Innovative Technologies
Integrated Solutions
Global Support
ANNUAL REPORT 2014
imdexlimited.com
Imdex Limited (Imdex)
ABN 78 008 947 813
Australian Securities Exchange (ASX)
Listing Date 24 September 1987
ASX Code: IMD
Registered Office
216 Balcatta Road,
Balcatta Western Australia 6021
Head Office
216 Balcatta Road,
Balcatta Western Australia 6021
Directors
Mr Ross Kelly (Chairman)
Mr Bernie Ridgeway (Managing Director)
Mr Kevin Dundo (Non-Executive Director)
Mr Magnus Lemmel (Non-Executive Director)
Ms Betsy Donaghey (Non-Executive Director)
Company Secretary
Mr Paul Evans
2014 Annual General Meeting
Imdex’s AGM will be held at
The Celtic Club, 48 Ord Street, West Perth,
Western Australia commencing at
11am on Thursday 16 October 2014.
For further information please contact Paul Evans
on 08 9445 4010 or visit the investor section of
Imdex’s website at: www.imdexlimited.com
2
Throughout this document, unless otherwise stated, all
monetary amounts are recorded in Australian currency.
2014 IMDEX LIMITED ANNUAL REPORT2014 IMDEX LIMITED ANNUAL REPORTIMDEX GROUP AT A GLANCE
Contents
Imdex Group at a Glance
Group Financial Performance
Corporate Profile
The Imdex Way
Key Data
Company Structure
Innovative Technologies
Minerals Products Used by Stage
What are Drilling Fluids?
What are Solids Removal Units?
What are Downhole Survey &
Core Orientation Instruments?
What is On-site Geoanalysis?
What is Geochemical Data Analysis Software?
What are Rig Monitoring Instruments?
What are Data Management Solutions?
Global Business
FY14 SnapShot
Strategy for Increasing Shareholder Value
FY14 Growth Initiatives & Performance
FY14 Market Overview
Operational Highlights & Challenges
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Minerals Division
Oil & Gas Division
Summary Financial Highlights
corporate Governance
Board oF dIrectorS
chaIrman’S report
manaGInG dIrector’S report
operatIonal overvIew
Executive Management Team
Global Team
Community Involvement
Quality, Health, Safety & Environment
Managing Risk
Ongoing Product Development
2014 FInancIal report
companY hIStorY
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2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe
Imdex Mission
“We deliver leading innovative technologies to the global minerals
industry and select oil and gas markets, focusing on integrated
solutions that enhance our customers’ operations and deliver value
for shareholders. We achieve this through our extensive industry
knowledge and commitment to product development, ensuring
innovative, simple to use and fit for purpose technologies.”
AMC Drilling Fluids, Drilling Operation Western Australia
2
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe Corporate Profile
Imdex is a leading provider of drilling fluid products, advanced downhole
instrumentation, data management solutions and geo-analytical services.
The Company’s strength is derived from its global operations, superior
customer service and leading technologies.
Imdex supports a diverse range of customers at all stages of the mining
cycle, from junior explorers to major producers across a wide range of
commodities. Customers include: exploration, development, production
and mining services companies within the minerals and oil and gas
sectors; together with horizontal directional drilling and civil construction
companies worldwide.
The Company has operational centres in key mining regions of the world,
including Asia-Pacific, Africa, Europe and the Americas, to provide optimal
service to customers.
Imdex’s substantial commitment to ongoing product development has
enabled the Company to achieve market leader status in its fields of
operation. It is continuously refining its integrated range of fluid products,
unrivalled instrumentation and data management solutions to ensure
customers have the most advanced operational technology available.
3
2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe IMDEX GROUP AT A G LA N CE
AMC Minerals conducting a mud test
The Imdex Way
the Imdex way sets out the key principles and expected behaviours that govern the company’s
decision making, business practices and employee reward programs.
Integrity – Communicating openly and honestly.
Avoiding activities or organisations that are unethical,
harm people or the environment.
Teamwork – Working collaboratively, safely and with
respect for diversity within Imdex’s Group to achieve
the best results for the Company, customers and
colleagues.
Accountability – Taking responsibility for and delivering
on Imdex’s commitments to the Company, customers
and colleagues.
Being Dynamic – Maintaining an efficient global
company with the flexibility to provide localised
customer solutions and the adaptability to react quickly
to new opportunities and change.
Innovation – Leveraging Imdex’s advanced technologies,
research and development capabilities to deliver
innovative, leading edge products and services that
optimise customer operations.
Continuous Improvement – Pursuing Imdex’s strategy
of ongoing growth and reward for shareholders,
customers and employees through continuous
improvement of the Company’s products, services and
work practices.
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2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe IMDEX GRO UP AT A GL ANCE
Key Data
AS AT 30 JUNE 2013
AS AT 30 JUNE 2014
Market capitalisation:
$130.5 million
Shares on issue:
210.5 million
Market capitalisation:
$133.6 million
Shares on issue:
212.1 million
Share price at 30 June 2013:
Share price at 30 June 2014:
$0.62
$0.63
Number of shareholders:
Number of shareholders:
3,897
Number of employees:
604
3,367
Number of employees:
567
Banking institutions:
HSBC and Westpac
Banking institutions:
HSBC and Westpac
Legal advisors:
Hopgoodganim
Auditors:
Legal advisors:
Hopgoodganim
Auditors:
Deloitte Touche Tohmatsu
Deloitte Touche Tohmatsu
Share registry:
Computershare
Share registry:
Computershare
5
5
2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe Company Structure
Imdex has two operational divisions, Minerals and Oil & Gas.
Imdex’s Minerals Division includes the AMC and REFLEX businesses.
AMC is a leading provider of innovative drilling fluids, chemicals and solids
removal technologies to the global drilling industry. REFLEX markets
downhole instrumentation and data management solutions; together
with geoanalytical consulting services and software to resource, mining
services and civil construction companies worldwide.
Imdex’s Oil & Gas Division comprises AMC Oil & Gas and a 30% share
of VES International. The VES joint venture is the third largest provider
of downhole survey services to the oil and gas markets, primarily in the
USA and Middle East.
The AMC Oil & Gas and VES International businesses provide drilling
fluids, production and completion chemicals, together with downhole
survey services to the global oil and gas market.
Imdex
lImIted
oIl & GaS
dIvISIon
mIneralS
dIvISIon
30% joint venture
6
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe Innovative Technologies
Brand
reFlex
product & Service range
market
REFLEX ACT III: Digital core orientation
REFLEX HT ACT: Digital core orientation
REFLEX EZ-Shot: Single-shot magnetic survey
REFLEX EZ-Trac: Multi-shot magnetic survey
REFLEX HT EZ-Trac: Multi-shot magnetic survey
REFLEX Maxibor II: Optical survey
REFLEX Gyro: Gyroscopic survey
REFLEX HT Gyro: Gyroscopic survey
REFLEX TN14 Gyrocompass: Rig aligner
REFLEX XRF: On-site geoanalysis
REFLEX HUB: Data management solutions
REFLEX Geochemistry: Geochemical data analysis
ioGAS: Geochemical data analysis software
Customised downhole motors
Global mining / mineral
exploration, HDD
and civil construction
markets
amc minerals
Drilling fluids and chemicals
Fluid containment and transfer equipment
Waste management equipment
Solids removal units
(surface, underground & heli-portable SRUs)
Brands
product range
market
amc oil & Gas
Drilling fluids and production chemicals market
Fluid containment and transfer equipment
Waste management equipment
Solids control units (SCUs)
veS International
Joint venture
Inflex (formerly Target INS)
Gyroflex survey tool
Global oil & gas market
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2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe
Mineral Products Used by Stage
amc
SOLIDS REMOVAL UNITS
amc
reFlex
reFlex
FLUIDS
reFlex
CORE ORIENTATION
INTEGRATED SaaS / DATA MANAGEMENT SOLUTIONS
GYRO DOWNHOLE SURVEY
reFlex
MAGNETIC DOWNHOLE SURVEY
reFlex
DIRECTIONAL EQUIPMENT
reFlex
GEOANALYSIS
non-Mining
10% revenue*
EXPLORATION
21% REVENUE
DEVELOPMENT
46% REVENUE
PRODUCTION
23% REVENUE
*Non-mining includes waterwell drilling, civil and tunnelling operations
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2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe What are
Drilling Fluids?
What are Solids
Removal Units?
AMC’s Solids Removal Units (SRUs) are used to eliminate cuttings in
the drilling mud flow cycle. Drilling fluid is circulated directly from
the drill collar to the SRU’s shaker or centrifuge feed tube, where drill
solids are removed via a centrifuge. Cleaned drilling fluids are then
returned to the drill hole. The highly mobile units also incorporate a
mixing chamber and weir system, which enables drilling fluids to be
added accurately and efficiently.
AMC’s SRUs provide significant economic and environmental
advantages as they eliminate the need to dig and rehabilitate
traditional mud pits. The sumpless technology also reduces water
consumption, mud usage and wear-and-tear to drilling components,
while enhancing drilling productivity.
Surface, underground and heli-portable units are available.
Drilling fluids, or mud as referred to in
the industry, are a key part of the drilling
process for mining, oil and gas, water-
well, horizontal directional drilling and
tunnelling applications.
There is a broad range of drilling fluids, all
with unique properties and uses, however,
their principal role is to clean, cool and
lubricate the drill-bit, return chips of rocks
known as cuttings to the surface, and keep
the borehole stabilised and open.
During the drilling process a continuous
circulation of drilling fluid is used. Fluid
is pumped down the drill-pipe, through
the drill-bit and returned to the surface
via the aperture between the drill-pipe
and borehole. The fluid then circulates
through a shale shaker, mud tanks, or
AMC’s Solids Removal Units to remove
the cuttings from the fluid for re-use.
Drilling fluids also help keep the borehole
stabilised by forming a thin membrane on
the interior surface.
Traditional drilling fluid sumps
Sumpless drilling sites
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2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe What are Downhole Survey &
Core Orientation Instruments?
SURVEY
INSTRUMENTATION
Downhole survey instruments
provide geologists and drillers
with comprehensive data, including
azimuth and dip, which allows the
exact trajectory of boreholes to be
determined, even at thousands of
metres below the surface.
Borehole deviations, where the
actual path is different to the
planned path, are common and
costly. Geological variations, drilling
parameters, including excessive or
irregular thrust and hole design,
are just some of the reasons why a
borehole may deviate. A two degree
deviation at the surface can lead to
a 35 metre lateral displacement at a
hole depth of 1000 metres, resulting
in significant additional drilling costs
and loss of opportunity if zones of
economic mineralisation are missed.
By surveying the borehole
throughout the drilling process,
deviations can be corrected and the
likelihood of intercepting desired
targets is significantly enhanced.
CORE ORIENTATION
INSTRUMENTS
Core orientation instruments
are used to determine the exact
position of a core sample in the
ground prior to extraction. This
process allows geoscientists to
accurately assess the sample to
determine the structural geology,
which often controls a mineralised
ore system. By understanding the
structural geology, wasted time
and money caused by drilling in the
wrong location or direction are
avoided. Core orientation is also
particularly important during mine
planning and development to avoid
potential problem areas such as
faults or slip zones.
GYROSCOPIC SURVEY
AND DIRECTIONAL
STEERING INSTRUMENTS
Drilling is becoming increasingly
complex and challenging due to
diminishing accessible reserves, high
exploration costs and environmental
impact concerns. As a result, energy
companies are drilling deeper, for
smaller targets, re-entering existing
wells, and drilling multiple wells
from a single platform. In such an
environment, advanced technology
and accurate data are crucial to
locate reserves efficiently and to
avoid collision with existing wells
which can be catastrophic and cost
millions of dollars to remediate.
Imdex has developed a range of
advanced gyroscopic survey and
directional steering instruments
specifically designed for challenging
multiple well environments, in
areas of high magnetic interference,
to allow directional drillers to
accurately control the path of
the wells.
On-site training with the REFLEX ACT
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2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe What is
On-site
Geoanalysis?
The REFLEX XRF is a hand-held instrument, which
collects and transmits geochemical data to REFLEX
HUB, where built-in analytics produce derived outputs
that can be used immediately for logging, domaining
and classification.
Customers can obtain real-time geochemical analysis
in the field then immediately reassess drilling programs.
They can also reduce time and costs by screening and
prioritising samples before assaying.
What is
Geochemical Data
Analysis Software?
REFLEX ioGAS is the optimal software for exploratory
and geochemical data analysis. The software has been
specially developed for exploratory and geochemical
data analysis. It offers the best tools and workflows
for efficiently interpreting customers’ data by capturing
the experience and knowledge of the REFLEX
Geochemistry team of world-class geochemists.
The REFLEX XRF hand-held instrument
REFLEX Geochemical data analysis
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2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe What are Rig Monitoring Instruments?
REFLEX TN14 GYROCOMPASS
The REFLEX TN14 Gyrocompass (TN14) provides fast and accurate rig alignment in surface and underground operations.
The TN14 was designed as an alternative to the traditional manual system of rig alignment, which is often inefficient and
prone to human error.
The TN14’s settlement and calibration process takes approximately 15 minutes and then a rig can be aligned to the correct
azimuth and dip within 5 minutes. Drillers no longer need to wait hours, or occasionally days, for surveyors to determine
the azimuth line for rig alignment and drilling to commence.
The REFLEX Gyrocompass TN14 is the only rig aligner with the capability to preload co-ordinates from any location
through REFLEX HUB. It also has enhanced accuracy with a roll and pitch range of +/- 90 degrees and does not have the
attitude limitations seen on lower quality instruments.
REFLEX TN14 Gyrocompass
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2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe What are Data Management Solutions?
REFLEX HUB
REFLEX HUB delivers a new way of operating for the drilling, exploration, production and mining services sectors. It
provides a complete solution for the collection, storage and reporting of data and critical operational information – directly
from site to the office, with real time visibility.
Data is automatically transmitted, whenever an internet connection is available, directly to REFLEX HUB’s secure, central
database. Customers can then access their data via a web browser from any location worldwide. Customised dashboards
provide real time information and critical statistics for a single site or an entire business.
The unique paperless system makes collecting field data easy and accurate using any iPad, Android or Windows Mobile
device to digitally record and validate data as it is entered. It also delivers significant operational efficiencies through highly
efficient workflows and reduces the cost and time associated with managing valuable and complex data sets.
REFLEX HUB
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2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe IMDEX GROUP AT A G LA N CE
Global Business
Imdex is a global business operating in diversified geographical markets.
The Company has successfully established operations in all key mining
and exploration regions throughout Asia Pacific, Africa, Europe and the
Americas. Imdex is also growing its business in the principal oil and gas
regions within Africa, Asia Pacific, Europe and the Middle East.
Vancouver, Canada
Calgary, Canada
Timmins, Canada
San Luis Obispo, USA
Salt Lake City, USA
NORTH AMERICA
Corpus Christi, USA
Torreon, Mexico
EUROPE
East Sussex, UK
Amsterdam, Netherlands
Bremen, Germany
Rastede, Germany
Romania
New Delhi, India
Dubai (DMCC), UAE
ASIA PACIFIC
Ecuador
Lima, Peru
SOUTH AMERICA
Belo Horizonte, Brazil
Itajai S.C., Brazil
Santiago, Chile
Mendoza, Argentina
Accra, Ghana
AFRICA
Singapore
Jakarta
Johannesburg,
South Africa
Newman, WA
Kalgoorlie, WA
Perth, WA
Adelaide, SA
Townsville, QLD
Roma, QLD
Brisbane, QLD
Mudgee, NSW
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Imdex’s Regional Offices
New Operational and Service Facility Opened in FY14
VES JV Office
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe IMDEX GRO UP AT A GL ANCE
Imdex’s global presence and comprehensive distribution network allows
it to provide a unique service to customers and allows greater access to
international mineral exploration and oil and gas markets.
During FY14 the Company established a new operational and service
facility in Belo Horizonte, Brazil.
Vancouver, Canada
Calgary, Canada
Timmins, Canada
San Luis Obispo, USA
Salt Lake City, USA
NORTH AMERICA
Corpus Christi, USA
Torreon, Mexico
EUROPE
Vancouver, Canada
East Sussex, UK
Calgary, Canada
Bremen, Germany
Timmins, Canada
Amsterdam, Netherlands
San Luis Obispo, USA
Rastede, Germany
Salt Lake City, USA
Romania
NORTH AMERICA
Corpus Christi, USA
New Delhi, India
Torreon, Mexico
Dubai (DMCC), UAE
ASIA PACIFIC
EUROPE
East Sussex, UK
Amsterdam, Netherlands
Bremen, Germany
Rastede, Germany
Romania
New Delhi, India
Dubai (DMCC), UAE
ASIA PACIFIC
Ecuador
Lima, Peru
Accra, Ghana
Ecuador
Singapore
AFRICA
Jakarta
Accra, Ghana
AFRICA
Singapore
Jakarta
SOUTH AMERICA
Belo Horizonte, Brazil
Itajai S.C., Brazil
Santiago, Chile
Mendoza, Argentina
SOUTH AMERICA
Johannesburg,
South Africa
Santiago, Chile
Kalgoorlie, WA
Itajai S.C., Brazil
Perth, WA
Adelaide, SA
Mendoza, Argentina
Lima, Peru
Newman, WA
Townsville, QLD
Belo Horizonte, Brazil
Roma, QLD
Brisbane, QLD
Mudgee, NSW
Johannesburg,
South Africa
Newman, WA
Kalgoorlie, WA
Perth, WA
Adelaide, SA
Townsville, QLD
Roma, QLD
Brisbane, QLD
Mudgee, NSW
Imdex’s Regional Offices
New Operational and Service Facility Opened in FY14
VES JV Office
Imdex’s Regional Offices
New Operational and Service Facility Opened in FY14
VES JV Office
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2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe FY14 S NAPSHOT
Strategy for Increasing Shareholder Value
• Growing Imdex’s global business
•
Expanding into new markets, particularly oil and gas
• Maintaining product leadership through investment in product development
•
•
Increasing rental based revenue
Achieving operational efficiencies.
ON TRACK WITH STRATEGY
END MARKET
Minerals
Oil and Gas
END MARKET
Asia Pacific
Other Regions
RENT/SELL MIX
Sales
Rentals
PAST
FY14
100%
39%
61%
100%
56%
44%
100%
34%
66%
Note: All numbers based on actual or anticipated combined revenue
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2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRt FY 14 S NAPS HOT
FY14 Growth Initiatives & Performance
FY14 GROWTH INITIATIVES
FY14 PERFORMANCE
Strong cost discipline and prudent working
capital management.
$15.7 million of working capital was released due to
improvements in stock and debtor levels.
Continuing to increase Imdex’s market share in
previously under-penetrated regions.
Imdex successfully increased its market share in
the Americas.
Utilising Imdex’s specialist technical expertise and
product development capabilities.
During FY14 Imdex successfully commercialised
a number of new AMC drilling fluids and REFLEX
technologies to the minerals market.
Expanding Imdex’s data solution offerings to new and
existing customers globally.
Imdex continued to market REFLEX HUB and
successfully expanded its customer base to include a
greater number of blue chip resource companies.
Investing further and growing Imdex’s oil and gas
market presence to increase return on investment in
this Division.
Imdex continued to invest in equipment, working
capital and talented personnel, including a new CEO of
AMC Oil & Gas, to support ongoing growth.
Capitalising on investment in Imdex’s oil and gas
equipment and SRUs.
AMC Oil & Gas achieved record revenue and a 16%
increase on FY13 reflecting the ongoing development
of the Division.
Continued support of customers as they seek to
increase efficiencies and reduce costs.
Imdex successfully commercialised new technologies,
which are designed to enhance the efficiency of
customers’ operations including its underground and
heli-portable SRUs and REFLEX technologies.
