Annual Report 2011
Providing Quality Drilling Fluids and Leading
Down Hole Instrumentation to the World
Imdex Limited (Imdex)
ABN 78 008 947 813 Imdex was listed on the
Australian Securities Exchange on 24 September 1987.
Registered office
8 Pitino Court
Osborne Park WA
Australia 6017
Head office
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)
2011 Annual General Meeting
Imdex’s AGM will be held at The Celtic Club, 48 Ord St
West Perth, Western Australia commencing at 1pm on
Thursday 20 October 2011.
Contents
Imdex Group at a glance
FY11 snapshot
Chairman’s report
FY11 comparative financial performance
Imdex board of directors
Managing director’s report
FY11 initiatives
Global business
Quality, health, safety and environment
Managing risk
FY11 financial report
FY11 and Imdex
The past 12 months have been the most
exciting in the history of our Company,
owing to the strength of our commitment in
meeting our customer’s needs at a time when
global exploration spending is continuing to
set new records. The future looks bright and
Imdex is committed to working hard with
our customers to ensure a sustainable and
rewarding future.
As we wrap up on a busy year, we thank shareholders
for their continued support. We hope you enjoy
this Annual Report as you discover more about the
achievements it details to 30 June 2011 and beyond.
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Imdex 2011 Annual Report |
1
Imdex Group at a glance
Vital stats as at 30 June 2011
An overview of the Imdex Group
Market capitalisation
$429,353,205
Shares on issue
199,699,165
Shareholders
3,636
Employees
399
Company structure
Imdex Limited supplies quality drilling fluids and leading down
hole instrumentation to the mining, water well and horizontal
directional drilling, civil engineering and niche on-shore oil
and gas industries. Imdex is represented globally through a
wide sales and distribution network and manufactures its
own products. In addition, our joint venture with DHSO
Services, in which Imdex has 50% ownership, supplies
gyroscopic and magnetic surveying services to the
global onshore and offshore oil and gas industry.
Imdex has an expert team with extensive technical
and product knowledge together with unrivalled field
experience. Headquartered in Perth, Western Australia
and with regional office locations in Africa, Asia Pacific,
the Americas and Europe, we offer on-site technical support
to our customers worldwide.
We also have dedicated research and product development
facilities, ensuring product improvements, introduction
of new products and client support. We provide quality
drilling fluids and advanced down hole instrumentation
with extensive field experience. We are focussed on
expanding our research and product development
capability, maintaining our technology leadership position,
retaining our commitment to customers and growing our
international footprint.
JV with
DHSO
SERVICES
2
Conducting onsite AMC mud mixing.
Imdex Group at a glance continued
Page heading continued
Our divisions
Imdex’s two divisions position the Group to service
our customers in key regions of the world.
Minerals division
The Minerals division offers AMC branded drilling fluids
and Reflex branded down hole instrumentation and is
aimed primarily at the mining and mineral exploration,
HDD and water well markets throughout the world.
We service our customers in this sector with a complete
down hole survey instrumentation and drilling fluid solution
encompassing an extensive range of drilling fluids, down hole
instrumentation, recycling units, and on-site technical support.
Specialist AMC drilling fluids for the minerals sector include:
• Clay and shale stabilisers
• Flocculants and dispersants
• Lost circulation materials
• Lubricants
• Specialty products and chemicals
• Treating chemicals
• Viscosifiers
Listed in 1987, Imdex now
employs more than 390 people
in 20 office locations servicing
over 75 different countries.
Imdex’s range of instruments for the mining and mineral
exploration industries are developed and marketed by
Reflex and include the following core orientation and
survey instruments:
• ACT II RD - rapid descent core orientation instrument
• EZ-Shot - single shot magnetic survey instrument
• EZ-AQ - magnetic survey instrument specifically
designed for AQ sized boreholes
• EZ-Trac - multi shot magnetic survey instrument
• Maxibor II - optical non-magnetic survey instrument
• Reflex Gyro - gyroscopic survey instrument
• Customised directional motors.
Reflex instruments are manufactured in state-of-the-art
manufacturing facilities in Western Australia. Reflex is the
leading supplier of down hole survey and core orientation
instruments to the global mining and mineral exploration
industries. The instruments are renowned for their reliability,
ease of use and ability to obtain superior data.
Our current business model focuses on renting rather than
selling instrumentation, to provide our customers with
greater flexibility and the ability to upgrade instrumentation
as it becomes available.
Imdex 2011 Annual Report |
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Imdex Group at a glance continued
Oil & Gas division
The Oil & Gas division has the following focus:
• Drilling, completion and production fluids and equipment
through AMC Oil & Gas branded products to niche
onshore oil and gas, geothermal, HDD water well and
CBM industries; and
• Down hole survey services to the global oil and gas
industry through the DHSO joint venture.
Imdex’s Oil & Gas division is a logical diversification to the
cyclical nature of the minerals industry.
Effective 1 July 2011, Imdex formed a 50:50 joint venture
with DHS Oil Holdings Pty Ltd (DHSO), majority owned by
Lime Rock. The joint venture provides down hole surveying
services to the onshore and offshore oil and gas industry.
The initial market focus is the Middle East; however, the
business will expand globally in the coming years.
AMC Oil & Gas focuses on niche onshore drilling, developing
and manufacturing oil and gas drilling fluid products, treating
chemicals, and equipment.
By investing in continual development of innovative
products, the company is able to meet the demands of its
international customers in diverse drilling environments.
The company’s operations and technical teams have many
years of industry experience and knowledge.
AMC Oil & Gas is one of the few drilling fluids
companies to manufacture its own products – PHPA,
lubricants, surfactants, emulsifiers, speciality products
and production chemicals and a range of solids control
and waste management equipment. The company
offers a premium service with the resources to fully
service customers.
The following companies form part of this division:
Wildcat Chemicals provide services to the oil and gas
sector and improve performance through expert advice,
quality chemical products and superior customer service.
Wildcat are the experts in manufacturing a range
of high performance chemicals formulated for every
situation and need. The range includes oilfield production
and treatment chemicals, contract blending and drilling fluids,
and services to the coal bed methane, geothermal wells and
production chemicals sectors. This company forms part of
AMC Oil & Gas.
AMC Oil & Gas Europe specialise in the development,
design and manufacture of mud handling equipment, such as
mixing units, storage tanks, centrifuges and flocking stations.
The Company provides a full mud service, solids control
and waste handling services to the oil and gas sector
in Europe. This company forms part of AMC Oil & Gas.
DHSO Services is a 50:50 joint venture between Imdex
and DHS Oil Services Pty Ltd (DHSO), based in Dubai.
DHSO provides down hole survey services for both
onshore and offshore oil and gas operations using state
of the art inertial navigation and MEMS gyro systems
and magnetic instruments.
By investing in continual
development of innovative
products, the company is able
to meet the demands of its
international customers in
diverse drilling environments.
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Imdex Group at a glance continued
Page heading continued
What are drilling fluids?
Drilling fluids, or muds, as they are known in the drilling
industry are a key part of the drilling process to ensure
productivity and successful completion of the hole in
some of the most difficult ground conditions. Imdex
offers a broad range of drilling fluids, all with distinctive
properties and uses, adapted to specific formations.
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 typically 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 recycling equipment?
AMC has developed drilling fluid recycling units that
provide an economical and environmentally acceptable
alternative to the conventional mud pits used in the
drilling process. They reduce the environmental footprint
of a drill site and reduce consumption of water.
What are down hole survey
and core orientation instruments?
Reflex’s down hole survey and core orientation
instrumentation are essential for efficient exploration and
mine planning and provide accurate data on the path of
the bore hole. A 2 degree variation at surface can lead to
a 35 metre discrepancy at 1000 metres. Core orientation
is the procedure of aligning (or marking) the orientation
of a drill core sample in relation to its in situ position,
prior to retrieval from the hole allowing geological
structure to be defined for planning purposes.
Fluid is pumped down the drill pipe lubricating the drill bit and
returning cuttings to the surface.
Fluids stabilise and keep the bore hole open.
Planned path
Actual path
Bore hole deviation from planned path (as described left).
Ore body
Imdex 2011 Annual Report |
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FY11 snapshot
Strategic focus
Operational achievements
• Consistent growth of our business in key regions
of our global network
• Restructuring to manage two main end markets,
minerals and oil and gas
• Pursuing greater market share in the oil and gas sector
• Continued investment in engineering and product
development to maintain Imdex’s position as a
leader and innovator in drilling fluids and advanced
down hole instrumentation
• Cross selling benefits gained through the restructuring
of the AMC and Reflex businesses along regional lines
• Reflex brand of down hole instrumentation continued
to be the market leader for the global mining and
exploration industry
•
Identification and achievement of operational efficiencies
•
Innovative drilling fluid recycling technology (previously
known as the solids control units) to be marketed in the
major mining markets around the world
• Overall winner in the Innovator of the Year Awards in the
Western Australian Chamber of Commerce’s Industry
and Export Awards in November 2010
• Both AMC and Reflex posted record revenues in FY11
• Continued improvements in the range of down
hole instrumentation
• Continued demand in niche markets for production
and completion chemicals developed and produced
by Imdex subsidiary Wildcat Chemicals Australia
• AMC and Reflex conducted (and continue to conduct)
expert training for customers in the use of our fluid
products and down hole instrumentation across
our regions
•
Imdex Technology Sweden, repair and production
facility, successfully transferred to head office in
Western Australia in September 2010
• Strengthened AMC’s UK and European operations
• Continued investment in engineering and product
development to maintain an active technology
pipeline for both minerals and oil and gas markets.
• Expand the rental market for our instrumentation
• Capitalise on positive industry dynamics and outlook
for future growth
• Superior customer service and support
• Ongoing organic growth of our business and bolt
on acquisitions that are earnings accretive.
Strategic growth
• European based Mud-Data (renamed AMC Oil & Gas
Europe) acquired 1 March 2011 strengthening our
presence in Europe and integrated into AMC Oil & Gas
• Oilfield Services joint venture between Imdex and DHS
Oil to form DHSO Services (from 1 July 2011) to deliver
survey services to the global oil and gas market
• Fluidstar was acquired effective 1 September 2010
and integrated into the AMC Minerals brand
• Australian Drilling Specialities (ADS) was acquired
effective 1 July 2011, providing access to drilling fluid
technology and increased control over supply chain.
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FY11 snapshot continued
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Market review
• Record mining instrumentation rental fleet
numbers achieved
• Significantly improved trading activity in Africa, Asia Pacific,
the Americas and Europe
• Drilling activity continued to be robust in the four
major mining regions with the major drilling contractors
estimating increased rig utilisation in the year ahead
subject to no material deterioration in their markets
• Strong commodity prices added to upward pressure
on the Australian dollar, a mixed blessing for our
global business
• Activity in the coal bed methane sector in Australia
gathered momentum although was negatively impacted
by flooding during the year.
The resources ‘boom’ in Australia
(and globally) and what’s driving it
Australia is one of the world’s major exporters of
commodities such as nickel, iron ore, copper, coal and
precious metals. Demand for these resources is largely
due to the huge growth in industry and urbanisation in
emerging countries such as China and India. Construction
projects in these countries require enormous amounts
of steel (from iron ore), copper for wiring and electricity,
which is still mostly supplied by coal fired generators. As a
result prices for commodities have been increasing and given
the resource riches in Australia, it is in a prime position to
benefit from this demand. A similar situation exists in the
other major mining regions of the world giving rise to robust
demand globally for the products and services provided by
the Imdex Group.
Prices for gold and other precious metals have also increased
dramatically in recent years, known as safe-haven investments.
Uncertainties in global share markets and concerns about
sovereign debt levels have seen some countries stockpiling
metals and minerals.
Financial performance in FY11
Revenue from continuing operations
(excluding interest revenue)
$205,163,000
Normalised EBITA from continuing operations
(excluding non-operational items)
$48,146,000
Normalised net profit after tax from continuing
operations (excluding non operational items)
$29,002,000
Cash flow from operations
$35,893,000
Gearing levels net debt / (net debt + equity)
13.44 %
Net assets
$125,409,000
Imdex 2011 Annual Report |
7
Chairman’s report
On behalf of Imdex Limited’s Board,
welcome to our 2011 Annual Report. I am
pleased to report that the year to 30 June
2011 was an exceptionally positive one
for Imdex with record revenue and profit
performance and the achievement of key
operational milestones.
Our revenue improved sharply during the 12 months to
30 June 2011 to set a new record at $205.2 million. This
was 53% higher than FY10 revenue of $134.3 million. A
similar theme was experienced with earnings before interest,
taxation and amortisation (EBITA) setting a new record at
$48.1 million for the year which was 132% higher than the
$20.7 million achieved in FY10. These results are a fitting
reward for the expertise and commitment displayed by our
staff and management and the consistent delivery of quality
products and services to our global customers.
In line with the Board’s commitment to pay a growing
dividend stream while balancing the capital needs of the
business during this exciting growth phase, the Directors
were delighted to announce a 2.75 cents per share fully
franked final dividend. This is in addition to the 1.75 cents
per share fully franked interim dividend paid in March 2011.
Looking back on the past year,
significant momentum has been
built and our achievements have
consolidated our place as a major
player in our key markets.
Mr. Ross Kelly AM BE (HONS) FAICD
Non Executive Chairman
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Chairman’s report continued
Realising our potential
The current financial year allowed the Imdex Group to reap
the financial benefit of much work undertaken during the
global financial crisis.
Financial benefits have been gained by Imdex continuing to
adhere to its proven strategy of being committed to:
• Growing its global business (organically and
through acquisition)
• Expanding into new markets
• Maintaining product leadership through investment
in research and product development
•
Increasing rental based revenue
• Achieving operational efficiencies.
Imdex’s decision to implement a regional structure dividing
its minerals business into four operational regions, Africa,
Asia Pacific, the Americas and Europe, yielded significant
market share growth in FY11, particularly in the Americas
and Africa. We expect this strategy to continue to yield
further gains in market share across all regions in FY12 and
beyond as cross selling opportunities are further unlocked.
Our ongoing research and product development spending
saw the continued global uptake of new and improved down
hole instrumentation which was a significant driver behind
the increase in the size of the rental instrumentation fleet
in FY11. By 30 June 2011, Reflex’s mining rental fleet had
exceeded the previous high point in July 2008 by 79% and we
expect new record levels to be achieved in FY12. This is very
pleasing for our Company as we have remained focussed on
renting rather than selling instrumentation.
Reflex rental fleet
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Imdex 2011 Annual Report |
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Chairman’s report continued
Acquisitions drive growth
Outlook
Consistent with our strategy to grow Imdex’s core business
through complementary and strategic acquisitions, Imdex
acquired new businesses during the year.
The acquisition of Fluidstar based in Brisbane, Queensland,
Australia increased our fluids business in the Australian east
coast market and the Asia Pacific region and further built our
business in the expanding Coal Bed Methane industry.
Recent volatility in global financial markets has highlighted
the uncertainties and concerns that exist in relation to
European and US government debt levels and the slow
recovery of the US economy. However, the outlook for
our key target markets appears strong given the resilience
of global commodity prices and continued focus on
exploration by minerals and energy companies.
The acquisition of Mud-Data in Germany and Romania,
allows Imdex to grow its oil and gas fluids footprint in
Europe with further potential to enter the growing
geothermal market.
Imdex plans to continue to pursue further local and
international bolt on acquisitions where synergies
and market growth opportunities exist.
Leading edge technology recognised
Looking back on the past year, significant momentum has
been building and our achievements have consolidated our
place as a major player in our key markets. We have worked
closely with our existing and potential customers, to ensure
we meet or exceed their needs in the regions and develop
products to enhance their future growth.
Significant achievements continue to be made in the
development of Imdex’s range of down hole survey
instrumentation for application in our markets (see
pages 20-21 for further information). Imdex’s
instrumentation continues to be acknowledged by the
industry as being leading edge and was recognised as
a finalist in the C.Y. O’Connor Award for Excellence
in Engineering and Technology.
Our technology even made headlines helping to save
lives in Chile during the mine rescue in August 2010.
My sincere thanks to Kelvin Brown and all staff involved
for their quick response to this crisis.
The mineral exploration market is buoyant with strong
commodity prices maintained even during the recent period
of volatility in global financial markets. Major, intermediate
and junior mining companies have increased budgets and
are spending on exploration projects. McKinsey / Metals
Economics Group predicts a 70% increase in global drilling
activity in the 2010 – 2013 period with exploration spending
set to exceed and be sustained above previous record levels.
This is confirmed by our major customers who expect
drill rig utilisation levels to move towards full utilisation
levels in calendar 2011.
The oil and gas market remains strong as global demand for
these commodities continues to grow. The dearth of new
world class discoveries drives exploration into more and
more challenging environments where Imdex’s expertise
and technology are well positioned to assist.
Since 1 July 2011 three new growth initiatives came into
operation. The first is the oil and gas services joint venture
with DHSO Services. This is expected to generate significant
upside in future years as the advanced technology of the
Imdex Group is combined with the customer network
and industry expertise of DHSO Services. The second is
the acquisition of Australian Drilling Specialities (ADS), an
AMC dedicated drilling fluids manufacturer in Australia.
This acquisition allows improved synergies and ownership
of fluids technology and intellectual property. The third is the
proposed acquisition of System Mud (Brazil) which provides
Imdex access to the growing Brazilian minerals market and
the ability to better serve our global customers.
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Chairman’s report continued
Key growth drivers for FY12 and beyond for the
Imdex Group will be:
• Oil and Gas DHSO Services joint venture operating
out of Dubai
• Growth in mud recycling technology rentals / sales business
• Organic growth in all regions, particularly
underpenetrated markets in Africa and the Americas
• Growth of Mud-Data, renamed AMC Oil & Gas Europe
•
Integration of ADS as dedicated fluids manufacturer
for Australia and flow on effects to our global drilling
Oilfield rig.
fluids manufacturing
• Further bolt on acquisitions.
I am confident that the Imdex Group will continue to benefit
from the work done in the past few years to grow our
research and product development capability, maintain our
technology leadership position, retain our commitment to
customers and grow our international footprint.
On behalf of the Board of Directors and employees, I would
like to offer my sincerest thanks to our valued customers,
shareholders, staff and management for your ongoing support
and hope you will continue to be part of Imdex’s exciting future.
I am confident that the Imdex Group will continue to benefit from
the work done in the past few years to grow our research and
product development capability, maintain our technology leadership
position, retain our commitment to customers and grow our
international footprint.
Mixing of AMC fluids.
Imdex 2011 Annual Report |
11
FY11 comparative
financial performance
2009
$’000
2010
$’000
2011
$’000
Variance
%
Revenue from continuing operations (excluding interest income)
136,968
134,253
205,163
Operating profit before interest, tax, depreciation and amortisation
Depreciation
Earnings before interest, tax and amortisation (EBITA)
EBITA margin
Amortisation
Earnings before interest and tax (EBIT)
Net interest expense
Net profit before tax
Income tax expense
Net profit after tax (before non-operational items)
Forex gain/(loss) on loan to SEH
Impairment of SEH investment
Impairment of intangible assets
Tax effect of non-operational items
Net profit (loss) for the year after tax
Basic earnings (loss) per share from continuing operations (cents)
Net cash provided by operating activities
Cash on hand
Net assets
Total borrowings
Net tangible assets per share
27,817
(3,318)
24,499
18%
(6,535)
17,964
(826)
17,138
(5,811)
11,327
1,057
-
-
(317)
12,067
6.37c
16,175
11,975
116,198
34,039
19.10c
24,893
(4,182)
20,711
15%
(6,363)
14,348
(771)
13,577
(3,781)
9,796
(677)
(10,440)
(23,531)
3,304
(21,548)
(11.05c)
5,700
9,007
94,495
32,018
22.83c
12
53,867
(5,721)
48,146
24%
(6,778)
41,368
(2,775)
38,593
(9,591)
53%
116%
37%
132%
7%
188%
260%
184%
154%
29,002
196%
-
-
-
-
29,002
14.69c
35,893
18,388
125,409
37,860
34.83c
-
-
-
-
-
-
530%
104%
33%
18%
53%
FY11 comparative financial performance continued
Normalised* revenue by division
1H07
2H07
1H08
2H08
1H09
2H09
1H10
2H10
1H11
2H11
Normalised* EBITA
$42.6m / $3.3m total $45.9m
$54.0m / $3.9m total $57.9m
Minerals division
Oil & Gas division
$61.4m / $7.7m total $69.1m
Imdex Group
$63.6m / $9.3m total $72.9m
$68.5m / $11.8m total $80.3m
$40.5m / $16.2m total $56.7m
$46.5m / $11.9m total $58.4m
$64.8m / $11.1m total $75.9m
$81.6m / $14.4m total $96.0m
$96.2m / $13.0m total $109.2m
$10.1m
$12.2m
$19.8m
$20.0m
$20.0m
$4.5m
$7.5m
$13.0m
1H07
2H07
1H08
2H08
1H09
2H09
1H10
2H10
1H11
2H11
*Excludes discounted operations and non operational items
$21.2m
$26.9m
Imdex 2011 Annual Report |
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Imdex’s board of directors
Imdex’s Board members combine extensive professional expertise, business experience
and technical knowledge of the mineral exploration / mining and oil and gas industries.
