
500,000
4,368,327
13,436,864
1,000,000
-
-
700,000
3,242,668
625,000
500,000
4,655,000
10,722,668
Page 57 of 83
Imdex 2010 Annual Report | 85
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
22 Dividends
Notes
2010
Cents per
share
2010
Total
$’000
2009
Cents per
share
2009
Total
$’000
Recognised amounts
Fully paid ordinary shares - interim dividend franked to 30%
Fully paid ordinary shares - final dividend franked to 30%
(i)
(ii)
Unrecognised amounts
Fully paid ordinary shares - final dividend franked to 30%
-
-
-
-
-
-
-
-
1.00
2.25
3.25
1,839
4,135
5,974
-
-
(i) The interim, fully franked dividend was paid on 24 March 2009. The record date for determining the entitlement to the interim dividend was
6 March 2009. There are no dividend reinvestment plans in operation.
(ii) The final, fully franked dividend was paid on 31 October 2008. The record date for determining the entitlement to the final dividend was 17
October 2008. There are no dividend reinvestment plans in operation.
Consolidated
2010
$'000
2009
$'000
27,079
-
-
19,652
-
-
Adjusted franking account balance
Impact on franking account of dividends not recognised
Income tax consequences of unrecognised dividends
23 Commitments for Expenditure
(a) Capital expenditure commitments
At 30 June 2010 the Group had capital expenditure commitments amounting to $1,092,000. These commitments were comprised of
$1,039,000 for gyros in Imdex Technology Germany GmbH and $53,000 for sundry capital equipment in Samchem Drilling Fluids and
Chemicals (Pty) Ltd.
At 30 June 2009 the Group had a capital expenditure commitments amounting to $3,344,000. This comprised $3,186,000 for gyro
purchases in Imdex Technology Germany GmbH and software and sundry software and equipment purchase commitments amounting
to $158,000. The Company had capital expenditure commitments of $118,000 relating to software purchases.
(b) Lease commitment
Hire purchase liabilities and non-cancellable operating lease commitments are disclosed in note 25.
86 | Imdex 2010 Annual Report
Page 58 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
24 Contingent Liabilities and Contingent Assets
There are no contingent liabilities or contingent assets in the current or prior years.
25 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
2010
$’000
2009
$’000
Company
2010
$’000
2009
$’000
Consolidated
2010
$’000
2009
$’000
Company
2010
$’000
2009
$’000
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
-
1,777
-
2,688
-
-
-
4,465
-
(527)
3,938 1,664 91 - 3,938 1,664 91 -
1,450 485 19
2,488 1,179 72
- -
3,938 1,664 91
- - -
27
84
-
111
(20)
-
-
-
-
-
607
1,279
-
1,886
(222)
Hire purchase liabilities provided for in the Financial Report
Current – Note 16
Non current – Note 16
(b) Operating Leases
Operating leasing arrangements
-
1,450 485 19
-
2,488 1,179 72
3,938 1,664 91 -
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
2010
$’000
2009
$’000
Company
2010
$’000
2009
$’000
3,224
2,607
60
5,891
2,662
3,661
190
6,513
378
162
-
540
424
221
-
645
Page 59 of 83
Imdex 2010 Annual Report | 87
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26 Subsidiaries
Parent Entity
Imdex Limited
Controlled Entities
Notes
Country of
Incorporation
Ownership Interest
2010
%
2009
%
(i), (ii), (iii)
Australia
Australian Mud Company Pty Ltd
Samchem Drilling Fluids & Chemicals (Pty) Ltd
Imdex International Pty Ltd
Imdex Sweden AB
Reflex Instruments Asia Pacific Pty Ltd
Imdex Technology UK Ltd (formerly Chardec Technology Ltd)
Reflex Instrument AB
Reflex Instrument North America
Reflex Instrument South America Ltda
Reflex Instruments Europe Ltd
Drillhole Surveying Instruments (Pty) Ltd
Imdex Technology Sweden AB (formerly Flexit AB)
Flexit Australia Pty Ltd
Suay Energy Services LLP
AMC North America Ltd (formerly Poly-Drill Drilling Systems Ltd)
Imdex South America S.A.
AMC Chile S.A. (formerly Southernland S.A.)
Wildcat Chemicals Australia Pty Ltd
Imdex Technology Australia Pty Ltd
Flexit Americas Inc
AMC Reflex Argentina S.A.
AMC Reflex Peru S.A.C.
Imdex Technology Germany GmbH (formerly System Entwicklungs
GmbH)
AMC Reflex Do Brasil Serviços Para Mineração Ltda
AMC Drilling Fluids Pvt Limited
(ii), (iii)
(ii), (iii)
(ii), (iii)
(iv)
(ii)
(ii), 27(a)
(ii)
Australia
South Africa
Australia
Sweden
Australia
United Kingdom
Sweden
Canada
Chile
United Kingdom
South Africa
Sweden
Australia
Kazakhstan
Canada
Chile
Chile
Australia
Australia
United States of America
Argentina
Peru
Germany
(v)
(vi)
Brazil
India
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.
(ii) These companies are part of the Australian tax consolidated group.
(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 deed on
29 June 2006, Imdex International Pty Ltd on 20 October 2006 and Reflex Instruments Asia Pacific Pty Ltd on 14 September 2007.
(iv) This entity was struck off the Companies Register effective 30 June 2010.
(v) This entity was incorporated on 30 September 2009.
(vi) This entity was incorporated on 10 December 2009.