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2014 Imdex LImIted AnnuAL RepoRt FY14 S NAPSHOT
FY14 Market Overview
•
•
Subdued activity within the global minerals industry
due to the cyclical slowdown
• Growth available in under-penetrated mining regions
•
Low utilisation of REFLEX rental fleet in line with
challenging conditions within the minerals industry
• Minerals sector rig utilisation rates of approximately 25%
•
•
•
Signs of increasing activity within the minerals
industry during the 4Q14
Imdex’s Minerals revenue increased month-on-
month from 3Q14
Positive customer feedback regarding the benefits of
REFLEX’s new technologies
Relatively low commodity prices
• Utilisation of REFLEX rental feel increased week-on-
week during 4Q14 – up 21% on 3Q14
•
•
REFLEX HUB throughput and revenue increased
during 4Q14
Positive traction with SRUs and a growing number
on hire
• Continuing strong long-term growth potential within
the conventional and unconventional oil and gas
industries globally
•
Record revenue generated by Oil & Gas Division.
Operational Highlights & Challenges
HIGHLIGHTS
• Continued product development during the minerals
sector downturn producing an exciting pipeline of
AMC fluids and REFLEX technologies;
• Growing industry demand and continued positive
momentum with solids removal units (SRUs) –
particularly in the Americas;
• Development of Imdex’s underground and heli-
portable SRUs and positive customer feedback from
field trials;
•
•
Increased throughput and continuing positive
feedback with the marketing of REFLEX HUB;
Expansion of the Company’s customer base,
together with greater exposure to resource
companies and the production phase
of the mining cycle;
• Commercialisation of new REFLEX technologies –
enhancing REFLEX’s leading product range;
•
•
Adoption of REFLEX HUB by blue chip resource
companies and mining service companies;
Increasing exposure and capabilities within non
mining applications, including HDD and waterwell
markets;
•
•
Record revenue levels for Oil & Gas, reflecting
ongoing development of the Division;
Further investment in equipment, working capital
and talented personnel to support ongoing growth;
• Continuing strong revenue and EBITDA performance
by the VES joint venture;
•
•
•
Imdex Technology successfully relocated from
Germany to California in the USA;
Appointment of a new CEO of AMC Oil & Gas; and
Investment in InFlex (previously known as the
Target INS) resulting in the most accurate and
fastest downhole survey instrument in the
oil and gas industry.
CHALLENGES
•
The subdued minerals market deflated the sector’s
interest in adopting new technologies;
• Managing down working capital, particularly stock
levels, in a slow minerals market;
•
A product contamination incident -
AMC Oil & Gas; and
• Managing costs ahead of revenue growth in
AMC Oil & Gas.
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2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRt FY 14 S NAPS HOT
Group Financial Performance
•
Statutory revenue down 21% to $183.5 million (FY13: $232.8 million);
-
-
31% decline in Minerals Division revenue reflecting the cyclical downturn in the minerals sector
19% increase in revenue in Oil & Gas Division
• Combined revenue (excluding the interest) down 18% to $204.6 million (FY13: $249.4 million);
• Underlying EBITA of $0.5 million1 (FY13: $35.2 million) reflecting the higher fixed cost base and continued
investment in product development through the cycle;
• Gross margins largely maintained;
•
EBITA loss of $2.8 million (FY13: $35.2 million profit), impacted by a number of one-off balance sheet adjustments
and non-recurring items;
• Net profit after tax (NPAT) a loss of $5.3 million (FY13: $19.4 million profit)
• Net assets of $176.9 million (30 June 2013: $188.5 million);
•
•
•
Positive operating cash-flow of $2.9 million (FY13: $39.0 million);
Reduced gearing with net debt / capital of 18.5% (30 June 2013: 22%); and
Positive signs of improvement in the minerals sector evident in 4Q14.
1 Adjusted to exclude one-off items (totalling a net loss of $3.2 million) as follows: $24.1 million profit on the partial sale
of Imdex’s shareholding in Sino Gas & Energy Holdings (ASX: SEH); $18.2 million of non-cash balance sheet adjustments
($14.4 million of asset write downs and $3.8 million of closure costs); and $9.1 million of costs and provisions relating to the
product containment incident as reported on 13 March 2014.
COMBINED REVENUE ($m)
NORMALISED EBITA ($m)
278.9
249.4
87%
73%
205.3
87%
Minerals
Oil and Gas
137.0
134.3
80%
83%
20%
17%
13%
13%
27%
204.6
61%
39%
75.2
48.1
35.2
24.5
21.3
0.5
FY09
FY10
FY11
FY12
FY13
FY14
FY09
FY10
FY11
FY12
FY13
FY14
*Includes share of VES JV revenue $21.1m (FY13: $16.6m)
*Includes 30% equity accounted VES International JV NPAT.
Strong EBITDA margins in the JV of 37% (FY13 31%).
Imdex share of result impacted by amortisation, depreciation and
tax charges.
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2014 Imdex LImIted AnnuAL RepoRt FY14 S NAPSHOT
Minerals Division
Imdex’s Minerals Division generated $125.3 million and contributed 61% of our combined full year revenue.
This result represents a 31% decrease on the previous corresponding period (FY13: $182.7 million).
DIVISIONAL REVENUE
Revenue ($m)
Europe (9%)
Africa (16%)
Americas (33%)
Asia Pacific (42%)
108.8
111.3
241.7
177.7
182.7
125.3
FY09
FY10
FY11
FY12
FY13
FY14
DIVERSIFIED REVENUE BASE
(Minerals Revenue)
CUSTOMER
PROJECT PHASE
COMMODITY
Junior
19%
Intermediate/
Major 81%
Non Mining
10%
Exploration
21%
Production
23%
Development
46%
Gold
39%
Others
27%
Iron
13%
Copper
21%
•
•
•
60% from gold and copper
70% from development and production with growing proportion from non mining
81% from major and intermediate customers
Customer Type defined as annual revenue:
Major – Greater than US$500m
Intermediate – Greater than US$50m
Junior – Less than US$50m
Drilling Phase defined as follows:
Exploration - Pre-inferred resource/greenfields
Development - Post-inferred resource moving towards indicated and measured resource
Production - In-Pit / Underground drilling , mine life extension drilling programmes, resource
delineation drilling, grade control, dewatering, etc.
Non-Mining - Drilling in the Construction/Civil Industry, Non-Mining Waterwell and Non-Mining HDD.
20
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRt FY 14 S NAPS HOT
Oil & Gas Division
Imdex’s Oil & Gas Division generated $79.3 million revenue in FY14 and contributed 39% of the
Company’s combined full year revenue. This result represents a 19% increase on the previous
corresponding period (FY13: $66.7 million).
DIVISIONAL REVENUE
Combined Revenue* ($m)
VES International JV revenue
AMC Oil & Gas
66.7
79.2
37.2
28.0
23.0
27.4
FY09
FY10
FY11
FY12
FY13
FY14
*Includes 30% of VES International JV revenue
AMC’s Solids Removal Unit (SRU), Austria
21
2014 Imdex LImIted AnnuAL RepoRt AMC Minerals conducting a viscosity test
22
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe FY 14 S NAPS HOT
Summary Financial Highlights for the
Year Ended 30 June 2014 (Audited Results)
Consolidated
2012
$’000
2013
$’000
2014
$’000
13-14 Var
%
Revenue from continuing operations (excluding interest income)
269,563
232,791
183,485
Operating Profit before Interest, Tax, Depreciation & Amortisation
Depreciation
81,960
(6,761)
42,910
(7,728)
8,035
(7,575)
Earnings / (Loss) before Interest, Tax & Amortisation (EBITA)
75,199
35,182
460
0.3%
27.9%
15.1%
(5,957)
(3,364)
(1,469)
(21%)
(81%)
(2%)
(99%)
(98%)
(56%)
EBITA margin
Amortisation
Earnings / (Loss) before Interest & Tax (EBIT)
69,242
31,818
(1,009)
(103%)
Net interest expense
Net profit before tax
Income tax expense
(1,742)
(3,308)
(2,811)
(15%)
67,500
28,510
(3,820)
(113%)
(21,723)
(9,127)
1,785
(120%)
Net Profit / (Loss) after Tax (before non-operational items)
45,777
19,383
(2,035)
(110%)
Non-operational items
Gain on the disposal of shares in Sino Gas and Energy Holdings Ltd (SEH)
Office and business closure costs
Write down of assets
Product containment costs
-
-
-
-
-
-
-
-
24,094
(3,837)
(14,419)
(9,080)
-
-
-
-
Net Profit / (Loss) for the Year after Tax
45,777
19,383
(5,277)
(127%)
Basic earnings / (loss) per share from continuing operations (cents)
22.32 ¢
9 .24 ¢
( 2.50 ¢)
-
Net Cash provided by Operating Activities
Cash on hand
Net Assets
56,939
11,232
38,970
2,914
(93%)
9,979
10,070
168,066
188,452
176,922
Total Borrowings (incl deferred acquisition payments)
59,429
63,986
50,141
Net Tangible Assets per Share
51.35 ¢
57.52 ¢
54.06 ¢
1%
(6%)
(22%)
(6%)
23
2014 Imdex LImIted AnnuAL RepoRt
CORPORAT E G OVER N ANCE
Corporate Governance
Imdex’s Board and Leadership Team strive to achieve best practice in all aspects of corporate governance.
The Company’s practices and disclosures are underpinned by the Australian Securities Exchange Corporate
Governance Council recommendations. Further information relating to Imdex’s Corporate Governance during
FY14 can be found on pages 69 to 73 of this report.
24
24
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRt BOARD O F DI RECTO RS
Board of Directors
Imdex’s Board of Directors has extensive professional expertise, business experience and technical knowledge
of the mineral exploration, mining and oil and gas industries.
Members of the Board are well respected in these sectors and play an active role in the generation and
management of the Company’s strategic planning.
Further information relating to the Board of Directors, including details of meetings and remuneration can be
found on pages 50 to 60 of this report.
25
25
2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe BOARD O F DI R ECTO RS
mr ross Kelly
am Be (honS) FaIcd
non-executive chairman
mr Bernard ridgeway
B.Bus (acctG) aca
managing director
Age 76 years
Age 60 years
•
•
Appointed to the Board 23 May 2000
Bachelor of Business and 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
• Over 28 years’ experience with public and private
companies as a business owner, Director and
Manager.
•
•
•
•
Appointed to the Board 14 January 2004
Appointed as Chairman 15 October 2009
Bachelor of Electrical Engineering with Honours
Fellow of the Australian Institute of Company
Directors
• Consultant to a number of major Australian
companies in the mining, offshore gas, oil refining,
steel, construction and heavy process industries
•
•
•
Previously advisor to the Western Australian
Government on water policy and reform
Previously Councillor of the Australian Institute of
Company Directors and member of the Advisory
Board of the Curtin University Graduate School of
Business
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.
26
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRt
BOARD O F DI RECTO RS
mr magnus lemmel
B.a.
non-executive director
mr Kevin dundo
B. comm, llB
non-executive director
ms Betsy donaghey,
B.S. civil engineering, m.S.
operations research
non-executive director
Age 75 years
Age 62 years
Age 56 years
•
Appointed to the Board
19 October 2006
• Management consultant based
in Brussels, Belgium, involved
in small business development
in Sweden. Former Chairman
of FiberformVindic Holding AB,
previously the largest Imdex
shareholder
•
Previously Senior Vice-President
of Ericsson Telecommunications,
Chief Executive Officer of the
Federation of Swedish Industries
and Director General for
Enterprise Policy of the European
Commission.
•
•
Appointed to the Board
14 January 2004
Bachelor of Commerce and
Bachelor of Laws
• Member of the Law Society of
Western Australia, Law Council
of Western Australia, Australian
Institute of Company Directors
and a Fellow of the Australian
Society of Certified Practicing
Accountants
•
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 ORM
Limited.
•
•
•
Appointed to the Board
28 October 2009
Bachelor of Civil Engineering A &
M University, Texas, and Master in
Operations Research University
of Houston
Extensive experience within the
energy sector, including 19 years
with BHP Billiton and 9 years
with Woodside Energy
• Non-Executive Director of
Australian Renewable Energy
Agency
•
Previously Non-Executive
Director of St Barbara Limited.
27
2014 Imdex LImIted AnnuAL RepoRt AMC Oil & Gas Environmental Technology, Mixing Tank
28
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe CH AI RMAN’S REP ORT
Chairman’s
Report
Dear Shareholders,
LONG-TERM STRATEGY
As anticipated, the 2014 financial year (FY14) was
challenging for Imdex. The Minerals Division was
adversely affected by the cyclical downturn, where activity
levels continued to decline throughout most of FY14.
Imdex’s long term strategy is designed to facilitate growth
and reduce the Company’s exposure to cyclical variations,
which are characteristic of the mining and minerals
exploration industries.
Activity levels within the energy sector remained robust
and Imdex’s Oil & Gas Division achieved revenue growth
of 16% during the year. Unfortunately the performance of
AMC Oil & Gas was negatively impacted during the fourth
quarter (4Q14) by the product containment incident,
which was announced to the market on 13 March 2014.
The appropriateness and importance of such a strategy
was highlighted by the minerals industry downturn and
its negative impact on the Company’s FY14 results. I am
therefore pleased to report Imdex’s balance sheet, despite
the downturn, allowed the Company to continue to invest
in its diversification strategy by:
On a more positive note, encouraging signs of
improvement in the minerals industry were evident in
4Q14. The number of instruments and solids removal
units (SRUs) on hire increased month-on-month, which
saw the Minerals Divisional revenue increase in step –
suggesting a cyclical recovery is underway.
Imdex’s significant investment in its Oil & Gas Division
also started to yield rewards. AMC Oil & Gas was cash
positive in 4Q14 and is continuing to grow.
Furthermore, Imdex’s suite of new high-tech products
is gaining strong market interest and the Company is
confident that, over time, they will be widely accepted
by the industry.
FY14 PERFORMANCE SUMMARY
Over the twelve months ended 30 June 2014, Imdex
achieved:
•
•
•
•
A total combined revenue of $204.6 million – down
18% on last year’s figure of $249.4 million;
An EBITA before one-off balance sheet adjustments
and non-recurring items of $0.5 million (FY13 –
$35.2 million);
An EBITA loss of $2.8 million (FY 13 – a profit of
$35.2 million) after adjustments and non- recurring
items; and
A net loss after tax of $5.3 million (FY13 – a profit
of $19.4 million).
Further details regarding Imdex’s financial performance,
including the one-off balance sheet adjustments and non-
recurring items mentioned above, are provided in the
Managing Director’s Report on pages 32 to 34.
•
•
Expanding geographically;
Expanding into new markets, particularly
oil & gas; and
• Developing new and innovative technologies to
further penetrate existing and new markets.
expanding geographically
Imdex made its first international acquisition in 2005.
Since that time the Company has pursued a considered
international growth strategy with the view to supporting
its international mining customers, irrespective of
where they operate; and developing or acquiring leading
technology to enhance the operations of its customers.
As a result of this international growth strategy,
approximately 60% of Imdex’s revenue is now generated
outside Australia. The Company continues to focus
on this element of its strategy and accordingly, its
international business is expected to grow further.
expanding into new markets, particularly oil & gas
As I mentioned earlier, Imdex is successfully building its
oil and gas business and the Company is confident both
revenue and profit will increase in FY15 and beyond.
Other areas for market expansion include the horizontal
directional drilling and water well drilling industries.
During FY14 customers, particularly in the Americas,
started to embrace Imdex’s drilling products and services
– this trend is expected to accelerate and will further
diversify the Company’s revenue stream.
29
2014 Imdex LImIted AnnuAL RepoRt
CHAIRMA N’S RE PORT
new and innovative technologies
Innovative technologies capable of producing step change
improvements in customers’ operations are now part of
Imdex’s DNA and are critical to the Company’s
future success.
The acquisition of REFLEX and Chardec in 2006
commenced a transformation that has seen Imdex move
from being a provider of drilling fluids and downhole
instrumentation to a company facilitating integrated
solutions including: simple-to-use data acquisition; data
management and data analysis. The combination of
Imdex’s traditional product offering, together with its new
technologies and services, has the potential to transform a
significant part of the minerals industry.
During FY15 the Company will continue down the path
of enhancing its integrated range of technologies. Imdex’s
recent acquisition of 2iC Australia Pty Ltd represents
another strategic step in this journey. Further details
regarding this acquisition are also outlined in the Managing
Director’s report.
FY15 will also see Imdex commercialise another group
of technically advanced products to the market, thereby
further differentiating itself from its competitors;
increasing the revenue available from existing customers;
and expanding its customer base.
CORPORATE GOVERNANCE
Your Board strives to achieve best practice in all aspects
of corporate governance. It also applies insight, industry
experience and commercial acumen to its deliberations.
Information pertaining to corporate governance within
Imdex is provided on page 69 of this report.
LOOKING FORWARD TO FY15
While the Company remains cautious, the outlook for the
minerals industry is optimistic. At the macroeconomic
level the:
• Chinese economy is expected to maintain its
current rate of growth;
• US economy is predicted to experience
modest growth; and
•
Japanese and European economies should
be relatively flat or grow marginally.
In Australia, the mining industry, (which is transitioning
from a phase of strong development to one of higher
production), will continue to be challenged by lower
commodity prices and a relatively high exchange rate
– hence considerations related to cost reduction and
production efficiency will remain paramount.
30
At an industry level, the performance of our Minerals
Division in 4Q14, coupled with a 21% increase in the
number of REFLEX instruments on hire (from 3Q14),
an increasing number of SRUs on hire and strengthening
demand for the REFLEX HUB, indicates the market is
improving and should continue to improve.
As mentioned previously, the oil and gas sector remains
robust and continues to offer substantial year-on-year
growth opportunities for Imdex’s Oil & Gas Division.
During calendar 2014, the global markets for drilling
fluids, completion fluids and solids control and waste
management are expected to grow by between 15%
and 20%. Very small shares of each of these multibillion
dollar markets represent significant opportunities for
the Company.
Summing up, Imdex is in a good position to capitalise on
the opportunities that exist within its core markets
and therefore, the Company predicts improved
results in FY15.
STRONG MANAGEMENT TEAM
Imdex continues to have a dedicated, talented workforce
led by an exceptional executive team that has been
strengthened by the addition of new Chief Executives
for AMC Minerals and AMC Oil and Gas. Through the
application of their experience and leadership skills, they
have already had a significant positive impact on the
operations for which they are responsible.
I would also like to recognise and thank our Managing
Director, Bernie Ridgeway and his executive team for
their dedication and hard work. The effective way in
which they handled the year’s significant challenges, while
continuing to work towards the achievement of the
Company’s strategic objectives, should be acknowledged.
I also offer my sincere thanks to all of Imdex’s employees
globally for their commitment and for what they achieved
throughout the year.
To my fellow Board Members I once again say thank
you for your significant contributions. I look forward to
continuing to work with you all during FY15.
Finally on behalf of Imdex’s Board and all of its employees
I say to our customers and shareholders thank you for
your loyalty and ongoing support.
Yours Faithfully
ross Kelly am Be (honS) FaIcd
chairman
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRt AMC Minerals drilling fluids on site, Turkey
31
2014 Imdex LImIted AnnuAL RepoRtImdex GRoup At A GLAnCe MANAGING D IRE CTOR S’ RE PO RT
Managing
Director’s
Report
Dear Shareholders,
I am pleased to present Imdex’s full year report for the
2014 financial year (FY14).
Imdex’s performance over the 2014 financial year was
adversely impacted by subdued activity within the
minerals sector, underscoring the importance of our
diversification strategies. It is pleasing to note our Oil &
Gas Division generated record revenue for the year in
line with these strategies. Unfortunately the Division was
not profitable due to the product containment incident
that impacted revenue and earnings in the 4Q14. Our
Oil & Gas Division was cash positive in July 2014 and
we remain confident the Division will make a meaningful
contribution to the Company’s earnings in the future.