Mr. Ross Kelly AM BE (HONS) FAICD
Non Executive Chairman
Age 73 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 57 years
• Appointed to the Board 23 May 2000
• Over 26 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
• Non Executive Director of Sino Gas and Energy
Holdings Limited
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Imdex’s board of directors continued
Mr. Magnus Lemmel B.A.
Non Executive Director
Age 72 years
• Appointed to the Board 19 October 2006
• Management Consultant based in Brussels, Belgium
Involved in small business development in Sweden. Former
•
Chairman of Fiberform Vindic Holding AB, previously 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
Mr Kevin Dundo B.Com, LLB
Non Executive Director
Age 59 years
• 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 Intrepid Mines Limited
• 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 Accountant
Ms. Betsy Donaghey, B.S. Civil Engineering,
M.S. Operations Research
Non Executive Director
Age 53 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 with BHP Billiton and nine years with Woodside Energy
• Non-executive director of St Barbara Limited
Imdex 2011 Annual Report |
15
Managing director’s report
I am delighted with the achievements
we have made this financial year. We have
delivered strong revenue and earnings,
increased market share in all key regions,
record Reflex instrumentation rental levels,
and a number of operational highlights,
including strategic acquisitions and
continuing development of our products for
the minerals and oil and gas industries. In a
nutshell, the financial year to 30 June 2011
was record breaking for our business on a
number of fronts.
Having identified significant opportunities for market
penetration for both our drilling fluids and down hole
instrumentation products, we deployed regional managers
to ensure operational efficiencies, a high level of support
for global customers, and the realisation of opportunities
to gain market share. This strategy has yielded, and continues
to yield, excellent results across all major mining regions of
Africa, Asia Pacific, the Americas and Europe.
Drilling contractors continue to report strong demand from
the major, intermediate and junior mining companies and
global rig utilisation rates are also well up at approximately
75-80%, due mainly to robust commodity prices and
increased liquidity.
Imdex has a long and successful history of growth, both
organically and through acquisitions. We have integrated
several strategic acquisitions into the Group over the past
six years. In FY11, the acquisitions of Fluidstar and Mud-Data
have been complementary to existing operations, and have
integrated smoothly into our Group (discussed in more
detail on page 22). In addition, towards the close of FY11,
we announced the acquisition of Australian Drilling Specialities
(ADS) effective 1 July 2011. ADS is a dedicated manufacturer
of drilling fluids and chemicals for AMC and owns proprietary
PHPA (Polymer) technology which AMC intends to expand
further in strategic overseas locations.
Mr. Bernard Ridgeway B.Bus (ACCTG) ACA
Managing Director
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Managing director’s report continued
Exciting aspects of the business are our technologies and
product development which continue to position us as a
leader in both drilling fluids and down hole instrumentation.
This requires tremendous effort and dedication from our
employees in order to produce leading products using
innovation and expertise for global application.
Best ever results
The highlights of our financial performance for the full
2011 year were:
• Record revenue (excluding interest revenue), up 53%
to $205.2 million (FY10: $134.3 million)
• Record normalised EBITA up 132% to $48.1 million
(FY10: $20.7 million)
• Record normalised net profit after tax from continuing
operations, up 196% to $29.0 million (FY10: $9.8 million)
• Dividend reinstated with the payment of a 1.75 cents per
share fully franked interim FY11 dividend and declaration
of a 2.75 cents per share fully franked final FY11 dividend
• Exceptional growth in cash flow from operations to
$35.9 million, an increase of 530% (FY10: $5.7 million)
• Strong balance sheet with gearing (net debt/capital)
reducing to 13.4% (30 June 2010: 19.6%) even after
the acquisitions of Fluidstar and Mud-Data
• Net assets up 33% to $125.4 million (FY10: $94.5 million).
Having identified significant
opportunities for market
penetration for both our
drilling fluids and down hole
instrumentation products,
we deployed regional
managers to ensure operational
efficiencies, a high level of
support for global customers,
and the realisation of
opportunities to gain market
share. This strategy has yielded,
and continues to yield, excellent
results across all major mining
regions of Africa, Asia Pacific,
the Americas and Europe.
Imdex 2011 Annual Report |
17
Managing director’s report continued
Divisional performance
Minerals division
In FY11, the minerals division achieved record revenues up
60% to $177. 7 million, representing 87% of the Company’s
total revenue for the year.
Key operational highlights
• Reflex instrumentation rental fleet has increased by 337%
since the April 2009 low to record levels at the end of
June 2011 due to additional drill rig utilisation and growing
market share globally (as shown on the graph below)
• Strong performance across all regions, with record sales
in Chile, Mexico, Argentina, Africa and parts of Asia Pacific
for AMC
• The regional structure has had a significant impact on the
business globally, particularly in facilitating product cross
selling, operational efficiencies, greater local support for
customers, and increasing market share
• Generated the first AMC sales out of Europe during the year
• Record revenue generated given strong demand for
Reflex’s rental instruments in Africa, Asia Pacific,
the Americas and Europe
• Reflex continued its active product development and
technology improvements
• Continued development of Imdex’s innovative drilling
fluid recycling technology (previously known as the solids
control units) to be marketed in the major mining
markets around the world
• Overall winner in the Innovator of the Year Awards in the
Western Australian Chamber of Commerce’s Industry
and Export Awards held on 4 November 2010
• Demand continues to grow for Reflex’s newly launched
MEMS gyro down hole survey instrument within the
global mining and mineral exploration market.
Reflex rental fleet
e
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s
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I
18
Managing director’s report continued
Oil & Gas division
Platform for growth
Oil & Gas division revenue was up 19% to $27.5 million,
representing 13% of the Company’s total revenue for
the year.
The oil and gas sector has significant growth potential and
is a logical diversification from the cyclical minerals industry.
Imdex has exciting growth opportunities in the oil and gas
sector through an oilfield services joint venture (DHSO)
and the acquisition of Mud-Data (as outlined on page 22).
The Queensland and central Australia floods had a negative
effect on sales of our conventional oil and gas drilling fluids
and coal bed methane fluid products during the second
half of FY11.
Key operational highlights
• AMC Oil & Gas brand continues to grow in niche
South East Asian markets and onshore Australia and PNG
• Further demand in niche markets for production and
completion chemicals developed and produced by
Wildcat Chemicals Australia, a wholly owned
subsidiary of Imdex
• Continued investment in engineering and product
development to maintain an active technology pipeline
• As announced to the ASX on 22 March 2011, Imdex
completed the acquisition of Mud-Data, a drilling
fluids and equipment supplier to the oil and gas and
geothermal markets in Germany and key parts of
Europe, a market with attractive growth opportunities
• Completed a joint venture agreement with DHSO
Services allowing Imdex to penetrate the global oil
and gas down hole survey services markets, effective
1 July 2011. Details of the joint venture are outlined
in the Investors section of our website.
As we look toward the new financial year, our focus will
be in six key areas:
• Expanding our capabilities and presence in the
oil and gas and geothermal markets in Germany
and the rest of Europe
• Developing organic initiatives, particularly the fluids
recycling technology for delivery to major mining
markets around the world
• Continuing to invest in research and product
development to extend our product offering
and maintain technology market leadership
• Expanding the DHSO oil and gas services joint
venture globally
• Continuing to grow market share in under-penetrated
minerals markets globally
•
Integrating the bolt on acquisitions of ADS
and System Mud.
Trading conditions globally are conducive to growing our
business and Imdex is well positioned to respond to the
growing needs of the sectors in which we specialise.
Subject to there being no material deterioration in our
end markets, Imdex’s sound fundamentals and balance
sheet, comfortable liquidity position and low gearing, global
footprint, leading brands and technologies, and strong
customer relationships, place the Company in a strong
position to accelerate future growth. We look forward
to partnering with our customers to ensure our mutual
success in FY12 and beyond.
I wish to congratulate everyone, particularly our
hardworking, dedicated and loyal staff, who contributed to
our record results, recent awards success and our growing
number of loyal customers. We remain focused on seizing
new opportunities and growing our business for the benefit
of all customers and shareholders.
Imdex 2011 Annual Report |
19
FY11 initiatives
Experts in the field
From 1 July 2010, Imdex’s new regional operating structure
for the Minerals division came into effect. This divided the
business into four operational regions – Africa, Asia Pacific,
the Americas and Europe. Many of our customers in the
fluids and down hole instrumentation sectors are common
so the change has allowed Imdex to facilitate important cross
selling opportunities. There are significant opportunities for
market penetration for our drilling fluids and down hole
instrumentation products, particularly in Africa, the Americas
and Europe where benefits have emerged from the shift to
greater local representation of technical expertise in these
sometimes challenging environments.
The drilling fluids product development laboratory in
Osborne Park, Western Australia is adding value with
specialised analytical equipment to test and develop drilling
fluids used in oil and gas, mining, water well and specialised
drilling sectors. The ability to offer these services gives Imdex
a significant competitive advantage within the drilling fluids
market, in particular.
During the year, Reflex published a professional reference
guide to drilling, titled A guide to borehole deviation and
surveying. The essential guide contains 40 pages of detailed
instructions with accompanying visual diagrams on managing
every aspect of drilling, including surveying techniques,
measuring principles and interpreting survey data. The
guide is aimed at all professionals involved in drilling,
including drillers, geologists and down hole surveyors.
The guide is also being provided to tertiary students
intent on entering the workforce to supplement their
theoretical and practical understanding of drilling
and instrumentation.
AMC’s popular drilling fluid training continued during
the year to educate our customers and staff on various
aspects in the optimum use of AMC’s drilling fluids.
The training is designed to address specific customer
requirements and provide a unique hands-on opportunity to
work with AMC drilling fluids and equipment. The schools
are an integral part of the superior level of service and
training accessible to our customers worldwide.
Over the past two years, we have centralised our
manufacturing facilities for the down hole instrumentation
used in the mining and exploration sectors. This was to
enhance operational efficiencies, generate cost saving
benefits, and allow greater control over the manufacturing
and research and product development functions. The first
of these activities relocated Reflex’s manufacturing facility at
Imdex Technology in the United Kingdom to Osborne Park,
Western Australia. The repair and production facility at Imdex
Technology, Sweden was successfully transferred to Imdex’s
premises in Osborne Park, Western Australia at the end of
September 2010. Imdex upgraded its Osborne Park premises
into a dedicated facility for ongoing research, product
development and future growth.
The operations of AMC in the European region were
strengthened during the year with the relocation of an
experienced AMC Sales Manager to Europe to establish
AMC’s drilling fluids division in Europe. Customers in the
European region (including Ireland, Turkey, Kazakhstan and
Kyrgyzstan) were previously supported from Australia and
Canada but will now be supported directly from Europe.
There are significant opportunities
for market penetration for both
our drilling fluids and down hole
instrumentation products
20
FY11 initiatives continued
Advancing technology
Award winning products
Imdex subsidiaries, Reflex and AMC, were both nominated
as finalists in the Western Australian (WA) Industry and
Export Awards.
The awards, described by the Western Australian Chamber
of Commerce as WA’s most prestigious, acknowledge
the importance of WA businesses and the contributions
they make to the local economy. The awards cover various
industry and export categories and recognise the innovation
and hard work of business, both large and small.
AMC was the winner of 2010 WA Innovator of the Year
award for its unique SCU design. This award is made for
outstanding achievement or excellence in developing
an innovative commercial product, process, service
or technology.
Reflex was selected as a finalist for the C.Y. O’Connor
Award for Excellence in Engineering and Technology
category. The C.Y. O’Connor Award is awarded for
excellence in engineering, technology, medical technology,
information technology and/or technical research and
development. Reflex was selected for its design and
development of the Reflex ACT II Rapid Descent core
orientation instrument. Key benefits of this instrument
are speed, accuracy and ease of use making it the
industry wide preferred tool for core orientation.
Since introducing the concept of our Solids Control Unit
(SCU) (MK1) in 2009 to the diamond drilling industry, the
process of commercialisation continued with positive results
from several field trials conducted in Western Australia in
2H11. The unique design of the unit is being developed to
conserve water, contain used drilling fluids and enable the
responsible disposal of solids and reduce the digging of mud
pits. The unit will initially be rolled out in the Asia Pacific
market and will move to the other major mining markets
of Africa, Canada and Latin America in 2H12.
A recent successful field trial involved access to a restricted
area of national park in northwest Australia. Previously off
limits to exploration drilling, crews had not been permitted
to operate in this highly sensitive area. With the contained
drilling fluid system, drillers were given permission to enter
the area and drilling operations were successfully conducted.
AMC was the winner of 2010
WA Innovator of the Year award
for its unique SCU design. This
award is made for outstanding
achievement or excellence
in developing an innovative
commercial product, process,
service or technology.
Imdex 2011 Annual Report |
21
FY11 initiatives continued
Organic and acquisition growth
Refl ex to the rescue
Imdex has enjoyed a consistently successful history of
acquisitions to increase its global presence, product offerings
and expertise. FY11 was no exception.
Imdex was proud to play a role in the successful rescue
mission of 33 miners who became trapped at the San Jose
underground mine in Northern Chile on 5 August 2010.
The acquisition of Fluidstar became effective 1 September
2010, and its specialist products were integrated with AMC’s
range of drilling fl uids. The business is now benefi ting from
a combined sales team and an expanded sales presence in
South East Asia.
The acquisition of the European based Mud-Data was
effective 1 March 2011. This provides a base for Imdex to
effectively penetrate the oil and gas and geothermal drilling
fl uids markets in Europe, with considerable potential for
market growth in Germany and Romania. It will
deliver an expanded product range, excellent capabilities
and enhanced exposure to these industries across Europe.
The acquisition was funded from existing cash resources.
Whilst Mud-Data did not contribute to profi ts in FY11, the
business is well placed to generate signifi cant revenue and
profi ts in FY12 and future periods.
Imdex has enjoyed a consistently
successful history of acquisitions
to increase its global presence,
product offerings and expertise.
FY11 was no exception.
Refl ex’s Global Product Manager, Kelvin Brown, assisted with
the planning and design of the drill hole which successfully
intercepted the refuge chamber in which the miners were
trapped, some 700 metres below the surface.
Mr. Kelvin Brown was fl own to Chile to help direct the
drilling and was on site working with the rescue team
when it fi rst made contact with the miners on 22 August,
2010. Refl ex’s EZ-Trac survey instrument, renowned for
its superior accuracy and speed, was utilised to survey
the communications bore hole and orientate the
HX Navimotors.
In addition, AMC drilling fl uid was also used to increase
drilling effectiveness through the hard rock formations.
The product is a unique high performance extreme
pressure lubricant and cutting oil, with excellent lubricating
characteristics that improve drilling penetration rates and
reduce wear to drilling equipment.
Since returning, Kelvin has presented on behalf of Refl ex at
various forums to share the experience and learnings with
industry professionals. and has been awarded the WA Spatial
Excellence award for his role in the rescue.
As a result of Kelvin’s efforts, Refl ex has been selected as a
Kelvin Brown also received the “Miner of the Year” and
fi nalist in the outstanding contribution to mining award in the
“Outstanding Contribution to Mining” awards at the Australian
2011 Australian Mining Prospect Awards to be held in Sydney
Mining Prospect industry ceremony held in Sydney on 7 September
in September 2011.
2011. Reflex is very pleased to be recognised in this way and
sincerely thank Kelvin and the Reflex team for their quick response
and role played in the mine rescue.
22
1058609 Imdex AR pg 22.indd 1
12/09/11 10:03 AM
FY11 initiatives continued
Committed to health and safety
During the year, Imdex maintained an excellent record of
health and safety for its people, customers and others with
whom we interact. During FY11, Imdex achieved a number
of quality ISO9001 certifications, including AMC Chile and
Reflex Chile. More information about these achievements
is outlined on page 26.
Imdex was proud to play a
role in the successful rescue
mission of 33 miners who
became trapped at the San Jose
underground mine in Northern
Chile on 5 August 2010. Reflex’s
Global Product Manager, Kelvin
Brown, assisted with the planning
and design of the drill hole
which successfully intercepted
the refuge chamber in which the
miners were trapped, some 700
metres below the surface.
Operator inserts Reflex EZ-Trac.
Onsite testing of AMC fluids.
Imdex 2011 Annual Report |
23
Global business
Imdex is well established globally
with operations in all key global
markets, including Africa, Asia
Pacific, Europe, North America
and South America.
Asia Pacific
51
% employees
13.5
Africa
16.5
Europe
11.5
South America
7.5
North America
Europe
East Sussex, UK
Riegel, Germany
Rastede, Germany
Aktau, Kazakhstan
New Delhi, India
Asia Pacific
Accra, Ghana
Africa
Singapore
Jakarta
Johannesburg, SA
Perth, WA
Townsville, QLD
Brisbane, QLD
Mudgee, NSW
Kalgoorlie, WA
Adelaide, SA
24
We are set apart by our ability to
provide innovative drilling fluids and
advanced down hole instrumentation
with unrivalled onsite technical support.
Calgary, Canada
Salt Lake City, USA
Timmins, Canada
North America
Torreon, Mexico
Lima, Peru
South America
Santiago, Chile
Belo Horizonte, Brazil
Imdex 2011 Annual Report |
25
Quality, health, safety
and the environment
s
r
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o
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16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
Imdex Group Lost Time Injury Frequency Rate (LTIFR)
June 2011 = 9.26 (incidents per million hours worked)
l
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e
F
r
a
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p
A
y
a
M
n
u
J
Month
Worksafe LTIFR
Benchmark 13.40
Imdex Average
12 month LTIFR
Imdex LTIFR
Imdex Group Lost Time Incident Rate (LTIR)
June 2011 = 1.90 (incidents per hundred workers)
l
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p
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y
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Month
Worksafe LTIR
Benchmark 2.90
Imdex Average
12 month LTIR
Imdex LTIR
Imdex’s dedicated Quality, Health, Safety and Environmental
(QHSE) department oversees the Company’s commitment
to continuous improvement, and the safety and wellbeing of
its employees, customers and others with whom it interacts.
Key achievements for FY11
Imdex Limited, AMC, Reflex Asia Pacific, Imdex
•
Technology, Flexit Australia, AMC Africa (Samchem),
Wildcat and Reflex Canada successfully maintained
•
•
certification to ISO9001:2007
Imdex South America including AMC Chile
and Reflex Chile achieved ISO9001 certification
Imdex’s integrated QHSE Management System was
rolled out in March, providing universal QHSE
standards, checklists for responsible managers
and documentation for audit purposes
•
Imdex Limited, including AMC Asia Pacific, Reflex Asia
Pacific and Imdex Technology were successfully certified
to the internationally recognised Occupational Health
and Safety standard OHSAS18001:2007 and Australian
Standard AS/ANZ4801.
Injury Statistics for FY11
Globally, the Imdex Group Lost Time Injury Frequency
Rate (LTIFR) was below the stringent Western Australian
WorkSafe benchmark. 6 lost time injuries occurred globally,
with a total of 23 days lost.
LTIFR = Number of lost time injuries / diseases
for each one million hours worked.
WorkSafe benchmark
LTIFR = 13.4
Imdex Group
LTIFR = 9.26
26
Managing risk
Corporate governance
Risk management framework
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 and Risk
Management function which regularly conducts reviews
and location based internal audits and risk reviews.
Imdex has a strong and
stable management team with
extensive technical and product
knowledge together with
unrivalled hands-on experience.
With regional managers based
in Africa, Asia Pacific, the
Americas and Europe, we can
offer on-site technical support
to our customers worldwide.
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
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 risk
mitigation strategies to reduce risk exposure
•
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.
Imdex 2011 Annual Report |
27
FY11
financial
report
Director’s report
Auditor’s independence declaration
Independent audit report
Director’s declaration
Corporate governance statement
Income statement
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial report
29
43
44
46
47
52
53
54
55
56
57
Additional stock exchange information
113
28
Director’s report
for the year ended 30 June 2011
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2011
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 2011.
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 AM
Non Executive
Chairman
73
Mr B W Ridgeway
Managing Director
57
Mr K A Dundo
Independent, Non
Executive Director
58
Mr M Lemmel
Independent, Non
Executive Director
72
Ms E Donaghey
Independent, Non
Executive Director
53
Engineer
Director since 14 January 2004
Appointed as Chairman on 15 October 2009
Member of the Audit and Compliance Committee
Chairman of the Remuneration Committee until 14 December 2009
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.