88 | Imdex 2010 Annual Report
Page 60 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26
Subsidiaries (continued)
The consolidated income statement of entities which are party to the deed of cross guarantee are:
Income Statement
Revenue from sale of goods and operating lease rental
Other revenue from operations
Total revenue
Other income
Raw materials and consumables used
Employee benefit expenses
Depreciation and amortisation expense
Finance costs
Commissions
Consultancy fees
Legal and professional expenses
Rent and premises costs
Travel and accommodation
Motor vehicle costs
Foreign exchange gain/(loss)
Impairment charges
Other expenses
Profit before income tax expense
Income tax expense
Profit for the year
2010
$’000
2009
$’000
80,158
3,459
83,617
9,991
(41,215)
(15,576)
(4,436)
(1,736)
(263)
(340)
(1,303)
(1,938)
(1,470)
(1,600)
(707)
(10,440)
(5,091)
7,493
(1,551)
5,942
86,339
3,822
90,161
6,633
(46,168)
(15,629)
(3,851)
(2,241)
(115)
(318)
(1,068)
(1,434)
(2,047)
(808)
(46)
-
(1,056)
22,013
(7,324)
14,689
Page 61 of 83
Imdex 2010 Annual Report | 89
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26
Subsidiaries (continued)
The consolidated balance sheet of entities which are party to the deed of cross guarantee are:
Balance Sheet
Current Assets
Cash and Cash Equivalents
Trade and Other Receivables
Inventories
Other Financial Assets
Other
Total Current Assets
Non Current Assets
Other Financial Assets
Property, Plant and Equipment
Other Intangible Assets
Deferred Tax Asset
Total Non Current Assets
Total Assets
Current Liabilities
Trade and Other Payables
Borrowings
Current Tax Payables
Provisions
Other Current Liabilities
Total Current Liabilities
Non Current Liabilities
Borrowings
Deferred Tax Liabilities
Provisions
Total Non Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed Capital
Employee Equity-Settled Benefits Reserve
Retained Profits *
Total Equity
* 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
2010
$’000
2009
$’000
12,753
29,150
13,399
-
201
55,503
90,495
14,727
772
5,006
111,000
166,503
10,040
11,000
5,723
1,212
-
27,975
8,500
-
704
9,204
37,179
129,324
67,414
5,107
56,803
129,324
50,861
5,942
-
56,803
12,019
26,190
13,507
20,470
281
72,467
84,757
6,263
1,306
-
92,326
164,793
10,566
10,000
6,530
1,182
2,492
30,770
11,500
492
310
12,302
43,072
121,721
66,836
4,024
50,861
121,721
42,146
14,689
(5,974)
50,861
90 | Imdex 2010 Annual Report
Page 62 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
27
Acquisition of Businesses
(a) Acquisition of entity - Wildcat Chemicals Australia Pty Ltd
With effect from 1 September 2008, Imdex Limited, acquired 100% of the issued share capital of Wildcat Chemicals Australia Pty Ltd (Wildcat), a
company incorporated in Australia and operating out of premises north of Brisbane. Wildcat manufacture production and completion chemicals for
the oil and gas industry. 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
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
427
393
266
(685)
401
-
-
-
-
-
(i)
(ii)
Operating results of Wildcat included in the Consolidated Income Statement of Imdex Limited from acquisition on 1 September
2008 to 30 June 2009:
Revenue
Total expenses
Profit after tax for the period
427
393
266
(685)
401
1,501
1,902
1,843
-
59
1,902
Results since
acquisition
$’000
3,267
(3,045)
222
(i) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire Wildcat. 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 Wildcat. 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. No identifiable intangibles were present in this acquisition.
(ii) The Consolidated Cash Flow Statement for the year ended 30 June 2009 records the payment for the acquisition of Wildcat as $1.9 million
being the total consideration including on-costs that was paid in cash in the current year.
(iii) Had the acquisition of Wildcat been effected on 1 July 2008, the beginning of the prior year, the Wildcat financial results included in the Imdex
consolidated results would have been revenue of approximately $3.9 million and profit of approximately $0.3 million. The results of Wildcat are
included in the Drilling Fluids and Chemicals 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.
(b) Acquisition of entity - Imdex Technology UK Ltd (formerly Chardec Consultants Ltd)
On 31 July 2009, the third and final deferred acquisition payment of GBP 1.0 million ($2.1 million) was paid. On 31 July 2008 the second
of the three deferred acquisition payments, being GBP 1.5 million ($3.1 million), was paid. At 30 June 2010 there are no further amounts
outstanding amounts in relation to this acquisition.
Page 63 of 83
Imdex 2010 Annual Report | 91
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
28 Segment Information
Adoption of AASB 8 Operating Segments
The Group has adopted AASB 8 Operating Segments with effect from 1 July 2009. AASB 8 requires operating segments to be identified
on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in
order to allocate resources to the segments and to assess their performance. In contrast, the predecessor Standard (AASB 114
Segment Reporting) required an entity to identify two sets of segments (business and geographical), using a risks and returns approach,
with the entity’s ‘system of internal financial reporting to key management personnel’ serving only as the starting point for the
identification of such segments. As a result, following the adoption of AASB 8, the identification of the Group’s reportable segments has
not changed.
Reportable Segments
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.
The Group comprises the following reportable 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 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.