As we move into FY15, we are seeing evidence that the
minerals market is improving, with month-on-month
increases in Minerals revenue during the 4Q14. REFLEX
instruments on hire are increasing, up 21% from 3Q14
and the number of solids removals units on hire
is also rising.
Our strategy of continuing to invest through the cycle
means we are well positioned to benefit from an upturn
in the minerals sector.
FY14 FINANCIAL SUMMARY
Following is a summary of Imdex’s FY14 performance:
•
Statutory revenue down 21% to $183.5 million
(FY13: $232.8 million)
- 31% decline in Minerals Division revenue
reflecting the cyclical downturn in minerals sector
- 19% increase in revenue in Oil & Gas Division
• Combined revenue (excluding interest) down 18% to
$204.6 million (FY13: $249.4 million);
• Underlying EBITA of $0.5 million1(FY13: $35.2
million) reflecting the higher fixed cost base and
continued investment in product development
through the cycle;
• Gross margins largely maintained;
•
EBITA loss of $2.8 million (FY13: $35.2 million
profit), impacted by a number of one-off balance
sheet adjustments and non-recurring items;
• Net profit after tax (NPAT) a loss of $5.3 million
(FY13: $19.4 million profit);
• Net assets of $176.9 million
(30 June 2013: $188.5 million);
32
•
•
•
Positive operating cash-flow of $2.9 million
(FY13: $39.0 million);
Reduced gearing with net debt / capital of 18.5%
(30 June 2013: 22%); and
Positive signs of improvement in the minerals
sector evident in 4Q14.
1Adjusted to exclude one-off items (totalling a net loss of $3.2 million) as
follows: $24.1 million profit on the partial sale of Imdex’s shareholding in
Sino Gas & Energy Holdings (ASX: SEH); $18.2 million of non-cash balance
sheet adjustments ($14.4 million of asset write downs and $3.8 million
of closure costs); and $9.1 million of costs and provisions relating to the
product containment incident as reported on 13 March 2014.
one-off balance sheet adjustments and non-
recurring items
Our FY14 results were negatively impacted by a number
of one-off balance sheet adjustments and non-recurring
items as noted above.
Asset write-downs and closure costs totalled
$18.2 million, largely relating to: the closure of AMC Oil
& Gas Kazakhstan; goodwill impairment related to AMC
Minerals in South America; the write off of capitalized
R&D costs related to the MEMS Gyro development and
debtors and stock provisioning.
As announced to the market on 13 March 2014, Imdex’s
subsidiary Australian Mud Company Pty Ltd, a global
drilling fluids provider, undertook precautionary
measures for the containment of an imported product
used by a limited number of customers in drilling
operations within Queensland, Australia. The measures
were taken following notification that certain batches
were contaminated with asbestos.
The containment incident has subsequently resulted in
costs and provisions totalling $9.1 million being brought
to account in FY14. Imdex continues to pursue the
recovery of costs associated with this incident.
During FY14, we partially disposed of our shareholding
in Sino Gas & Energy Holdings (SEH) – a non-core asset
– resulting in a profit on disposal of $24.1 million. The
remaining share of our investment in SEH was divested in
July 2014 resulting in a further profit on disposal of
$14.2 million, which will be recognised in FY15.
The impact of these one-off balance sheet adjustments
and non-recurring items to our FY14 financial results was
a net loss of $3.2 million.
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRt
MANAGING DI RECTO RS’ RE PO RT
MINERALS DIVISION
OIL & GAS DIVISION
Our Minerals Division generated $125.3 million and
contributed 61% of our combined full year revenue.
This result represents a 31% decrease on the previous
corresponding period (FY13: $182.7 million).
Our Oil & Gas Division generated $79.3 million revenue
in FY14, and contributed 39% of our Company’s combined
full year revenue. This result represents a 19% increase on
the previous corresponding period (FY13: $66.7 million).
Operational EBITA was a loss of $21.2 million (FY13:
loss of $4.1 million) resulting from one-off balance sheet
adjustments totalling $7.8 million and costs associated
with product containment as outlined above which
totalled $9.1 million. The Division’s underlying EBITA
was a loss of $4.3 million. This loss was principally due
to the product containment incident and subsequent
loss of revenue and profit in 4Q14, together with
underperformance by AMC Germany.
It is important to note AMC Oil & Gas in Europe and
the Middle East were both cash positive in 4Q14 and
profitable in July 2014. AMC Oil & Gas in Asia Pacific was
also profitable in July 2014.
Key operating highlights and achievements
•
•
Record revenue levels for Oil & Gas, reflecting
ongoing development of the Division;
Further investment in equipment, working capital and
talented personnel to support ongoing growth;
• Continuing strong revenue and EBITDA performance
by the VES joint venture;
•
•
•
Imdex Technology successfully relocated from
Germany to California in the USA;
Appointment of a new CEO of AMC Oil & Gas; and
Investment in InFlex (previously known as the Target
INS) resulting in the most accurate and fastest
downhole survey instrument in the
oil and gas industry.
Operational EBITA decreased 96% to $1.6 million (FY13:
$43.2 million). As expected, the decline in revenue and
EBITA reflects the subdued activity levels within the
minerals market, which persisted throughout the majority
of FY14. Prior to asset write-downs and closure costs
mentioned earlier, EBITA was a profit of $11.6 million.
Notwithstanding challenging market conditions, our
Minerals Division made significant progress with its
technology development, successfully strengthened its
operations and diversified its customer base.
Key operating highlights and achievements
Highlights and achievements for our Minerals Division
throughout FY14 included:
• Continued product development during the minerals
sector downturn producing an exciting pipeline of
AMC drilling fluids and REFLEX technologies;
• Growing industry demand and continued positive
momentum with AMC’s Solids Removal Units (SRUs)
– particularly in the Americas;
• Development of Underground and Heli-portable
SRUs and positive customer feedback from field
trials;
•
•
Increased throughput and continuing positive
feedback with the marketing of REFLEX HUB;
Expansion of our customer base, together with
greater exposure to resource companies and the
production phase of the mining cycle;
• Commercialisation of new REFLEX technologies –
enhancing REFLEX’s leading product range;
•
•
Adoption of REFLEX HUB by blue chip resource
companies and mining service companies; and
Increasing exposure and capabilities within non
mining applications, including HDD and
waterwell markets.
number of instruments on rent
N 08
JU
D E C 08
JU
N 09
D E C 09
JU
N 10
D E C 10
JU
N 11
D E C 11
JU
N 12
D E C 12
JU
N 13
D E C 13
JU
N 14
• Monthly reductions from July 12 peak to December 13
reflecting cyclical slowdown
• Up month-on-month for last 3 months, reflecting
bottom of cycle
• The typical seasonal shut down is throughout
December and January
33
2014 Imdex LImIted AnnuAL RepoRt MANAGING D IRE CTOR S’ RE PO RT
OUTLOOK
The outlook for our minerals markets in FY15 is
encouraging. Fourth quarter performance of the
Minerals Division provides evidence of improving market
conditions and provides confidence that market activity
will continue to strengthen over the next 12 months.
Equally, it is encouraging to note the 21% increase in the
number of REFLEX rental instruments on hire in 4Q14,
coupled with an increasing number of SRUs on hire and
improving demand for REFLEX HUB.
The expected increase in activity levels is largely due
to the return of some brown field expenditure and
recent capital raisings by junior exploration companies,
with some of these funds being converted into metres
drilled. Assets divested by the major companies are also
being acquired by smaller companies, with Imdex well
positioned to benefit.
Growing customer interest in our new technologies
provides an attractive platform for further sustainable
revenue growth through FY15 and beyond, with
customers focused on maximizing the efficiency and
productivity of their operations.
Imdex’s technologies enable customers to achieve this and
provide our Company with a growing sustainable annuity
revenue stream.
Activity within the energy sector remains robust and
continues to offer substantial year-on-year growth
opportunities for Imdex’s Oil and Gas Division.
As noted during the fourth quarter, the global drilling
and completion fluids market is expected to increase
by more than 20% to US$13.5 billion during calendar
year 2014, and the solids control and waste management
market is forecast to grow by more than 15% to US$4.3
billion. A small share of this market will make a significant
contribution to our growth.
We have historically continued to invest in growth
and diversification strategies through previous cycles,
which have positioned the business well for long-term
growth. At the same time, our Company maintains a
disciplined approach to investments in new products and
technologies. We are managing our inventory and working
capital with care and will continue to manage costs in a
measured and disciplined manner.
Moving into FY15, we are particularly encouraged by
improving minerals market activity at the end of FY14 and
into early FY15 as follows:
• Month-on-month increases in Minerals revenue
during 4Q14;
•
•
REFLEX rental instruments on hire are increasing,
up 21% from 3Q14; and
SRUs on hire increasing.
We are in a strong position to capitalise on a number
of opportunities within its core markets and forecasts
improved results for FY15.
34
KEY AREAS OF FOCUS AND GROWTH
INITIATIVES FOR FY15
With our technologies and services supporting customers
to increase the productivity and efficiency of their
operations, during FY15 we will focus on the following
growth initiatives:
•
Investing in our oil and gas business to accelerate
the Division’s growth;
• Marketing new technologies to new and existing
customers globally;
•
•
•
•
•
•
Increasing annuity revenue streams via REFLEX HUB;
Supporting customers to increase the productivity
and efficiency of their operations;
Increasing exposure and capabilities within non
mining applications, including HDD and
waterwell markets;
Leveraging our specialist expertise and product
development capabilities;
Increasing market share in previously
underpenetrated regions; and
Identification of strategic market opportunities and
acquisitions. Accordingly, we recently made the $3
million equity acquisition of 2iC Australia Pty Ltd,
a developer and supplier of patented exploration,
production and technical downhole products.
2iC’s portfolio of products and mechanical engineering
expertise will complement REFLEX’s capabilities and
further enhance its leading range of technologies. The
acquisition will position REFLEX as the single provider of
the most complete range of core orientation solutions,
for mining and exploration, globally.
We are becoming a stronger, more diversified business
to better meet the challenges presented by downturns in
the minerals sector. At the same time, our Company is
successfully growing its business in the oil and gas sector
and is continuing to develop its innovative products and
leading technologies. We are well on our way to becoming
the industry standard in providing innovative, simple-
to-use technologies, which improve the productivity,
efficiency and environmental impact of customers’
day-to-day operations.
I would like to thank our Executive Management Team
for their leadership and dedication to our Company
throughout a challenging year.
I would also like to extend my thanks to all of our global
team for their hard work, innovation and expertise – it
is a pleasure working with you all and I look forward
with enthusiasm for what we can achieve during FY15. I
would also like to thank Imdex’s valued customers and
shareholders for their ongoing support of our Company.
Yours Faithfully
Bernie ridgeway
managing director
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRt O PERATI ONAL OVERVIEW
Executive Management Team
mr. paul evans
mr. mark parsons
chief Financial officer and company Secretary
chief executive, amc minerals
• Chartered Accountant
•
Fellow of the Institute of Chartered Accountants
in Australia
• Chief Financial Officer and Company Secretary
since 17 October 2006
•
•
Extensive experience in commercial, general
management and financial roles
Industry experience covering the media,
manufacturing, mining services and
telecommunications industries.
•
•
34 years within the minerals and oil and gas
industries with Halliburton and BHP
Extensive management and leadership experience
- particular strengths include: setting strategy,
execution, cost management, business development
and company mergers
• Diverse geographical experience including Eurasia,
South East Asia, China and Australia.
mr. derek loughlin
chief executive, reFlex
mr. Sven maikranz
chief executive, amc oil & Gas
•
•
•
28 years experience within the drilling industry
8 years in executive management positions at Imdex
17 years with leading drilling company Boart
Longyear in engineering, operations, sales and global
exports, working in Ireland, Australia and Germany
• Honours Degree in Mining Engineering from the
Camborne School Of Mines, UK
• Diploma of Executive Development at the
International Institute for Management and
Development in Lausanne.
•
•
•
•
17 years within the oil and gas industry, including
11 years with MI-Swaco and Schlumberger
Extensive management and leadership experience
with a focus on driving profitability, business
turnarounds and start-ups
14 years on international assignments in Asia,
Europe and the USA
Executive Masters of Business. Masters of Business
and Masters in Chemistry.
35
2014 Imdex LImIted AnnuAL RepoRt OPERATIONA L OVERV IEW
Global Team
Imdex values talented people who are committed to the Company’s guiding principles and expected behaviours. Imdex’s
Recruitment & Selection Policy also ensures suitably qualified and experienced employees are engaged to meet business needs.
Key principles of the Policy include:
•
Recruitment of the person whose competencies best match requirements of the role;
• Compliance with Equal Employment Opportunity Legislation;
• Development of existing employees and where possible, provide employees with career opportunities; and
•
Support of local industry, communities and talent through the recruitment of local nationals in the first instance,
where ever possible.
Imdex also adheres to its Equal Employment Opportunity Policy, whereby all decisions affecting employment and career
development, including those associated with hiring, training, promotion, transfer and general working conditions are based
on the principle of merit. Discrimination in any form is considered an unacceptable practice, which is contrary to the spirit
and intent of this policy.
WORKFORCE PROFILE
As at 30 June 2014, Imdex employed
567 people globally and engaged
26 contractors. The number of
employees reduced by 6% from the
previous year (604), principally due
to a heightened focus on productivity
and cost savings in line with the
downturn of the minerals market.
During the year Imdex took
advantage of lower levels of
competition for talent in the
marketplace by continuing to
invest in high-calibre personnel –
particularly in key management and
strategic growth positions.
Retaining the knowledge, skills and
experience of personnel remains a
priority. The Company’s lower than
global industry average of voluntary
turnover (13%) demonstrates
Imdex’s employees are committed to
the Company and its future.
36
employees by region FY14
Employees by Region FY2014
Employees by Region FY2014
Employees by Region FY2014
Africa (49)
Asia Pacific (24)
Africa (49)
Africa (49)
Africa (49)
Australia (228)
Asia Pacific (24)
Asia Pacific (24)
Asia Pacific (24)
Central Asia (22)
Australia (228)
Australia (228)
Europe (95)
Australia (228)
Central Asia (22)
Middle East (22)
Central Asia (22)
Central Asia (22)
Europe (95)
North America (75)
Europe (95)
Europe (95)
Middle East (22)
South America (63)
Middle East (22)
Middle East (22)
North America (75)
Total Employees 567
North America (75)
North America (75)
South America (63)
South America (63)
South America (63)
Total Employees 567
Total Employees 567
Total Employees 567
Employees by Region FY2013
employees by region FY13
Employees by Region FY2013
Employees by Region FY2014
Employees by Region FY2013
Africa (60)
Asia Pacific (21)
Africa (60)
Africa (60)
Australia (234)
Africa (49)
Asia Pacific (21)
Central Asia (46)
Asia Pacific (21)
Asia Pacific (24)
Africa (60)
Australia (234)
Europe (102)
Australia (234)
Australia (228)
Asia Pacific (21)
Central Asia (46)
Middle East (8)
Central Asia (46)
Central Asia (22)
Australia (234)
Europe (102)
North America (66)
Europe (102)
Europe (95)
Middle East (8)
Central Asia (46)
South America (67)
Middle East (8)
Middle East (22)
North America (66)
Total Employees 604
Europe (102)
North America (66)
North America (75)
South America (67)
Middle East (8)
South America (67)
South America (63)
Total Employees 604
North America (66)
Total Employees 604
Total Employees 567
South America (67)
Total Employees 604
Gender Diversity FY14
Gender Diversity FY14
Employees by Region FY2013
Gender Diversity FY14
Africa (60)
Asia Pacific (21)
Female 23% (129 employees)
Australia (234)
Male 77% (438 employees)
Central Asia (46)
Female 23% (129 employees)
Total Employees 567
Male 77% (438 employees)
Europe (102)
Total Employees 567
Middle East (8)
Gender Diversity FY13
Gender Diversity FY13
North America (66)
Female 23% (129 employees)
South America (67)
Male 77% (438 employees)
Total Employees 604
Total Employees 567
Gender Diversity FY13
Gender Diversity FY14
Female 24% (142 employees)
Male 76% (462 employees)
Female 24% (142 employees)
Male 76% (462 employees)
Female 23% (129 employees)
Female 24% (142 employees)
Male 77% (438 employees)
Male 76% (462 employees)
Total Employees 567
Gender Diversity FY13
Female 24% (142 employees)
Male 76% (462 employees)
Total Number of Contractors
Total Number of Contractors
FY2012 (28)
FY2013 (31)
FY2012 (28)
FY2013 (31)
Total Number of Contractors
FY2012 (28)
FY2013 (31)
FY2012 (28)
FY2013 (31)
Total Number of Contractors
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRt Employees by Region FY2014
Employees by Region FY2014
Employees by Region FY2014
Employees by Region FY2013
Employees by Region FY2013
Employees by Region FY2014
Employees by Region FY2013
Africa (49)
Asia Pacific (24)
Australia (228)
Central Asia (22)
Europe (95)
Middle East (22)
North America (75)
South America (63)
Total Employees 567
Africa (60)
Asia Pacific (21)
Australia (234)
Africa (49)
Central Asia (46)
Asia Pacific (24)
Europe (102)
Australia (228)
Middle East (8)
Central Asia (22)
North America (66)
Europe (95)
South America (67)
Middle East (22)
Total Employees 604
North America (75)
South America (63)
Total Employees 567
Africa (49)
Asia Pacific (24)
Australia (228)
Central Asia (22)
Europe (95)
Middle East (22)
Africa (49)
North America (75)
Asia Pacific (24)
South America (63)
Australia (228)
Total Employees 567
Central Asia (22)
Europe (95)
Middle East (22)
North America (75)
South America (63)
Total Employees 567
Africa (60)
Asia Pacific (21)
Australia (234)
Central Asia (46)
Africa (60)
Europe (102)
Asia Pacific (21)
Middle East (8)
Australia (234)
North America (66)
Central Asia (46)
South America (67)
Europe (102)
Total Employees 604
Middle East (8)
North America (66)
Gender Diversity FY14
Employees by Region FY2013
Africa (60)
Asia Pacific (21)
Australia (234)
Central Asia (46)
Europe (102)
Female 23% (129 employees)
Middle East (8)
Male 77% (438 employees)
North America (66)
Total Employees 567
South America (67)
Total Employees 604
Gender Diversity FY13
Gender Diversity FY14
South America (67)
Total Employees 604
Gender Diversity FY14
O PERATI ONAL OVERVIEW
Female 23% (129 employees)
Male 77% (438 employees)
Total Employees 567
Female 23% (129 employees)
Male 77% (438 employees)
Total Employees 567
Gender Diversity FY13
Gender diversity FY14
Gender Diversity FY14
Gender diversity FY13
Gender Diversity FY13
Female 23% (129 employees)
Female 23% (129 employees)
Female 24% (142 employees)
Male 77% (438 employees)
Male 77% (438 employees)
Male 76% (462 employees)
Total Employees 567
Total employees 567
Female 24% (142 employees)
Female 24% (142 employees)
Female 24% (142 employees)
Male 76% (462 employees)
Male 76% (462 employees)
Male 76% (462 employees)
Total employees 604
Total Number of Contractors
Total Number of Contractors
Total Number of Contractors
Gender Diversity FY13
WORKFORCE EQUALITY
AND DIVERSITY
During the reporting year Imdex updated its Code of
Conduct in order to ensure that the Company provides a
fair and equal workplace that is free from discrimination.
Workplace diversity is important to Imdex and the
Company is committed to providing a balanced and
inclusive working environment.