Chartered Accountant
Director since 23 May 2000
Over 25 years experience with public and private companies as owner,
director and manager
Member of the Institute of Chartered Accountants in Australia and Australian
Institute of Company Directors.
Director of Sino Gas and Energy Holdings Ltd
Lawyer
Chairman of the Audit and Compliance Committee
Member of the Remuneration Committee
Director since 14 January 2004
Director of Red 5 Limited and Synergy Plus Limited
Previously Director of Intrepid Mines Ltd
Management Consultant
Director since 19 October 2006
Chairman of the Remuneration Committee from 14 December 2009
Chairman of Fiberform Vindic 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
Civil Engineer
Director since 28 October 2009
Member of the Audit and Compliance Committee from 14 December 2009
Member of the Remuneration Committee from 14 December 2009
Director of St Barbara Limited
Previously held a range of technical and senior management positions in
Woodside Petroleum and BHP Petroleum
Page 1 of 86
Imdex 2011 Annual Report |
29
Director’s report continued
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2011
(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 B W Ridgeway
Mr K A Dundo
Sino Gas and Energy
Holdings Limited
Red 5 Limited
Synergy Plus Limited
Intrepid Mines Ltd
Non Executive Director
2007 – Current
Non Executive Director
Non Executive Director
Non Executive Director
2010 – Current
2006 – Current
2002 – 2009
2011 – Current
Ms E Donaghey
St Barbara Limited
Non Executive Director
(c) Company Secretary
Mr P A Evans
Mr Evans, a Chartered Accountant, joined Imdex Limited on 17 October 2006. After leaving professional practice he worked in a range
of commercial and financial roles in the media, manufacturing and telecommunications industries. Mr Evans is a 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 th e financial
year and the number of meetings attended by each Director (while they were a Director or committee member). During the financial
year, six Board meetings, three Audit and Compliance Committee meetings and five Remuneration Committee meetings were held.
Board of Directors
Audit and Compliance
Committee
Remuneration Committee
Held
Attended
Held
Attended
Held
Attended
6
6
6
6
6
6
6
6
5
6
3
-
3
-
3
3
-
2
-
3
-
-
5
5
5
-
-
5
5
5
R W Kelly
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
-
-
-
903,921
185,000
380,000
2,435,000
300,000
-
-
-
-
-
-
-
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 32. Details of performance rights on issue at the end of the financial year are disclosed in note 33.
30
Page 2 of 86
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2011
Director’s report continued
(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 nomin al 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 $374,300, 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 28% of his base remuneration package. Each year the
Remuneration Committee sets key performance indicators (KPIs) for the Managing Director to earn this short term incentive bonus.
These KPIs typically 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 typically 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 and Mr M L
Quesnel‟s contract provided for a 30 day notice period. No additional benefits above those already entitled to will become payable on
termination.
Page 3 of 86
Imdex 2011 Annual Report |
31
Director’s report continued
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2011
Director and Senior Management details
The Directors of Imdex Limited during the year were:
(i)
(ii)
(iii)
(iv)
(v)
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); and
Ms E Donaghey (Non Executive Director).
The term „Senior Management‟ is used in this remuneration report to refer to the following persons:
Mr G E Weston (Project General Manager; General Manager: Oil & Gas division);
Mr D J Loughlin (General Manager: Minerals division);
Mr M L Quesnel (General Manager: Fluids and Chemicals (Oil & Gas division); resigned 31 August 2010);
(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
Mr P A Evans (Company Secretary and Chief Financial Officer).
(v)
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 principally motor vehicles;
Post-employment benefits – superannuation;
(i)
(ii)
(iii) Equity – share options granted under the Staff Option Scheme (note 32) or performance rights granted under the Performance
Rights Plan (note 33) 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 wealt h for the
five years to June 2011:
30 June 2011
30 June 2010
30 June 2009
30 June 2008
30 June 2007
Revenue – continuing and
discontinued operations ($000s)
Net profit / (loss) before tax from
continuing operations ($000s)
Net profit / (loss) after tax from
continuing operations ($000s)
Share price at start of year (cents)
Share price at end of year (cents)
Interim dividend (cents) – fully
franked
Final dividend (cents) – fully
franked
Basic earnings / (loss) per share
(cents) – continuing operations
Diluted earnings / (loss) per share
(cents) – continuing operations
205,334
135,625
138,992
150,493
119,340
38,593
29,002
73.0
215.0
1.75
2.75 *
14.69
14.25
(21,071)
(21,548)
64.5
73.0
-
-
(11.05)
(11.05)
18,195
12,067
165
64.5
1.00
-
6.37
6.23
31,885
21,081
150
165
1.75
2.25
11.22
10.79
18,115
11,950
61
150
1.00
1.50
7.72
7.09
* - Declared post year end on 12 August 2011 hence the financial effect of this dividend has not been recognised in the financial
statement at 30 June 2011.
32
Page 4 of 86
Director’s report continued
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Imdex 2011 Annual Report |
33
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34
Director’s report continued
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2011
(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 Directo r‟s
compensation is reviewed and determined annually by the Remuneration Committee.
Mr Ridgeway earned a short term cash bonus of $140,000 in the current year. This bonus was achieved for exceeding budgeted EBITA
levels by more than a set percentage and for achieving one of three product development milestones. An additional $40,000 could have
been earned by Mr Ridgeway had the remaining two product development targets and one cash flow related target been met. Mr
Ridgeway earned a short term cash bonus of $10,000 in the prior year on the achievement of operational targets.
No options were granted to Mr Ridgeway in the current year or in the prior year.
The grant of 196,579 performance rights to Mr Ridgeway in the current year was approved by the shareholders at the Annual Gen eral
Meeting on 14 October 2010. The Managing Director is subject to two hurdles each with equal weighting. The first is that the Total
Shareholder Return (TSR) of Imdex Limited must exceed the average TSR of the ASX300 over the 3 year measurement period. The
second is that the Earnings Per Share of Imdex Limited must exceed the average EPS of the ASX300 over the 3 year measurement
period. The performance hurdle in relation to these performance rights will be measured after the audit sign off of the FY13 fin ancial
statements on or about August 2013. No value has therefore been received by Mr Ridgeway in the current year. Refer note 33 for
further details.
The grant of 234,375 performance rights to Mr Ridgeway in the prior year was approved by the shareholders at the Annual General
Meeting on 15 October 2009. All of these performance rights expired in the prior year due to the FY10 EBITA performance hurdles not
being met. No value was therefore received by Mr Ridgeway. Refer note 33 for further details.
(ii) Mr G E Weston is party to a service contract with Imdex Limited, which sets out a fixed compensation package, reviewable annually.
The service contract stipulates a twelve month notice period in the event that the contract is terminated. There are no termination
benefits specified in this contract. Performance incentives may be agreed between Mr Weston and Imdex 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.
Mr Weston earned a short term cash bonus of $178,500 on achievement of specified profitability hurdles. This was the maximum
possible bonus that Mr Weston could have earned. No short term cash bonus was earned in the prior year 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 32 for further details.
Mr Weston was granted 120,897 performance rights in the current period under the Performance Rights Plan. It is expected that the
hurdles applicable to all of these performance rights will be achieved in the current year. These 120,897 performance rights will be
settled via the issue of 120,897 fully paid ordinary shares in Imdex Limited in equal one third tranches annually on or about August each
year starting in August 2011 on condition that Mr Weston remains employed by Imdex Limited at that time. Refer note 33 for further
details.
Mr Weston was granted 136,009 performance rights in the prior period under the Performance Rights Plan. All of these performance
rights expired in the prior year due to the FY10 EBITA performance hurdles not being met. No value was therefore received by Mr
Weston. Refer note 33 for further details.
(iii) Mr D J Loughlin is a party to a service contract with Imdex Limited, which sets out a fixed compensation package reviewable
annually. The service contract specifies a six month notice period in the event that the contract is terminated. There are no termination
benefits specified in this contract. Additional performance incentives may be agreed between Mr Loughlin and I mdex Limited from time
to time.
Mr Loughlin earned a short term cash bonus of $113,150 on achievement of specified profitability hurdles. This was the maximum
possible bonus that Mr Loughlin could have earned. No short term cash bonus was earned in the prior year 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 32 for further details.
Mr Loughlin was granted 125,587 performance rights in the current period under the Performance Rights Plan. It is expected that the
hurdles applicable to all of these performance rights will be achieved in the current year. These 125,587 performance rights will be
settled via the issue of 125,587 fully paid ordinary shares in Imdex Limited in equal one third tranches annually on or about August each
year starting in August 2011 on condition that Mr Loughlin remains employed by Imdex Limited at that time. Refer note 33 for further
details.
Mr Loughlin was granted 93,493 performance rights in the prior 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 33 for further details.
Page 7 of 86
Imdex 2011 Annual Report |
35
Director’s report continued
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2011
(iv) Mr M L Quesnel was a party to a consulting contract with Imdex Limited, which set out a fixed compensation package. This contract
terminated on 31 August 2010. No termination benefits became payable as a result of the termination of this contract.
No short term cash bonus was earned in the current or prior year as the required hurdles were not met.
No options were granted to Mr Quesnel in the current or prior year.
No performance rights were granted to Mr Quesnel in the current year. Mr Quesnel was granted 68,751 performance rights in the prior
period under the Performance Rights Plan. All of these performance rights expired in the prior year due to the FY10 EBITA performance
hurdles not being met. No value was therefore received by Mr Quesnel. Refer note 33 for further details.
(v) Mr P J Mander ceased to be a Group Executive on 1 July 2010 when changed internal reporting structures came into effect. Mr
Mander was a party to a service contract with Imdex Limited, which set out a fixed compensation package reviewable annually. The
service contract specified 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 cash bonus was earned in the prior year as the required hurdles were not met.
No options were granted to Mr Mander in the prior year. The options expense shown in the tables above includes a portion of the value
of options granted in past years that has been spread over the three year vesting period. Refer note 32 for further details.
Mr Mander was granted 73,437 performance rights in the prior period under the Performance Rights Plan. All of these performance
rights expired in the prior year due to the FY10 EBITA performance hurdles not being met. No value was therefore received by Mr
Mander. Refer note 33 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.
Mr Evans earned a short term cash bonus of $149,650 on achievement of specified profitability hurdles. This was the maximum possible
bonus that Mr Evans could have earned. No short term cash bonus was earned in the prior year 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 32 for further details.
Mr Evans was granted 111,806 performance rights in the current period under the Performance Rights Plan. It is expected that the
hurdles applicable to all of these performance rights will be achieved in the current year. These 111,806 performance rights will be
settled via the issue of 111,806 fully paid ordinary shares in Imdex Limited in equal one third tranches annually on or about August each
year starting in August 2011 on condition that Mr Evans remains employed by Imdex Limited at that time. Refer note 33 for further
details.
Mr Evans was granted 112,110 performance rights in the prior period under the Performance Rights Plan. All of these performance
rights expired in the prior year due to the FY10 EBITA performance hurdles not being met. No value was therefore received by Mr
Evans. Refer note 33 for further details.
Bonuses granted to Directors and Senior Managers
The table below sets out the bonuses earned by Directors and Senior Managers in the current year. Bonuses are paid on the
achievement of performance criteria specific to the individual. Where performance hurdles are not met, no bonus is paid. The
performance criteria used are chosen by the Remuneration Committee annually and are linked to the financial performance of th e
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
140,000
G E Weston
D J Loughlin
M L Quesnel
178,500
113,150
-
P A Evans
149,650
78%
100%
100%
-
100%
22%
-
-
100%
-
16%
23%
19%
-
23%
Page 8 of 86
36
Director’s report continued
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2011
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
B W Ridgeway
G E Weston
D J Loughlin
M L Quesnel
P A Evans
-
-
-
-
-
2,040,000
1,640,000
-
-
-
-
-
-
-
-
$
$
$
$
Number
$
%
2,040,000
-
-
1,640,000
166,668
33%
58,375
%
-
-
-
-
-
-
-
-
-
-
66,667
13%
23,350
4%
-
8%
-
-
(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 7.5% 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 profitability 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 (iii)
Value at
grant date
Value at
issue
date
Value
included in
remuneration
during the
year
Percentage of
remuneration for
the year that
consisted of
performance
rights
Number
$
Number
$
Number
$
%
B W Ridgeway (i)
196,579
212,305
G E Weston (ii)
120,897
157,690
D J Loughlin (ii)
125,587
161,487
M L Quesnel
-
-
P A Evans (ii)
111,806
145,832
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
53,076
97,013
99,340
-
89,718
6%
13%
17%
-
15%
(i)
Approved by the shareholders at the Annual General Meeting on 14 October 2010.
(ii)
Granted per the Performance Rights Plan
(iii) Where performance rights expire no value is 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 33.
Page 9 of 86
Imdex 2011 Annual Report |
37
Director’s report continued
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2011
Share options held by Directors and Senior Managers
2011
Balance at
1 July 2010
Granted as
compensation
Exercised
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.
2,000,000
No.
-
-
-
-
1,500,000
500,000
-
150,000
500,000
4,650,000
No.
(2,000,000)
-
-
-
-
(1,000,000)
-
-
-
-
(3,000,000)
-
-
-
-
-
-
-
-
-
-
-
Inception /
(cessation) as key
management person
Balance at
30 June
2011
Vested but
not
exercisable
Vested and
exercisable
Options
vested
during year
No.
No.
No.
No.
No.
-
-
-
-
-
-
-
-
(150,000)
-
(150,000)
-
-
-
-
-
500,000
500,000
-
-
500,000
1,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
500,000
-
-
500,000
1,500,000
166,668
-
-
-
66,667
233,335
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)
* - 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 and resigned on 31 August 2010. Disclosures above relate only to the period when in office.
~ - Mr P J Mander ceased to be a Key Management Person on 1 July 2010 when changed internal reporting structures came into effect. 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 3,000,000 options were exercised by key management personnel during the current year. The exercise price was 35c per share for the
1,000,000 exercised by Mr G Weston and 30c per share for the 2,000,000 exercised by Mr B Ridgeway. No amounts remain unpaid on the options
exercised.
38
Page 10 of 86
Director’s report continued
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2011
(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
Staff Share
Options
Staff Share
Options
Staff Share
Options
Staff Share
Options
Staff Share
Options
Ordinary
300 cents
28 Mar 2008
27 Mar 2013
(aa)
4,279,991
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)
2,150,666
Ordinary
75 cents
23 Feb 2007
22 Feb 2012
(aa)
700,000
(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 is sue 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
Imdex
Limited
Imdex
Limited
Staff Share
Options
Staff Share
Options
Managing
Director‟s
Options
Former
Chairman‟s
Options
Ordinary
35 cents
1 Feb 2006
31 Jan 2011
1,552,870
Ordinary
100 cents
23 Feb 2007
22 Feb 2012
711,668
Ordinary
30 cents
15 Sep 05
14 Sep 10
2,000,000
Ordinary
75 cents
19 Oct 2006
18 Oct 2011
1,000,000
Page 11 of 86
Imdex 2011 Annual Report |
39
Director’s report continued
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2011
(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
– Tranche 1
Imdex
Limited
Performance Rights
– Tranche 2
Imdex
Limited
Performance Rights
– Managing
Directors‟ Tranche
Imdex
Limited
Performance Rights
– Tranche 3
Imdex
Limited
Performance Rights
– Tranche 4
Ordinary
Nil
19 Feb 2010
Aug 2014
(aa)
253,669
Ordinary
Nil
3 Dec 2010
Aug 2015
(bb)
2,072,372
Ordinary
Nil
14 Oct 2010
Nov 2015
(cc)
196,579
Ordinary
Nil
28 Jan 2011
Aug 2015
(bb)
200,000
Ordinary
Nil
10 Jun 2011
Aug 2016
(dd)
200,000
(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. Subject to ongoing employment tenure.
(bb) 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 FY11 independent audit report. Subject to ongoing employment tenure.
(cc) To be satisfied by the issue of fully paid ordinary shares in Imdex Limited on or about November 2015. Subject to the achievement
of specified performance hurdles and ongoing employment tenure.
(dd) 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 FY12 independent audit report. Subject to ongoing employment tenure.
(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 year the Imdex Group continued with its strategy to sell drilling fluids and chemicals as well as develop, rent and sell
technologically advanced down hole instrumentation to the mining and oil and gas industries globally.
The Imdex Group expanded its European footprint by purchasing Mud-Data GmbH, a mud business with a presence in Germany and
Romania. The competitive position in the Australian east coast market was also strengthened through the purchase of Brisbane based
Fluidstar Pty Ltd and Ecospin Pty Ltd.
These acquisitions occurred against the global backdrop of strong commodity prices, high drill rig utilisation rates and incr easing
exploration spending which assisted existing Imdex Group businesses to expand organically.
The Imdex Group to earn revenue from continuing operations including interest of $205.3 million (2010: $135.6 million) and profit after
tax of $29.0 million (2010: loss $21.5 million).
(k) Dividends
In the current year a fully franked interim dividend of 1.75 cents per ordinary share was paid on 25 March 2011 to shareholders
registered on 11 March 2011. Since 30 June 2011 the Directors have declared a fully franked final dividend of 2.75 cents per ordinary
share, the financial effect of which has not been reflected in this Financial Report.
In the prior year no dividends were declared or paid.
(l)
Changes in State Of Affairs
There were no significant changes in the state of affairs of the Group.
Page 12 of 86
40
Director’s report continued
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2011
(m) Subsequent Events
Effective 1 July 2011 Imdex Limited was allotted fully paid ordinary shares in DHS Oil Services Limited (DHSO) in exchange for the
granting of an exclusive global technology license to use its oil and gas surveying instruments and technology. Following this allotment
Imdex Limited holds 50% of the issued share capital of DHSO. DHSO is registered in the British Virgin Islands and will operate an
oilfield services business based in Dubai using the technology licensed to it by Imdex Limited. Imdex Limited will account for its
investment in DHSO as an associate per Australian Accounting Standard 128 “Investments in Associates” since it holds 50% of t he
issued capital but only 2 out of 5 Board positions. Imdex Limited therefore has significant influence over DHSO but does not control or
jointly control DHSO. Additional disclosures with respect to this acquisition are impracticable at this stage as the acquisition accounting
is still being finalised.
Effective 1 July 2011 Imdex Limited acquired 100% of the issued share capital of Australian Drilling Specialties Pty Ltd, a drilling fluids
manufacturer based in Kwinana, Western Australia. The consideration of $12 million will be paid $6 million in cash and $6 million in
Imdex shares valued at the 5 days volume weighted average price at completion. Additional disclosures with respect to this acquisition
are impractical at this stage as the acquisition accounting is still being finalised.
On 25 July 2011 Imdex announced that it had entered into a conditional heads of agreement to purchase 100% of the issued share
capital of System Mud Industria e Comercio Ltda (System Mud) effective 1 August 2011. System Mud is a manufacturer and seller of
drilling muds in Brazil. Imdex will pay approximately $9.0 million as follows:
BRL 6.7 million (approximately $4.0 million) in cash at settlement; plus
$3.8 million by the issue of 1,600,000 fully paid Imdex Limited ordinary shares at an issue price of $2.40 per share, to be
escrowed for 12 months; plus
$1.2 million by the issue of 330,000 fully paid Imdex Limited ordinary shares at an issue price of $3.50 per share. If the share
price on the two year anniversary of the settlement date is below $3.50 an additional cash payment arises as the difference
between the share price at that date and $3.50 multiplied by 330,000. In the event that the Imdex share price reaches $3.50
at any time within the two year period, the potential cash top up falls away.
Additional disclosures with respect to this acquisition are impracticable at this stage as the due diligence process is still underway.
Subsequent to year end the Directors declared a 2.75 cent per share fully franked dividend with an entitlement date of 7 October 2011
and a payment date of 21 October 2011. The effect of this dividend has not been reflected in this financial 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 dis charge.
This is controlled through an effluent system. No known environmental breaches have occurred in relation to th e Group‟s operations.
(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.
Page 13 of 86
Imdex 2011 Annual Report |
41
Director’s report continued
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2011
(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 suc h 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 AM
Chairman
PERTH, Western Australia, 12 August 2011.
42
Page 14 of 86
Auditor’s independence declaration
Deloitte Touche Tohmatsu
ABN 74 490 121 060
The Board of Directors
Imdex Limited
8 Pitino Court
Osborne Park WA 6017
The Board of Directors
12 August 2011
Imdex Limited
8 Pitino Court
Osborne Park WA 6017
Dear Board Members
Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Deloitte Touche Tohmatsu
ABN 74 490 121 060
DX 206
Tel: +61 (0) 8 9365 7000
Woodside Plaza
Fax: +61 (0) 8 9365 7001
Level 14
www.deloitte.com.au
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
DX 206
Tel: +61 (0) 8 9365 7000
Fax: +61 (0) 8 9365 7001
www.deloitte.com.au
Imdex Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
12 August 2011
following declaration of independence to the directors of Imdex Limited.