(a) Segment Revenues
Drilling Fluids and Chemicals
Down Hole Instrumentation
Total of all segments
Unallocated
Total revenue
(b) Segment Results
Drilling Fluids and Chemicals
Down Hole Instrumentation
Total of all segments
Eliminations
Impairment adjustments
Central administration costs ^
(Loss) / Profit before income tax expense
Income tax benefit / (expense)
(Loss)/Profit attributable to ordinary equity holders of Imdex Limited
2010
$'000
2009
$'000
89,597
44,656
134,253
1,372
135,625
91,687
45,281
136,968
2,024
138,992
8,567
7,744
16,311
-
(33,971)
(3,411)
(21,071)
(477)
(21,548)
11,277
8,747
20,024
-
-
(1,829)
18,195
(6,128)
12,067
^ - includes a loss of $0.7 million (prior period - gain of $2.1 million) on revaluation of loan to Sino Gas and Energy Holdings Ltd
(c) Segment Assets and Liabilities
Drilling Fluids and Chemicals
Down Hole Instrumentation
Total of all segments
Unallocated (i)
Consolidated
Assets
Liabilities
2010
$'000
2009
$'000
2010
$'000
2009
$'000
57,930
98,665
156,595
6,802
163,397
62,999
90,349
153,348
20,470
173,818
14,869
22,015
36,884
32,018
68,902
7,941
15,640
23,581
34,039
57,620
(i) Unallocated assets comprise the investment in and loan to Sino Gas & Energy Holdings Ltd. Unallocated liabilties comprise commerical
bills, bank loans, hire pruchase liabilities and deferred acquisition payments.
92 | Imdex 2010 Annual Report
Page 64 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
28
Segment Information (continued)
(d) Other segment information
Drilling Fluids and
2010
$'000
2009
$'000
Down Hole
Unallocated
Total
2010
$'000
2009
$'000
2010
$'000
2009
$'000
2010
$'000
2009
$'000
Depreciation
Amortisation
Acquisition of segment assets
1,301
148
3,913
836
-
3,226
2,645
6,215
3,317
Significant non cash expenses other
than depreciation and amortisation
Impairment losses
770
11,031
1,041
-
330
12,500
2,295
6,535
4,279
446
-
236
-
316
15
-
187
-
236
194
-
4,182
6,363
7,546
1,115
23,531
3,318
6,535
7,741
1,681
-
Geographical Segments
The Group operates in the following geographical segments:
(i) Asia Pacific: Manufacture and sale of drilling fluids and chemicals; sale and rental of down hole instrumentation
(ii) Europe: Manufacture and sale of drilling fluids and chemicals; sale and rental of down hole
(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
Asia Pacific
Europe
Africa
Americas
Total
(e) Information about major customers
Revenue from external
2009
$'000
2010
$'000
Segment assets
2010
2009
$'000
$'000
Acquisition of segment
2010
$'000
2009
$'000
83,976
4,257
16,700
30,692
135,625
77,659
8,185
23,209
29,939
138,992
29,918
46,453
1,039
3,674
81,084
8,459
67,032
4,739
9,734
89,964
5,285
213
749
1,299
7,546
2,934
2,033
1,084
1,690
7,741
The Group has a broad range of customers across its global operations with no single customer making up more than 10% of revenue.
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 26. 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.
Page 65 of 83
Imdex 2010 Annual Report | 93
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
29 Related Party Disclosures (continued)
(iii) Key management personnel equity holdings
2010
Balance at
1 July 2009
Granted as
compensation
Received on
exercise of
options
No.
No.
Mr I F Burston *
Mr B W Ridgeway
Mr R W Kelly
Mr K A Dundo
Mr M Lemmel
Ms E Donaghey ^
Mr G E Weston
Mr D J Loughlin
Mr M L Quesnel +
Mr P J Mander
Mr P A Evans
No.
393,786
3,500,000
380,000
300,000
793,084
-
-
-
-
-
45,000
5,411,870
Inception /
(cessation) as key
management
person
No.
(393,786)
-
-
-
-
70,000
-
-
-
-
-
-
-
-
-
-
-
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Net other
change #
Balance at
30 June 2010
Balance held
nominally
No.
-
-
-
-
110,825
40,000
(650,000)
-
-
-
-
No.
-
3,500,000
380,000
300,000
903,909
110,000
350,000
-
-
-
45,000
5,588,909
No.
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
(323,786)
(499,175)
2009
Balance at
1 July 2008
Granted as
compensation
Received on
exercise of
options
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 J Mander ~
Mr P A Evans
No.
343,786
3,500,000
290,000
300,000
447,347
-
-
-
10,000
4,891,133
No.
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Inception /
(cessation) as key
management
person
No.
-
-
-
-
-
-
-
-
-
-
Net other
change #
Balance at
30 June 2009
Balance held
nominally
No.
50,000
-
90,000
-
345,737
-
-
-
35,000
520,737
No.
393,786
3,500,000
380,000
300,000
793,084
-
-
-
45,000
5,411,870
No.
-
-
-
-
-
-
-
-
-
-
* - Mr I Burston retired from the position of Chairman on 15 October 2009. Disclosures above relate only to the period when in office.
^ - Ms E Donaghey was appointed as a director on 28 October 2009. Disclosures above relate only to the period when in office.
+ - Mr Quesnel was appointed on 15 October 2009. Disclosures above relate only to the period when in office.
~ - Mr P J Mander became a Key Management Person when he was appointed to the position of General Manager: Fluids and Chemicals
(Minerals) Division on 1 September 2008. Disclosures above relate only to the period when in office.
# - represent on market transactions
94 | Imdex 2010 Annual Report
Page 66 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
29 Related Party Disclosures (continued)
(iv) Share options issued by Imdex Limited
2010
Balance at
1 July 2009
Granted as
compensation
Exercised
Inception /
(cessation) as key
management person
Balance at
30 June
2010
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
Ms E Donaghey ^
Mr G E Weston
Mr D J Loughlin
Mr M L Quesnel +
Mr P J Mander
Mr P A Evans
No.