Female 24% (142 employees)
Male 76% (462 employees)
Imdex’s annual compliance report to the Workplace
Gender Equality Agency confirmed the Company is
compliant with the Workplace Gender Equality Act 2012
(Act). During FY14 Imdex maintained the proportion
of women in its global workforce at 23%. The Company
also values the expertise and guidance of a female
Director and has female representation in its Senior
Management Team.
FY2012 (28)
FY2013 (31)
FY2012 (28)
FY2013 (31)
FY2012 (28)
FY2013 (31)
DEVELOPING A HIGH PERFORMANCE
CULTURE
Imdex continues to foster a culture of achievement and
innovation with a highly engaged and effective team.
Essential employee training continued throughout the
year, however, cost management limited the Company’s
investment in non-essential training and development
programs.
Throughout FY14 Imdex carried out the following
initiatives to strengthen, support and engage its diverse
global team:
•
•
•
Introduction and implementation of Document
Management System to HR;
Long Term Incentive Plan revision to create a
stronger link between performance and reward and
align the interests and aims of Imdex employees
and shareholders;
Short Term Incentive Plan revision to instill a
culture focused on specific business objectives and
align the reward with business results; and
• Global salary reviews awarded in line with cost of
living increases.
Total Number of Contractors
FY2012 (28)
FY2013 (31)
37
2014 Imdex LImIted AnnuAL RepoRt OPERATIONA L OVERV IEW
Community Involvement
Imdex supports events and initiatives undertaken by its regional operations to assist their local communities
and charity fundraisers.
Support during FY14 included:
•
•
•
The Movember Foundation;
Breast Cancer Care WA;
The Good Samaritan Children’s Home and Rehabilitation Centre, Kenya;
• Grupo Simsa (Gas Natural Industrial, Mexico); and
• WHOlives.org
The Good Samaritan Children’s Home
and Rehabilitation Centre
The Village Drill, Tanzania
HOLISTIC SERVICES AND SUPPORT FOR
NEEDY AND VULNERABLE CHILDREN
The Good Samaritan Children’s Home and
Rehabilitation Center located in Mathare Valley near
the Kosovo slum, was founded to help the victims of
teenage pregnancy, orphans, family breakdown and
separation of spouses leading to abandonment of
children and possible child abuse. The home provides
shelter, food, education and clothing to these children
irrespective of age, race, gender and religious belief.
Its Vision is to be a leading well managed institution
offering holistic services and support for needy and
vulnerable children in Kenya.
WATER, HEALTH & OPPORTUNITY
AMC was proud to assist a small not for profit
organization, Water, Health, Opportunity (WHOlives. org)
based in Salt Lake City, Utah.
WHOlives.org aims to save and improve the lives of
millions by providing easy access to clean water via the
Village Drill – a human powered drill.
AMC’s products, training and phone support enabled
WhoLives.org to produce safe drinking water wells in very
remote areas. Hundreds of people in these villages are
benefiting from the work of WhoLives.org – Imdex is glad
to be a part of this humanitarian initiative.
38
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRt O PERATI ONAL OVERVIEW
Quality, Health, Safety & Environment
COMPLIANCE, REVIEW AND CONTINUAL IMPROVEMENT
Regular risk assessments are carried out at all of Imdex’s global operational facilities. These assessments then
underpin site specific systems, schedules, registers, controls and procedures.
To ensure the Company’s high level of system compliance is maintained, Imdex Global QHSE representatives
perform scheduled audits against established processes and their associated procedures or standards. Audit reports
are validated by the Global QHSE Manager before release and action assignment within the Company’s global
continual improvement database, the Quality Alert system.
To close the system review cycle, additional regular QHSE Management reviews are performed at all operational
facilities to ensure system effectiveness and to monitor performance.
HEALTH AND SAFETY
During FY14 Imdex maintained
its focus on reducing the risk of
injuries globally and successfully
reduced its Total Recordable
Injuries (TRIs) for the year. The
Company also adopted the more
stringent APPEA oil and gas
industry results to benchmark
its performance.
Over the last twelve months two
medical treatment injuries and
one lost time injury occurred.
Imdex Group lost time Injury Frequency rate (ltIFr)
June 2014 = 0.88 (incidents per million hours worked)
s
t
n
e
d
c
n
i
i
f
o
o
n
&
F
R
T
L
I
4
3
2
1
0
JUL 13
SEPT 13
NOV 13
JAN 14
MAR 14
MAY14
No. of Lost Time Injuries
LTIFR
LTIFR Benchmark (APPEA = 0.8)
total reportable Injury Frequency rate (trIFr)
by division FY14
16
14
12
10
8
6
4
2
0
7.61
0
JUL 13
AUG 13
SEPT 13 OCT 13 NOV 13 DEC 13
JAN 14
FEB 14 MAR 14
APR14
MAY14
JUN 14
REFLEX Injuries
AMC Oil & Gas Injuries
AMC
APPEA Benchmark
AMC Injuries
REFLEX
AMC Oil & Gas
39
2014 Imdex LImIted AnnuAL RepoRt
OPERATIONA L OVERV IEW
HAZARD IDENTIFICATION
During FY14 Imdex introduced a hazard
identification process utilising a Take-5
card. The process is a pre-task hazard
identification tool for non-routine tasks
where there is no procedure.
The pocket size hazard identification card
assists employees to determine the safest
method to proceed, based on a risk rating.
The card guides employees through the
steps for completion, hazard identification,
risk assessment, risk rating and determining
control measures that may be used to do
the job safely.
AMC’S GAME-CHANGING TECHNOLOGY
WINS AMEC ENVIRONMENTAL AWARD FOR
SOLIDS REMOVAL UNIT
The environmental benefits of AMC’s unique Solids Removal
Unit (SRU) were recognised at the AMEC Convention
Award Winners’ Dinner held at Crown Perth on
2 July 2014.
AMC General Manager – Asia Pacific, Mr Craig Weston,
said he was really pleased the SRU won the AMEC
Environmental Award, as a lot of work has been invested
in its technology to benefit customers within the global
minerals industry.
‘The SRU was developed with our customers to reduce
their environmental footprint while enhancing the efficiency
of their drilling operations. The unit has demonstrated
significant reductions in water usage, site rehabilitation and
contamination risks – at some site customers have achieved
a 90% reduction in water’, said Mr Weston.
The AMEC Environment Award reflects the increasing
importance of managing environmental impacts of
mineral mining and exploration projects. It recognises a
company that goes above and beyond in its management of
environmental impacts or is developing innovative methods
to achieve better long-term environmental outcomes.
Mr Weston added the AMC SRU also provides significant
economic benefits to customers, such as effective cuttings
management, enhanced mud properties, less wear-and-tear
to drilling components and reduced mud usage.
40
NEW SAFETY DATA SHEETS
Imdex worked with Chemwatch to develop an
advanced online product labelling system.
This initiative utilises GHS regulatory MSDS
data from the Chemwatch database and
displays it in a customised label format in
four languages. This new system enables
the Company to easily print product labels
that are compliant to country regulatory
requirements from any of its global locations.
ENVIRONMENT
Imdex’s production of emissions and
consumption of energy do not meet the
reporting thresholds of the National
Greenhouse and Energy Reporting (NGER)
Act, therefore it is not required to provide a
formal environmental report. The company,
however, is integrating environmental
requirements into its day-to-day operational
procedures to ensure environmental
considerations are standard practice.
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRt O PERATI ONAL OVERVIEW
ISO (SGS) CERTIFICATIONS
During the year, all Imdex certified sites successfully maintained their certifications to ISO9001 (Quality Assurance),
OHSAS18001 (Heath & Safety) and ISO14001 Environmental.
In total Imdex has 55 certifications globally and a global certification programme with SGS
(largest certification body in the world).
Certified countries include Australia, Brazil, Canada, Chile, Germany, Romania, South Africa and the UK.
This certification enables these entities to use the above SGS certification marks.
During FY14 the following certifications were achieved:
•
AMC Oil & Gas Adelaide received additional certification ISO 14001;
• Wildcat Chemicals received additional certification to OHSAS18001 and ISO 14001;
•
•
•
•
AMC Brisbane received additional certification ISO 14001;
REFLEX Brisbane received additional certification ISO 14001;
REFLEX Kalgoorlie received certification to ISO9001 and OHSAS18001; and
AMC Kalgoorlie received certification to ISO9001 and OHSAS18001.
Some of the REFLEX and AMC Brisbane team who received additional certification ISO 14001
41
2014 Imdex LImIted AnnuAL RepoRt OPERATIONA L OVERV IEW
Managing Risk
MANAGING RISKS TO DELIVER LONG-TERM SHAREHOLDER VALUE
The identification and management of risk is central to delivering long-term value to Imdex’s shareholders.
Each year, as part of the Company’s annual strategic planning cycle, the Board reviews and considers the risk
profile for the entire organisation.
Imdex has also established a formal framework for governance of managing risk. The principal aim of Imdex’s
risk management governance structure is to enhance the system of internal control to create a culture of
risk-informed decision making to manage business risks, enhance the value of shareholder investments,
and safeguard assets.
The Company is committed to an effective risk management process, which enables management to operate
a risk-based approach in establishing internal control systems to effectively identify, mitigate and/or control
significant risks.
The risk management framework is used to provide governance for the identification, assessment and
management of risks. Risks are rated using a methodology outlined in ISO 31000:2009 – Risk Management –
Principles and Guidelines. When a risk is assessed as material, it is reported to the senior management group on
a monthly basis until it is satisfactorily mitigated.
All employees globally are responsible for being aware of potential business and operational risks and the
supporting risk management frame work established by the Audit, Risk and Compliance Committee (ARCC).
Employees are also requested to promptly communicate significant issues to their line manager in accordance
with the Group’s risk management framework.
Each business unit is responsible for incorporating risk management activities and controls into their daily
operations and to monitor risks relating to the unit. The risk management framework incorporates the
following factors:
• Consideration of other ASX principles on corporate governance as they relate to risk management;
• Consultation with the Board, senior management and the leadership group in identifying the
business risk areas;
• Consideration of the Imdex quality assurance, quality control and health and safety risk assessment
system to ensure a common language is used across both operational and commercial environments;
• Development of a Corporate risk register to record and manage risks by assigning an owner,
designing mitigating treatments and then applying the treatment; and
•
Identification of areas where additional work is required by an internal audit and/or business unit
to reduce risk exposure.
COMPLIANCE
INTERNAL AUDIT
CORPORATE
GOVERNANCE
RISk MANAGEMENT
42
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRt O PERATI ONAL OVERVIEW
Ongoing Product Development
SOLIDS REMOVAL UNITS – THE WAY OF THE FUTURE
AMC’s unique Solids Removal Unit (SRU) provides a highly innovative alternative to traditional drilling sumps and is being
described as the way of the future by drilling contractors and resource companies worldwide. The closed-loop fluid
system significantly reduces the environmental impact and greatly improves the efficiency of drilling operations.
Drilling fluid is circulated directly from the drill collar to the SRU’s shaker, then drill solids are removed via the centrifuge.
Cleaned drilling fluids are then returned to the drill hole.
The highly mobile unit also incorporates a mixing chamber and weir system, which enables drilling fluids to be added
accurately and efficiently.
During FY14 Imdex successfully commercialised underground and heli-portable options to meet customer demand.
Underground Solids Removal Unit (UG-SRU)
Heli-portable Solids Removal Unit (HP-SRU)
43
2014 Imdex LImIted AnnuAL RepoRt OPERATIONA L OVERV IEW
CASE STUDY:
AMC’S UNDERGROUND SRU SIGNIFICANTLY REDUCED WATER
COSTS FOR UNDERGROUND DRILLING OPERATIONS
CASE
STUDY:
Background
In many remote areas water is a scare commodity.
When coupled with underground mining operations,
its management becomes challenging and costly.
AMC’s customer took the initiative to seek ways to
reduce the amount of water and mud used. A trial was
conducted comparing two holes – one was using the
AMC’s Underground Solids Removal Unit (UG-SRU)
and the other traditional methods.
Key challenges
Reduce water and mud consumption, together with
associated costs for underground drilling operations.
Solution
AMC’s UG-SRU was trialled to determine the
reduction in water and mud consumption, together
with the associated economic benefits.
results
The trial demonstrated economic benefits for the
drilling operator and the mining resource company.
A significant reduction in water (90%) and mud
consumption (55%), together with associated costs,
were achieved when utilizing the UG-SRU. The trial
also highlighted the success of the unit’s small footprint
and its ability to operate when water supply is
interrupted due to technical difficulties.
Mud uSAGE
WAtEr CoStS
Slurry VoluME
down BY
55%
down BY
90%
down BY
96%
$7,134*
net SavInGS
per rIG
per month
* Does not include rental of the UG-SRU as the terms of the contact vary depending on the project.
44
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRt O PERATI ONAL OVERVIEW
CASE
STUDY:
CASE STUDY:
AMC’S HELI-PORTABLE SRU RESOLVED CHALLENGES
AT REMOTE AND INACCESSIBLE SITE
Background
The customer’s diamond drilling operation was in a
remote location within the Flinders Ranges, South
Australia. The site was not accessible by road and only
a small footprint for drilling was available due to the
steep hills and dense vegetation.
Key challenges
•
Solids removal at a remote site -
inaccessible by road
• Minimal drilling footprint
•
Reducing environmental impact
Solution
The customer trialled AMC’s Heli-portable Solids
Removal Unit (HP-SRU) – the unit’s light, highly mobile
and compact design can be installed for operation at
remote and inaccessible sites within four heli-lifts.
results
Lifting and placement of AMC’s HP-SRU was
completed within 20 minutes following its delivery.
The drill crew, geologist and pilot were impressed with
how fast and easy it was to mobilise for operation –
no aligning of nuts and bolts was required. The unit’s
compact design also reduced the drilling footprint
by 70%; limited clearing of vegetation; eliminated the
need to dig earthen sumps; and reduced the amount of
water required by 60%.
SEt up
drillinG
footprint
WAtEr uSAGE
Mud CoSt
opErAtionAl
EffiCiEnC y
20
mInuteS
down BY
70%
down BY
60%
down BY
79%
SavInG oF
$1,800
EnVironMEntAl
CoStS
SavInG oF
$2,500
diSpoSAl of
WAStE Mud
SavInG oF
up to
$4,000
$9,100*
(8 dAy triAl pEriod)
total
SavInGS per
hole/rIG*
* Does not include rental of the HP-SRU as the terms of the contact vary depending on the project.
45
2014 Imdex LImIted AnnuAL RepoRt OPERATIONA L OVERV IEW
GAME-CHANGING TECHNOLOGY “ESSENTIAL” TO SURVIVE THE CYCLES
REFLEX recently launched three new technologies, which are playing a pivotal role in the future of global exploration and
mining operations.
The leader of innovative technology for field data collection and analysis, officially unveiled its REFLEX XRF and REFLEX
TN14 GYROCOMPASS at the Mining Indaba expo in South Africa.
Commenting on the Company’s commitment to innovation and investment in ongoing product development, REFLEX’s
Chief Executive, Derek Loughlin, said:
“It is essential. Our clear focus is to be ahead of the game and deliver real economic and operational benefits
to our customers.
“While the downturn of the global minerals industry is challenging for everyone within the sector, it also presents
opportunities for our business.
Resource, drilling and service companies are looking increasingly to technologies to reduce costs, enhance the efficiencies
of their operations and remain competitive – our technologies are specifically designed to achieve these objectives.”
Mr Loughlin said he had experienced a great deal during his 28 years within the drilling industry, however, he was now
witnessing fundamental operational changes that were rapidly gaining momentum.
“Our customers want greater accuracy, visibility and flexibility when collecting, accessing and analysing their data – they
need to make informed decisions faster from any location and at any time without the time delays and inefficiencies that
typified the past”, said Mr Loughlin.
Each of REFLEX’s new technologies enables standalone customer benefits, yet form part of the company’s integrated
product offering via REFLEX Connect and REFLEX HUB.
REFLEX CONNECT allows seamless transfer of survey data from the drill rig to a secure, central database for review in
near real-time. Survey and geochemical data is transferred automatically from the digital instrumentation to REFLEX HUB
via a mobile device. Geologists can view and approve survey records and then commit them for storage.
Data is then available for incorporation with other core geological data sets or exporting directly into mining and GIS
software packages.
REFLEX HUB is a complete Software-as-a-Service solution that seamlessly transfers data – including maintenance,
operational, safety, drilling, rig operational, survey, accreditation and geological data – from the drill site to a secure central
database, where it can be accessed via a web browser from any location worldwide.
REFLEX Gyrocompass
REFLEX XRF
46
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRt O PERATI ONAL OVERVIEW
Looking to FY15
LONG-TERM STRATEGY
• Continue growth of Imdex’s global business;
•
Expand into new markets, with particular focus on the oil and gas sector;
• Maintain product leadership through investment in product development;
•
•
Increase rental based revenue; and
Achieve operational efficiencies.
FY15 GROWTH INITIATIVES AND KEY AREAS OF FOCUS
•
•
•
Strong cost discipline and prudent working capital management;
Increasing market share in previously under-penetrated regions;
Increasing exposure and capabilities within non-mining applications, including
HDD and waterwell markets;
• Marketing new technologies to new and existing customers globally;
•
•
•
•
Increasing annuity revenue streams via REFLEX HUB;
Leveraging Imdex’s specialist expertise and product development capabilities;
Investing in Imdex’s oil and gas business to accelerate the Division’s growth; and
Supporting customers to increase the productivity and efficiency
of their operations.
47
2014 Imdex LImIted AnnuAL RepoRt FY14 FINANCI AL R EPORT
[FINANCIALS SECTION]
AMC Minerals mud testing in the field
48
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRt FY14
financial report
Directors’ report
AuDitor’s inDepenDence DeclArAtion
inDepenDent AuDitor’s report
Directors’ DeclArAtion
corporAte GovernAnce stAtement
consoliDAteD stAtement of profit or loss AnD
other comprehensive income
consoliDAteD stAtement of finAnciAl position
consoliDAteD stAtement of chAnGes in equity
consoliDAteD stAtement of cAsh flows
notes to the finAnciAl report
50
65
66
68
69
74
75
76
77
78
ADDitionAl securities exchAnGe informAtion
127
49
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2014
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 2014.
In order to comply with the provisions of the Corporations Act 2001, the Directorsʼ 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
76
Mr B W Ridgeway
Managing Director
60
Mr K A Dundo
Independent, Non
Executive Director
61
Mr M Lemmel
Independent, Non
Executive Director
75
Ms E Donaghey
Independent, Non
Executive Director
56
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
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
Non Executive Director of Australian Renewable Energy Agency
Previously held a range of commercial and senior management positions in
Woodside Petroleum and BHP Petroleum
50
Page 1 of 79
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2014
(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
ORH Limited
Non Executive Director
2007 – Current
Non Executive Director
Non Executive Director
Non Executive Director
2010 – Current
2008 – Current
2013 – 2014
Ms E Donaghey
St Barbara Limited
Non Executive Director
2011 – 2014
(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) Directorsʼ Meetings
The following table sets out the number of Directorsʼ meetings (including meetings of committees of Directors) held during the financial
year and the number of meetings attended by each Director (while they were a Director or committee member). During the financial
year, eight Board meetings, four Audit and Compliance Committee meetings and four Remuneration Committee meetings were held.
Board of Directors
(Number)
Audit and Compliance
Committee
(Number)
Remuneration Committee
(Number)
Held
Attended
Held
Attended
Held
Attended
R W Kelly
B W Ridgeway
K A Dundo
M Lemmel
E Donaghey
8
8
8
8
8
8
8
7
7
8
4
-
4
-
4
4
-
4
-
4
-
-
4
4
4
-
-
4
2
4
(e) Directorsʼ Shareholdings
At the date of this report the Directors held the following interests in shares, options in shares and performance rights 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
(#)
Performance Rights
Held Directly ^
(#)
-
380,000
128,876
2,214,630
-
150,000
562,000
210,000
-
-
-
-
-
-
-
-
718,136
-
-
-
^ - Performance rights expire either on failure to maintain employment tenure or on failure to satisfy performance hurdles. Refer to note
33 for further details.