As lead audit partner for the audit of the financial statements of Imdex Limited for the financial
Dear Board Members
year ended 30 June 2011, I declare that to the best of my knowledge and belief, there have been
no contraventions of:
Imdex Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of Imdex Limited.
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
(i)
(ii) any applicable code of professional conduct in relation to the audit.
As lead audit partner for the audit of the financial statements of Imdex Limited for the financial
year ended 30 June 2011, I declare that to the best of my knowledge and belief, there have been
no contraventions of:
Yours sincerely
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
DELOITTE TOUCHE TOHMATSU
Yours sincerely
Peter Rupp
Partner
Chartered Accountants
DELOITTE TOUCHE TOHMATSU
Peter Rupp
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
Liability limited by a scheme approved under Professional Standards Legislation.
Imdex 2011 Annual Report |
43
Member of Deloitte Touche Tohmatsu Limited
Independent audit report
Independent Auditor’s Report
to the members of Imdex Limited
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Woodside Plaza
Level 14
240 St Georges Terrace
Deloitte Touche Tohmatsu
Perth WA 6000
ABN 74 490 121 060
GPO Box A46
Perth WA 6837 Australia
Woodside Plaza
Level 14
DX 206
240 St Georges Terrace
Tel: +61 (0) 8 9365 7000
Perth WA 6000
Fax: +61 (0) 8 9365 7001
GPO Box A46
www.deloitte.com.au
Perth WA 6837 Australia
DX 206
Tel: +61 (0) 8 9365 7000
Fax: +61 (0) 8 9365 7001
www.deloitte.com.au
Independent Auditor’s Report
Report on the Financial Report
to the members of Imdex Limited
We have audited the accompanying financial report of Imdex Limited, which comprises the statement
of financial position as at 30 June 2011, and the income statement, the statement of comprehensive
income, the statement of cash flows and the statement of changes in equity for the year ended on that
Report on the Financial Report
date, notes comprising a summary of significant accounting policies and other explanatory
information, and the directors’ declaration of the consolidated entity, comprising the company and the
We have audited the accompanying financial report of Imdex Limited, which comprises the statement
entities it controlled at the year’s end or from time to time during the financial year as set out on pages
of financial position as at 30 June 2011, and the income statement, the statement of comprehensive
46 and 52 to 112.
income, the statement of cash flows and the statement of changes in equity for the year ended on that
date, notes comprising a summary of significant accounting policies and other explanatory
Directors’ Responsibility for the Financial Report
information, and the directors’ declaration of the consolidated entity, comprising the company and the
entities it controlled at the year’s end or from time to time during the financial year as set out on pages
The directors of the company are responsible for the preparation of the financial report that gives a
46 and 52 to 112.
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
Directors’ Responsibility for the Financial Report
financial report that is free from material misstatement, whether due to fraud or error. In Note 2, the
directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
The directors of the company are responsible for the preparation of the financial report that gives a
Statements, that the financial statements comply with International Financial Reporting Standards.
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
Auditor’s Responsibility
financial report that is free from material misstatement, whether due to fraud or error. In Note 2, the
directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
Statements, that the financial statements comply with International Financial Reporting Standards.
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
Auditor’s Responsibility
obtain reasonable assurance whether the financial report is free from material misstatement.
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
in the financial report. The procedures selected depend on the auditor’s judgement, including the
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
obtain reasonable assurance whether the financial report is free from material misstatement.
In making those risk assessments, the auditor considers internal control, relevant to the entity’s
preparation of the financial report that gives a true and fair view, in order to design audit procedures
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
in the financial report. The procedures selected depend on the auditor’s judgement, including the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
accounting policies used and the reasonableness of accounting estimates made by the directors, as well
In making those risk assessments, the auditor considers internal control, relevant to the entity’s
as evaluating the overall presentation of the financial report.
preparation of the financial report that gives a true and fair view, in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
our audit opinion.
accounting policies used and the reasonableness of accounting estimates made by the directors, as well
as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
44
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
Independent audit report continued
Auditor’s Independence Declaration
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001,
which has been given to the directors of Imdex Limited, would be in the same terms if given to the
directors as at the time of this auditor’s report.
Opinion
In our opinion:
(a) the financial report of Imdex Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at
30 June 2011 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the financial statements also comply with International Financial Reporting Standards as disclosed
in Note 2.
Report on the Remuneration Report
We have audited the Remuneration Report included in paragraph (f) of the directors’ report for the
year ended 30 June 2011. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion the Remuneration Report of Imdex Limited for the year ended 30 June 2011, complies
with section 300A of the Corporations Act 2001.
DELOITTE TOUCHE TOHMATSU
Peter Rupp
Partner
Chartered Accountants
Perth, 12 August 2011
Imdex 2011 Annual Report |
45
Directors’ declaration
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 t he
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, as stated in note 2 to the financial statements; 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 natur e of the
deed of cross guarantee is such that each company which is party to the deed guarantees to each creditor payment in full of any debt in
accordance with the deed of cross guarantee.
In the Directors‟ opinion, there are reasonable grounds to believe that the Company and the companies to which the ASIC Class Order
applies, as detailed in note 25 to the financial statements will, as a group, be able to meet any obligations or liabilities to which they are,
or may become, subject by virtue of the deed of cross guarantee.
Signed in accordance with a resolution of the Directors made pursuant to s.295(5) of the Corporations Act 2001.
Dated at Perth, 12 August 2011.
Mr Ross Kelly AM
Chairman
46
Page 18 of 86
Corporate governance statement
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 th ey 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 2011. 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 2011, 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 crit eria
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:
Director
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
Assessment
Existence of any matters contained in
ASX Recommendation 2.1 affecting Independence
Independent
Nil
Not Independent
Managing Director
Independent
Independent
Independent
Nil
Nil
Nil
Page 19 of 86
Imdex 2011 Annual Report |
47
Corporate governance statement continued
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 committ ee.
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. T he Code
addresses matters relevant to the Company‟s legal and other obligations to its Shareholders and covers:
the way in which duties must be discharged;
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
This policy imposes trading restrictions when dealing with Imdex securities, specifically limiting key management and employees of the
Company or persons who have access to inside information relating directly or indirectly to the Company, from trading in the Company's
securities. This policy aims to develop a culture of awareness of individual responsibilities under insider trading laws and is made
available on the Company website.
Employees generally may freely trade in Imdex securities, however, they are reminded that insider trading restrictions apply to them.
Additional restrictions on dealing in the Company‟s securities apply to those persons having authority and responsibility for planning,
directing and controlling the activities of the Company, directly or indirectly, including Directors and any of their associates, where
considered appropriate, executives reporting directly to the Managing Director/Chief Executive Officer and any other employees of the
Company considered appropriate by the Chief Executive Officer and Company Secretary from time to time (Key Management
Personnel). A list of all Key Management Personnel is maintained by the Company Secretary who ensures that all Key Management
Personnel receive notification of this policy.
48
Page 20 of 86
Corporate governance statement continued
IMDEX LIMITED
and its controlled entities
CORPORATE GOVERNANCE STATEMENT
Key Management Personnel cannot trade in the Company's securities without written approval. Certain types of dealings are however
excluded from the policy.
Key Management Personnel must, on all occasions before dealing with the Company's securities, provide a written application t o deal in
the prescribed format. The Company Secretary will then refer the application to the Chairman of the Board.
The Board has the discretion to prohibit trading by any Key Management Personnel. In addition Key Management Personnel are
prohibited from trading during:
1.
2.
3.
the period commencing from the end of the financial half (31 December) to the release of the Company's half year results to
the ASX and ending 24 hours after such releases; and
the period commencing from the end of the financial year (30 June) to the release of the Company's year end results to the
ASX and ending 24 hours after such releases; and
the period commencing two weeks prior to the Company's Annual General Meeting and ending 24 hours after the close of the
Annual General Meeting,
An application may be made to sell (but not to purchase) securities, when this policy otherwise prohibits, on the grounds of exceptional
circumstances approval for which can only be granted by the Board.
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 20 11 Annual
Financial Report presents a true and fair view, in all material respects, of the Company‟s financial condition and operational results and
are in accordance with relevant accounting standards.
(ii) The Audit and Compliance Committee
The Audit and Compliance Committee consists of three independent Non Executive Directors and operates under a formal charter
approved by the Board. The Charter is published on the Company‟s website.
The Committee is chaired by an independent Chairperson who is not the Chairman of the Board of Directors.
The role of the Committee is to advise on the establishment and maintenance of a framework of internal control, risk management
protocols, 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; and
Ms E Donaghey.
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 au ditors 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 ans wer 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.
Page 21 of 86
Imdex 2011 Annual Report |
49
Corporate governance statement continued
IMDEX LIMITED
and its controlled entities
CORPORATE GOVERNANCE STATEMENT
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
Board‟s 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 affec ting
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 is 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
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. 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 managemen t 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 i ntegrity 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.
50
Page 22 of 86
Corporate governance statement continued
IMDEX LIMITED
and its controlled entities
CORPORATE GOVERNANCE STATEMENT
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);
Mr K Dundo; and
Ms E Donaghey .
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 benef its 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.
Page 23 of 86
Imdex 2011 Annual Report |
51
Income statement
for the year ended 30 June 2011
IMDEX LIMITED
and its controlled entities
INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2011
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
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the year
Attributable to:
Owners of the Company
Non-controlling interests
Earnings / (loss) per share
Consolidated
Company
Year Ended Year Ended Year Ended Year Ended
30 June 2011 30 June 2010 30 June 2011 30 June 2010
Notes
$’000
$’000
$’000
$’000
4
4
4
4
4
4
4
4
4
5
205,163
171
205,334
134,253
1,372
135,625
-
297
(84,514)
(33,241)
(5,721)
(6,778)
(2,946)
-
(33,541)
38,593
(9,591)
29,002
29,002
-
29,002
(58,140)
(27,068)
(4,182)
(6,363)
(2,143)
(33,971)
(25,126)
(21,071)
(477)
(21,548)
(21,548)
-
(21,548)
-
1,103
1,103
3,791
-
(10,814)
(244)
-
(2,252)
-
(16,563)
(24,979)
10,033
(14,946)
(14,946)
-
(14,946)
-
3,153
3,153
10,255
-
(7,500)
(236)
-
(1,629)
(3,434)
(5,034)
(4,425)
1,027
(3,398)
(3,398)
-
(3,398)
Basic earnings / (loss) per share (cents)
Diluted earnings / (loss) per share (cents)
20
20
14.69
14.25
(11.05)
(11.05)
The Income Statement should be read in conjunction with the accompanying notes.
52
Page 24 of 86
Statement of comprehensive income
for the year ended 30 June 2011
IMDEX LIMITED
and its controlled entities
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2011
Consolidated
Company
Year Ended
Year Ended
30 June 2011 30 June 2010 30 June 2011 30 June 2010
Year Ended
Year Ended
Note
$’000
$’000
$’000
$’000
Profit / (loss) for the period
29,002
(21,548)
(14,946)
(3,398)
Other comprehensive (loss) / income
Fair value adjustment on investment in SEH
Exchange differences arising on the translation of foreign operations
Other comprehensive income for the period
19
19
Income tax relating to components of other comprehensive income
9,320
(5,291)
4,029
(3,324)
-
(2,868)
(2,868)
1,351
269
-
269
(81)
-
-
-
-
Total comprehensive income / (loss) for the period
29,707
(23,065)
(14,758)
(3,398)
Total comprehensive income / (loss) attributable to:
Owners of the parent
Non-controlling interests
29,707
-
(23,065)
-
(14,758)
-
(3,398)
-
The Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
Page 25 of 86
Imdex 2011 Annual Report |
53
Statement of financial position
as at 30 June 2011
IMDEX LIMITED
and its controlled entities
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2011
Current Assets
Cash and Cash Equivalents
Trade and Other Receivables
Inventories
Other
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
Bank Overdraft
Trade and Other Payables
Borrowings
Current Tax Liabilities
Provisions
Other Current Liabilities
Total Current Liabilities
Non Current Liabilities
Borrowings
Provisions
Other Non Current Liabilities
Total Non Current Liabilities
Total Liabilities
Net Assets
Equity
Issued Capital
Foreign Currency Translation Reserve
Investment Revaulation Reserve
Employee Equity-Settled Benefits Reserve
Retained Earnings / (Accumulated Losses)
Total Equity
Consolidated
Company
30 June 2011 30 June 2010 30 June 2011 30 June 2010
Notes
$’000
$’000
$’000
$’000
29
7
8
10
9
11
5
12
13
29
14
15
5
16
17
15
16
17
18
19
19
19
18,388
50,219
40,565
4,596
113,768
16,122
17,344
16,030
38,705
17,146
105,347
219,115
-
32,879
28,945
19,707
2,191
2,628
86,350
6,074
1,069
213
7,356
93,706
125,409
70,059
(11,441)
6,524
7,158
53,109
125,409
9,007
41,210
28,600
3,496
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
-
1,813
-
-
1,813
105,626
920
2,602
-
-
109,148
110,961
1,697
3,079
20,371
15,050
677
2,628
43,502
5,551
565
213
6,329
49,831
61,130
70,059
-
188
7,158
(16,275)
61,130
7,644
1,775
-
24
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
The Statement of Financial Position should be read in conjunction with the accompanying notes.
54
Page 26 of 86
Statement of changes in equity
for the year ended 30 June 2011
IMDEX LIMITED
and its controlled entities
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2011
Fully Paid
Ordinary
Shares
Foreign
Currency
Translation
Reserve
Employee
Equity-Settled
Benefits
Reserve
Investment
Revaluation
Reserve
Retained
Earnings /
(Accumulated
Losses)
Total
Attributable to
Equity Holders
of the Entity
CONSOLIDATED
Notes
$'000
$'000
$'000
$'000
$'000
$'000
Balance at 1 July 2009
Exchange differences on translation of
foreign operations after taxation
Profit for the period
Total comprehensive income for the period
Share based payments - options
Share based payments - performance
rights
Issue of shares under staff option plan
Balance at 30 June 2010
Exchange differences on translation of
foreign operations after taxation
Fair value adjustment on available for sale
financial instrument net of taxation
Loss for the period
Total comprehensive income for the period
Dividend paid
Share based payments - options
Share based payments - performance
Shares purchased to satisfy performance
rights
Issue of shares under staff option plan
Balance at 30 June 2011
COMPANY
Balance at 1 July 2009
Profit for the period
Total comprehensive income for the period
Share based payments - options
Share based payments - performance
rights
Issue of shares under staff option plan
Balance at 30 June 2010
Fair value adjustment on available for sale
financial instrument net of taxation
Loss for the period
Total comprehensive income for the period
Dividend paid
Share based payments - options
Share based payments - performance
Shares purchased to satisfy performance
rights
Issue of shares under staff option plan
Balance at 30 June 2011
19
19
19
18, 19
19
19
21
19
19
19
18, 19
19
19
18, 19
19
21
19
19
19
18, 19
67,136
-
-
-
-
-
279
67,415
-
-
-
-
-
-
-
-
2,644
70,059
67,136
-
-
-
-
279
67,415
-
-
-
-
-
-
-
2,644
70,059
(4,105)
(1,517)
-
(1,517)
-
-
-
(5,622)
(5,819)
-
-
(5,819)
-
-
-
-
-
(11,441)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,024
-
-
-
995
104
(16)
5,107
-
-
-
-
-
580
2,131
(134)
(526)
7,158
4,024
-
-
995
104
(16)
5,107
-
-
-
-
580
2,131
(134)
(526)
7,158
-
-
-
-
-
-
-
-
-
6,524
-
6,524
-
-
-
-
-
6,524
-
-
-
-
-
-
-
188
-
188
-
-
-
-
-
188
The Statement of Changes in Equity should be read in conjunction with the accompanying notes.
49,143
116,198
-
(21,548)
(21,548)
-
-
-
27,595
(1,517)
(21,548)
(23,065)
995
104
263
94,495
-
(5,819)
-
29,002
29,002
(3,488)
-
-
-
-
53,109
5,557
(3,398)
(3,398)
-
-
-
2,159
-
(14,946)
(14,946)
(3,488)
-
-
-
-
(16,275)
6,524
29,002
29,707
(3,488)
580
2,131
(134)
2,118
125,409
76,717
(3,398)
(3,398)
995
104
263
74,681
188
(14,946)
(14,758)
(3,488)
580
2,131
(134)
2,118
61,130
Page 27 of 86
Imdex 2011 Annual Report |
55
Statement of cash flows
for the financial year ended 30 June 2011
IMDEX LIMITED
and its controlled entities
STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011
Consolidated
Company
Year Ended Year Ended Year Ended Year Ended
30 June 2011 30 June 2010 30 June 2011 30 June 2010
Notes
$’000
$’000
$’000
$’000
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
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 in Fluidstar Pty Ltd and Ecospin Pty Ltd net
of cash acquired
Payment for shares in AMC Germany GmbH (formerly Mud-
Data GmbH) 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
Net cash (used in) / provided by Investing Activities
Cash Flows From Financing Activities
Advances from Controlled Entities
Cash received on exercise of options
Shares purchased to satisfy performance rights
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 Increase / (Decrease) 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
29(c)
11
13
26(a)
26(b)
26(c)
9
21
219,761
(173,417)
-
(2,305)
(8,146)
35,893
127,775
(110,193)
-
(1,569)
(10,313)
5,700
171
(11,402)
247
-
(691)
(12,413)
(2,067)
-
-
(26,155)
-
2,118
(134)
(3,488)
-
(2,987)
14,250
(8,001)
1,758
87
(7,546)
300
-
(3,322)
-
-
(2,101)
4,115
(8,467)
-
263
-
-
3,163
(1,137)
7,846
(9,832)
303
-
(12,309)
-
(1,946)
18,176
3,921
124
(745)
200
-
-
(12,580)
(2,153)
-
-
(15,154)
(2,927)
2,118
(134)
(3,488)
-
(27)
14,250
(7,900)
1,892
-
(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
11,496
(2,464)
(9,341)
6,189
29(a)
9,007
11,975
7,644
1,455
(2,115)
(504)
-
-
29(a)
18,388
9,007
(1,697)
7,644
The Statement of Cash Flows should be read in conjunction with the accompanying notes.
56
Page 28 of 86
Notes to the financial report
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
1
Adoption of New and Revised Accounting Standards
(a) New standards and interpretations adopted affecting amounts reported in the current (and/or prior periods)
No new or revised Standards and Interpretations have been adopted in the current period and have affected the amounts reported in
these financial statements.
Standard or Interpretation
Nature of Change
to AASB
Amendments
Instruments: Disclosure‟ (adopted in
advance of effective date of 1 January
2011)
„Financial
7
Amendments
Assets Held for Sale and Discontinued
Operations‟
to AASB 5 „Non-current
The amendments (part of AASB 2010-4 „Further Amendments to Australian Accounting
Standards arising from the Annual Improvements Project‟) clarify the required level of
disclosures about credit risk and collateral held and provide relief from disclosures
previously required regarding renegotiated loans.
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.
Amendments to AASB 101 „Presentation of
Financial Statements‟ (adopted in advance
of effective date of 1 January 2011)
The amendments (part of AASB 2010-4 „Further Amendments to Australian Accounting
Standards arising from the Annual Improvements Project‟) clarify that an entity may choose
to present the required analysis of items of other comprehensive income either in the
statement of changes in equity or in the notes to the financial statements.
Amendments to AASB 107 „Statement of
Cash Flows‟
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.
Page 29 of 86
Imdex 2011 Annual Report |
57
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
1
Adoption of New and Revised Accounting Standards (continued)
(b) Standards and Interpretations adopted with no effect on financial statements
The Company and the Group have adopted all of the new and revised Standards and Interpretations issued by the Australian
Accounting Standards Board that are relevant to their operations and are effective for the current financial reporti ng period beginning 1
July 2010.
Standard or Interpretation
Nature of Change
AASB 2009-5: Further Amendments to
Australian Accounting Standards arising
from the Annual Improvements Process
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.
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.
AASB 2009-8: Amendments to Australian
Accounting Standards – Group Cash-settled
Share-based Payment Transactions AASB
2.
The application of AASB 2009-8 makes amendments to AASB 2 „Share-based Payment‟ to
clarify the scope of AASB 2, as well as the accounting for group cash-settled share-based
payment transactions in the separate (or individual) financial statements of an entity
receiving the goods or services when another group entity or shareholder has the
obligation to settle the award.