1,000,000
2,000,000
-
-
-
-
2,500,000
500,000
-
150,000
500,000
6,650,000
No.
No.
-
-
-
-
-
-
(1,000,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
No.
(1,000,000)
-
-
-
-
-
-
-
-
-
-
No.
-
2,000,000
No.
-
-
-
-
1,500,000
500,000
-
150,000
500,000
4,650,000
-
-
-
-
-
-
-
-
-
-
-
-
No.
No.
-
2,000,000
-
-
-
-
-
-
-
-
-
-
1,333,332
500,000
-
100,000
433,333
4,366,665
166,666
166,667
-
50,000
166,667
550,000
(1,000,000)
(1,000,000)
2009
Balance at
1 July 2008
Granted as
compensation
Exercised
Inception /
(cessation) as key
management person
Balance at
30 June
2009
Vested but
not
exercisable
Vested and
exercisable
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 J Mander ~
Mr P A Evans
No.
1,000,000
2,000,000
-
-
-
2,500,000
500,000
-
500,000
6,500,000
No.
No.
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150,000
-
150,000
No.
1,000,000
2,000,000
No.
-
-
-
2,500,000
500,000
150,000
500,000
6,650,000
-
-
-
-
-
-
-
-
-
-
Options
vested
during year
No.
1,000,000
-
-
-
-
No.
1,000,000
2,000,000
-
-
-
2,166,666
333,333
50,000
266,667
5,816,666
500,000
166,667
50,000
166,667
1,883,334
* - Mr I Burston retired from the position of Chairman on 15 October 2009. Disclosures above relate only to the period when in office.
^ - Ms E Donaghey was appointed as a director on 28 October 2009. Disclosures above relate only to the period when in office.
+ - Mr Quesnel was appointed on 15 October 2009. Disclosures above relate only to the period when in office.
~ - Mr P J Mander became a Key Management Person when he was appointed to the position of General Manager: Fluids and Chemicals (Minerals)
Division on 1 September 2008. Disclosures above relate only to the period when in office.
No options were granted to key management personnel in the current or prior year.
A total of 1,000,000 options were exercised by key management personnel during the current year. The exercise price was 20c per share. No amounts
remain unpaid on the options exercised.
Page 67 of 83
Imdex 2010 Annual Report | 95
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
29 Related Party Disclosures (continued)
(v) Performance rights granted by Imdex Limited
2010
Balance at
1 July 2009
Granted as
compensation
Mr I F Burston *
Mr B W Ridgeway
Mr R W Kelly
Mr K A Dundo
Mr M Lemmel
Ms E Donaghey ^
Mr G E Weston
Mr D J Loughlin
Mr M L Quesnel +
Mr P J Mander ~
Mr P A Evans
No.
-
-
-
-
-
-
-
-
-
-
-
-
No.
-
234,375
-
-
-
-
136,009
93,493
-
73,437
112,110
649,424
Satisfied by
the issue of
shares
Expired
No.
No.
Closing
balance at
30 June
2010
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
(234,375)
-
-
-
-
(136,009)
(93,493)
-
(73,437)
(112,110)
(649,424)
-
-
-
-
-
-
-
-
-
-
-
-
* - Mr I Burston retired from the position of Chairman on 15 October 2009. Disclosures above relate only to the period when in office.
^ - Ms E Donaghey was appointed as a director on 28 October 2009. Disclosures above relate only to the period when in office.
+ - Mr M L Quesnel was appointed on 15 October 2009. Disclosures above relate only to the period when in office.
~ - Mr P J Mander became a Key Management Person when he was appointed to the position of General Manager: Fluids and Chemicals (Minerals)
Division on 1 September 2008. Disclosures above relate only to the period when in office.
Performance rights expired where performance hurdles were not met. No value was received where performance rights expired.
No performance rights existed in the prior year.
More information on the Performance Rights Plan can be found in note 34.
96 | Imdex 2010 Annual Report
Page 68 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
29 Related Party Disclosures (continued)
(vi) Other transactions with key management personnel (and their related parties) of Imdex Limited
(a) 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 $127,766 (2009: $251,081)
(b) Transactions with Directors
Note
Consolidated
Company
2010
$
2009
$
2010
$
2009
$
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:
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 Liabilities
(c) Transactions with other related parties
(i) Transactions within the wholly-owned Group
vi(a)
127,766 193,865 127,766
193,865
vi(a)
- 57,216
- 57,216
vi(a)
9,087
41,420 9,087
41,420
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 $10,188,290 (2009:
$9,361,401) 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.