Details of performance rights on issue at the end of the financial year are disclosed in note 33.
Page 2 of 79
51
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2014
(f)
Remuneration Report (audited)
Remuneration policy for Directors and Executives
Non Executive Directors
The Board seeks the approval of Shareholders in relation to the aggregate of Non Executive Directorsʼ 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 Companyʼs performance
in order to preserve independence. Other than statutory superannuation, no Non Executive Director is entitled to any additional benefits
on retirement from the Company.
Management of the Company believes that in order to retain quality Non Executive Directors on the Board, some incentive to maintain
their future involvement, commitment and loyalty to the Company is required on certain occasions over and above nominal Directors'
fees. No Director received a payment during the current or prior years as consideration for agreeing to hold the relevant position.
The maximum total remuneration payable to Non Executive Directors was approved by Shareholders at the 2006 Annual General
Meeting and is currently $500,000. In the current year remuneration to Non Executive Directors totalled $434,138, including statutory
superannuation. The Board determines the apportionment of directorsʼ fees between each Director.
Managing Director
The Managing Directorʼs remuneration is determined by the Remuneration Committee with due regard to current market rates.
The Managing Director has a short term incentive bonus up to 35% 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 Imdexʼs 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 Groupʼs
performance.
From time to time performance rights may be issued to the Managing Director as a long term performance incentive. The portion of the
Managing Directorʼs compensation package that comprises performance rights is linked to the Companyʼs performance. The number of
performance rights granted is determined with regard to current market trends. The issue of any such 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 Imdexʼs 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 performance rights may be issued to the Executives and staff as a long term performance incentive. The portion of
remuneration package that comprises performance rights is linked to the Companyʼs performance. The number of performance rights
granted is determined with regard to current market trends. The issue of any such performance rights requires the approval of
Shareholders in General Meeting.
All Executives are employed under permanent contracts. Mr D J Loughlinʼs and Mr P A Evanʼs contracts provide a six month notice
period upon termination and a six month termination pay out. Mr S Maikranzʼs contract specifies a 12 week notice period in the event
that the contract is terminated. If the employment is terminated by Imdex after the probation period and prior to completion of 1 (one)
year employment, Imdex will pay as compensation the monthly base salary times the number of months remaining to complete 12
months. Mr M Parsonsʼs contract specifies a 12 week notice period in the event that the contract is terminated.
No additional benefits above those already entitled to will become payable on termination.
52
Page 3 of 79
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2014
(f)
Remuneration Report (audited) (continued)
Director and Key Management Personnel details
The Directors of Imdex Limited during the year were:
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
(i)
(ii)
(iii)
(iv)
(v) Ms E Donaghey (Non Executive Director).
The term ʻKey Person Managementʼ is used in this remuneration report to refer to the following persons:
Mr D J Loughlin (Chief Executive Reflex);
(i)
(iii) Mr P A Evans (Company Secretary and Chief Financial Officer).
(iii) Mr M Parsons (Chief Executive AMC Minerals); commenced 1 October 2013
(iv) Mr S Maikranz (Chief Executive AMC Oil & Gas); commenced 17 March 2014
(v) Mr G E Weston (Project General Manager; General Manager: Oil & Gas Division); resigned 31 December 2013
Except as noted above Directors and Key Management Personnel held their current position for the whole of the financial year and
since the end of the financial year.
Elements of Director and Key Management Personnel 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 – comprise payments made under the Imdex Loyalty Programme rewarding long term service with the Imdex
Group.
Earnings and Movements in Shareholder Wealth
The table below sets out summary information about the Consolidated Entityʼs earnings and movements in shareholder wealth for the
five years to June 2014:
30 June 2014
30 June 2013
30 June 2012
30 June 2011
30 June 2010
Revenue – continuing and
discontinued operations
($000s)
Net (loss) / profit before tax
from continuing operations
($000s)
Net (loss ) / profit after tax
from continuing operations
($000s)
Share price at start of year
(cents)
Share price at end of year
(cents)
Interim dividend (cents) – fully
franked
Final dividend (cents) – fully
franked
Basic (loss) / earnings per
share (cents) – continuing
operations
Diluted (loss) / earnings per
share (cents) – continuing
operations
183,557
232,921
269,652
205,334
135,625
(7,062)
28,510
67,500
38,593
(21,071)
(5,277)
19,383
45,777
29,002
(21,548)
62.0
63.0
-
-
176.0
62.0
2.50
0.40
215.0
176.0
3.25
4.00
73.0
215.0
1.75
2.75
64.5
73.0
-
-
(2.50)
9.24
22.34
14.69
(11.05)
(2.50)
9.14
21.85
14.25
(11.05)
Page 4 of 79
53
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
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2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
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55
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2014
(f)
Remuneration Report (audited) (continued)
(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 Directorʼs
compensation is reviewed and determined annually by the Remuneration Committee.
In the current year Mr Ridgeway did not earn a cash bonus as specified targets were not met. A bonus of $280,000 could have been
earned by Mr Ridgeway had the targets been met. Mr Ridgeway did not earn a cash bonus in the prior year as specified targets were
not met. A bonus of $320,000 could have been earned by Mr Ridgeway had the targets been met.
No options were granted to Mr Ridgeway in the current year or in the prior year.
The grant of 300,000 performance rights to Mr Ridgeway in the current year was approved by the shareholders at the Annual General
Meeting on 17 October 2013. 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 FY16 financial
statements on or about August 2016, which will determine the number of performance rights to be issued. Refer note 33 for further
details.
The grant of 264,818 performance rights to Mr Ridgeway in the prior year was approved by the shareholders at the Annual General
Meeting on 20 October 2012. 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 FY15 financial
statements on or about August 2015, which will determine the number of performance rights to be issued. Refer note 33 for further
details.
196,579 Performance Rights were issued to Mr Ridgeway for nil consideration after approval at the FY 10 AGM. These performance
rights were subject to performance hurdles being met. Following the successful satisfaction of the majority of the performance hurdles
over the 3 year measurement period, 128,876 shares were issued in October 2013 to Mr Ridgeway.
(ii) 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 and a six month pay out
upon termination. Additional performance incentives may be agreed between Mr Loughlin and Imdex Limited from time to time.
In the current year Mr Loughlin did not earn a cash bonus as specified targets were not met. A bonus of $100,000 could have been
earned by Mr Loughlin had the targets been met. Mr Loughlin did not earn a cash bonus in the prior year as specified targets were not
met. A bonus of $176,000 could have been earned by Mr Loughlin had the targets been met.
No options were granted to Mr Loughlin in the current or prior year.
Mr Loughlin was granted 174,603 performance rights in the current period under the Performance Rights Plan. As the hurdles
applicable to these performance rights were not achieved all of the performance rights expired.
Mr Loughlin was granted 58,239 performance rights in 2013 under the Performance Rights Plan. As the hurdles applicable to these
performance rights were not achieved all of the performance rights expired.
During the year Mr Loughlin was allocated 53,982 shares upon the successful achievement of hurdles relating to performance rights
granted prior to 2013.
During the prior year Mr Loughlin was allocated 53,981 shares upon the successful achievement of hurdles relating to performance
rights granted prior to 2013.
(iii) 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 and a six month pay out upon
termination. Additional performance incentives may be agreed between Mr Evans and Imdex Limited from time to time.
In the current year Mr Evans did not earn a cash bonus as specified targets were not met. A bonus of $97,850 could have been earned
by Mr Evans had the targets been met. Mr Evans did not earn a cash bonus in the prior year as specified targets were not met. A bonus
of $172,000 could have been earned by Mr Evans had the targets been met.
No options were granted to Mr Evans in the current or prior year.
Mr Evans was granted 170,635 performance rights in the current period under the Performance Rights Plan. As the hurdles applicable
to these performance rights were not achieved all of the performance rights expired.
Mr Evans was granted 56,818 performance rights in 2013 under the Performance Rights Plan. As the hurdles applicable to these
performance rights were not achieved all of the performance rights expired.
Page 7 of 79
56
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2014
(f)
Remuneration Report (audited) (continued)
During the year Mr Evans was allocated 49,387 shares upon the successful achievement of hurdles relating to performance rights
granted prior to 2013.
During the prior year Mr Evans was allocated 49,388 shares upon the successful achievement of hurdles relating to performance rights
granted prior to 2013.
(iv) Mr M Parsons is a party to a service contract with Imdex Limited, which sets out a fixed compensation package reviewable
annually. The service contract specifies a 12 week notice period in the event that the contract is terminated.
In the current year Mr Parsons did not earn a cash bonus as specified targets were not met. A bonus of $55,000 could have been
earned by Mr Parsons had the targets been met.
No options or performance rights were granted to Mr Parsons in the current year.
(v) Mr S Maikranz is a party to a service contract with Imdex Limited, which sets out a fixed compensation package reviewable
annually. The service contract specifies a 12 week notice period in the event that the contract is terminated. If the employment is
terminated by Imdex after the probation period and prior to completion of 1 (one) year employment, Imdex will pay as compensation the
monthly base salary times the number of months remaining to complete 12 months.
In the current year Mr Maikranz did not earn a cash bonus as specified targets were not met. A bonus of $16,500 could have been
earned by Mr Maikranz had the targets been met.
No options or performance rights were granted to Mr Maikranz in the current year.
(vi) Mr G E Weston ceased to be Project General Manager; General Manager: Oil & Gas Division on 31 December 2013 upon the
termination of his contract with Imdex Limited. Per his service contract, Mr Weston received a twelve month pay out upon his
termination of employment.
No cash bonus was earned in the current or prior year.
No options were granted to Mr Weston in the current or prior year.
Mr Weston was granted 192,460 performance rights in the current period under the Performance Rights Plan. As the hurdles applicable
to these performance rights were not achieved due to his employment tenure ceasing all of the performance rights expired.
Mr Weston was granted 65,341 performance rights in 2013 under the Performance Rights Plan. As the hurdles applicable to these
performance rights were not achieved all of the performance rights expired.
During the year Mr Weston was allocated 54,245 shares upon the successful achievement of hurdles relating to performance rights
granted prior to 2013.
During the prior year Mr Weston was allocated 54,245 shares upon the successful achievement of hurdles relating to performance rights
granted prior to 2013.
Bonuses granted to Directors and Key Management Personnel
During the current year there were no bonuses earned by Directors and Key Management Personnel. Bonuses are paid on the
achievement of performance criteria specific to the individual and as performance hurdles were not met in the current year then no
bonus was paid. The performance criteria used are chosen by the Remuneration Committee annually and are linked to the financial
performance of the company and hence shareholder value. Performance criteria typically revolve around areas of risk management,
people development, systems improvement and EBITA performance. Performance criteria are reviewed by the Remuneration
Committee against budgeted outcomes before granting bonuses.
Imdex Loyalty Programme
Imdex Limited has introduced a new global Loyalty Programme in recognition of employees with long standing years of service.
Employees with 5, 10, 15, 20 or 25 years employment with Imdex will be entitled to rewards for their years of service. Rewards range
from a $500 voucher for 5 years' service through to a cash equivalent of 3 and 6 monthsʼ salary for employees who remain with the
business for 20 and 25 years respectively.
Page 8 of 79
57
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2014
(f)
Remuneration Report (audited) (continued)
Key Management Personnel Equity Holdings
Ke y m a na ge m e nt pe rsonne l e quity holdings
2014
Ba la nce a t
1 July 2013
Gra nte d a s
com pe nsa tion
M r B W Ridgeway
M r R W Kelly
M r K A Dundo
M r M Lemm el
M s E Donaghey
M r D J Loughlin
M r P A Evans
M r M Parsons 1
M r S Maikranz 2
M r G E W eston 3
No.
2,214,630
380,000
150,000
648,000
210,000
207,343
346,657
-
-
499,151
4,655,781
No.
128,876
-
-
-
-
53,982
49,387
-
-
54,245
286,490
Re ce ive d on
e x e rcise of
options
No.
Ne t othe r cha nge
#
Ba la nce a t 30
June 2014
Ba la nce he ld
nom ina lly
No.
No.
No.
-
-
-
-
-
-
-
-
-
-
-
-
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(86,000)
-
(261,325)
-
-
-
(553,396)
(900,721)
2,343,506
380,000
150,000
562,000
210,000
-
396,044
-
-
-
4,041,550
-
-
-
-
-
-
-
-
-
-
-
2013
Ba la nce a t
1 July 2012
Gra nte d a s
com pe nsa tion
Re ce ive d on
e x e rcise of
options
Ne t othe r cha nge
#
Ba la nce a t 30
June 2013
Ba la nce he ld
nom ina lly
M r B W Ridgeway
M r R W Kelly
M r K A Dundo
M r M Lemm el
M s E Donaghey
M r G E W eston
M r D J Loughlin
M r P A Evans
No.
2,214,630
380,000
150,000
730,921
210,000
1,040,299
253,362
382,269
5,361,481
# - represent on m arket transactions
1 Commenced 01/10/2013
2 Comm enced 17/03/2014
3 Resigned 31/12/2013
No.
No.
No.
No.
No.
-
-
-
-
-
54,245
53,981
49,388
157,614
-
-
-
-
-
-
-
-
-
-
-
-
(82,921)
-
(595,393)
(100,000)
(85,000)
(863,314)
2,214,630
380,000
150,000
648,000
210,000
499,151
207,343
346,657
4,655,781
-
-
-
-
-
-
-
-
-
Value of performance rights granted to Directors and Key Management Personnel
Performance rights are granted to Key Management Personnel 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 allocation/allotment of one fully paid Imdex
Limited ordinary share for nil consideration should specified performance hurdles be met. The following table discloses the value of
performance rights granted and allocated as shares during the year:
Granted
Satisfied by the allocation/allotment
of shares
Value at grant
date
Value at allocation/
allotment date
Percentage of
remuneration for the
year that consisted of
performance rights
Number
$
Number
$
%
B W Ridgeway (i)
G E Weston (ii)
D J Loughlin (ii)
P A Evans (ii)
300,000
(MD Tranche)
192,460
(Tranche 11)
174,603
(Tranche 11)
170,635
(Tranche 11)
232,890
128,876
90,213
121,250
54,245
37,972
110,000
53,982
37,787
107,500
49,387
34,572
(i) Approved by the shareholders at the Annual General Meeting on 17 October 2013.
(ii) Granted per the Performance Rights Plan.
58
2%
1%
1%
1%
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IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2014
(f)
Remuneration Report (audited) (continued)
Key Management Personnel Performance Rights Holdings
2014
Mr B W Ridgeway
Mr R W Kelly
Mr K A Dundo
Mr M Lemmel
Ms E Donaghey
Mr D J Loughlin
Mr P A Evans
Mr M Parsons 1
Mr S Maikranz 2
Mr G E Weston 3
2013
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 P A Evans
Balance at
1 July 2013
No.
614,715
Granted as
compensation
No.
300,000
-
-
-
-
77,394
72,586
-
-
80,933
845,628
-
-
-
-
174,603
170,635
-
-
192,460
837,698
Balance at
1 July 2012
No.
349,897
-
-
-
-
125,377
122,639
113,451
711,364
Granted as
compensation
No.
264,818
-
-
-
-
65,341
58,239
56,818
445,216
Satisfied by
the
allocation/
allotment of
shares
No.
(128,876)
-
-
-
-
(53,982)
(49,387)
-
-
(54,245)
(286,490)
Satisfied by
the
allocation/
allotment of
shares
No.
-
-
-
-
-
(54,245)
(53,981)
(49,388)
(157,614)
Closing
balance at
30 June
2014
No.
718,136
-
-
-
-
12,120
12,120
-
-
-
742,376
Closing
balance at
30 June
2013
No.
614,715
-
-
-
-
80,933
77,394
72,586
845,628
Expired
No. #
(67,703)
-
-
-
-
(185,895)
(181,714)
-
-
(219,148)
(654,460)
Expired
No. #
-
-
-
-
-
(55,540)
(49,503)
(48,295)
(153,338)
1 Commenced 01/10/2013
2 Commenced 17/03/2014
3 Resigned 31/12/2013
# 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.
Share options held by Directors and Key Management Personnel
No options were issued to, granted to or exercised by Key Management Personnel in the current or prior year.
There were no share options held by Directors and Key Management Personnel at the end of the current financial year or prior financial
year.
Page 10 of 79
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2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2014
(f)
Remuneration Report (audited) (continued)
Other transactions with key management personnel (and their related parties) of Imdex Limited
Mr K A Dundo is a Partner of the legal firm HopgoodGanim, that provided legal services to the Imdex Group on normal commercial
terms and conditions. Total legal costs arising from HopgoodGanim were $506,857 (2013: $116,619).
Transactions with Directors
2014
$
2013
$
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
506,857 116,619
Total assets and liabilities arising from transactions, other than
compensation, with Directors or their related entities:
Current Liabilities
70,680 5,731
(g) Performance Rights
Performance Rights in existence during the current year
2014
Grant Date Expiry Date Exercise
Price
$
Estimated
Fair Value
at Grant
Opening
balance
Date
$
Estimated Number of Performance Rights
Granted
Satisfied by
the allocation/
allotment of
shares
Expired ^
Closing
balance
Tranche 2
Tranche 4
MD Tranche
MD Tranche
Tranche 7
Tranche 9
Tranche 10
MD Tranche
MD Tranche
Tranche 11
3-Dec-10
10-Jun-11
14-Oct-10
20-Oct-11
5-Sep-11
7-Oct-11
28-Sep-12
18-Oct-12
17-Oct-13
4-Oct-13
Aug-15
Aug-16
Oct-15
Oct-16
Aug-15
Aug-16
Aug-17
Oct-17
Oct-18
Oct-18
-
-
-
-
-
-
-
-
-
-
1.395
2.160
1.140
1.910
2.100
1.790
1.620
1.440
0.780
0.810
580,117
66,666
196,579
153,318
665,000
437,811
38,463
264,818
- 300,000
- 5,124,070
-
- (536,534) (43,583)
- -
- (66,666)
-
- (128,876) (67,703)
- - - 153,318
640,000
- - (25,000)
210,596
- (204,713) (22,502)
- - (38,463)
-
- - - 264,818
- - 300,000
-
- (5,124,070)
^ - Performance rights expire either on failure to maintain employment tenure or on failure to satisfy performance hurdles.
Refer below for vesting details.
60
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IMDEX LIMITED
and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2014
(g)
Performance Rights (continued)
Performance rights on issue at the date of this report
Issuing
Entity
Class
Class of
shares
Exercise
price
Grant date
Expiry date
Key
terms
Number of
shares under
performance
right
Imdex
Limited
Imdex
Limited
Imdex
Limited
Imdex
Limited
Imdex
Limited
Performance Rights
(Managing Directorsʼ
Tranche 2)
Performance Rights
(Tranche 7)
Performance Rights
(Tranche 9)
Performance Rights
(Managing Directorsʼ
Tranche 3)
Performance Rights
(Managing Directorsʼ
Tranche 4)
Ordinary
Nil
20 Oct 2011
Oct 2016
(aa)
153,318
Ordinary
Nil
5 Sept 2011
Aug 2016
(bb)
640,000
Ordinary
Nil
7 Oct 2011
Aug 2016
(cc)
210,596
Ordinary
Nil
18 Oct 2012
Oct 2017
(dd)
264,818
Ordinary
Nil
17 Oct 2013
Oct 2018
(ee)
300,000
(aa) To be satisfied by the issue of fully paid ordinary shares in Imdex Limited on or about October 2016. Subject to the achievement of
specified performance hurdles and ongoing employment tenure.