AASB 2009-10: Amendments to Australian
Accounting Standards – Classification of
Rights Issues
AASB 2010-3: Amendments to Australian
Accounting Standards arising
the
Annual Improvements Project
from
„Financial
The application of AASB 2009-10 makes amendments
Instruments: Presentation‟
issues
denominated in a foreign currency as either an equity instrument or as a financial liability.
To date, the Group has not entered into any arrangements that would fall within the scope
of the amendments.
the classification of certain rights
to AASB 132
to address
The application of AASB 2010-3 makes amendments to AASB 3(2008) „Business
Combinations‟ to clarify that the measurement choice regarding non-controlling interests at
the date of acquisition is only available in respect of non controlling interests that are
present ownership interests and that entitle their holders to a proportionate share of the
entity's net assets in the event of liquidation. All other types of non controlling interests are
measured at their acquisition-date fair value, unless another measurement basis is
required by other Standards.
In addition, the application of AASB 2010-3 makes amendments to AASB 3(2008) to give
more guidance regarding the accounting for share-based payment awards held by the
acquiree's employees. Specifically, the amendments specify that share-based payment
transactions of the acquiree that are not replaced should be measured in accordance with
AASB 2 „Share-based Payment‟ at the acquisition date („market-based measure‟).
AASB 2010-4
to
Australian Accounting Standards arising
from the Annual Improvements Project‟
„Further Amendments
Except for the amendments to AASB 7 and AASB 101 described earlier this section, the
application of AASB 2010-4 has not had any material effect on amounts reported in the
financial statements.
Interpretation 19: Extinguishing Financial
Liabilities with Equity Instruments.
This Interpretation provides guidance regarding the accounting for the extinguishment of a
financial liability by the issue of equity instruments. In particular, the equity instruments
issued under such arrangements will be measured at their fair value, and any difference
between the carrying amount of the financial liability extinguished and the fair value of
equity instruments issued will be recognised in profit or loss. To date, the Group has not
entered into transactions of this nature.
58
Page 30 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
1
Adoption of New and Revised Accounting Standards (continued)
(c)
Standards and Interpretations in issue not yet adopted
Significant new and revised standards and interpretations effective for the current financial reporting period that are relevant to the
Company and the Group are:
Standard / Interpretation
AASB 124 Related Party Disclosures (2009) and AASB 2009-
12 Amendments to Australian Accounting Standards
AASB 9: Financial Instruments, AASB 2009-11 Amendments
to Australian Accounting Standards arising from AASB 9 and
AASB 2010-9 Amendments to Australian Accounting
Standards arising from AASB 9 (December 2010)
AASB 2010-4 Further Amendments to Australian Accounting
Standards arising from Annual Improvements Project
AASB 2010-5 Amendments to Australian Accounting
Standards
AASB 2010-6 Amendments to Australian Accounting
Standards – Disclosures on Transfers of Financial Assets
AASB 2010-8 Amendments to Australian Accounting
Standards – Deferred Tax: Recovery of Underlying Assets
Effective for annual reporting
periods beginning/ending on
or after
Expected to be applied be
consolidated entity
1 January 2011
30 June 2012
1 January 2013
30 June 2014
1 January 2011
30 June 2012
1 January 2011
30 June 2012
1 July 2011
30 June 2012
1 January 2012
30 June 2013
Page 31 of 86
Imdex 2011 Annual Report |
59
Notes to the financial report continued
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 12 August 2011.
(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 concept s 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:
(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
(iii)
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 financin g
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 acqu isition-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 t he
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 t o
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 p eriod.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
60
Page 32 of 86
Notes to the financial report continued
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 financ e 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 settlem ent 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%
Capital works in progress in the course of construction for production or supply purposes, or for purposes not yet determined, are
carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs
capitalised in accordance with the Group‟s accounting policy. Depreciation of these assets, on the same basis as other property, plant
and equipment assets, commences when the assets are ready for their intended use.
(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, Binomial Tree Method and Monte-Carlo
Simulation as appropriate. 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 Comp any (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 lin e with those
used by other members of the Group.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
Page 33 of 86
Imdex 2011 Annual Report |
61
Notes to the financial report continued
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 occ urs, 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.
62
Page 34 of 86
Notes to the financial report continued
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 th e 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 exch ange
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 rem easured 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.
(m)
Financial assets
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
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 ass ets „at fair value through profit or loss‟, „held-to-
maturity‟ investments, „available-for-sale‟ financial assets, and „loans and receivables‟. The classification depends on the nature and
purpose of the financial assets and is determined at the time of initial recognition.
(i)
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest i ncome over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of
the financial asset, or, where appropriate, a shorter period.
Income is recognised on an effective interest rate basis for debt instruments other than those financial assets „at fair value through profit
or loss‟.
Page 35 of 86
Imdex 2011 Annual Report |
63
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
(m)
(ii)
Summary of Significant Accounting Policies (continued)
Financial assets (continued)
Held-to-maturity investments
Bills of exchange and debentures with fixed or determinable payments and fixed maturity dates where the Group has the positive intent
and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortised cost
using the effective interest method less impairment, with revenue recognised on an effective yield basis.
(iii)
Financial assets at fair value through profit or loss
Financial assets are classified as financial assets at fair value through profit or loss where the financial asset:
Has been acquired principally for the purpose of selling in the near future;
Is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern
of short-term profit-taking; or
Is a derivative that is not designated and effective as a hedging instrument.
Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. The
net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset.
(iv)
Available-for-sale financial assets
Available-for-sale assets are stated at fair value. Gains and losses arising from changes in fair value are recognised directly in the
investments revaluation reserve with the exception of impairment losses, interest calculated using the effective interest rate method and
foreign exchange gains and losses on monetary assets which are recognised directly in profit or loss. Where the investment is disposed
of or is determined to be impaired, the cumulative gain or loss previously recognised in the investments revaluation reserve is included
in profit or loss for the period. The fair value of available-for-sale monetary assets held in a foreign currency is determined in that foreign
currency and translated at the spot rate at reporting date. The change in fair value attributable to translation differences that results from
a change in amortised cost of the asset is recognised in profit or loss, and other changes are recognised in equity. Available-for-sale
financial assets include investments where shareholding is greater than 20% but significant influence is not exerted over the invest ed
company.
(v)
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are
classified as „loans and receivables‟. Loans and receivables are measured at amortised cost using the effective interest rate method
less impairment. Interest is recognised by applying the effective interest rate.
(vi)
Impairment of financial assets
Financial assets other than those at fair value through profit or loss, are assessed for indicators of impairment at each bal ance sheet
date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the
initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financi al assets
carried at amortised cost, the amount of the impairment is the difference between the asset‟s carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest rate.
The carrying value of the financial asset is reduced by the impairment loss directly for all financial assets wit h the exception of trade
receivables where the carrying value is reduced through the use of an allowance account. When a trade receivable is uncollect ible, it is
written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance
account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and
the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised
impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the d ate 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 direct ly in
equity.
64
Page 36 of 86
Notes to the financial report continued
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 recognis ed 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.
Page 37 of 86
Imdex 2011 Annual Report |
65
Notes to the financial report continued
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
Each period, the useful life of this asset is reviewed to determine whether events and circumstances continue to support an i ndefinite
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 intangi ble 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)
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
(i)
Current tax
The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit as reported in the income statement
because of items of income or expense that are taxable or deductible in other periods and items that are never taxable or ded uctible.
The Company and the Group‟s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by
the end of the reporting period.
66
Page 38 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
(p)
(ii)
Summary of Significant Accounting Policies (continued)
Taxation (continued)
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements
and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable
temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is
probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax
assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and ass ociates, and
interests in joint ventures, except where the Company and the Group is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductibl e temporary
differences associated with such 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 revers e in the
foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or
the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the repor ting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the
Company and the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities .
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets agains t current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Company and the Group intends to settle
its current tax assets and liabilities on a net basis.
(iv)
Current and deferred tax for the period
Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items that are recognised
outside profit or loss (whether in other comprehensive income or directly in equity), in which case the tax is also recognised outside
profit or loss, or where they arise from the initial accounting for a business combination. In the case of a business combin ation, the tax
effect is included in the accounting for the business combination.
(v)
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 n ote 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.
Page 39 of 86
Imdex 2011 Annual Report |
67
Notes to the financial report continued
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 n et 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.
68
Page 40 of 86
Notes to the financial report continued
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 (other than goodwill)
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 recov erable 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 carryi ng 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 cas hflows
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.
Page 41 of 86
Imdex 2011 Annual Report |
69
Notes to the financial report continued
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. T he
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. Details of the key assumptions made are contained in note 12
(Goodwill) and note 13 (Intangibles). No impairment losses were booked in the current year. Impairment losses booked in the
prior year are detailed in notes 12 and 13.
Recognition of net deferred tax asset
A net deferred tax asset of $16.0 million has been recognised on the face of the balance sheet. The largest component of this
asset is the future tax benefit of depreciation of unrealised profits in self manufactured property, plant and equipment items.
This tax benefit will be realised progressively over the next 3-5 years as these assets are depreciated. This net asset has
been raised as it is considered more likely than not that it will be realised. In making this assessment of likelihood a forw ard
looking estimation of cash flows and the likelihood of business success needs to be made up to 5 years into the future. A
forward looking estimation of this nature over 5 years is inherently uncertain. Details of deferred tax balances are contained in
note 5.
Fair value of options and performance rights
Options and performance rights as detailed in notes 32 and 33 are inherently complex to value due to their nature and
relationship to the share market and its uncertainties. The Imdex Group therefore engaged valuation professionals to perform
a valuation. The models used by the valuation professionals, although they are industry standard models, are subject to
limitations and uncertainties.
70
Page 42 of 86
Notes to the financial report continued
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 / (loss) before income tax
Other than as disclosed on the face of the income statement, profit /
(loss) before income tax has been arrived at after crediting / (charging)
the following gains and losses:
Consolidated
Company
2011
$’000
2010
$’000
2011
$’000
2010
$’000
142,254
62,909
171
-
205,334
100,576
33,677
87
1,285
135,625
-
-
125
978
1,103
-
-
41
3,112
3,153
(Loss) / gain on disposal of property, plant and equipment
(32)
12
-
-
Foreign exchange loss
(3,334)
(1,511)
(1,616)
(1,319)
Financial liabilities at amortised cost
Interest expense
(2,946)
(2,143)
(2,252)
(1,629)
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 11)
Amortisation of Intangible Assets (note 13)
Impairment Charges
Impairment of Financial Asset (note 9)
Impairment of Goodwill (note 12)
Impairment of Intangible Asset (note 13)
-
-
-
-
-
5,721
6,778
12,499
-
-
-
-
12
-
-
285
297
4,182
6,363
10,545
10,440
22,498
1,033
33,971
-
3,791
-
-
3,791
244
-
244
-
-
-
-
-
10,188
-
67
10,255
236
-
236
3,434
-
-
3,434
Page 43 of 86
Imdex 2011 Annual Report |
71
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
4
Profit from Operations (continued)
Consolidated
Company
2011
$’000
2010
$’000
2011
$’000
2010
$’000
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
Other interest
Other expenses
Commissions
Consultancy fees
Legal and professional expenses (i)
Foreign exchange loss
Rent and premises costs
Travel and accommodation
Motor vehicle costs
Other expenses
(i) Includes legal, audit, accounting, share registry and corporate secretarial fees.
Employee benefits expense
Post-employment benefits:
Defined contribution superannuation costs
Share based payments:
Equity-settled share based payments - share options (note 19)
Equity-settled share based payments - performance rights (note 19)
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
Under/(over) provision per prior year
Total tax expense
343
101
1,917
221
113
16
235
2,946
2,552
2,104
4,573
3,334
3,402
4,121
1,645
11,810
33,541
1,716
580
2,131
28,814
33,241
84,514
(325)
3,448
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
8
101
1,917
-
-
4
222
2,252
-
313
2,167
1,616
79
663
18
11,707
16,563
493
580
2,131
7,610
10,814
-
-
80
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
-
-
301
Consolidated
Company
2011
$’000
2010
$’000
2011
$’000
2010
$’000
21,911
13,885
(6,297)
2,025
(9,861)
(2,459)
9,591
(12,683)
(725)
477
(200)
(3,536)
(10,033)
(3,015)
(37)
(1,027)
72
Page 44 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
5
Income Taxes (continued)
Prima facie income tax expense on pre-tax accounting profit /
(loss) from operations reconciles to income tax in the financial
statements as follows:
Consolidated
Company
2011
$’000
2010
$’000
2011
$’000
2010
$’000
Profit / (loss) from operations
38,593
(21,071)
(24,979)
(4,425)
Income tax expense / (benefit) calculated at 30%
Non-deductible share based payments
Non-deductible interest on deferred payments
Non-deductible impairment charges
Other non-deductible and non-assessable items
Tax rate differential arising from foreign entities
Under / (over) provision of prior year income tax
11,578
773
-
-
(86)
(215)
(2,459)
9,591
(6,321)
330
4
7,090
182
(84)
(724)
477
(7,494)
773
-
-
224
-
(3,536)
(10,033)
(1,328)
330
-
-
8
-
(37)
(1,027)
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: SEH fair value uplift taken directly to reserve
Deferred tax: Translation of foreign operations
Consolidated
Company
2011
$’000
2010
$’000
2011
$’000
2010
$’000
(2,796)
(528)
(3,324)
-
1,351
1,351
(81)
-
(81)
-
-
-
(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:
Intangible assets
Available-for-sale non-current assets
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
19,707
8,768
15,050
6,261
569
3,133
13,558
1,700
2,860
-
1,355
-
23,175
(5,660)
(1,485)
(7,145)
16,030
392
1,217
8,073
2,333
598
1,872
1,883
44
16,412
(5,709)
-
(5,709)
10,703
-
-
-
-
1,488
388
726
-
2,602
-
-
-
2,602
75
-
-
-
615
1,030
726
44
2,490
-
-
-
2,490
1,723
652
-
-
Page 45 of 86
Imdex 2011 Annual Report |
73
Notes to the financial report continued
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 equival ent
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 d etermination 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 amount ed 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
2011
$
2010
$
2011
$
2010
$
271,085
246,130
271,085
246,130
184,060
13,690
468,835
136,395
-
382,525
184,060
13,690
468,835
136,395
-
382,525
65,111
13,733
17,070
95,914
81,006
11,558
5,072
97,636
69,075
99,871
93,105
162,180
66,663
166,534
-
-
-
-
-
-
-
-
-
-
-
-
-
-
726,929
646,695
468,835
382,525
74
Page 46 of 86
Notes to the financial report continued
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
2011
$’000
2010
$’000
Company
2011
$’000
2010
$’000
49,887
(1,321)
48,566
1,653
50,219
41,843
(1,646)
40,197
1,013
41,210
1,759
-
1,759
54
1,813
1,618
-
1,618
157
1,775
(i) The average credit period on sales of goods is around 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
1,929
6,144
2,048
10,121
2,897
6,070
2,023
10,990
-
-
1,740
1,740
-
-
1,618
1,618
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.
1,646
-
(325)
1,321
609
-
1,037
1,646
-
-
-
-
-
-
-
-
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
2011
$’000
2010
$’000
2011
$’000
2010
$’000
9,493
499
30,573
40,565
4,286
562
23,752
28,600
-
-
-
-
-
-
-
-
Page 47 of 86
Imdex 2011 Annual Report |
75
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
9
Other Financial Assets
Consolidated
2011
$’000
2010
$’000
Company
2011
$’000
2010
$’000
Notes
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
(i)
(ii)
16,122
6,802
465
196
-
-
-
-
79,390
77,643
25,771
12,604
90,443
16,122
6,802
105,626
(i) Comprises 251,908,446 fully paid ordinary shares in Sino Gas and Energy Holdings Pty Ltd (SEH) held at fair value (2010:
251,908,446 shares). This amounts to 25.96% of the issued share capital of SEH (2010: 26.95%). 243,448,446 of these shares are
subject to escrow until 15 September 2011. The shareholding percentage dropped in the current year due to additional shares being
issued by SEH to third parties.
Despite holding more than 20% of the issued share capital of SEH, the Company does not have significant influence over SEH in the
current or prior periods 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 in June
2010. The partial sub-underwriting was undertaken to facilitate the Company‟s exit from the SEH convertible note that had been issued
by SEH to Imdex Limited in a prior year. 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
Uptake of sub-underwriting commitment
Conversion of loan interest
Impairment adjustment
Fair value adjustment taken directly to equity
Balance at end of financial year
2011
2010
Shares
251,908,446
-
-
-
-
251,908,446
$000's
6,802
-
-
-
9,320
16,122
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
During the prior 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. As part of this capital
raising, 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.
At 21 June 2010 Imdex held a convertible loan note of $13.2 million with SEH. On 21 June 2010 capitalised interest of $1.8 million was
converted into fully paid 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 above and the balance of $4.1 million was repaid.
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.
In the current year the carrying value of this investment was written up to its market value of $0.064 per share or $16.1 million in total at
30 June 2011.
(ii) 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
76
Consolidated
Company
2011
$’000
2010
$’000
2011
$’000
2010
$’000
4,596
4,596
3,496
3,496
-
-
24
24
Page 48 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
11
Property, Plant and Equipment
Consolidated
Plant and
Equipment at
cost
Equipment
Rented to Third
Parties at cost
Equipment under
Hire Purchase at
cost
Capital Works in
Progress at cost
TOTAL
$’000
$’000
$’000
$’000
$’000
Gross Carrying Value
10,283 6,012 492 990 17,777
Balance at 30 June 2009
2,264 2,435 2,770 77
7,546
Additions
(754) (2,004) - (179) (2,937)
Disposals
- (63) (532)
Net foreign currency exchange differences (485) 16
(502) 555 (33) (20) -
Transfer
10,806 7,014 3,229 805 21,854
Balance at 30 June 2010
Additions
5,303 5,346 - 753 11,402
Acquisitions through business combinations 1,536 - - - 1,536
Disposals
(581) (834) (590) (526) (2,531)
Net foreign currency exchange differences (387) (4,712) - (14) (5,113)
143 389 - (107) 425
Transfer
16,820 7,203 2,639 911 27,573
Balance at 30 June 2011
Accumulated Depreciation
3,434 3,437 125 - 6,996
Balance at 30 June 2009
(508) (2,141) - - (2,649)
Disposals
Depreciation expense
1,872 2,142 168 - 4,182
Net foreign currency exchange differences (175) (104) - - (279)
(284) 294 (10) - -
Transfer
4,339 3,628 283 - 8,250
Balance at 30 June 2010
(1,418) (834) - - (2,252)
Disposals
Acquisitions through business combinations 22
- - - 22
Depreciation expense
2,347 3,258 116 - 5,721
Net foreign currency exchange differences (162) (1,775) - - (1,937)
(208) (11) 644 - 425
Transfer
4,920 4,266 1,043 - 10,229
Balance at 30 June 2011
Net Book Value
As at 30 June 2010
As at 30 June 2011
6,467 3,386 2,946 805 13,604
11,900 2,937 1,596 911 17,344
Page 49 of 86
Imdex 2011 Annual Report |
77
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
11
Property, Plant and Equipment (continued)
Company
Gross Carrying Value
Balance at 30 June 2009
Additions
Disposals
Balance at 30 June 2010
Additions
Disposals
Balance at 30 June 2011
Accumulated Depreciation
Balance at 30 June 2009
Depreciation expense
Balance at 30 June 2010
Disposals
Depreciation expense
Balance at 30 June 2011
Net Book Value
As at 30 June 2010
As at 30 June 2011
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
1,010 - - 29
1,039
207 - 107 - 314
- - (19) -
19
1,353
1,236 - 107 10
663 - - 82
745
(208) - - - (208)
1,890
1,691 - 107 92
498 - - - 498
- 236
216 - 20
714 - 20
- 734
(8) - - - (8)
- 244
237 - 7
- 970
943 - 27
522 - 87
748 - 80
10
92
619
920
Consolidated
Company
2011
$’000
2010
$’000
2011
$’000
2010
$’000
Aggregate depreciation allocated, whether recognised as an
expense or capitalised as part of the carrying amount of other
assets during the year:
Plant and equipment
Plant and equipment rented to third parties
Equipment under hire purchase
2,347 1,872 237 216
3,258 2,142
116 168
20
5,721 4,182 244 236
- -
7
78
Page 50 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
12
Goodwill
Consolidated
Company
Notes
2011
$’000
2010
$’000
2011
$’000
2010
$’000
Gross Carrying Amount
Balance at beginning of the financial year
Recognised on acquisition of Fluidstar Pty Ltd and Ecospin
Pty Ltd
Recognised on acquisition of AMC Germany GmbH
(formerly Mud-Data GmbH)
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:
AMC Germany
Fluidstar / Ecospin
Reflex / Imdex Technology UK
Flexit / Imdex Technology Germany
53,204
7,848
145
6
61,203
55,268
-
-
(2,064)
53,204
(22,498)
-
(22,498)
-
(22,498)
(22,498)
30,706
38,705
55,268
30,706
145
7,848
19,953
10,759
38,705
-
-
19,933
10,773
30,706
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(i) Goodwill arose in the current year on the acquisition of Fluidstar Pty Ltd (Fluidstar) and Ecospin Pty Ltd (Ecospin) by Imdex Limited
effective 1 September 2010 (Refer note 26(a)). Fluidstar and Ecospin were purchased simultaneously from the same vendor in a single
deal. Effective 1 January 2011, the businesses of Fluidstar and Ecospin were transferred into Australian Mud Company Pty Ltd (AMC),
an existing legal entity and separate cash generating unit. This transfer occurred to gain synergies since these businesses are similar in
nature and have similar customers and end markets. The goodwill of Fluidstar and Ecospin has therefore been absorbed into the AMC
CGU and has been assessed for impairment as part of the AMC CGU.