30 Notes to the Statement of Cash Flows
(a) Reconciliation of cash and cash equivalents
For the purposes of the Statement of Cash Flows, 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 Statement of Cash
Flows is reconciled to the related items in the balance sheet as follows:
Cash and cash equivalents
Bank overdraft
Consolidated
Company
2010
$’000
2009
$’000
2010
$’000
2009
$’000
9,007
-
9,007
11,975
-
11,975
7,644
-
7,644
1,455
-
1,455
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
$9,006,970 (2009: $11,975,244)
Page 69 of 83
Imdex 2010 Annual Report | 97
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
30 Notes to the Cash Flow Statement (continued)
(c) Reconciliation from the (Loss) / Profit for the Year to Net Cash Provided by Operating Activities
(Loss) / Profit for the year
(21,548)
12,067
(3,398)
8,516
Consolidated
Company
2010
$’000
2009
$’000
2010
$’000
2009
$’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
Dividends received disclosed as investing activities
Impairment losses
Interest and forex loss on SEH settled in shares
Interest received disclosed as investing activities
Share options and performance rights expensed
Loss / (profit) on sale of non-current assets
Interest on hire purchase liabilities
Fair value adjustment on interest rate cap
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
Current tax liability
Deferred tax balances
4,182
6,363
15
-
-
33,971
(608)
(87)
1,099
(12)
249
-
(17,941)
(2,065)
(1,989)
13,040
557
3,500
(13,026)
3,318
6,535
194
-
-
-
-
(119)
1,487
86
53
229
8,129
(5,321)
(307)
(5,365)
340
(3,524)
(1,627)
236
-
-
(1,827)
-
3,434
-
(41)
1,099
-
9
-
(8,368)
-
(2)
413
151
(5,599)
(3,222)
187
-
-
(1,861)
(7,500)
-
-
(56)
1,487
(41)
-
229
(4,842)
-
(2)
133
359
(394)
405
Net Cash Provided by / (used in) Operating Activities
5,700
16,175
(17,115)
(3,380)
(d) Financing facilities
Total facilities available
Bank loan - Sweden
Bank loan - Canada
Commercial bills
Equipment finance facility
Multi option facility (including bank overdraft)
Facilities utilised at balance sheet date
Bank loan - Sweden
Bank loan - Canada
Commercial bills
Equipment finance facility
Multi option facility (including bank overdraft)
Facilities not utilised at balance sheet date
Bank loan - Sweden
Bank loan - Canada
Commercial bills
Equipment finance facility
Multi option facility (including bank overdraft)
2,907
6,509
19,500
4,015
2,220
35,151
2,907
5,673
19,500
3,938
-
32,018
-
836
-
77
2,220
3,133
8,383
-
24,500
2,177
220
35,280
8,383
-
21,500
-
-
29,883
-
-
3,000
2,177
220
5,397
-
-
19,500
106
2,220
21,826
-
-
19,500
91
-
19,591
-
-
-
15
2,220
2,235
-
-
24,500
2,177
220
26,897
-
-
21,500
-
-
21,500
-
-
3,000
2,177
220
5,397
98 | Imdex 2010 Annual Report
Page 70 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
31
Financial Instruments
(a) Capital Risk Management
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 19
and 20. Management and the Board review the capital structure regularly. The treasury function present regular updates 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 prior years.
The gearing ratio at the end of the reporting period was as follows:
Debt (i)
Cash and bank balances
Net debt
Equity (ii)
2010
$ 000's
2009
$ 000's
32,018
(9,007)
23,011
34,039
(11,975)
22,064
94,495
116,198
Net debt divided by debt plus equity
19.6%
16.0%
(i) Debt includes commercial bills, bank loans, deferred acquisition liabilities and hire purchase liabilities .
(ii) Equity includes all capital and reserves of the Group that are managed as capital.
(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
Available-for-sale financial assets
Financial Liabilities
Amortised cost
Consolidated
2009
$ 000s
2010
$ 000s
Company
2010
$ 000s
2009
$ 000s
9,007
41,210
6,802
11,975
35,707
-
7,644
79,418
196
1,455
80,406
-
57,707
46,808
21,170
22,666
Page 71 of 83
Imdex 2010 Annual Report | 99
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 year end is an interest rate cap as described in note (g) below.
(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 regular 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 Pound
European Dollar
Chilean Pesos
Other
Liabilities
Assets
2010
$ 000s
2009
$ 000s
2010
$ 000s
2009
$ 000s
1,096
1,452
9,299
3,257
1,141
104
465
657
1,234
1,274
390
8,495
5,165
204
195
59
5,696
2,972
3,675
2,570
204
519
3,797
1,138
12,148
3,806
2,057
3,176
2,984
3,056
1,453
819
100 | Imdex 2010 Annual Report
Page 72 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
31
Financial Instruments (continued)
(f) Foreign currency risk management (continued)
Foreign currency sensitivity
The Group is mainly exposed to United States Dollars, Swedish Kroner, Canadian Dollars, British Pounds, European Dollars and South
African Rand.
The following table details the Group’s sensitivity to a 5% (2009: 5%) increase and decrease in the Australian Dollar against the relevant
foreign currencies. The sensitivity rate of 5% (2009: 5%) is the rate used when performing regular reporting on foreign currency risk
internally. Foreign exchange risk is reported regularly to key management personnel and the Board. The estimated movement of 5%
(2009: 5%) 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 5% (2009: 5%) 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.
United States Dollar Impact
South African Rand Impact
Consolidated
Company
2010
$ 000's
2009
$ 000's
2010
$ 000's
2009
$ 000's
Consolidated
2010
$ 000's
2009
$ 000's
Company
2010
$ 000's
2009
$ 000's
Profit or (loss)
Other equity
(230)
-
(546)
-
-
-
-
-
(i)
(ii)
(76)
-
(127)
-
-
-
-
-
(i)
(ii)
Swedish Kroner Impact
Canadian Dollar Impact
Consolidated
Company
2010
$ 000's
2009
$ 000's
2010
$ 000's
2009
$ 000's
Consolidated
2010
$ 000's
2009
$ 000's
Company
2010
$ 000's
2009
$ 000's
Profit or (loss)
Other equity
34
-
266
-
-
-
-
-
(i)
(ii)
281
-
(83)
-
-
-
-
-
(i)
(ii)
British Pound Impact
Consolidated
Company
2010
$ 000's
2009
$ 000's
2010
$ 000's
2009
$ 000's
European Dollar Impact
Consolidated
2010
$ 000's
2009
$ 000's
Company
2010
$ 000's
2009
$ 000's
Profit or (loss)
Other equity
47
-
109
-
-
-
-
-
(i)
(ii)
(21)
-
(143)
-
-
-
-
-
(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
Page 73 of 83
Imdex 2010 Annual Report | 101
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
31
Financial Instruments (continued)
(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 treasury 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 $0.3 million (2009: $0.3 million). There would be a nil impact on equity other than via profit. 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 (2009:
$0.3 million). This is mainly attributable to the Group’s exposure to interest rates on its variable rate borrowings.