(bb) To be satisfied by the issue of fully paid ordinary shares in Imdex Limited with 1/4 allotted August 2014 and the remaining 3/4
allotted August 2015 with the anniversary date being the day after signature of the FY14 independent audit report. Subject to ongoing
employment tenure.
(cc) 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.
(dd) To be satisfied by the issue of fully paid ordinary shares in Imdex Limited on or about October 2017. Subject to the achievement of
specified performance hurdles and ongoing employment tenure.
(ee) To be satisfied by the issue of fully paid ordinary shares in Imdex Limited on or about October 2018. Subject to the achievement of
specified performance hurdles and ongoing employment tenure.
(h) Share options
There are no share options on issue at the date of this report and there were no share options exercised during or since the end of the
financial year.
(i)
Principal Activities
The Groupʼs principal continuing activities during the course of the financial year were providing drilling fluid products, advanced
downhole instrumentation, data solutions and geo-analytics services to exploration, development and production companies in the
minerals and oil and gas sectors worldwide.
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and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2014
(j)
Review of Operations
Imdexʼs FY14 results reflected the subdued activity levels within the minerals industry due to the cyclical downturn. Positive signs of
improvement, however, were evident during 4Q14 including:
Month-on-month increases in Minerals revenue from 3Q14;
A 21% increase in the number of REFLEX rental instruments on hire (a key leading indicator for Imdexʼs Minerals
business and sector activity) from 3Q14;
Increasing throughput and revenue generated by REFLEX HUB, a trend that is expected to continue in FY15 and
beyond providing a growing and sustainable annuity revenue stream; and
A growing number of solids removal units (SRUs) on hire with further increases forecast in early FY15.
Notwithstanding the challenging market conditions, Imdexʼs Minerals Division made significant progress with its technology
development, successfully strengthened its operations and diversified its customer base. Strong activity levels continued within the oil
and gas sector with substantial opportunities for long-term growth. Imdex continued to invest in the development of this business and
the Companyʼs Oil & Gas Division achieved record revenue levels for the year.
Financial results for FY14:
Statutory revenue down 21% to $183.5 million (FY13: $232.8 million);
Combined revenue (excluding interest) down 18% to $204.6 million (FY13: $249.4 million);
EBITA loss of $2.8 million (FY13: $35.2 million profit) including: $24.1 million profit on sale of SEH; $18.2 million of
asset write-downs and closure costs; and $9.1 million of costs and provisions relating to the product containment
incident;
EBITA profit of $0.5 million prior to the profit on sale of SEH and product containment, asset write-downs and closure
costs;
Gross margins were largely maintained;
Net profit after tax (NPAT) a loss of $5.3 million (FY13: $19.4 million profit);
Net assets of $176.9 million (30 June 2013: $188.5 million);
Positive operating cash-flow of $2.9 million (FY13: $39.0 million); and
Reduced gearing with net debt / capital of 18.5% (30 June 2013: 22%).
Key operational highlights for the year included:
Continued product development during the minerals sector downturn producing an exciting pipeline of AMC Fluids and
REFLEX technologies;
Growing industry demand and continued positive momentum with our solids removal units (SRUs) – particularly in the
Americas;
Development of underground and heli-portable SRUs and positive customer feedback from field trials;
An AMEC Environmental Award for our SRUs;
Increased throughput and continuing positive feedback with the marketing of REFLEX HUB;
Expansion of our customer base, together with greater exposure to resource companies and the production phase of the
mining cycle;
Commercialization of four new REFLEX technologies – further enhancing REFLEXʼs leading product range;
Adoption of REFLEX HUB by blue chip resource companies for their drilling programs and maintenance management;
Increasing exposure and capabilities within non-mining applications, including HDD and waterwell markets;
Year-on-year revenue growth reported since FY10;
Further investment in equipment, working capital and talented personnel to support ongoing growth of the Companyʼs oil
and gas business;
Continuing strong revenues and EBITDA performance by VES International (VES); and
Continuing growth from the coal bed methane industry in Australia with an increased demand for equipment solutions to
ensure environmental disturbance by drilling activities is minimised.
Key operational challenges for the year included:
The subdued minerals market deflated the sectorʼs interest in adopting new technologies;
Managing equipment utilisation levels and managing down working capital, particularly stock levels and increasing
pressure on customer collections, in a slow minerals market;
Managing costs ahead of revenue growth in AMC Oil & Gas – Germany; and
A product containment incident – as announced to the market on 13 March 2014.
(k) Dividends
No dividend was paid during the current year.
In the prior year a fully franked interim dividend of 2.50 cents per ordinary share was paid on 22 March 2013 to shareholders registered
on 8 March 2013, and a fully franked final dividend of 0.40 cents per ordinary share was paid on 25 October 2013 to shareholders
registered on 11 October 2013.
62
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and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2014
(l)
Changes in State Of Affairs
There were no significant changes in the state of affairs of the Group.
(m) Subsequent Events
Subsequent to year end, the Group sold the remaining 91.9 million shares of its Sino Gas and Energy Holdings Ltd shareholdings at a
share price of 18.5 cents per share to realise gross cash proceeds of $17.0 million at a book profit before tax of $14.2 million. Amounts
shown within the Investment Revaluation Reserve at 30 June 2014 will be recycled to the Income Statement as a result of this sale.
(n)
Future Developments
In support of our mission to deliver leading innovative technologies and solutions to the global minerals and oil and gas industry, we
continue to focus on integrated solutions that enhance our customersʼ operations and deliver value for shareholders. We achieve this
through our extensive industry knowledge and commitment to product development, ensuring innovative, simple to use and fit-for-
purpose technologies.
The outlook for Imdexʼs minerals markets in FY15 is encouraging. There is evidence of increasing activity and growing optimism that
the current cycle has bottomed and is forecast to improve over the next twelve months.
This expected increase in activity levels is largely due to the return of some brown field expenditure and recent capital raisings by junior
exploration companies. The juniors have not been a factor over the last two years or so, however, they are raising funds and are now
converting some of these funds into metres drilled. Assets divested by the major companies are also being acquired by smaller
companies who are working those assets.
There is also growing interest in the Companyʼs new technologies, which provide an attractive platform for further revenue growth
through FY15 and beyond. Customers are focused on maximising the efficiency and productivity of their operations – Imdexʼs
technologies enable them to achieve this and provide Imdex with a growing and sustainable annuity revenue stream.
Activity within the energy sector remains robust and continues to offer substantial year-on-year growth opportunities for Imdexʼs Oil &
Gas Division. The global drilling and completion fluids market is expected to increase by more than 20% to US$13.5 billion during
calendar year 2014, and the solids control and waste management market is forecast to grow by more than 15% to US$4.3 billion.
Even a fraction of this market will make a significant contribution to the Companyʼs growth.
Imdex is in a strong position to capitalise on a number of opportunities within its core markets and are forecasting significantly better
results in the new financial year.
Key Areas of Focus and Growth Initiatives for FY15
Strong cost discipline and prudent working capital management;
Increasing market share in previously under-penetrated regions;
Increasing exposure and capabilities within non-mining applications, including HDD and waterwell markets;
Marketing new technologies to new and existing customers globally;
Increasing annuity revenue streams via REFLEX HUB;
Leveraging Imdexʼs specialist expertise and product development capabilities;
Investing in Imdexʼs Oil & Gas business to accelerate the Divisionʼs growth; and
Supporting customers to increase the productivity and efficiency of their operations.
Imdex is becoming a stronger, more diversified business to better meet the challenges presented by downturns in the minerals sector.
At the same time, the company is growing its business in the oil and gas sector and is continuing to develop its innovative products and
leading technologies. Imdex aims to become the industry standard in providing innovative, simple to use technologies, which improve
the effectiveness and efficiency of customersʼ day to day operations.
(o) Environmental Regulations
The only entity in the Group that is subject to environmental regulations is Samchem Drilling Fluids and Chemicals (Pty) Ltd. They are
required to comply with the South African National Water Act, Act No 36 of 1998 which requires the management of effluent discharge.
This is controlled through an effluent system.
As announced to the market on 13 March 2014, Imdexʼs subsidiary the Australian Mud Company Pty Ltd (AMC), undertook
precautionary measures for the containment of an imported product used in some drilling operations within Queensland, Australia. The
measures were taken following notification that certain batches were contaminated.
Page 14 of 79
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and its controlled entities
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2014
(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 auditorʼs 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 fees paid for services provided as disclosed in note 6 to the financial statements do not
compromise the external auditorʼs 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 auditorʼs 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) Auditorʼs Independence Declaration
The auditorʼs independence declaration is included in the Annual Report immediately prior to the Audit Report.
(r)
Indemnification of Officers and Auditors
During the financial year, the Company paid a premium in respect of a contract insuring the Directors of the Company, the Company
Secretary, and all Executive Officers of the Company and of any related body corporate against a liability incurred as such a Director,
Secretary or Executive Officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of
the nature of the liability and the amount of the premium.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or
agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer
or auditor.
(s) Rounding Off of Amounts
The Company is a Company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class
Order amounts in the Directorsʼ 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, 15 August 2014.
64
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2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt 66
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt 67
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt IMDEX LIMITED
and its controlled entities
DIRECTORS’ DECLARATION
The Directors declare that:
(a)
(b)
in the Directorsʼ 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 Directorsʼ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001,
including compliance with accounting standards and giving a true and fair view of the financial position and performance of the
Group;
(c)
in the Directorsʼ 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 nature of the
deed of cross guarantee is such that each company which is party to the deed guarantees to each creditor payment in full of any debt in
accordance with the deed of cross guarantee.
In the Directorsʼ opinion, there are reasonable grounds to believe that the Company and the companies to which the ASIC Class Order
applies, as detailed in note 24 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, 15 August 2014.
Mr Ross Kelly AM
Chairman
68
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2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt IMDEX LIMITED
and its controlled entities
CORPORATE GOVERNANCE STATEMENT
ASX Governance Principles and ASX Recommendations
The Australian Securities Exchange Corporate Governance Council sets out best practice recommendations, including corporate
governance practices and suggested disclosures. ASX Listing Rule 4.10.3 requires companies to disclose the extent to which they have
complied with the ASX recommendations and to give reasons for not following them.
Unless otherwise indicated the best practice recommendations of the ASX Corporate Governance Council, including corporate
governance practices and suggested disclosures, have been adopted by the Company for the full year ended 30 June 2014. 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 2014, 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 Companyʼs website.
The performance of Senior Executives is measured against prescribed criteria as set by the Remuneration Committee. These criteria
are set annually and individual performance is assessed annually.
Principle 2: Structure the Board to add value
Imdexʼs 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 Companyʼs 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 Directorsʼ Report and further details
concerning the skills, experience, expertise and term of office of each Director is set out in the Directorʼs 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 Groupʼs 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 Shareholdersʼ understanding of the Directorʼs performance. The Board has conducted a review of each
Directorʼs 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
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2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt IMDEX LIMITED
and its controlled entities
CORPORATE GOVERNANCE STATEMENT
(iii) Board Nomination
The Board does not have a separate nomination committee and, given the Companyʼs size, does not intend to form such a committee.
However, the composition of the Board is determined using the following principles:
The Board should comprise a majority of independent, Non Executive Directors with a broad range of experience, skills and
expertise;
The Chairman of the Board should be an independent, Non Executive Director; and
The roles of the Chairman and the Managing Director should not be exercised by the same individual.
(iv) Procedure for the selection and appointment of new Directors to the Board
The Company has published on its website, procedures for the selection and appointment of new Directors to the Board. The Company
also has terms and conditions which govern the appointment of Non Executive Directors. These are subject to the Companyʼs
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 Companyʼs 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 Directorʼs
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
Diversity
The Company has adopted a diversity policy to guide the Companyʼs employees and Board in developing and achieving its diversity
objectives. The Company values diversity among its workforce and seeks to employ, retain and develop employees for the long term,
assisting in their development and the development of the culture and values of the Company. This is done by promoting the value of
different perspectives, ideas and benefits brought by engaging employees from all available talent.
The Company seeks to develop a culture of diversity within the Company whereby a mix of skills and diverse backgrounds are
employed by the Company at all levels. This is achieved by:
developing and maintaining a diverse and skilled workforce through transparent recruitment processes
promoting an inclusive workplace culture that values and utilises the contributions of all employees backgrounds, experiences
and perspective through improved awareness of the benefits of workforce diversity
facilitating diversity in the workplace by developing programs that promote growth for all employees, so each employee may
reach their full potential, and providing maximum benefit for the Company
reviewing the demographic profile at all levels of the Company (considering any patterns or gaps that are apparent); and
setting measurable objectives to encourage diversity within the Company.
The Board continues to work on objectives that will work towards achieving these goals. The objectives will be reviewed and analysed
regularly to assist the Company to benefit from a diverse workplace.
At 30 June 2014:
of five Board positions, four (80%) were held by males, and one (20%) was held by a female.
of nine senior executive positions, eight (89%) were held by males, and one (11%) was held by a female.
Of 567 full time employees, 438 (77%) were male and 129 (23%) were female.
70
Page 21 of 79
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt IMDEX LIMITED
and its controlled entities
CORPORATE GOVERNANCE STATEMENT
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 2014 Annual
Financial Report presents a true and fair view, in all material respects, of the Companyʼs 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 Companyʼs 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 Directorsʼ Profiles in the first section of the Annual Report.
The Company Secretary acts as secretary of this Committee.
The external auditors, the Risk and Compliance Manager, 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 Directorsʼ Report.
(iii) External Auditors
The Board reviews the performance, skills, cost and other matters when assessing the appointment of external auditors. This review is
generally undertaken at the completion of the preparation of the Annual Financial Report and involves discussions with the auditors and
the Group's senior management. Information concerning the selection and appointment of external auditors is published on the
Companyʼs website.
The external auditors are required to attend the Annual General Meeting of the Company and be available to answer questions from
Shareholders.
(iv) Internal Audit
The Group has an internal audit function that reports directly to the Audit and Compliance Committee. The conduct and independence
of the internal audit function are governed by the Internal Audit Charter which is approved by the Audit and Compliance Committee. The
annual work plan of the internal audit function is approved annually by the Audit and Compliance Committee.
Principle 5: Make timely and balanced disclosure
(i) Continuous disclosure policies and procedures
The Company has developed procedures to ensure that it complies with the disclosure requirements of the ASX Listing Rules. The
procedures are published on the Companyʼs website.
The procedures set out who is responsible for determining whether information is of a type or nature that requires disclosure, the
Boardʼs 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 Companyʼs website as soon as practicable.
Page 22 of 79
71
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt IMDEX LIMITED
and its controlled entities
CORPORATE GOVERNANCE STATEMENT
Principle 6: Respect the rights of Shareholders
Shareholders Communications Strategy: The Board aims to ensure that Shareholders are informed of all major developments affecting
the Group 's state of affairs. Information is communicated to Shareholders through:
the Annual Report which 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. The Half-Year Financial Report is prepared in accordance with the requirements of Accounting Standards and the
Corporations Act 2001 and is lodged with the Australian Securities & Investments Commission and the Australian Securities
Exchange. The Half-Year Financial Report is made available to all Shareholders;
regular reports released through the ASX and the media including Quarterly Shareholder newsletters;
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 Companyʼs 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 Companyʼs Annual General Meetings and is available to answer Shareholders questions concerning
the conduct of the audit.
The Companyʼs Shareholder Communications Strategy is published on the Companyʼs 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 Companyʼs 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 Companyʼs and Groupʼs risk management and
internal control processes on a continuous basis.
The risk management policy is published on the Companyʼs website.
In addition to receiving Internal Audit Reports, the Audit and Compliance Committee also receives regular reports from the External
Audit function.
(ii) Statement by the Managing Director and Chief Financial Officer
The Managing Director and the Chief Financial Officer have signed a declaration to the Board attesting to the fact that the integrity of
Financial Reports are founded on a sound system of risk management and internal compliance and control which implements the
policies adopted by the Board, and that the system is operating efficiently and effectively in all material respects.
72
Page 23 of 79
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt IMDEX LIMITED
and its controlled entities
CORPORATE GOVERNANCE STATEMENT
Principle 8: Remunerate fairly and responsibly
(i) Companyʼs remuneration policies
Details on the remuneration of Directors and Executives as well as the Companyʼs 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 Directorsʼ Profiles in the first section of the Annual Report.
The Remuneration Committee operates under a written Charter that is published on the Companyʼs website.
(iii) Structure of Non Executive Directorʼs remuneration
The terms and conditions governing the remuneration of Non Executive Directorʼs are set out in their appointment letter. All Non
Executive Directors are remunerated by way of fixed cash fees. Non Executive Directors are not provided with retirement benefits other
than statutory superannuation. The maximum total remuneration payable to Non Executive Directors was approved by Shareholders at
the 2006 Annual General Meeting and is currently $500,000. From time to time additional benefits may be agreed with Directors with
due regard to market conditions.
Page 24 of 79
73
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt IMDEX LIMITED
and its controlled entities
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2014
Revenue from sale of goods and operating lease rental
Other revenue from operations
Total revenue
Other income
Gain on the disposal of shares in Sino Gas and Energy Holdings Ltd (SEH)
Raw materials and consumables used
Employee benefit expense
Depreciation expense
Amortisation expense
Write down of fixed assets
Impairment of intangibles and goodwill
Finance costs
Share of profit of associate
Other expenses
(Loss)/profit before tax
Income tax credit/(expense)
(Loss)/profit for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Fair value adjustment on investment in SEH
Income tax relating to components of other comprehensive income
Cumulative profit reclassified to profit or loss on sale of SEH shares, net of tax
Exchange differences arising on the translation of foreign operations
Other comprehensive income for the year, net of income tax
Year Ended
Year Ended
30 June 2014 30 June 2013
Notes
$ʼ000
$ʼ000
4
4
4
4
4
4
4
4
4
4
26
4
5
18
18
18
18
183,485
72
183,557
89
24,094
(86,870)
(51,448)
(7,575)
(1,469)
(3,803)
(3,746)
(2,883)
715
(57,723)
(7,062)
1,785
(5,277)
17,107
(5,132)
(17,172)
(595)
(5,792)
232,791
130
232,921
46
-
(101,069)
(51,339)
(7,728)
(3,364)
-
-
(3,438)
1,300
(38,819)
28,510
(9,127)
19,383
5,038
(1,511)
-
6,536
10,063
Total comprehensive (loss)/income for the year
(11,069)
29,446
(Loss)/profit attributable to owners of the parent
(5,277)
19,383
Total comprehensive (loss)/income attributable to owners of the parent
(11,069)
29,446
(Loss)/earnings per share
Basic (loss)/earnings per share (cents)
Diluted (loss)/earnings per share (cents)
19
19
(2.50)
(2.50)
9.24
9.14
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
74
Page 25 of 79
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2014
Note s
30 June 2014
$ʼ000
30 June 2013
$ʼ000
Curre nt Asse ts
Cas h and Cas h E quivalents
Trade and Other Rec eivables
Inventories
Current Tax A s s ets
Other
Financ ial A s s et A vailable for S ale
Tota l Curre nt Asse ts
Non Curre nt Asse ts
P roperty , P lant and E quipm ent
Inves tm ent in A s oc iates
Deferred Tax A s s ets
Goodwill
Other Intangible A s s ets
Other Rec eivables
Tota l Non Curre nt Asse ts
Tota l Asse ts
Curre nt Lia bilitie s
Trade and Other P ay ables
B orrowings
Other Financ ial Liabilities
Current Tax Liabilities
P rovis ions
Tota l Curre nt Lia bilitie s
Non Curre nt Lia bilitie s
B orrowings
P rovis ions
Tota l Non Curre nt Lia bilitie s
Tota l Lia bilitie s
Ne t Asse ts
Equity
Is s ued Capital
S hares Res erved for P erform anc e Rights P lan
Foreign Currenc y Trans lation Res erve
Inves tm ent Revaulation Res erve
E m ploy ee E quity -S ettled B enefits Res erve
M andatory Is s uable Capital
Retained E arnings
Tota l Equity
28
7
8
5
10
9
11
26
5
12
13
14
15
29
5
16
15
16
17
17
18
18
18
18
10,070
39,744
42,631
267
2,870
95,582
14,705
110,287
47,180
26,270
15,832
60,377
1,884
957
152,500
262,787
17,306
6,902
80
-
16,185
40,473
43,239
2,153
45,392
85,865
176,922
90,259
-
(11,762)
8,557
6,266
-
83,602
176,922
9,979
45,231
53,356
2,661
5,909
117,136
26,450
143,586
40,701
25,555
8,632
61,782
5,610
-
142,280
285,866
25,776
14,738
-
1,900
4,681
47,095
49,248
1,071
50,319
97,414
188,452
89,269
(952)
(11,167)
13,754
6,087
990
90,471
188,452
The Cons olidated S tatem ent of Financ ial P os ition s hould b e read in c onjunc tion with the ac c om panying notes .