(ii) Goodwill arose in the current year on the acquisition of AMC Germany GmbH (formerly Mud-Data GmbH) (AMC Germany) by Imdex
Limited effective 1 March 2011 (Refer note 26(b)). AMC Germany is considered to be a separate cash generating unit since it operates
independently from other Imdex operations in a separate geographical area being the greater European region and in a separate
market, being the oil and gas and geothermal markets.
Page 51 of 86
Imdex 2011 Annual Report |
79
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
12
Goodwill (continued)
(iii) During the prior 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)
AMC Chile
Flexit / Imdex Technology Germany
Impairment losses by segment
Minerals
Oil & Gas
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
7,231
15,267
22,498
1,033
-
1,033
8,264
15,267
23,531
At 31 December 2009 it was recognised that the major mining regions had been hit hard by the global financial crisis and were 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 at this time which was the trigger for performing impairment reviews of the Drilling
Fluids and Chemicals businesses (Samchem, Wildcat, Suay, AMC North America and AMC Chile). In addition Imdex took the
opportunity to restructure these businesses along regional lines and re-branding all entities to the “AMC” brand. Wildcat and Suay are
both oil and gas segment businesses while Samchem, AMC North America and AMC Chile are Minerals Segment businesses.
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 at 31 December 2009 within the Down Hole Instrumentation
businesses (Flexit and Imdex Technology Germany). Both these businesses are oil and gas segment businesses.
The recoverable amount of goodwill was 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 were 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.
80
Page 52 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
12 Goodwill (continued)
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 (CGU‟s) are as follows:
CGU
Forecasted revenue growth
Discount
Rate
Forecasted net margins
Expected exchange rate
fluctuations
AMC
(including
Fluidstar and
Ecospin)
Wildcat
Suay
AMC Chile
Reflex /
Imdex
Technology
Flexit / Imdex
Technology
Germany
Revenue growth has been forecast in
line with the expected rate of growth in
the mining and mineral exploration
markets in Australia as driven by strong
commodity prices and ongoing strong
demand
from Chinese and other
emerging markets.
Revenue growth has been forecast in
line with the expected activity levels of
local and
international oil and gas
industries serviced by Wildcat and
potential new opportunities expected to
arise with the ongoing expansion of the
broader Imdex Group.
Revenue growth has been forecast in
line with the expected rate of growth in
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 growth in
the mining and mineral exploration
markets of South and Latin America as
well as growth expected to arise from
the
recent
alliances
global
managerial changes.
and
Revenue growth has been forecast in
line with the expected rate of growth in
the mining and mineral exploration
markets in Australia and the broader
Asia Pacific Region as driven by strong
commodity prices and ongoing strong
demand
from Chinese and other
emerging markets.
from
the services based
Income
associate will be accounted for at the
net margin level. Net margins have
the associated
been
company‟s management
into
taking
account local market conditions and
expected strategic growth plans.
forecast by
15.16%
12.89%
24.40%
12.44%
12.60%
7.02%
Net margins have been
forecasted using current
period actuals as a base
operational
on which
improvements
and
economies of scale are
expected to be gained,
the
particularly
from
of
introduction
a
reporting
regionalised
structure
and
improved/expanded
product offerings.
Exchange rate fluctuation
expectations have been
built into the forecasted
numbers based on FY12
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.
the
Returns
joint
from
venture are based on the
expected
rate of cash
flows as projected by joint
venture
management.
These are a function of
activity levels and market
the
share expected
Middle Eastern oil and
gas survey market.
in
Samchem
(prior year
impairment
review only)
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% (30
June 2010)
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.
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 53 of 86
Imdex 2011 Annual Report |
81
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
13
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 2009
Capitalised during the year
Impairment losses
Impact of exchange rate changes
Balance at 30 June 2010
Capitalised during the year
Impact of exchange rate changes
Balance at 30 June 2011
Accumulated Amortisation and
Impairment
Balance at 30 June 2009
Amortisation expense
Impact of exchange rate changes
Impairment losses
Balance at 30 June 2010
Amortisation expense
Impact of exchange rate changes
Balance at 30 June 2011
Net Book Value
As at 30 June 2010
As at 30 June 2011
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
761
-
-
-
761
-
-
761
329
153
-
-
482
152
-
634
279
127
2,586
-
(1,033)
(48)
1,505
-
-
1,505
226
150
-
-
376
150
-
526
14,412
-
-
(332)
14,080
-
-
14,080
6,074
2,289
(204)
-
8,159
2,230
-
10,389
1,129
979
5,921
3,691
1,315
-
-
-
1,315
3,914
-
5,229
1,138
85
-
-
1,223
346
-
1,569
92
3,660
11,621
-
-
(690)
10,931
-
14
10,945
5,092
2,009
(423)
-
6,678
1,962
(29)
8,611
4,253
2,334
4,079
3,322
-
-
7,401
691
-
8,092
172
945
-
-
1,117
1,245
-
2,362
6,284
5,730
4,210
-
-
(317)
3,893
-
2
3,895
2,038
732
(188)
-
2,582
693
(5)
3,270
38,984
3,322
(1,033)
(1,387)
39,886
4,605
16
44,507
15,069
6,363
(815)
-
20,617
6,778
(34)
27,361
1,311
625
19,269
17,146
During the prior 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 12
above for discussion on how intangibles are allocated to cash generating units.
14
Trade and Other Payables
Trade payables
Accruals and other payables
Notes
(i)
Consolidated
2011
$’000
2010
$’000
Company
2011
$’000
2010
$’000
22,926
9,953
32,879
20,392
5,297
25,689
707
2,372
3,079
70
1,509
1,579
(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.
82
Page 54 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
15
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
Notes
(i)
(ii)
(iii)
(iv) 24
(i)
(ii)
(iv) 24
Consolidated
2011
$’000
2010
$’000
Company
2011
$’000
2010
$’000
20,350
971
6,904
720
28,945
5,500
-
574
6,074
11,000
969
5,673
1,450
19,092
8,500
1,938
2,488
12,926
20,350
-
-
21
20,371
5,500
-
51
5,551
11,000
-
-
19
11,019
8,500
-
72
8,572
(i) Commercial bills bear interest at a floating interest rate. Current weighted average interest rate is 7.46% per annum. Bills totaling $3.1
million are repayable on demand. Bills totaling $14.25 million are repayable on 30 September 2011 and the balance of bills totaling $8.5
million are repayable in 11 instalments of $0.75 million each due at the end of each calendar quarter and one final instalment of $0.25
million on 30 June 2014. 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,
Fluidstar Pty Ltd, Ecospin Pty Ltd, Imdex Technology Australia Pty Ltd, Imdex Sweden AB, Imdex Technology Sweden AB, Reflex
Instruments AB, Samchem Drilling Fluids and Chemicals (Pty) Ltd, Drillhole Surveying Instruments (Pty) Ltd, AMC North America Ltd and
Reflex Instruments North America Ltd.
(ii) Comprises a loan of SEK 6.6 million which bears interest at the 7 day Stockholm Interbank Offered Rate ('STIBOR'), currently 2.15%
plus a margin of 3.5% per annum. The loan is repayable in quarterly instalments of SEK 1.65 million each with the next installment due on
30 September 2011. This loan is secured over the assets of the Reflex and Flexit companies that are domiciled in Sweden.
(iii) Comprises a loan of CAD 7.1 million at a floating interest rate, currently 4.5%. This loan is repayable in one instalment of CAD 0.4
million on 1 September 2011 as well as 41 monthly instalments of CAD 0.14 million each commencing on 1 July 2011, followed by 11
monthly instalments of CAD 0.08 million each. 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 9.53% (2010: 9.38%).
16
Provisions
Current provisions
Employee entitlements
Non-current provisions
Employee entitlements
Consolidated
2011
$’000
2010
$’000
Company
2011
$’000
2010
$’000
Notes
(i)
2,191
1,706
677
500
1,069
721
565
383
(i) The majority of these entitlements are expected to be taken during the coming year.
Page 55 of 86
Imdex 2011 Annual Report |
83
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
17 Other Liabilities
Consolidated
Company
Notes
2011
$’000
2010
$’000
2011
$’000
2010
$’000
Other Current Liabilities
Unsecured
At amortised cost
Deferred acquisition payments
26(b)(iii)
Other Non Current Liabilities
Unsecured
At amortised cost
Deferred acquisition payments
26(b)(iii)
2,628
2,628
213
213
-
-
-
-
2,628
2,628
213
213
-
-
-
-
18
Issued Capital
Consolidated
2011
$’000
2010
$’000
Company
2011
$’000
2010
$’000
Notes
Issued and Paid Up Capital - Fully paid ordinary shares
(i)
70,059
70,059
67,415
67,415
70,059
70,059
67,415
67,415
(i) Fully paid ordinary shares carry one vote per share and the right to dividends.
Consolidated and Company
2011
2010
Notes
Number
$'000
Number
$'000
Ordinary shares
Balance at beginning of the financial year
Issue of shares under staff option plan
Closing balance at end of the financial year
(ii)
195,047,128
4,652,037
199,699,165
67,415
2,644
70,059
193,808,793
1,238,335
195,047,128
67,136
279
67,415
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) 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 2011, executives, directors and staff have options over 8,518,158
ordinary shares (all of which had vested), in aggregate. These options expire over a range of dates up to March 2013. 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. 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 32.
(iii) Shares issued in satisfaction of Performance Rights
No shares were issued in the current or prior years in satisfaction of performance rights. Performance rights obligations were settled by the
purchase of existing shares on market. More information on the performance rights plan can be found in note 33.
84
Page 56 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
19 Reserves
Consolidated
2011
$’000
2010
$’000
Company
2011
$’000
2010
$’000
Notes
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
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.
Investment Revaluation Reserve
Balance at beginning of the financial year
Arising on revalution of SEH shares to market value
Tax thereon
Balance at the end of the financial year
The investment revaluation reserve records increases
in the market value of the SEH investment net of
deferred taxation. Refer note 9 for details of the SEH
investment.
Employee Equity-Settled Benefits Reserve
Balance at beginning of the financial year
Options expensed
Performance rights expensed
Shares purchased on market to satisfy performance
rights
Options exercised during the financial year
Balance at the end of the financial year
4
4
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. Further information regarding the Staff
Option Plan is contained in note 32. Further
information regarding the Performance Rights Plan is
contained in note 33.
(5,622)
(5,291)
(528)
(11,441)
(4,105)
(2,868)
1,351
(5,622)
-
9,320
(2,796)
6,524
-
-
-
-
-
-
-
-
-
269
(81)
188
-
-
-
-
-
-
-
-
5,107
580
2,131
(134)
(526)
7,158
4,024
995
104
-
(16)
5,107
5,107
580
2,131
(134)
(526)
7,158
4,024
995
104
-
(16)
5,107
Page 57 of 86
Imdex 2011 Annual Report |
85
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
20 Earnings / (Loss) Per Share
Basic earnings / (loss) per share
Diluted earnings / (loss) per share
Consolidated
2011
Cents per share
2010
Cents per share
14.69
14.25
(11.05)
(11.05)
(a) Basic earnings / (loss) per share
2011
2010
The earnings and weighted average number of ordinary shares used in the
calculation of basic earnings / (loss) per share are as follows:
Earnings / (Loss)
Weighted average number of ordinary shares for the purposes of basic
earnings / (loss) per share
$'000s
$'000s
29,002
(21,548)
Shares
Shares
197,472,481
194,960,972
(b) Diluted earnings / (loss) per share
2011
2010
The earnings and weighted average number of ordinary shares used in the
calculation of diluted earnings / (loss) per share are as follows:
Earnings / (Loss)
Weighted average number of ordinary shares for the purposes of diluted
earnings / (loss) per share (ii)
(ii) The weighted average number of ordinary shares for the purposes of
diluted earnings / (loss) per share reconciles to the weighted average number
of ordinary shares used in the calculation of basic earnings / (loss) per share
as follows:
Weighted average number of ordinary shares used in the calculation of basic
earnings / (loss) per share
Shares deemed to be issued for no consideration in respect of employee and
Director options
Shares deemed to be issued for no consideration in respect of performance
rights (assuming not purchased on market)
Weighted average number of ordinary shares used in the calculation of diluted
earnings / (loss) 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 earnings / (loss) 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
29,002
(21,548)
Shares
Shares
203,462,391
194,960,972
Shares
Shares
197,472,481
194,960,972
3,663,869
2,326,041
-
-
203,462,391
194,960,972
Shares
Shares
-
-
-
-
-
575,000
200,000
4,279,991
5,054,991
1,000,000
2,000,000
1,579,536
700,000
3,014,001
275,000
500,000
4,368,327
13,436,864
86
Page 58 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
21 Dividends
Recognised amounts
Notes
2011
Cents per
share
2011
Total
$’000
2010
Cents per
share
2010
Total
$’000
Fully paid ordinary shares - interim dividend franked to 30%
(i)
1.75
3,488
Unrecognised amounts
Fully paid ordinary shares - final dividend franked to 30%
(ii)
2.75
5,492
-
-
-
-
(i) The interim, fully franked dividend was paid on 25 March 2011. The record date for determining the entitlement to the interim dividend was
11 March 2011. There are no dividend reinvestment plans in operation.
(ii) The final fully franked dividend was declared on 12 August 2011 with an entitlement date of 7 October 2011 and a payment date of 21
October 2011. The financial effect of this dividend has not been recognised in the financial statements at 30 June 2011.
Consolidated
2011
$'000
2010
$'000
30,494
(2,354)
-
27,079
-
-
Adjusted franking account balance
Impact on franking account of dividends not recognised
Income tax consequences of unrecognised dividends
22 Commitments for Expenditure
(a) Capital expenditure commitments
At 30 June 2011 the Group had capital expenditure commitments amounting to $162,000. These commitments were for sundry capital
equipment items for Australian Mud Company Pty Ltd in the Asia Pacific region.
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.
(b) Lease commitment
Hire purchase liabilities and non-cancellable operating lease commitments are disclosed in note 24.
Page 59 of 86
Imdex 2011 Annual Report |
87
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
23 Contingent Liabilities and Contingent Assets
There are no contingent liabilities or contingent assets in the current or prior years.
24 Leases
(a) Hire Purchases
Hire purchase arrangements
Hire purchase arrangements relate to plant and equipment with terms of up to 5 years. The Group has options to purchase the equipment for a
nominal amount at the conclusion of the arrangements.
Minimum future lease payments
Present value of minimum future lease
payments
Consolidated
Company
Consolidated
Company
2011
$’000
2010
$’000
2011
$’000
2010
$’000
2011
$’000
2010
$’000
2011
$’000
2010
$’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
21 19
27 27 720 1,450
820 1,777
602 2,688
51 72
57 84 574 2,488
- - - - - - - -
1,422 4,465
72 91
(128) (527) (12) (20) - - - -
72 91
1,294 3,938
72 91 1,294
84 111 1,294
3,938
3,938
Hire purchase liabilities provided for in the Financial Report
Current – Note 15
Non current – Note 15
(b) Operating Leases
Operating leasing arrangements
720 1,450
574 2,488
3,938
1,294
21 19
51 72
72 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
Company
2011
$’000
2010
$’000
2011
$’000
2010
$’000
2,734
4,624
275
7,633
3,224
2,607
60
5,891
-
-
-
-
378
162
-
540
88
Page 60 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
25 Subsidiaries
Parent Entity
Imdex Limited
Controlled Entities
Australian Mud Company Pty Ltd
Samchem Drilling Fluids & Chemicals (Pty) Ltd
Imdex International Pty Ltd
Imdex Sweden AB
Reflex Instruments Asia Pacific Pty 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
Flexit Australia Pty Ltd
Suay Energy Services LLP
AMC North America Ltd
Imdex South America S.A.
AMC Chile 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
AMC Reflex Do Brasil Serviços Para Mineração Ltda
AMC Drilling Fluids Pvt Limited
Fluidstar Pty Ltd
Ecospin Pty Ltd
Imdex Nominees Pty Ltd
AMC Germany GmbH (formerly Mud-Data GmbH)
Mud-Data-Rom SRL
Notes
Country of
Incorporation
Ownership Interest
2011
%
2010
%
(i), (ii), (iii)
Australia
(ii), (iii)
(ii), (iii)
(ii), (iii)
(ii)
(ii)
(ii), (iii)
(vii)
(iv)
(v)
(ii), 26(a)
(ii), 26(a)
(ii), (vi)
26(b)
26(b)
Australia
South Africa
Australia
Sweden
Australia
Sweden
Canada
Chile
United Kingdom
South Africa
Sweden
Australia
Kazakhstan
Canada
Chile
Chile
Australia
Australia
United States of America
Argentina
Peru
Germany
Brazil
India
Australia
Australia
Australia
Germany
Romania
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
-
-
(i) Imdex Limited is the ultimate parent company and is the head entity within the tax consolidated group.
(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, Reflex Instruments Asia Pacific Pty Ltd on 14 September 2007 and
Imdex Technology Australia Pty Ltd on 28 April 2011.
(iv) This entity was incorporated on 30 September 2009.
(v) This entity was incorporated on 10 December 2009.
(vi) This entity was incorporated on 27 July 2010.
(vii) This entitiy was dissolved effective 1 June 2011.
Page 61 of 86
Imdex 2011 Annual Report |
89
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
25
Subsidiaries (continued)
The consolidated income statement of the 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
Management fee overprovision from prior periods
Foreign exchange loss
Impairment charges
Other expenses
Profit before income tax expense
Income tax expense
Profit for the year
2011
$’000
2010
$’000
155,969
1,386
157,355
1,929
(44,683)
(22,084)
(8,564)
(2,435)
(1,522)
(822)
(3,186)
(1,360)
(1,913)
(811)
(5,753)
(3,022)
-
(14,503)
48,626
(15,811)
32,815
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
90
Page 62 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
25
Subsidiaries (continued)
The consolidated statement of financial position of the 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
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
Provisions
Other Non Current Liabilities
Total Non Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed Capital
Employee Equity-Settled Benefits Reserve
Investment Revaulation Reserve
Retained Earnings *
Total Equity
* Retained Earnings at the beginning of the financial year
Net Profit
Opening retained earnings of entities joining the closed group
Retained Earnings at the end of the financial year
2011
$’000
2010
$’000
10,647
79,409
28,491
120
118,667
118,166
20,622
4,186
597
143,571
262,238
25,612
21,070
18,202
1,769
2,628
69,281
6,074
1,069
213
7,356
76,637
185,601
70,059
7,158
6,524
101,860
185,601
56,803
32,815
12,242
101,860
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
Page 63 of 86
Imdex 2011 Annual Report |
91
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26
Acquisition of Businesses
(a) Acquisition of entity - Fluidstar Pty Ltd and Ecospin Pty Ltd
With effect from 1 September 2010, Imdex Limited, acquired 100% of the issued share capital of Fluidstar Pty Ltd (Fluidstar) and Ecospin Pty Ltd
(Ecospin). Both companies are incorporated in Australia and operate out of premises located in Brisbane. Fluidstar manufactures and distributes
drilling fluids throughout the Asia Pacific region with a strong presence in the Queensland market. Ecospin develops and sell solids control
solutions for the drilling industry. Both companies focus predominately on the mineral drilling industry. The provisional 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
Intangibles
Trade and other payables
Deferred tax
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
3,357
2,970
434
-
(2,381)
-
4,380
-
-
-
-
-
-
-
(i)
(i)
(ii)
(iii)
Operating results of Fluidstar and Ecospin included in the Consolidated Income Statement of Imdex Limited from acquisition on
1 September 2010 to 31 December 2010:
Revenue
Total expenses
Profit after tax for the period
(iv)
3,357
2,970
434
-
(2,381)
-
4,380
7,848
12,228
12,395
(167)
12,228
Results since
acquisition
$’000
6,279
(5,503)
776
(i) Provisional acquisition numbers were presented in the 31 December 2010 half year financial report released to the ASX on 21 February 2011.