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 $0.2 million (2009: $0.2 million). There would be a nil impact on equity other than via profit. 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 (2009:
$0.2 million). This is mainly attributable to the Company’s exposure to interest rates on its variable rate borrowings.
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 2010 this interest rate cap had a fair value of nil (30 June 2009: nil). (note 9) These fair values have been determined by
seeking market valuations at year end 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
monitored on a weekly basis 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 2010 no such collateral had been
obtained. (30 June 2009 : nil)
102 | Imdex 2010 Annual Report
Page 74 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
31 Financial Instruments (continued)
(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 regularly 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 31(d) is a listing of additional undrawn facilities that the Company/Group has at its disposal to further reduce
liquidity risk.
Liquidity and interest risk tables
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.
Consolidated
2010
Non-interest bearing
Finance lease liability
Variable interest rate
instruments
2009
Non-interest bearing
Finance lease liability
Variable interest rate
instruments
Company
2010
Non-interest bearing
Finance lease liability
Variable interest rate
instruments
2009
Non-interest bearing
Finance lease liability
Variable interest rate
instruments
Weighted average
effective interest
rate
0-3 months
3 months to 1
year
1-5 years
5+ years
%
-
9.38%
5.00%
-
7.89%
4.57%
$’000
$’000
$’000
$’000
19,267
444
15,008
34,719
8,877
152
9,011
18,040
6,422
1,332
3,739
11,493
6,384
455
5,267
12,106
-
2,689
11,385
14,074
-
1,279
18,387
19,666
Weighted average
effective interest
rate
0-3 months
3 months to 1
year
1-5 years
5+ years
%
$’000
$’000
$’000
$’000
-
9.88%
5.09%
-
-
5.09%
1,184
7
8,995
10,186
583
-
8,020
8,603
395
21
2,779
3,195
583
-
3,004
3,587
-
83
9,132
9,215
-
-
12,872
12,872
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page 75 of 83
Imdex 2010 Annual Report | 103
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
2010
Non-interest bearing
Variable interest rate
instruments
2009
Non-interest bearing
Variable interest rate
instruments
Fixed interest rate instruments
Company
Weighted average
effective interest
rate
0-3 months
3 months to 1
year
1-5 years
5+ years
%
-
0.25%
-
2.75%
13.50%
$’000
$’000
$’000
$’000
41,210
9,007
50,217
23,367
11,975
-
35,342
-
-
-
-
-
12,340
12,340
6,802
-
6,802
-
-
-
-
-
-
-
-
-
-
-
Weighted average
effective interest
rate
0-3 months
3 months to 1
year
1-5 years
5+ years
2010
Non-interest bearing
Variable interest rate
instruments
2009
Non-interest bearing
Variable interest rate
instruments
Fixed interest rate instruments
%
-
0.25%
-
2.75%
13.50%
$’000
$’000
$’000
$’000
1,775
7,644
9,419
5,836
1,455
-
7,291
-
-
-
-
-
12,340
12,340
196
-
196
-
-
-
-
77,643
-
77,643
62,230
-
-
62,230
104 | Imdex 2010 Annual Report
Page 76 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
31
Financial Instruments (continued)
(i) Liquidity risk management (continued)
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.
2010
Interest rate cap
2009
Interest rate cap
0-3 months
$’000
3 months to 1
year
$’000
1-5 years
5+ years
$’000
$’000
-
-
-
-
-
-
-
-
(j) Fair value of financial instruments
The fair values of financial assets and financial liabilities are determined as follows:
•
•
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 ‘available for sale’ listed shares which are measured at fair value (note 9).
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.
Fair value measurements recognised in the statement of financial position
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value,
grouped into Levels 1 to 3 based on the degree to which the fair value is observable.
•
•
•
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are
not based on observable market data (unobservable inputs).
Available-for-sale financial assets
Shares in Sino Gas & Energy Holdings Limited
6,802
-
-
6,802
Level 1
$ 000's
Level 2
$ 000's
Level 3
$ 000's
Total
$ 000's
Page 77 of 83
Imdex 2010 Annual Report | 105
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
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
2010
$
2009
$
2010
$
2009
$
2,244,909
179,145
28,278
-
154,572
2,606,904
1,987,338
154,812
36,688
-
252,715
2,431,553
2,244,909
179,145
28,278
-
154,572
2,606,904
1,987,338
154,812
36,688
-
252,715
2,431,553
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.
Former Chairman’s Options
Options were issued to the former Chairman as a reward for past performance and as an incentive for the future. These options have
been approved at a General Meeting of shareholders. 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
2010 all 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 2010 all of these options had vested.
At the 2008 Annual General Meeting 2,000,000 options were approved by the shareholders for issue to the Managing Director. These
were however not granted due to the impacts of the global financial crisis with the knowledge that this would be considered in future
employee share option allocations.