Page 26 of 79
75
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
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76
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014
Ye a r Ende d
30 June 2014
$ʼ000
Ye a r Ende d
30 June 2013
$ʼ000
Note s
Ca sh Flow s From Ope ra ting Activitie s
Rec eipts from c us tom ers
P ay m ents to s uppliers and em ploy ees
Interes t and other c os ts of financ e paid
Inc om e tax refund/(paid)
Ne t ca sh provide d by Ope ra ting Activitie s
Ca sh Flow s From Inve sting Activitie s
Interes t rec eived
P ay m ent for property , plant and equipm ent
P roc eeds from s ale of S E H s hares , net of trans ac tion c os ts
P roc eeds from s ale of property , plant and equipm ent
P ay m ent for developm ent c os ts c apitalis ed
P ay m ent for s hares in ioGlobal net of c as h ac quired
Ne t ca sh provide d by/(use d in) Inve sting Activitie s
Ca sh Flow s From Fina ncing Activitie s
S hares purc has ed on m ark et to s atis fy perform anc e rights
Dividend paid to owners of the Com pany
Hire purc has e and leas e pay m ents
P roc eeds from borrowings
Repay m ent of borrowings
Ne t ca sh use d in Fina ncing Activitie s
28(c )
9
13
25(a)
201,995
(197,690)
(2,850)
1,459
2,914
72
(16,903)
28,414
540
-
-
12,123
(464)
(842)
(266)
46,568
(59,743)
(14,747)
278,526
(216,267)
(3,219)
(20,070)
38,970
130
(23,768)
-
180
(996)
(3,874)
(28,328)
-
(13,591)
(581)
13,924
(12,314)
(12,562)
Ne t Incre a se /(De cre a se ) in Ca sh a nd Ca sh Equiva le nts
He ld
290
(1,920)
Cas h and Cas h E quivalents at the B eginning Of The Financ ial
Y ear
E ffec ts of ex c hange rate c hanges on the balanc e of c as h and
c as h equivalents held in foreign c urrenc ies
Ca sh a nd Ca sh Equiva le nts a t the End Of The Fina ncia l
Ye a r
9,979
(199)
28(a)
10,070
11,232
667
9,979
The Cons olidated S tatem ent of Cas h Flows s hould b e read in c onjunc tion with the ac c om panying notes .
Page 28 of 79
77
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
1
Adoption of New and Revised Accounting Standards
Adoption of new and revised Accounting Standards
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board
(the AASB) that are relevant to their operations and effective for the current reporting period.
In the current year, the Group has applied for the first time AASB 10, AASB 11, AASB 12, AASB 13, AASB 119 and AASB 128 (as
revised in 2011) together with the amendments to AASB 10, AASB 11 and AASB 12 regarding the transitional guidance. AASB 127 (as
revised in 2011) is not applicable to the Group as it deals only with separate financial statements.
The adoption of these amendments has not resulted in any significant changes to the Groupʼs accounting policies and has no significant
affect on the amounts reported for the current or prior periods.
Accounting Standards and Interpretations issued but not yet effective
At the date of authorisation of the financial report, a number of Standards and Interpretations were in issue but not yet effective.
Initial application of the following Standards/Interpretations is not, based on managementʼs assessment to date, expected to have any
material impact on the financial report of the company:
Standard/Interpretation
Effective for annual
reporting periods
beginning on or after:
Expected to be initially
applied in the financial
year ending:
AASB 9 ʻFinancial Instrumentsʼ, and the relevant amending standards1
1 January 2017
30 June 2018
AASB 1031 ʻMaterialityʼ (2013)
1 January 2014
30 June 2015
AASB 2012-3 ʻAmendments to Australian Accounting Standards – Offsetting
Financial Assets and Financial Liabilitiesʼ
1 January 2014
30 June 2015
AASB 2013-3 ʻAmendments to AASB 136 – Recoverable Amount Disclosures for
Non-Financial Assetsʼ
1 January 2014
30 June 2015
AASB 2013-4 ʻAmendments to Australian Accounting Standards – Novation of
Derivatives and Continuation of Hedge Accountingʼ
AASB 2013-9 ʻAmendments to Australian Accounting Standards – Conceptual
Framework, Materiality and Financial Instrumentsʼ
INT 21 ʻLeviesʼ
AASB 2014-1 ʻAmendments to Australian Accounting Standardsʼ
-
-
Part A: ʻAnnual Improvements 2010–2012 and 2011–2013 Cyclesʼ
Part C: ʻMaterialityʼ
1 January 2014
30 June 2015
1 January 2014
30 June 2015
1 January 2014
30 June 2015
1 July 2014
30 June 2015
AASB 2014-1 ʻAmendments to Australian Accounting Standardsʼ – Part E: ʻFinancial
Instrumentsʼ
1 January 2015
30 June 2016
IFRS 15 ʻRevenue from Contracts with Customersʼ
1 January 2017
30 June 2018
1 The AASB has issued the following versions of AASB 9 and the relevant amending standards:
AASB 9 ʻFinancial Instrumentsʼ (December 2009), AASB 2009-11 ʻAmendments to Australian Accounting Standards arising from
AASB 9ʼ, AASB 2012-6 ʻAmendments to Australian Accounting Standards – Mandatory Effective Date of AASB 9 and Transition
Disclosuresʼ
AASB 9 ʻFinancial Instrumentsʼ (December 2010), AASB 2010-7 ʻAmendments to Australian Accounting Standards arising from
AASB 9 (December 2010)ʼ, AASB 2012-6 ʻAmendments to Australian Accounting Standards – Mandatory Effective Date of AASB
9 and Transition Disclosureʼ.
In December 2013 the AASB issued AASB 2013-9 ʻAmendment to Australian Accounting Standards – Conceptual Framework,
Materiality and Financial Instrumentsʼ, Part C – Financial Instruments. This amending standard has amended the mandatory
effective date of AASB 9 to 1 January 2017. For annual reporting periods beginning before 1 January 2017, an entity may early
adopt either AASB 9 (December 2009) or AASB 9 (December 2010) and the relevant amending standards.
Page 29 of 79
78
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
Summary of Significant Accounting Policies
The financial report is a general purpose financial report which has been prepared in accordance with the requirements of the
Corporations Act 2001 and Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting
Standards Board.
The financial statements comprise the consolidated financial statements of the Group. For the purposes of preparing the consolidated
financial statements, the Group is a for-profit entity.
Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the
financial statements and notes of the company and the Group comply with International Financial Reporting Standards (ʻIFRSʼ).
The financial statements were authorised for issue by the directors on 15 August 2014.
Where applicable comparative numbers have been reclassified to ensure consistent disclosure.
(a)
Basis of preparation
The Financial Report has been prepared on the basis of historical cost except for the revaluation of current assets held for sale and
financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in
Australian dollars, unless otherwise noted.
The Company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class
Order amounts in the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.
Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of
relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.
The following significant accounting policies have been adopted in the preparation and presentation of the Financial Report:
(b)
Basis of Consolidation
The financial statements of the Company and entities controlled by the Company (its subsidiaries) (referred to as ʻthe Groupʼ in these
financial statements). Control is achieved when the Group has power over an entity and is exposed to, or has rights over, the variable
returns of the entity, as well as the ability to use this power to affect the variable returns of the entity.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective
date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those
used by other members of the Group.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it:
derecognises the assets (including goodwill) and liabilities of the subsidiary;
derecognises the carrying amount of any non-controlling interest;
recognises the fair value of the consideration received;
recognises the fair value of any investment retained;
recognises any surplus or deficit in profit or loss, and;
reclassifies to profit or loss or transfers directly to retained earnings, as appropriate, the parentʼs share of components
previously recognised in other comprehensive income.
Interest in associates are equity accounted and are not part of the consolidated Group (see 2(j)).
Transactions and balances between the company and its associates were eliminated in the preparation of consolidated financial
statements of the Group to the extent of the Groupʼs share in profits and losses of the associate resulting from these transactions.
Page 30 of 79
79
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
(c)
Summary of Significant Accounting Policies (continued)
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 consolidated statement of financial position.
(d)
Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
(i)
(ii)
where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of
acquisition of an asset or as part of an item of expense; or
for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows
are included in the consolidated statement of cash flows on a gross basis. The GST component of cash flows arising from investing and
financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.
(e)
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 acquirerʼs previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the
identifiable assets acquired and the liabilities assumed.
If, after reassessment, the Groupʼs interest in the fair value of the acquireeʼs identifiable net assets exceeds the sum of the
consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirerʼs 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 Groupʼs cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which
goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be
impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to
reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the
carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
(f)
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.
(g)
Property, plant and equipment
Plant and equipment, leasehold improvements and equipment under finance lease are stated at cost less accumulated depreciation and
impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or part
of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as
at the date of acquisition.
Depreciation is calculated on a straight line basis in order to write off the net cost of each asset over its expected useful life to its
estimated residual value. Leasehold improvements and assets held under finance lease are depreciated over the period of the lease or
estimated useful life, whichever is the shorter, using the straight line method. The estimated useful lives, residual values and
depreciation method is reviewed at the end of each annual reporting period, with the effect of any changes recognised on a prospective
basis.
The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between
the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
The annual depreciation rates used for each class of assets are as follows:
Plant and equipment:
10% to 50%
Equipment rented to third parties:
10% to 50%
Equipment under finance lease:
10% to 50%
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 Groupʼs 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.
Page 31 of 79
80
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
Summary of Significant Accounting Policies (continued)
(h)
Performance rights
Equity-settled performance rights 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 managementʼs best estimate, for the
effects of non-transferability, exercise restrictions, and behavioural considerations.
The fair value determined at the grant date of the performance right is expensed over the vesting period, based on the Groupʼs estimate
of shares that will eventually vest.
At each reporting date, the Group revises its estimate of the number of performance rights 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.
(i)
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 Groupʼs 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 acquireeʼs 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 acquireeʼs share based payment awards are
measured in accordance with AASB 2 Share-based Payment; and
assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 Noncurrent Assets Held for Sale
and Discontinued Operations are measured in accordance with that Standard.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the
Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during
the measurement period (see below), or additional assets or liabilities are recognised, to reflect new information obtained about facts
and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.
The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and
circumstances that existed as of the acquisition date – and is subject to a maximum of one year.
(j)
Investments in associates
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture.
Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint
control over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting,
except when the investment is classified as held for sale, in which case it is accounted for in accordance with AASB 5 ʻNon-current
Assets Held for Sale and Discontinued Operationsʼ. Under the equity method, an investment in an associate is initially recognised in the
consolidated statement of financial position at cost and adjusted thereafter to recognise the Groupʼs share of the profit or loss and other
comprehensive income of the associate. When the Groupʼs share of losses of an associate exceeds the Groupʼs interest in that
associate (which includes any long-term interests that, in substance, form part of the Groupʼs net investment in the associate), the
Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has
incurred legal or constructive obligations or made payments on behalf of the associate.
Any excess of the cost of acquisition over the Groupʼs share of the net fair value of the identifiable assets, liabilities and contingent
liabilities of the associate recognised at the date of acquisition is recognised as goodwill, which is included within the carrying amount of
the investment. Any excess of the Groupʼs share of the net fair value of the identifiable assets, liabilities and contingent liabilities over
the cost of acquisition, after reassessment, is recognised immediately in profit or loss.
Page 32 of 79
81
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
(j)
Summary of Significant Accounting Policies (continued)
Investments in associates (continued)
The requirements of AASB 139 are applied to determine whether it is necessary to recognise any impairment loss with respect to the
Groupʼs investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for
impairment in accordance with AASB 136 ʻImpairment of Assetsʼ as a single asset by comparing its recoverable amount (higher of value
in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the
investment. Any reversal of that impairment loss is recognised in accordance with AASB 136 to the extent that the recoverable amount
of the investment subsequently increases.
When a group entity transacts with its associate, profits and losses resulting from the transactions with the associate are recognised in
the Group's consolidated financial statements only to the extent of interests in the associate that are not related to the Group.
(k)
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.
(l)
Foreign currency
The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the
entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of
each entity are expressed in Australian dollars, which is the functional currency of Imdex Limited, and the presentation currency for the
consolidated financial statements.
In preparing the financial statements of the individual entities, transactions in currencies other than the entityʼs 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 Groupʼs 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 Groupʼs translation reserve. Such exchange
differences are recognised in profit or loss in the period in which the foreign operation is disposed.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity on or after the date of transition to A-IFRS are treated
as assets and liabilities of the foreign entity and translated at exchange rates prevailing at the reporting date. Goodwill arising on
acquisitions before the date of transition to A-IFRS is treated as an Australian dollar denominated asset.
(m)
Derivative financial instruments
The Group enters into derivative financial instruments to manage its exposure to interest rate risk. This risk is primarily managed
through the use of an interest rate cap. Further details of derivative financial instruments are disclosed in the financial instruments note
in the financial statements.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their
fair value at each reporting date. The resulting gain or loss is recognised in the profit or loss immediately. The Group has not designated
any financial instruments as being hedge accounted.
(i)
Embedded derivatives
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and
characteristics are not closely related to those of host contracts and the host contracts are not measured at fair value with changes in
fair value recognised in profit or loss.
82
Page 33 of 79
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
Summary of Significant Accounting Policies (continued)
(n)
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 ʻat fair value through the profit or lossʼ which are
initially measured at fair value.
Financial assets are classified into the following specified categories: financial assets ʻat fair value through profit or lossʼ, ʻheld-to-
maturityʼ investments, ʻcurrent assets held for saleʼ, ʻavailable-for-saleʼ financial assets, and ʻloans and receivablesʼ. The classification
depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
(i)
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of
the financial asset, or, where appropriate, a shorter period.
Income is recognised on an effective interest rate basis for debt instruments other than those financial assets ʻat fair value through profit
or lossʼ.
(ii)
Held-to-maturity investments
Bills of exchange and debentures with fixed or determinable payments and fixed maturity dates where the Group has the positive intent
and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortised cost
using the effective interest method less impairment, with revenue recognised on an effective yield basis.
(iii)
Financial assets at fair value through profit or loss
Financial assets are classified as financial assets at fair value through profit or loss where the financial asset:
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 invested
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 ʻloans and receivablesʼ. Loans and receivables are measured at amortised cost using the effective interest rate method
less impairment. Interest is recognised by applying the effective interest rate.
(vi)
Impairment of financial assets
Financial assets other than those at fair value through profit or loss, are assessed for indicators of impairment at each balance sheet
date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the
initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets
carried at amortised cost, the amount of the impairment is the difference between the assetʼs carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest rate.
The carrying value of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade
receivables where the carrying value is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is
written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance
account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and
the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised
impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is
reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
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and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
Summary of Significant Accounting Policies (continued)
(n)
Financial assets (continued)
In respect of available-for-sale instruments, any subsequent increase in fair value after an impairment loss is recognised directly in
equity.
(vii)
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.
(o)
(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 ʻat fair value through profit or lossʼ or other financial liabilities.
(iii)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss.
The net gain or loss recognised through profit or loss incorporates any interest paid on the financial liability.
A financial liability is held for trading if:
it has been incurred principally for the purpose of repurchasing in the near future; or
it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern
of short-term profit-taking; or
it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading is designated as ʻat fair value through profit or lossʼ 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 Groupʼs 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 ʻFinancial Instruments: Recognition
and Measurementʼ permits the entire combined contract (asset or liability) to be designated as ʻat fair value through profit or
lossʼ.
(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.
84
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and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
(p)
(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 indefinite
useful life assessment for the asset. Such assets are tested for impairment in accordance with the policy stated in note 2(u).
(ii)
Research and development costs
Expenditure on research activities is recognised as an expense in the period in which it is incurred. Where no internally-generated
intangible asset can be recognised, development expenditure is recognised as an expense in the period as incurred. An intangible asset
arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following are
demonstrated:
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
Capitalised development costs are stated at cost less accumulated amortisation and impairment, and are amortised on a straight-line
basis over their useful life of between 3 and 5 years, commencing on commercialisation of the underlying projects.
(q)
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 deductible.
The Company and the Groupʼs liability for current tax is calculated using tax rates that have been enacted or substantively enacted by
the end of the reporting period.
(ii)
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 associates, 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 deductible 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 reverse in the
foreseeable future.
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IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
Summary of Significant Accounting Policies (continued)
(q)
Taxation (continued)
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 reporting 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 against 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.
(iii)
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 combination, the tax
effect is included in the accounting for the business combination.
(iv)
Tax consolidation
The Company and all its wholly-owned Australian resident entities are part of a tax-consolidated group under Australian taxation law.
Imdex Limited is the head entity in the tax-consolidated group. Tax expense/income, deferred tax liabilities and deferred tax assets
arising from temporary differences in the members of the tax-consolidated group are recognised in the separate financial statements of
the members of the tax-consolidated group using the ʻseparate taxpayer within groupʼ approach by reference to the carrying amounts in
the separate financial statements of each entity and the tax values applying under tax consolidation. Current tax liabilities and assets
and deferred tax assets arising from unused tax losses and relevant tax credits of the members of the tax-consolidated group are
recognised by the Company (as head entity in the tax-consolidated group). Due to the existence of a tax funding arrangement between
the entities in the tax-consolidated group, amounts are recognised as payable to or receivable by the Company and each member of the
group in relation to the tax contribution amounts paid or payable between the parent entity and the other members of the tax-
consolidated group in accordance with the arrangement. Further information about the tax funding arrangement is detailed in note 5 to
the financial statements. Where the tax contribution amount recognised by each member of the tax-consolidated group for a particular
period is different to the aggregate of the current tax liability or asset and any deferred tax asset arising from unused tax losses and tax
credit in respect of that period, the difference is recognised as a contribution from (or distribution to) equity participants.
(r)
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. Initial direct costs
incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a
straight-line basis over the lease term.
(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
consolidated statement of financial position 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 Groupʼs 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.
86
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and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
Summary of Significant Accounting Policies (continued)
(s)
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)
Rental income
The Groupʼs policy for recognition of revenue from operating leases is described in note 2 (r)(i).
(iv)
Royalties
Royalty revenue is recognised on an accrual basis in accordance with the substance of the relevant agreement.
(v)
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 assetʼs net carrying
amount.
(t)
(i)
Employee benefits
Provisions
Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave
when it is probable that settlement will be required and they are capable of being measured reliably.
Provisions made in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values using
the remuneration rate expected to apply at the time of settlement.
Provisions made in respect of employee benefits which are not expected to be settled within 12 months are measured as the present
value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to reporting date.
(ii)
Defined contribution plans
Contributions to defined contribution superannuation plans are expensed when incurred.
(iii)
Termination benefit
A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination
benefit and when the entity recognises any related restructuring costs.
(u)
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 recoverable amount
of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating
unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately.