These provisional numbers included $1.1 million attributed to the mud separation technology contained within the Ecospin business. Upon further
investigation it was determined that this intangible asset could not be separately identified and reliably measured apart from goodwill. This amount
and the related deferred tax balance shown in the 31 December 2010 half year financial report has therefore been reclassified to goodwill.
(ii) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire Fluidstar and
Ecospin. 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 Fluidstar and Ecospin. These benefits are not recognised separately
from goodwill as the future economic benefits arising from them cannot be reliably measured. There were no acquisition provisions created, nor
were there any contingent liabilities assumed in the acquisition.
(iii) The Consolidated Cash Flow Statement for the year ended 30 June 2011 records the payment for the acquisition of Fluidstar and Ecospin as
$12.2 million being the total purchase consideration of $12.2 million shown above plus $0.2 million of on-costs expensed during the period and
less $0.2 million of cash acquired.
(iv) Fluidstar and Ecospin traded as independent entities from the date of their acquisition (1 September 2011) to 31 December 2011 after which
they ceased trading in their own rights and their businesses were transfered into Australian Mud Company Pty Ltd. The results presented above
represent trading for this four month period only. Had the acquisition of Fluidstar and Ecospin been effected on 1 July 2010, the beginning of the
current financial year, the Fluidstar and Ecospin financial results included in the Imdex consolidated results would have been revenue of
approximately $18.8 million and profit after tax of approximately $2.3 million. The results of Fluidstar and Ecospin are included in the Minerals
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.
92
Page 64 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26
Acquisition of Businesses (continued)
(b) Acquisition of entity - AMC Germany GmbH (formerly Mud-Data GmbH)
With effect from 1 March 2011, Imdex Limited, acquired 100% of the issued share capital of Mud-Data GmbH, a company incorporated in
Germany and operating out of premises in Rastede. This entity was subsequently renamed AMC Germany GmbH (AMC Germany). AMC
Germany own 100% of the issued share capital of Mud-Data-Rom SRL, an entity incorporated in Romania. AMC Germany manufactures and
distributes drilling fluids and solids control equipment for the oil & gas and geothermal industries in Europe. The numbers presented below are
provisional and 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
Intangibles
Trade and other payables
Deferred tax
Fair value of net identifiable assets acquired
Goodwill on acquisition
Total purchase consideration
Total purchase consideration comprises
Consideration in cash and cash equivalents
Add: Deferred consideration
Less: Cash and cash equivalents acquired
985
231
1,080
-
(926)
-
1,370
-
-
-
3,914
-
(1,174)
2,740
(i)
(i)
(ii)
(iii)
(iv)
Operating results of AMC Germany included in the Consolidated Income Statement of Imdex Limited from acquisition on 1
March 2011 to 30 June 2011:
Revenue
Total expenses
Profit after tax for the period
(v)
985
231
1,080
3,914
(926)
(1,174)
4,110
145
4,255
1,601
2,740
(86)
4,255
Results since
acquisition
$’000
1,143
(1,593)
(450)
(i) Intangibles assets of $3.9 million comprise the fair value of a key geothermal contract. AMC Germany is currently negotiating this contract and
it is expected that work will commence in financial year 2012. Additional deferred consideration comprising cash and share payments will be made
to the vendors over the next 5 years depending on the level of financial performance of this contract. (details in (iii) below) The discounted present
value of these expected payments have been used to determine the fair value of this intangible asset. This intangible asset is being amortised
over its expected useful life of 5 years. Deferred tax of $1.2 million was raised on this asset.
(ii) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire AMC Germany. 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 AMC Germany. These benefits are not recognised separately from goodwill as the
future economic benefits arising from them cannot be reliably measured. There were no acquisition provisions created, nor were there any
contingent liabilities assumed in the acquisition.
(iii) Additional cash and share payments become payable to the vendors in future periods, the discounted value of which is presented above.
Additional consideration becomes payable as follows:
- cash payment of € 1.2 million plus € 1.0 million in fully paid Imdex Limited ordinary shares should drilling commence on a key geothermal
contract before 1 April 2016 or a minimum of €2.0 million be received in cash from this client for the purchase of mud systems; and
- cash of € 0.15 million per complete set of four wells drilled on the key geothermal contract; and
- cash amounting to 1.065% of the revenue generated by the key geothermal contract for calendar years 2011 to 2015 paid quarterly.
(iv) The Consolidated Cash Flow Statement for the year ended 30 June 2011 records the payment for the acquisition of AMC Germany as $2.1
million being the cash consideration above of $1.6 million above plus $0.6 million of on-costs expensed in the current year and less $0.1 million of
cash acquired .
(v) Had the acquisition of AMC Germany been effected on 1 July 2010, the beginning of the current year, the AMC Germany financial results
included in the Imdex consolidated results would have been revenue of approximately $3.4 million with breakeven profit. The results of AMC
Germany are included in the Oil & Gas segment. The Board considers these 'pro-forma' numbers to represent an approximate measure of the
performance of the combined group on an annualised basis and to provide a reference point for comparison in future periods.
Page 65 of 86
Imdex 2011 Annual Report |
93
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26
Acquisition of Businesses (continued)
(c) 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. At 30 June 2010 there are
no further amounts outstanding amounts in relation to this acquisition.
27 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.
In prior years segment information reported externally was analysed on the basis of product (ie Drilling Fluids and Chemicals or Down
Hole Instrumentation). Effective 1 July 2010 changed internal reporting structures came into effect that chang ed the way information
was reported to the chief operating decision maker. Information is now presented along market lines with the Imdex Group reporting
financial results and making decisions to allocate resources made with reference to the Minerals market and the oil and gas market.
Reportable Segments
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocat ed 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) Minerals division: This segment comprises the manufacture, sale and rental of down hole instrumentation and manufacture and sale
of drilling fluids and chemicals to the mining and mineral exploration industry globally; and
(ii) Oil & Gas division: This segment comprises the manufacture, sale and rental of down hole instrumentation and manufacture and sale
of drilling fluids and chemicals to the oil and gas and geothermal industries globally;
(a) Segment Revenues
Minerals
Oil & Gas
Total of all segments
Unallocated
Total revenue
(b) Segment Results
Minerals
Oil & Gas
Total of all segments
Eliminations
Impairment adjustments
Central administration costs ^
Profit / (loss) before income tax expense
Income tax (expense) / benefit
Profit / (Loss) attributable to ordinary equity holders of Imdex Limited
^ - includes a loss of $0.7 million in the prior period on revaluation of loan to Sino Gas and Energy Holdings Ltd
94
2011
$'000
2010
$'000
177,683
27,480
205,163
171
205,334
111,185
23,068
134,253
1,372
135,625
45,916
(1,687)
44,229
-
-
(5,636)
38,593
(9,591)
29,002
21,680
(5,369)
16,311
-
(33,971)
(3,411)
(21,071)
(477)
(21,548)
Page 66 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
27
Segment Information (continued)
(c) Segment Assets and Liabilities
Minerals
Oil & Gas
Total of all segments
Unallocated (i)
Consolidated
Assets
Liabilities
2011
$'000
2010
$'000
2011
$'000
2010
$'000
176,688
26,305
202,993
16,122
219,115
128,840
27,755
156,595
6,802
163,397
39,030
16,816
55,846
37,860
93,706
24,372
12,512
36,884
32,018
68,902
(i) Unallocated assets comprise the investment in Sino Gas & Energy Holdings Ltd. Unallocated liabilties comprise commerical bills, bank
loans, hire pruchase liabilities and deferred acquisition payments.
(d) Other segment information
Depreciation
Amortisation
Acquisition of segment assets
Significant non cash expenses other
than depreciation and amortisation
Impairment losses
Geographical Segments
Minerals
Oil & Gas
Unallocated
Total
2011
$'000
2010
$'000
2011
$'000
2010
$'000
2011
$'000
2010
$'000
2011
$'000
2010
$'000
4,132
4,006
7,650
2,169
-
2,711
3,770
5,994
880
8,264
1,345
2,772
3,009
1,234
2,593
1,236
542
-
220
15,267
244
-
743
101
-
237
-
316
5,721
6,778
11,402
4,182
6,363
7,546
15
10,440
2,812
-
1,115
33,971
The Group operates in the following geographical segments:
(i) Asia Pacific: Manufacture and sale/rental of products to the mining and mineral exploration and oil & gas industries
(ii) Europe: Manufacture and sale/rental of products to the mining and mineral exploration and oil & gas industries
(iii) Africa: Manufacture and sale/rental of products to the mining and mineral exploration and oil & gas industries
(iv) Americas: Manufacture and sale/rental of products to the mining and mineral exploration and oil & gas industries
Asia Pacific
Europe
Africa
Americas
Total
(e) Information about major customers
Revenue from external
customers
2011
$'000
2010
$'000
Segment assets
(non-current)
2011
$'000
2010
$'000
Acquisition of segment
assets
2011
$'000
2010
$'000
118,723
10,457
28,659
47,495
205,334
83,976
4,257
16,700
30,692
135,625
78,421
15,417
3,523
7,986
105,347
63,927
12,444
1,039
3,674
81,084
4,891
2,466
1,712
2,333
11,402
5,285
213
749
1,299
7,546
The Group has a broad range of customers across its global operations with no single customer making up more than 10% of revenue.
Page 67 of 86
Imdex 2011 Annual Report |
95
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
28 Related Party Disclosures
(a) Equity interests in related parties
Details of the percentage ownership of subsidiaries and the wholly owned Group is set out in note 25. The wholly owned Group consists of
Imdex Limited and its wholly owned subsidiaries.
(b) Transactions with key management personnel
(i) Key management personnel compensation
Details of key management personnel compensation is set out in note 31.
(ii) Loans to key management personnel
No loans were made during the current or prior years to key management personnel or their related parties.
(iii) Key management personnel equity holdings
2011
Balance at
1 July 2010
Granted as
compensation
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 A Evans
No.
3,500,000
380,000
300,000
903,921
110,000
350,000
-
-
45,000
5,588,921
No.
-
-
-
-
-
-
-
-
-
-
2010
Balance at
1 July 2009
Granted as
compensation
Received on
exercise of
options
No.
2,000,000
-
-
-
-
1,000,000
-
-
-
3,000,000
Received on
exercise of
options
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
No.
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
-
-
-
-
Inception /
(cessation) as key
management
person
No.
-
-
-
-
-
-
-
-
-
-
Inception /
(cessation) as key
management
person
No.
(393,786)
-
-
-
-
70,000
-
-
-
-
-
Net other
change #
Balance at
30 June 2011
Balance held
nominally
No.
(3,065,000)
-
-
-
75,000
(350,000)
-
-
-
(3,340,000)
No.
2,435,000
380,000
300,000
903,921
185,000
1,000,000
-
-
45,000
5,248,921
No.
-
-
-
-
-
-
-
-
-
-
Net other
change #
Balance at
30 June 2010
Balance held
nominally
No.
-
-
-
-
110,837
40,000
(650,000)
-
-
-
-
No.
-
3,500,000
380,000
300,000
903,921
110,000
350,000
-
-
-
45,000
5,588,921
No.
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
(323,786)
(499,163)
* - 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 and resigned on 31 August 2010. Disclosures above relate only to the period when in
office.
~ - Mr P J Mander ceased to be a Key Management Person on 1 July 2010 when changed internal reporting structures came into effect.
Disclosures above relate only to the period when in office.
# - represent on market transactions
96
Page 68 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
28 Related Party Disclosures (continued)
(iv) Share options issued by Imdex Limited
2011
Balance at
1 July 2010
Granted as
compensation
Exercised
Inception /
(cessation) as key
management person
Balance at
30 June
2011
Vested but
not
exercisable
Vested and
exercisable
Options
vested
during year
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.
2,000,000
No.
-
-
-
-
1,500,000
500,000
-
150,000
500,000
4,650,000
No.
(2,000,000)
-
-
-
-
(1,000,000)
-
-
-
-
(3,000,000)
-
-
-
-
-
-
-
-
-
-
-
No.
No.
No.
No.
No.
-
-
-
-
-
-
-
-
(150,000)
-
(150,000)
-
-
-
-
-
500,000
500,000
-
-
500,000
1,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
500,000
-
-
500,000
1,500,000
166,668
-
-
-
66,667
233,335
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)
* - 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 and resigned on 31 August 2010. Disclosures above relate only to the period when in office.
~ - Mr P J Mander ceased to be a Key Management Person on 1 July 2010 when changed internal reporting structures came into effect. 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 3,000,000 options were exercised by key management personnel during the current year. The exercise price was 35c per share for the
1,000,000 exercised by Mr G Weston and 30c per share for the 2,000,000 exercised by Mr B Ridgeway. No amounts remain unpaid on the options
exercised.
Page 69 of 86
Imdex 2011 Annual Report |
97
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
28 Related Party Disclosures (continued)
(v) Performance rights granted by Imdex Limited
2011
Balance at
1 July 2010
Granted as
compensation
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 A Evans
No.
-
-
-
-
-
-
-
-
-
-
No.
196,579
-
-
-
-
120,897
125,587
-
111,806
554,869
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.
-
-
-
-
-
-
-
-
-
-
Satisfied by
the issue of
shares
Expired
No.
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(234,375)
-
-
-
-
(136,009)
(93,493)
-
(73,437)
(112,110)
(649,424)
Closing
balance at
30 June
2011
No.
196,579
-
-
-
-
120,897
125,587
-
111,806
554,869
Closing
balance at
30 June
2010
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 and resigned on 31 August 2010. Disclosures above relate only to the period when in office.
~ - Mr P J Mander ceased to be a Key Management Person on 1 July 2010 when changed internal reporting structures came into effect. 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.
More information on the Performance Rights Plan can be found in note 33.
98
Page 70 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
28 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 $378,638 (2010: $127,766)
(b) Transactions with Directors
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
Note
Consolidated
Company
2011
$
2010
$
2011
$
2010
$
vi(a)
378,638
127,766 378,638 127,766
vi(a)
- - - -
vi(a)
26,957
9,087 26,957
9,087
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 and amount to $79,390,000 (2010: $77,643,000). During the financial year Imdex Limited provided management
services amounting to $3,791,309 (2010: $10,188,290) 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.
29 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
2011
$’000
2010
$’000
2011
$’000
2010
$’000
18,388
-
18,388
9,007
-
9,007
-
(1,697)
(1,697)
7,644
-
7,644
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
$18,388,328 (2010: $9,006,970)
(b) Non cash financing and investing activities
During the year the Group acquired equipment under a finance lease of nil (2010: $3.2 million). This equipment acquisition was reflected in
the prior period cash flow cash flow statement over the term of the finance lease via lease repayments.
Page 71 of 86
Imdex 2011 Annual Report |
99
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
29 Notes to the Cash Flow Statement (continued)
(c) Reconciliation from the Profit / (Loss) for the Year to Net Cash Provided by Operating Activities
Profit / (Loss) for the year
29,002
(21,548)
(14,946)
(3,398)
Consolidated
Company
2011
$’000
2010
$’000
2011
$’000
2010
$’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
Impairment losses
Interest and forex loss on SEH settled in shares
Interest received disclosed as investing activities
Share options and performance rights expensed
(Profit) / loss on sale of non-current assets
Interest on hire purchase liabilities
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 and deferred tax liability
5,721
6,778
101
-
737
-
(171)
2,711
32
343
(5,380)
(8,764)
(1,100)
3,408
833
1,642
4,182
6,363
15
-
33,971
(608)
(87)
1,099
(12)
249
(17,941)
(2,065)
(1,989)
13,040
557
(9,526)
Net Cash Provided by / (used in) Operating Activities
35,893
5,700
(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)
971
7,631
25,850
4,015
2,220
40,687
971
6,904
25,850
1,294
-
35,019
-
727
-
2,721
2,220
5,668
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
244
-
101
(979)
737
-
(124)
2,711
-
8
5,946
-
24
1,500
359
8,340
3,921
-
-
25,850
87
2,220
28,157
-
-
25,850
72
-
25,922
-
-
-
15
2,220
2,235
236
-
-
(1,827)
3,434
-
(41)
1,099
-
9
(8,368)
-
(2)
413
151
(8,821)
(17,115)
-
-
19,500
106
2,220
21,826
-
-
19,500
91
-
19,591
-
-
-
15
2,220
2,235
Page 72 of 86
100
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
30
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 maximisi ng 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 15, cash and cash equivalents and
equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in notes 18
and 19. Management and the Board review the capital structure 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)
2011
$ 000's
2010
$ 000's
37,860
(18,388)
19,472
32,018
(9,007)
23,011
125,409
94,495
Net debt divided by debt plus equity
13.4%
19.6%
(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
Bank overdraft
Amortised cost
Consolidated
2010
$ 000s
2011
$ 000s
Company
2011
$ 000s
2010
$ 000s
18,388
50,219
16,122
-
70,739
9,007
41,210
6,802
-
57,707
-
81,203
465
1,697
31,842
7,644
79,418
196
-
21,170
Page 73 of 86
Imdex 2011 Annual Report |
101
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
30
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. There are no derivative instruments in operation at year end.
(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. There are no derivative financial instruments in operation at year end. 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 in Australian dollars of the Group‟s monetary assets and liabilities denominated in currencies other than Australian
dollars at the reporting date are as per the table below. Non Australian dollar liabilities include trade creditors, accruals and borrowings
recorded in Australian as well as non-Australian entities. Non Australian dollar assets include cash on hand and debtors recorded in
Australian as well as non-Australian entities. Any fluctuation in exchange rates relative to the Australian dollar will cause the below
assets and liabilities to change in value.
United States Dollars
South African Rand
Canadian Dollars
Swedish Kroner
British Pound
Euro
Chilean Pesos
Other
Liabilities
Assets
2011
$ 000s
2010
$ 000s
2011
$ 000s
2010
$ 000s
3,548
3,098
8,604
971
2,497
7,229
4,546
3,487
1,096
1,452
9,299
3,257
1,141
104
465
657
20,212
5,294
7,375
205
100
2,260
3,978
5,722
5,696
2,972
3,675
2,570
204
519
3,797
1,138
102
Page 74 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
30
Financial Instruments (continued)
(f) Foreign currency risk management (continued)
Foreign currency sensitivity
The Group is mainly exposed to United States Dollars, Canadian Dollars, European Dollars and South African Rand.
The following table details the Group‟s sensitivity to a 10% (2010: 5%) increase and decrease in the Australian Dollar against the
relevant foreign currencies. The sensitivity rate of 10% (2010: 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 estimate d
movement of 10% (2010: 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 10% (2010: 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
2011
$ 000's
2010
$ 000's
Company
2011
$ 000's
2010
$ 000's
Consolidated
Company
2011
$ 000's
2010
$ 000's
2011
$ 000's
2010
$ 000's
Profit or (loss)
Other equity
(1,666)
-
(230)
-
-
-
-
-
(i)
(ii)
(220)
-
(76)
-
-
-
-
-
(i)
(ii)
European Dollar Impact
Canadian Dollar Impact
Consolidated
2011
$ 000's
2010
$ 000's
Company
2011
$ 000's
2010
$ 000's
Consolidated
Company
2011
$ 000's
2010
$ 000's
2011
$ 000's
2010
$ 000's
Profit or (loss)
Other equity
497
-
(21)
-
-
-
-
-
(i)
(ii)
123
-
281
-
-
-
-
-
(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 75 of 86
Imdex 2011 Annual Report |
103
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
30
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 data below is presented 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 const ant 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 (2010: $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 (2010:
$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 $0.3 million (2010: $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 $0.3 million (2010:
$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 an num.
This interest rate cap expired on 31 December 2010. At 30 June 2010 this interest rate cap had a fair value of nil. This fair value was
determined by seeking market valuations at year end for an interest rate cap with identical terms that terminates on 31 December 2010.