106 | Imdex 2010 Annual Report
Page 78 of 83
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:
2010
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
18-Oct-07
17-Oct-12 1.80
28-Mar-08 27-Mar-13 3.00
$
0.01
0.02
0.56
0.48
0.51
0.81
0.42
1,141,666
1,716,205
700,000
3,242,668
625,000
500,000
4,655,000
- (1,141,666)
- -
- (96,669) (40,000) 1,579,536
- - 700,000
-
- (228,667) 3,014,001
-
- (350,000) 275,000
-
- - 500,000
-
- (286,673) 4,368,327
-
Former 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
15,580,539
-
- (1,238,335) (905,340)
- - 2,000,000
13,436,864
2009
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
1-Feb-06
31-Jan-11 0.35
23-Feb-07 22-Feb-12 0.75
23-Feb-07 22-Feb-12 1.00
12-Jun-07 11-Jun-12 1.80
18-Oct-07
17-Oct-12 1.80
28-Mar-08 27-Mar-13 3.00
$
0.01
0.02
0.56
0.48
0.51
0.81
0.42
1,178,333
1,812,872
700,000
3,563,667
625,000
500,000
4,815,000
- (36,667)
- 1,141,666
- (41,666) (55,001) 1,716,205
-
- - 700,000
- (70,999) (250,000) 3,242,668
- - 625,000
-
- - 500,000
-
- (160,000) 4,655,000
-
Former 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
16,194,872
-
- (149,332) (465,001)
- - 2,000,000
15,580,539
(i) Exercisable in one third lots in each year commencing one year after issue.
(ii) Expire on their expiry date 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
date.
Page 79 of 83
Imdex 2010 Annual Report | 107
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
No share options were issued in the current or prior year.
(d) Exercised during the financial year
2010
Option Series
Staff Options Tranche 2
Staff Options Tranche 1
Staff Options Tranche 2
Staff Options Tranche 2
Staff Options Tranche 1
Staff Options Tranche 1
Staff Options Tranche 1
Staff Options Tranche 1
Staff Options Tranche 1
Staff Options Tranche 1
Staff Options Tranche 2
2009
Option Series
Staff Options Tranche 3
Staff Options Tranche 1
Staff Options Tranche 2
Staff Options Tranche 3
Staff Options Tranche 3
Staff Options Tranche 2
Staff Options Tranche 3
Staff Options Tranche 1
Staff Options Tranche 2
Staff Options Tranche 1
Number
Exercised
33,334
20,000
33,334
20,000
30,000
50,000
15,000
1,667
1,000,000
25,000
10,000
1,238,335
Exercise
Date
21-Oct-10
02-Oct-10
01-Oct-10
28-Aug-10
27-Jul-10
24-Jul-10
23-Jul-10
22-Jul-10
16-Jul-10
15-Jul-10
12-May-10
Share Price at Exercise
Date ($)
0.86
0.71
0.73
0.75
0.62
0.6
0.6
0.59
0.65
0.63
0.485
Amount Paid
($)
11,667
4,000
11,667
7,000
6,000
10,000
3,000
333
200,000
5,000
3,500
Amount
Unpaid ($)
-
-
-
-
-
-
-
-
-
-
-
Number
Exercised
Exercise
Date
Share Price at Exercise
Date ($)
Amount Paid
($)
Amount
Unpaid ($)
50,000
10,000
20,000
8,333
4,333
5,000
8,333
16,667
16,666
10,000
149,332
17-Jul-08
25-Jul-08
25-Jul-08
15-Aug-08
1-Sep-08
3-Sep-08
3-Sep-08
15-Oct-08
15-Oct-08
12-Jun-09
1.565
1.57
1.57
1.68
1.91
1.86
1.86
0.77
0.77
0.65
37,500
2,000
7,000
6,250
3,250
1,750
6,250
3,333
5,833
2,000
-
-
-
-
-
-
-
-
-
-
(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 $1.48 (2009: $1.41), and a
weighted average remaining contractual life of 608 days (2009: 911 days)
(f) Reconciliation of movements in share options during the year
The following reconciles the outstanding share options granted under the Staff Option Scheme at the beginning and end of the financial
year
Balance at beginning of the financial year
Granted during the financial year
Forfeited during the financial year
Exercised during the financial year
Expired during the financial year
Balance at end of the financial year
Exercisable at end of the financial year
2010
2009
Weighted
Average
Exercise
Price ($)
1.41
-
-
0.21
1.91
1.48
Weighted
Average
Exercise
Price ($)
Number of
Options
16,194,872 1.41
- -
- -
(149,332) 0.62
1.86
15,580,539 1.41
(465,001)
10,468,872
Number of
Options
15,580,539
-
-
(1,238,335)
(905,340)
13,436,864
11,814,088
108 | Imdex 2010 Annual Report
Page 80 of 83
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
34
Performance Rights Plan
(a) Performance Rights Plan
At the Imdex Limited Annual General Meeting on 15 October 2009 the shareholders approved the formation of a Performance Rights
Plan (PRP or Plan). The Plan allows for the issue of performance rights to employees from time to time. The quantum of performance
rights granted to employees is at the discretion of the Directors and is generally based on seniority and level of contribution to the
strategic goals of Imdex Limited. A performance right is the right to receive one fully paid Imdex Limited ordinary share for nil
consideration should set hurdles be achieved and tenure of employment maintained. The hurdles are set by the Directors when
performance rights are issued and are generally linked to the achievement of financial or other strategic goals of Imdex Limited. If
hurdles are achieved generally shares will be issued evenly over the 3 year period assuming continuity of employment.
(b) Performance rights Granted in the current year
2,262,366 performance rights were granted to employees during the year. One fully paid Imdex Limited ordinary shares will be issued in
satisfaction of each performance right should specified FY10 EBITA targets be met. FY10 EBITA targets are required to be met by each
individual with due regard to the company and business unit they work in. No shares will be issued where targets are not met.