(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 cr edit
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 th e Group‟s
maximum exposure to credit risk without taking account of the value of collateral obtained. At 30 June 2011 no such collateral had been
obtained. (30 June 2010 : nil)
104
Page 76 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
30 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 29(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 t he 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
2011
Non-interest bearing
Finance lease liability
Variable interest rate
instruments
2010
Non-interest bearing
Finance lease liability
Variable interest rate
instruments
Company
2011
Non-interest bearing
Finance lease liability
Variable interest rate
instruments
2010
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
%
-
9.53%
6.80%
-
9.38%
5.00%
$’000
$’000
$’000
$’000
24,659
205
25,727
50,591
19,267
444
15,008
34,719
10,840
615
3,637
15,092
6,422
1,332
3,739
11,493
221
602
6,347
7,170
-
2,689
11,385
14,074
Weighted
average effective
interest rate
0-3 months
3 months to 1
year
1-5 years
5+ years
%
$’000
$’000
$’000
$’000
-
9.88%
7.46%
-
9.88%
5.09%
2,309
7
20,186
22,502
1,184
7
8,995
10,186
3,390
20
2,647
6,057
395
21
2,779
3,195
221
57
5,895
6,173
-
83
9,132
9,215
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page 77 of 86
Imdex 2011 Annual Report |
105
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
30 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 incl uded in the
carrying amount of the financial asset on the balance sheet.
Consolidated
2011
Non-interest bearing
Variable interest rate
instruments
2010
Non-interest bearing
Variable interest rate
instruments
Company
2011
Non-interest bearing
2010
Non-interest bearing
Variable interest rate
instruments
Weighted
average effective
interest rate
0-3 months
3 months to 1
year
1-5 years
5+ years
%
-
0.25%
-
2.75%
$’000
$’000
$’000
$’000
50,219
18,388
68,607
41,210
9,007
50,217
-
-
-
-
-
-
16,122
-
16,122
6,802
-
6,802
-
-
-
-
-
-
Weighted
average effective
interest rate
0-3 months
3 months to 1
year
1-5 years
5+ years
%
-
-
0.25%
$’000
$’000
$’000
$’000
1,813
1,813
1,775
7,644
9,419
-
-
-
-
-
465
465
196
-
196
79,390
79,390
77,643
-
77,643
(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.
106
Page 78 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
30
Financial Instruments (continued)
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).
Level 1
$ 000's
Level 2
$ 000's
Level 3
$ 000's
Total
$ 000's
Available-for-sale financial assets
2011
Shares in Sino Gas & Energy Holdings Limited
2010
Shares in Sino Gas & Energy Holdings Limited
16,122
6,802
-
-
-
-
16,122
6,802
31
Key Management Personnel Compensation
Key management personnel compensation
The aggregate compensation of the key management personnel of the Group and the Company is set out below:
Consolidated
Company
2011
$
2010
$
2011
$
2010
$
2,619,395
171,973
106,185
-
420,872
3,318,425
2,244,909
179,145
28,278
-
154,572
2,606,904
2,619,395
171,973
106,185
-
420,872
3,318,425
2,244,909
179,145
28,278
-
154,572
2,606,904
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
32
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 6-12 months. Options expire when the option holder ceases to be employed by the Group.
Page 79 of 86
Imdex 2011 Annual Report |
107
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
32
Staff Option Scheme (continued)
(a) Share Based Payment Arrangements (continued)
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
2011 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. These options were all exercised on 19 October 2010.
(b) The following share based payment arrangements were in existence during the current and comparative periods:
2011
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 2 (i)
Tranche 3 (i)
Tranche 4 (i)
Tranche 5 (i)
Tranche 6 (i)
Tranche 7 (i)
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
$
0.02
0.56
0.48
0.51
0.81
0.42
1,579,536
700,000
3,014,001
575,000
200,000
4,368,327
- (1,552,870) (26,666)
- - - 700,000
- (599,167) (151,667)
2,263,167
- - - 575,000
- - - 200,000
- - (88,336) 4,279,991
-
Former Chairman's Options
Tranche 1 (ii)
19-Oct-06
18-Oct-11 0.75
0.35
1,000,000
- (500,000)
- 500,000
Managing Directors' Options
Tranche 1 (iii)
15-Sep-05 14-Sep-10 0.30
0.01
2,000,000
13,436,864
- (2,000,000)
- (4,652,037) (266,669)
- -
8,518,158
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
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
1,141,666
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
- - (50,000) 575,000
- - (300,000) 200,000
4,368,327
- - (286,673)
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
- - - 2,000,000
13,436,864
- (1,238,335) (905,340)
(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.
108
Page 80 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
32
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
2011
Option Series
Staff Options Tranche 4
Staff Options Tranche 4
Staff Options Tranche 4
Staff Options Tranche 4
Staff Options Tranche 4
Staff Options Tranche 4
Staff Options Tranche 4
Staff Options Tranche 2
Staff Options Tranche 4
Staff Options Tranche 4
Staff Options Tranche 2
Former Chaiman's Options
Staff Options Tranche 2
Staff Options Tranche 4
Staff Options Tranche 2
Staff Options Tranche 2
Staff Options Tranche 2
Staff Options Tranche 2
Staff Options Tranche 2
Staff Options Tranche 2
Staff Options Tranche 4
Staff Options Tranche 2
Staff Options Tranche 2
Staff Options Tranche 2
Staff Options Tranche 2
Staff Options Tranche 4
Staff Options Tranche 2
Staff Options Tranche 4
Staff Options Tranche 4
Staff Options Tranche 2
Staff Options Tranche 2
Staff Options Tranche 2
Staff Options Tranche 2
Staff Options Tranche 4
Staff Options Tranche 2
Staff Options Tranche 2
Staff Options Tranche 2
Staff Options Tranche 4
Staff Options Tranche 2
Staff Options Tranche 2
Staff Options Tranche 2
Managing Directors' Options
Staff Options Tranche 2
Staff Options Tranche 2
Number
Exercised
Exercise
Date
Share Price at Exercise
Date ($)
Amount Paid
($)
Amount
Unpaid ($)
35,000
40,000
100,000
50,000
30,000
30,000
35,000
8,334
75,000
25,000
50,000
500,000
30,000
12,500
1,000,000
16,667
13,333
15,000
16,667
16,667
7,667
30,000
32,700
33,333
45,000
9,000
15,000
20,000
100,000
16,667
50,000
10,000
10,000
5,000
20,000
16,667
13,334
25,000
33,334
6,667
15,000
2,000,000
33,500
5,000
4,652,037
27-Jun-11
17-Jun-11
10-Jun-11
19-Apr-11
07-Apr-11
07-Apr-11
25-Mar-11
21-Mar-11
14-Mar-11
21-Feb-11
14-Feb-11
08-Feb-11
31-Jan-11
31-Jan-11
28-Jan-11
20-Jan-11
14-Jan-11
11-Jan-11
11-Jan-11
11-Jan-11
11-Jan-11
10-Jan-11
07-Jan-11
07-Jan-11
06-Jan-11
04-Jan-11
29-Dec-10
21-Dec-10
13-Dec-10
13-Dec-10
10-Dec-10
09-Dec-10
08-Dec-10
06-Dec-10
02-Dec-10
26-Nov-10
24-Nov-10
17-Nov-10
17-Nov-10
09-Nov-10
04-Nov-10
25-Oct-10
24-Sep-10
13-Sep-10
2.15
2.25
2.16
2.01
2.10
2.10
2.06
1.96
1.75
1.96
2.05
2.05
1.92
1.92
1.99
1.95
1.89
1.77
1.77
1.77
1.77
1.77
1.79
1.79
1.77
1.80
1.79
1.79
1.71
1.71
1.63
1.65
1.59
1.47
1.37
1.38
1.38
1.38
1.38
1.35
1.34
1.26
1.02
0.93
35,000
40,000
100,000
50,000
30,000
30,000
35,000
2,917
75,000
25,000
17,500
375,000
10,500
12,500
350,000
5,833
4,667
5,250
5,833
5,833
7,667
10,500
11,445
11,667
15,750
9,000
5,250
20,000
100,000
5,833
17,500
3,500
3,500
5,000
7,000
5,833
4,667
25,000
11,667
2,333
5,250
600,000
11,725
1,750
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page 81 of 86
Imdex 2011 Annual Report |
109
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
Staff Option Scheme (continued)
32
2010
Option Series
Staff Options Tranche 2
Staff Options Tranche 1
Staff Options Tranche 2
Staff Options Tranche 2
Staff Options Tranche 1
Staff Options Tranche 1
Staff Options Tranche 1
Staff Options Tranche 1
Staff Options Tranche 1
Staff Options Tranche 1
Staff Options Tranche 2
Number
Exercised
Exercise
Date
Share Price at Exercise
Date ($)
Amount Paid
($)
Amount
Unpaid ($)
33,334
21-Oct-10
20,000
2-Oct-10
33,334
1-Oct-10
20,000 28-Aug-10
30,000
27-Jul-10
50,000
24-Jul-10
15,000
23-Jul-10
1,667
22-Jul-10
1,000,000
16-Jul-10
25,000
15-Jul-10
10,000 12-May-10
1,238,335
0.86
0.71
0.73
0.75
0.62
0.6
0.6
0.59
0.65
0.63
0.485
11,667
4,000
11,667
7,000
6,000
10,000
3,000
333
200,000
5,000
3,500
-
-
-
-
-
-
-
-
-
-
-
(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 $2.04 (2010: $1.48), and a weighted
average remaining contractual life of 442 days (2010: 608 days)
(f) Reconciliation of movements in share options during the year
The following reconciles the outstanding share options granted under the Staff Option Scheme at the beginning and end of the financial year
2011
2010
Weighted
Average
Exercise
Price ($)
Weighted
Average
Exercise
Price ($)
Number of
Options
-
-
1.48 15,580,539 1.41
- -
- -
0.46 (1,238,335) 0.21
(905,340) 1.91
1.60
13,436,864 1.48
2.04
11,814,088
Number of
Options
13,436,864
-
-
(4,652,037)
(266,669)
8,518,158
8,518,158
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
33
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 be 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.
110
Page 82 of 86
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
33
Performance Rights Plan (continued)
(b) Performance rights Granted in the current year
Staff Performance Rights
2,630,029 performance rights were granted to employees during the current year in 3 tranches (Tranches 2, 3 and 4 in the table below).
Since their granting 157,657 of these performance rights have expired by virtue of staff leaving the employment of the Imdex Group.
One fully paid Imdex Limited ordinary shares will be issued in satisfaction of each performance right should specified targets be met.
Targets are typically a mixture of earnings per share, total shareholder return, EBITA or other profitability hurdle combined with the
requirement for ongoing employment tenure. Targets are tailored to each employee with due regard to the business unit they work in.
No shares will be issued where targets are not met. Measurement against targets will only be possible once the FY11 independent audit
report is signed in August 2011. Shares issued in satisfaction of performance rights will occur annually in 1/3 lots, with the first 1/3 lot
being issued after the FY11 independent audit report is signed.
For the purposes of the FY11 financial statements, the Directors have made an estimate of the likelihood of the achievement of FY1 1
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 2,472,372
remaining performance rights, all will meet the required performance hurdles and will result in 2,472,372 fully paid Imdex Limited
ordinary shares being issued over three years should employment tenure be retained.
The weighted average fair value of a performance right at grant date was $1.50 per right. The expected total cost of the estimated
2,472,372 fully paid ordinary shares to be issued in Imdex Limited will therefore be $3.7 million. This value will be expensed over the
vesting period from July 2010 to August 2013, with $2.0 million expensed in the current year.
Managing Director’s Performance Rights
196,579 performance rights were granted to the Managing Director on 14 October 2010 following approval by the shareholders at the
Annual General Meeting. One fully paid Imdex Limited ordinary shares will be issued in satisfaction of each performance right should
the specified earnings per share and total shareholder return targets be met over the 3 year measurement period from FY11 to FY13.
The Managing Director is subject to two hurdles each with equal weighting. The first is that the Total Shareholder Return (TSR) of Imdex
Limited must exceed the average TSR of the ASX300 over the 3 year measurement period. The second is that the Earnings Per Share
of Imdex Limited must exceed the average EPS of the ASX300 over the 3 year measurement period.
Measurement against targets will only be possible once the FY13 independent audit report is signed in August 2013.
For the purposes of the FY11 financial statements, the Directors have made an estimate of the likelihood of the achievement of the
specified targets and hence the number of fully paid Imdex Limited ordinary shares that are likely to be issued. Due to the hurdle being
market related, adjustment will not be made in future periods should the actual number of shares issued be different from those
estimated. It is estimated that out of the 196,579 performance rights issued, all will meet the required performance hurdles and will
result in 196,579 fully paid Imdex Limited ordinary shares being issued on or about August 2013 should employment tenure be retained.
The fair value of a performance right at grant date was $1.14 per right. The expected total cost of the estimated 196,579 fully paid
ordinary shares to be issued in Imdex Limited will therefore be $0.2 million. This value will be expensed over the vesting period from
October 2010 to August 2013, with $0.1 million expensed in the current year.
(c) Performance rights Granted in the prior year
2,262,366 performance rights were granted to employees during the prior year. Included in this total were 234,375 performance rights
granted to the Managing Director. The issue to the Managing Director was approved by the shareholders at the Annual General M eeting
on 14 October 2009. One fully paid Imdex Limited ordinary share was to be issued in satisfaction of each performance right for specified
FY10 EBITA targets met. FY10 EBITA targets were required to be met by each individual with due regard to the company and business
unit they work in. No shares were issued where targets were not met. Shares issued in satisfaction of performance rights will occur
annually in 1/3 lots, with the first 1/3 lot being issued after the FY10 independent audit report is signed.
Of the 2,262,366 performance rights issued, 458,779 met 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. Adjustments are made each year to the
number of performance rights outstanding to reflect where employment tenure has not been maintained.
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
February 2010 to August 2012, with $0.1 million expensed in the prior year.
Page 83 of 86
Imdex 2011 Annual Report |
111
Notes to the financial report continued
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
33
Performance Rights Plan (continued)
(d) Summary of performance rights outstanding
2011
Grant
Date
Expiry Date Exercise
Price
$
Estimated
Fair Value at
Grant Date
Opening
balance
Tranche 1
Tranche 2
Tranche 3
Tranche 4
MD Tranche
19-Feb-10
3-Dec-10
28-Jan-11
10-Jun-11
14-Oct-10
Aug-14
Aug-15
Aug-15
Aug-16
Nov-15
-
-
-
-
-
$
0.685
1.395
1.990
2.160
1.140
Estimated Number of Performance Rights
Granted
Satisfied by
the issue of
shares
Expired ^
Closing
balance
458,779
- 2,230,029
- 200,000
- 200,000
- 196,579
253,669
- (138,391) (66,719)
- (157,657)
2,072,372
- - 200,000
- - 200,000
- - 196,579
2010
Grant
Date
Expiry Date Exercise
Price
$
Estimated
Fair Value at
Grant Date
Opening
balance
$
Estimated Number of Performance Rights
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 failure to maintain employment tenure or on failure to satisfy performance hurdles.
34
Subsequent Events
Effective 1 July 2011 Imdex Limited was allotted fully paid ordinary shares in DHS Oil Services Limited (DHSO) in exchange for the
granting of an exclusive global technology license to use its oil and gas surveying instruments and technology. Following this allotment
Imdex Limited holds 50% of the issued share capital of DHSO. DHSO is registered in the British Virgin Islands and will operat e an oil
and gas services business based in Dubai using the technology licensed to it by Imdex Limited. Imdex Limited will account for its
investment in DHSO as an associate per Australian Accounting Standard 128 “Investments in Associates” since it holds 50% of t he
issued capital but only 2 out of 5 Board positions. Imdex Limited therefore has significant influence over DHSO but does not control or
jointly control DHSO. Additional disclosures with respect to this acquisition are impracticable at this stage as the acquisition accounting
is still being finalised.
Effective 1 July 2011 Imdex Limited acquired 100% of the issued share capital of Australian Drilling Specialties Pty Ltd, a drilling fluids
manufacturer based in Kwinana, Western Australia. The consideration of $12 million will be paid $6 million in cash and $6 million in
Imdex shares valued at the 5 days volume weighted average price at completion. Additional disclosures with respect to this acquisition
are impractical at this stage as the acquisition accounting is still being finalised.
On 25 July 2011 Imdex announced that it had entered into a conditional heads of agreement to purchase 100% of the issued share
capital of System Mud Industria e Comercio Ltda (System Mud) effective 1 August 2011. System Mud is a manufacturer and seller of
drilling muds in Brazil. Imdex will pay approximately $9.0 million as follows:
BRL 6.7 million (approximately $4.0 million) in cash at settlement; plus
$3.8 million by the issue of 1,600,000 fully paid Imdex Limited ordinary shares at an issue price of $2.40 per share, to be
escrowed for 12 months; plus
$1.2 million by the issue of 330,000 fully paid Imdex Limited ordinary shares at an issue price of $3.50 per share. If the share
price on the two year anniversary of the settlement date is below $3.50 an additional cash payment arises as the difference
between the share price at that date and $3.50 multiplied by 330,000. In the event that the Imdex share price reaches $3.50
at any time within the two year period, the potential cash top up falls away.
Additional disclosures with respect to this acquisition are impracticable at this stage as the due diligence process is still underway.
Subsequent to year end the Directors declared a 2.75 cent per share fully franked dividend with an entitlement date of 7 October 2011
and a payment date of 21 October 2011. The effect of this dividend has not been reflected in this financial report.
112
Page 84 of 86
Additional stock exchange information
as at 26 August 2011
IMDEX LIMITED
and its controlled entities
ADDITIONAL STOCK EXCHANGE INFORMATION
AS AT 26 AUGUST 2011
(a)
Distribution of Shareholders
Number of Fully
Paid Ordinary
Shareholders
422
1,272
771
1,072
120
3,657
86
Number of
Performance
Rights Holders
1
51
31
62
6
151
-
Number of
Option Holders
-
9
26
103
17
155
-
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
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
J P Morgan Nominees Australia Limited
(c)
Twenty Largest Holders of Quoted Equity Securities
Ordinary Shareholders
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
RBC Dexia Investor Services Australia Nominees Pty Limited (Pipooled
Account)
JP Morgan Nominees Australia Limited (Cash Income Account)
Telic Alcatel (Australia) Pty Ltd (Middendorp Directors SuperFund Account)
Cogent Nominees Pty Limited
Mr John Andrew Knox and Ms Janice Ann Knox (The J A Knox Family
Account)
Citicorp Nominees Pty Limited (Colonial First State Inv Account)
Mr Petrus Middendorp
Bond Street Custodians Ltd (Macquarie Smaller Co's Account)
Keeble Nominees Pty Ltd (Ridgeway SuperFund Account)
Wear Services Pty Ltd
Methuen Holdings Pty Ltd (PB Family Account)
Passio Pty Ltd (G Weston & Assoc SuperFund Account)
Aust Executor Trustees Ltd (Charitable Foundation)
Dimana Holdings Pty Ltd
RBC Dexia Investor Services Australia Nominees Pty Ltd (Piselect Account)
RBC Dexia Investor Services Australia Nominees Pty Ltd (BKCust Account)
Fully Paid
Number
Percentage
40,586,957
31,198,209
22,047,133
19.89%
15.29%
10.81%
Fully Paid
Number
Percentage
40,586,957
31,198,209
22,047,133
7,409,505
6,649,142
4,976,391
3,603,152
3,554,099
3,206,770
3,003,349
1,805,850
1,547,796
1,420,370
1,014,630
1,000,000
1,000,000
962,740
900,000
837,051
825,040
19.89%
15.29%
10.81%
3.63%
3.26%
2.44%
1.77%
1.74%
1.57%
1.47%
0.89%
0.76%
0.70%
0.50%
0.49%
0.49%
0.47%
0.44%
0.41%
0.40%
137,548,184
67.42%
Imdex 2011 Annual Report |
113
Additional stock exchange information continued
IMDEX LIMITED
and its controlled entities
ADDITIONAL STOCK EXCHANGE INFORMATION
AS AT 27 JULY 2011
(d)
Director and Company Secretary Shareholdings
Number of
Shares
Number of
Options
Number of
Performance
Rights
-
196,579
-
-
-
-
-
-
-
-
500,000
500,000
111,806
308,385
380,000
2,435,000
300,000
903,921
185,000
45,000
4,248,921
Name
Mr R W Kelly
Mr B W Ridgeway
Mr K A Dundo
Mr M Lemmel
Ms E Donaghey
Mr P A Evans
(e)
Company Secretary
Mr Paul Anthony Evans
(f)
Registered Office
Pitino Court
8
Osborne Park
Western Australia
6018
Phone: (08) 9445 4000
(g)
Share Registry
Computershare Investor Services
Level 2
45 St Georges Terrace
Perth WA 6000
Phone: (08) 9323 2000
114
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Imdex 2011 Annual Report |
115
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116
Providing Quality Drilling
Fluids and Leading Down Hole
Instrumentation to the World.
Imdex is an 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.
Imdex Limited (Imdex)
ABN 78 008 947 813
Head Office
8 Pitino Court, Osborne Park,
Western Australia 6017
T +61 8 9445 4010
F +61 8 9445 4042
E imdex@imdexlimited.com
www.imdexlimited.com