Measurement against targets will only be possible once the FY10 independent audit report is signed in August 2010. Shares issued in
satisfaction of performance rights will occur annually in 1/3 lots, with the first 1/3 lot being issued the day after the FY10 independent
audit report is signed.
For the purposes of the FY10 financial statements, the Directors have made an estimate of the likelihood of the achievement of FY10
EBITA targets and hence the number of fully paid Imdex Limited ordinary shares that are likely to be issued. An adjustment will be made
in the next financial year should the actual number of shares issued be different from those estimated. It is estimated that out of the
2,262,366 performance rights issued, 458,779 will meet the required performance hurdles and will result in 458,779 fully paid Imdex
Limited ordinary shares being issued over three years should employment tenure be retained.
The fair value of a performance right at grant date was $0.685 per share. The expected total cost of the estimated 458,779 fully paid
ordinary shares to be issued in Imdex Limited will therefore be $0.3 million. This value will be expensed over the vesting period from
Feb 10 to Aug 12 with $0.1 million being expensed in the current financial year.
No performance rights were issued in the prior year
2010
Grant Date Expiry Date Exercise
Price
$
Estimated
Fair Value at
Grant Date
$
Estimated Number of Performance Rights
Opening
balance
Granted
Satisfied by
the issue of
shares
Expired ^
Closing
balance *
Tranche 1
19-Feb-10
Aug-15
-
0.685
- 2,262,366
- (1,803,587)
458,779
^ - Performance rights expire either on resignation of employees or on failure to satisfy performance hurdles. The Directors estimate that
1,803,587 performance rights will not achieve the specified performance hurdles in the current year and will expire.
* - Fully paid ordinary shares in Imdex Limited will be issued in satisfaction of these performance rights in equal 1/3 lots annually
commencing in August 2010
35
Subsequent Events
There have been no material events subsequent to the end of the financial year requiring disclosure in this report.
Page 81 of 83
Imdex 2010 Annual Report | 109
IMDEX LIMITED
and its controlled entities
ADDITIONAL STOCK EXCHANGE INFORMATION
AS AT 5 AUGUST 2010
(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
Number of Fully
Paid Ordinary
Shareholders
Number of
Performance
Rights Holders
Number of
Option Holders
342
1,129
734
1,160
138
3,503
133
-
2
22
18
-
42
-
-
9
31
134
25
199
-
HSBC Custody Nominees (Australia) Limited
Invia Custodian Pty Limited
National Nominees Limited
RBC Dexia Investor Services Australia Nominees Pty Limited
J P Morgan Nominees Australia Limited
(c)
Twenty Largest Holders of Quoted Equity Securities
Ordinary Shareholders
HSBC Custody Nominees (Australia) Limited
Invia Custodian Pty Limited
National Nominees Limited
RBC Dexia Investor Services Australia Nominees Pty Limited
J P Morgan Nominees Australia Limited
ANZ Nominees Limited
Telic Alcatel (Australia) Pty Ltd
Cogent Nominees Pty Limited
Citicorp Nominees Pty Limited
Wear Services Pty Ltd
Mr Petrus Middendorp
Citicorp Nominees Pty Limited
Longo Pty Ltd
Keeble Nominees Pty Ltd
RBC Dexia Investor Services Australia Nominees Pty Limited
Methuen Holdings Pty Ltd
Mr Richard Hill
Dimana Holdings Pty Ltd
Melcretep Nominees Pty Ltd
Queensland Investment Corporation
Fully Paid
Number
Percentage
25,248,311
23,989,316
18,403,067
11,729,516
10,602,128
12.94%
12.30%
9.44%
6.01%
5.44%
Fully Paid
Number
Percentage
25,248,311
23,989,316
18,403,067
11,729,516
10,602,128
8,913,116
3,603,152
3,268,772
2,909,916
2,079,630
1,805,850
1,775,025
1,572,826
1,420,370
1,233,814
1,000,000
901,951
900,000
750,000
744,025
12.94%
12.30%
9.44%
6.01%
5.44%
4.57%
1.85%
1.68%
1.49%
1.07%
0.93%
0.91%
0.81%
0.73%
0.63%
0.51%
0.46%
0.46%
0.38%
0.38%
122,850,785
62.99%
110 | Imdex 2010 Annual Report
Page 82 of 83
IMDEX LIMITED
and its controlled entities
ADDITIONAL STOCK EXCHANGE INFORMATION
AS AT 5 AUGUST 2010
(d)
Director and Company Secretary Shareholdings
fo rebmuN
Shares
000,083
Number of
Options
-
000,005,3
000,000,2
000,003
909,309
000,011
000,54
-
-
-
000,005
909,832,5
000,005,2
emaN
ylleK W R rM
yawegdiR W B rM
odnuD A K rM
lemmeL M rM
yehganoD E sM
snavE A P rM
(e)
Company Secretary
Mr Paul Anthony Evans
(f)
Registered Office
Level 1, Canute House
8 Pitino Court
Osborne Park
Western Australia 6017
Phone +61 (0) 8 9445 4010
(g)
Share Registry
Computershare Investory Services
Level 2
45 St Georges Terrace
Perth WA 6000
Phone 1300 787 272
Page 83 of 83
Imdex 2010 Annual Report | 111
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112 | Imdex 2010 Annual Report
Providing Quality Drilling Fluids and Leading
Down Hole Instrumentation to the World
Imdex is a Western Australian based ASX listed company,
which provides quality drilling fluids and leading down hole
instrumentation to the mining, oil and gas, water well, and civil
engineering industries worldwide.
The Company has a presence in all significant mining and
exploration regions, and has a global profile and resources
to position it for extended future growth.
www.imdexlimited.com