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and its controlled entities
NOTES TO THE FINANCIAL REPORT
2
Summary of Significant Accounting Policies (continued)
(u)
Impairment of other tangible and intangible assets (other than goodwill) (continued)
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised
estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised in profit or loss immediately.
(v)
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive), as a result of a past event, it is probable that
the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting
date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cashflows
estimated to settle the present obligation, its carrying amount is the present value of those cashflows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable
is recognised as an asset if it is virtually certain that recovery will be received and the amount of the receivable can be measured
reliably.
(w)
Contingent Liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-
occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised
because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in
extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Group does not
recognise a contingent liability but discloses its existence in the financial statements.
(x)
Contingent Assets
A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-
occurrence of one or more uncertain future events beyond the control of the Group. The Group does not recognise contingent assets
but discloses its existence where inflows of economic benefits are probable, but not virtually certain.
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and its controlled entities
NOTES TO THE FINANCIAL REPORT
3
Critical Accounting Judgements and Key Sources of Estimation Uncertainty
In the application of the Groupʼs accounting policies, which are described in note 2, management is required to make judgements,
estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable
under the circumstance, the results of which form the basis of making the judgements. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
Critical judgements in applying the entityʼs accounting policies
Management has not made any significant critical judgements in the process of applying the Groupʼs 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:
Use of forecasts
The directors have considered a number of factors in regard to any forward looking estimates. Imdexʼs results for the year ended
30 June 2014 reflected the subdued activity levels within the minerals industry due to the cyclical downturn. Positive signs of
improvement were evident during 4Q14, as outlined within the Directorsʼ report. The use of estimates is inherently uncertain and
requires a significant level of judgement. Forward looking estimates have been used in the preparation of the financial report in
respect of impairment of assets, recognition of deferred tax assets, the appropriate level of provisions and preparation of the
financial report on a going concern basis. Management and the Directors have concluded that appropriate assessments have
been made with respect to the use of forecasts in the preparation of the financial report.
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). An impairment loss of $3.7 million was
booked in the current year (2013: nil). A goodwill amount of $60.3 million and intangible assets of $1.9 million have been
recognised on the face of the consolidated statement of financial position.
Recognition of net deferred tax asset
A net deferred tax asset of $15.8 million has been recognised on the face of the consolidated statement of financial
position. The largest component of this asset is the future tax benefit of depreciation of unrealised profits in property,
plant and equipment items. This tax benefit will be realised progressively over the next 3-5 years as these assets are
depreciated or sold. 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 forward 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 performance rights
Performance rights as detailed in note 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.
Provisions and contingent liabilities
The Group exercises judgement in measuring and recognising provisions and the exposures to contingent liabilities related to
pending litigation or other outstanding claims subject to negotiated settlement, mediation, arbitration or government regulation.
Judgement is necessary in assessing the likelihood that a pending claim will succeed, or a liability will arise and to quantify the
possible range of the financial settlement. Because of the inherent uncertainty in this evaluation process, actual losses may be
different from the originally estimated provision.
As announced to the market on 13 March 2014, Imdexʼs subsidiary the Australian Mud Company Pty Ltd (AMC), undertook
precautionary measures for the containment of an imported product used in some drilling operations within Queensland,
Australia. The measures were taken following notification that certain batches were contaminated. Costs relating to the product
containment incident are unlikely to be recoverable. As a result, management have made an estimate of the costs to remediate
and have provided for these costs in FY14 based on this best estimate. In making this assessment a forward looking estimate has
been made of future cash flows and the likely outcome of remediation negotiations.
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and its controlled entities
NOTES TO THE FINANCIAL REPORT
4
Profit from Operations
(a ) R e ve n u e fro m o p e ra tio n s
R e ve n u e
R evenue from the s ale of goods
O perating rental inc om e
Interes t inc om e - bank depos its
(b ) (L o ss)/p ro fit b e fo re in co m e ta x
2014
$ʼ000
2013
$ʼ000
137,765
45,720
72
183,557
165,827
66,964
130
232,921
O ther than as dis c los ed on the fac e of the inc om e s tatem ent, profit before
inc om e tax has been arrived at after c rediting / (c harging) the follow ing gains and
los s es :
Los s on dis pos al of property , plant and equipm ent
(206)
(58)
O th e r in co m e
G ain on the dis pos al of s hares in S E H (note 9)
O ther
D e p re cia tio n , a m o rtisa tio n a n d im p a irm e n t o f N o n C u rre n t A sse ts
D eprec iation of P roperty , P lant and E quipm ent (note 11)
A m ortis ation of Intangible A s s ets (note 13)
Im pairm ent of G oodw ill (note 12)
Im pairm ent of Intangibles (note 13)
W rite dow n of fix ed as s ets (note 11)
F in a n ce co sts
Interes t on hire purc has e liabilities
Interes t on c om m erc ial bills /bank loans
Interes t on overdraft
O ther interes t
O th e r e x p e n se s
C om m is s ions
C ons ultanc y fees
Legal and profes s ional ex pens es (i)
F oreign ex c hange los s
R ent and prem is es c os ts
Travel and ac c om m odation
F reight
M otor vehic le c os ts
O bs olete s toc k
D oubtful debts (note 7)
K az ak hs tan bus ines s c los ure c os ts
O ffic e c los ure c os ts
P roduc t c ontainm ent
O ther ex pens es
24,094
89
24,183
(7,575)
(1,469)
(1,500)
(2,246)
(3,803)
(16,593)
(33)
(2,717)
(103)
(30)
(2,883)
(1,416)
(2,297)
(7,261)
(859)
(6,913)
(5,458)
(1,106)
(2,700)
(2,568)
(4,199)
(2,437)
(1,400)
(9,080)
(10,029)
(57,723)
-
46
46
(7,728)
(3,364)
-
-
-
(11,092)
(68)
(3,016)
(88)
(266)
(3,438)
(2,120)
(2,783)
(6,435)
(1,061)
(5,354)
(5,512)
(1,973)
(2,514)
(593)
(1,098)
-
-
-
(9,376)
(38,819)
(i) Inc ludes legal, audit, ac c ounting, s hare regis try and c orporate s ec retarial fees .
Em p lo ye e b e n e fits e x p e n se
P os t-em ploy m ent benefits :
D efined c ontribution s uperannuation c os ts
S hare bas ed pay m ents :
E quity -s ettled s hare bas ed pay m ents - perform anc e rights (note 18)
Term ination benefits
O ther em ploy ee benefits
C o st o f sa le s
(2,649)
(2,549)
(845)
(547)
(47,407)
(51,448)
(1,331)
-
(47,459)
(51,339)
(86,870)
(101,069)
M o ve m e n t in p ro visio n fo r d o u b tfu l d e b ts (n o te 7)
4,199
1,098
O p e ra tin g le a se re n ta l (m in im u m le a se p a ym e n ts)
(7,045)
(6,174)
Page 41 of 79
90
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
5
Income Taxes
(a) Income credit/(tax) recognised in the income statement
Tax (credit)/expense comprises:
Current tax expense
Deferred tax (credit)/expense relating to the origination and
reversal of temporary differences
(Over)/Under provision per prior year
Total tax (credit)/expense
2014
$ʼ000
2013
$ʼ000
2,757
(3,728)
(814)
(1,785)
7,853
884
390
9,127
Prima facie income tax expense on pre-tax accounting (loss)/profit
from operations reconciles to income (credit)/tax in the financial
statements as follow s:
(Loss)/profit from operations
(7,062)
28,510
Income tax (credit)/expense calculated at 30%
Impairment of Goodwill
Non-assessable share of profit of Associate
Current year losses not recognised for deferred tax purposes
Other non-deductible and non-assessable items
(Over)/Under provision of prior year income tax
(2,119)
450
(215)
638
275
(814)
(1,785)
8,553
-
(390)
-
573
390
9,127
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 year.
(b) Income tax recognised directly in OCI
The following current and deferred amounts were charged directly
to equity during the year:
Deferred tax: SEH fair value uplift taken directly to reserve
(5,132)
(1,511)
(c) Current tax assets and liabilities
Current tax receivable
Current tax payable
267
-
2,661
1,900
Page 42 of 79
91
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
5
Income Taxes (continued)
(d) Deferred tax balances
Deferred tax assets comprise:
Provisions
Inventory
Property, plant and equipment
Carry forward tax losses in subsidiary companies
Accruals
Foreign currency movement
Other
Deferred tax liabilities comprise:
Intangible assets
Available-for-sale non-current assets
Untaxed reserves
Net deferred tax balances
Unrecognised deferred tax assets:
The following have not been brought to account as assets:
2014
$ʼ000
2013
$ʼ000
7,391
1,820
3,041
5,220
469
1,638
548
20,127
(280)
(3,667)
(348)
(4,295)
15,832
1,464
488
7,067
2,434
874
1,634
1,373
15,334
(1,693)
(4,584)
(425)
(6,702)
8,632
Temporary differences relating to the translation of investments in
subsidiary undertakings
2,018
2,802
Deferred Tax Assets in respect of unrecognised tax losses
761
-
Tax Consolidation
Relevance of tax consolidation to the Group
Legislation to allow groups, comprising a parent entity and its Australian resident wholly-owned entities, to elect to consolidate and be
treated as a single entity for income tax purposes was substantively enacted on 21 October 2002. The Company and its wholly-owned
Australian resident entities are eligible to consolidate for tax purposes under this legislation and have elected to be taxed as a single
entity from 1 July 2003. The head entity in the tax consolidated group for the purposes of the tax consolidation system is Imdex Limited.
Nature of tax funding arrangements and tax sharing agreements
Entities within the tax-consolidated group have entered into a tax funding and a tax-sharing agreement with the head entity. Under the
terms of this agreement, Imdex Limited and each of the entities in the tax consolidated group has agreed to pay a tax equivalent
payment to or from the head entity, based on the net accounting profit or loss of the entity and the current tax rate. Such amounts are
reflected in amounts receivable from or payable to other entities in the tax consolidated group.
The tax sharing agreement entered into between members of the tax consolidated group provides for the determination of the allocation
of income tax liabilities between the entities should the head entity default on its tax payment obligations or if an entity should leave the
tax consolidated group. The effect of the tax sharing agreement is that each member's liability for tax payable by the tax consolidated
group is limited to the amount payable by the head entity under the tax funding arrangement.
The amount of contribution or distribution relating to tax consolidation in the current and prior year amounted to nil.
92
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2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
6
Remuneration of Auditors
Deloitte Touche Tohmatsu (Australia)
Audit or review of the financial report
Other audit related services
Taxation services - mainly compliance work, transfer
pricing and global restructuring advice
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
2014
$
2013
$
345,500
9,000
47,176
401,676
326,550
-
762,501
1,089,051
56,300
81,601
47,919
22,750
126,969
68,131
-
149,732
Audit or review of the financial report
28,534
25,583
Total Auditor Remuneration
557,179
1,264,366
Page 44 of 79
93
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
7
Trade and Other Receivables
Curre nt
Trade rec eivables
A llowanc e for doubtful debts
O ther rec eivables
Note s
2014
$ʼ000
2013
$ʼ000
(i)
(ii)
42,650
(4,771)
37,879
1,865
39,744
45,071
(1,269)
43,802
1,429
45,231
(i) The average c redit period on s ales of goods is around 60 day s . Trade rec eivables are interes t free.
A n allowanc e has been m ade for es tim ated irrec overable am ounts from the s ale of goods and
s ervic es , determ ined by referenc e to pas t default ex perienc e and s pec ific k nowledge of individual
A geing of pas t due but not im paired debtors
0 - 30 day s pas t due
31 - 60 day s pas t due
61 + day s pas t due
1,719
7,493
2,498
11,710
2,034
8,629
2,876
13,539
The above analy s is s hows debtors that are pas t due at
provis ion has been rais ed as the G roup believes that
The G roup does not hold any c ollateral over thes e balanc es .
the end of the reporting date where no
the am ounts are s till c ons idered rec overable.
(ii) M ovem ent in the allowanc e for doubtful debts
B alanc e at the beginning of the y ear
A m ounts written off during the y ear
Inc reas e in allowanc e rec ognis ed in profit or los s
B alanc e at the end of the y ear
A ll im paired debtors are in ex c es s of 90 day s overdue.
1,269
(697)
4,199
4,771
1,463
(1,292)
1,098
1,269
In determ ining the rec overability of a trade rec eivable the G roup c ons iders any c hange in the c redit
quality of the trade rec eivable from the date c redit was initially granted up to the reporting date. The
ris k is lim ited due to the c us tom er bas e being large and unrelated.
c onc entration of c redit
there is no further c redit provis ion required in ex c es s of the
A c c ordingly ,
allowanc e for doubtful debts .
the direc tors believe that
8
Inventories
Current
Raw materials
Work in progress
Finished goods
2014
$ʼ000
2013
$ʼ000
7,597
1,321
33,713
42,631
7,989
4,331
41,036
53,356
A provision for diminution of stock of $2,762,530 existed at 30 June 2014 (2013: $722,000).
94
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2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
9
Financial Assets Available for Sale
Curre nt
Fina ncia l Asse t Ava ila ble for Sa le
Investment in Sino Gas and Energy Holdings Ltd
Note s
2014
$ʼ000
2013
$ʼ000
(i)
14,705
26,450
(i) Comprises 91,908,446 fully paid ordinary shares in Sino Gas and Energy Holdings Ltd (SEH) held at fair value (2013: 251,908,446
shares). This amounts to 6.01% of the issued share capital of SEH (30 June 2013: 20.11%).
This asset is non-core and accordingly, this investment has been classified as a Financial Asset Available for Sale and is carried at fair
value.
During the year Imdex disposed of 160,000,000 SEH shares resulting in cash proceeds (net of selling expenses) of $28.4m, and
resulting in a gain on disposal of $24.1m recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.
SEH shares have previously been accounted for as a financial asset held for sale, with revaluation gains/losses recorded within other
comprehensive income (net of tax). Historical revaluation gains up to the date of disposal of $17.2m (net of tax), have been reclassified
at the date of disposal from Other Comprehensive Income to the Statement of profit or loss.
Subsequent to year end, the Group sold the remaining 91.9 million shares of its Sino Gas and Energy Holdings Ltd shareholdings at a
share price of 18.5 cents per share to realise gross cash proceeds of $17.0 million at a book profit before tax of $14.2 million. Amounts
shown within the Investment Revaluation Reserve at 30 June 2014 will be recycled to the Income Statement as a result of this sale.
Investment in Sino Gas and Energy Holdings Ltd
Balance at beginning of the financial year
Part disposal of shares held in Sino Gas and Energy Holdings Ltd
Fair value adjustment taken directly to equity (pre-tax)
Balance at the end of the period
Shares
251,908,446
(160,000,000)
-
91,908,446
2014
$ʼ000
26,450
(28,852)
17,107
14,705
During the current year the carrying value of this investment was written up to its market value of $0.16 per share or $14.7 million in total
at 30 June 2014.
10
Other Assets
Current
Prepayments
2014
$ʼ000
2013
$ʼ000
2,870
5,909
Page 46 of 79
95
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
11
Property, Plant and Equipment
Plant and
Equipment at
cost
Leasehold
Improvements at
cost
Capital W orks in
Progress at cost
TOTAL
$ʼ000
$ʼ000
$ʼ000
$ʼ000
Gross Carrying Value
Balance at 30 June 2012
Additions
Acquisitions through business combinations
Disposals
Net foreign currency exchange differences
Balance at 30 June 2013
Additions
Disposals
W rite down of fixed assets
Net foreign currency exchange differences
3,339 2,720 32,656
26,597
21,597
680 2,043 24,320
175 - - 175
(1,596) - (292) (1,888)
5,334 104 188 5,626
52,107
4,123 4,659 60,889
8,102 4,366 4,523 16,991
(370) (340) - (710)
- - (3,803) (3,803)
(140) 1,472
1,595 17
Balance at 30 June 2014
61,434
8,166 5,239 74,839
Accumulate d Depre ciation
Balance at 30 June 2012
Disposals
Depreciation expense
Net foreign currency exchange differences
Balance at 30 June 2013
Disposals
Depreciation expense
Net foreign currency exchange differences
1,475 - 12,926
11,451
(1,650) - - (1,650)
7,083 645 - 7,728
1,171 13
- 1,184
18,055
2,133 - 20,188
(67) (247) - (314)
6,818 757 - 7,575
- 210
206 4
Balance at 30 June 2014
25,012
2,647 - 27,659
Net Book Value
As at 30 June 2013
As at 30 June 2014
34,052
1,990 4,659 40,701
36,422
5,519 5,239 47,180
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
Leasehold improvements
2014
$ʼ000
2013
$ʼ000
6,818 7,083
757 645
7,575 7,728
96
Page 47 of 79
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
12
Goodwill
Gross Ca rrying Am ount
Balance at beginning of the financial year
Recognised on acquisition of ioGlobal
Recognised on acquisition of System Mud Industria e Comercio Ltda
(System Mud)
Effect of foreign exchange movements
Balance at end of the financial year
Accum ula te d Im pa irm e nt Losse s
Balance at beginning of the financial year
Impairment losses for the year
Balance at end of the financial year
Ne t Book Va lue
At the beginning of the financial year
At the end of the financial year
Goodw ill is a lloca te d to ca sh-ge ne ra ting units a s follow s:
Reflex
AMC Minerals Asia Pacific
AMC Minerals South America
AMC Oil & Gas Europe
Note s
2014
$ʼ000
2013
$ʼ000
(i)
(ii)
84,280
-
-
95
84,375
77,075
6,357
338
510
84,280
(22,498)
(1,500)
(23,998)
(22,498)
-
(22,498)
61,782
60,377
54,577
61,782
35,909
18,360
5,811
297
60,377
35,979
18,360
7,146
297
61,782
(i) Foreign currency conversion of goodwill
Some goodwill balances are denominated in currencies other than Australian Dollars. In particular a portion of goodwill associated
with the Reflex CGU is denominated in Swedish Kroner and a portion of the AMC Minerals South America CGU is denominated in
Brazilian Real. These non-Australian Dollar balances are translated into Australian Dollars and fluctuate in line with foreign exchange
movements.
(ii) Impairment losses recognised by cash-generating units:
AMC Minerals South America
(1,500)
-
AMC Minerals South America
Imdex has performed a value in use calculation, using a post tax discount rate of 13.47%, for the AMC Minerals South America CGU
and has determined that the recoverable value is $5.8m (FY13: $7.1m). $1.5m of goodwill recognised on the acquisition of AMC
Minerals South America is not recoverable, and a goodwill impairment charge of $1.5m has been recognised as at 30 June 2014.
Page 48 of 79
97
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
12
Goodwill (continued)
(iii) Value in use calculations for AMC Minerals Asia Pacific, Reflex and AMC Oil and Gas Europe
The recoverable amount of AMC Minerals Asia Pacific, Reflex, and AMC Oil and Gas CGUʼs have been determined based on a value in
use calculation using cash flow projections covering a five year period, based on financial forecast models prepared by management
and approved by the Imdex Limited Board.
The following describes each key assumption on which management has based its value in use calculation for the above CGUʼs:
The discount rate applied to post tax cash flow projections is 11.47% (2013: 7.26%);
Revenue growth over the five year plan period for AMC Minerals Asia Pacific and Reflex has been forecast in line with the
expected rate of recovery of the mining and mineral exploration markets, while revenue growth for AMC Oil and Gas in
Europe has been projected to be in line with forecast growth in the Oil and Gas sector in the region. Projections are based on
a five year forecast model prepared by management and approved by the Board of Directors;
Cash flows beyond the five year period are estimated using a terminal value calculated under standard valuation principles
incorporating a long term growth rate of 2.5% (2013: nil);
The impact of working capital has been assumed to increase in line with revenue growth;
Capital investment required to run the business has been assumed based on a five year forecast model prepared by
management and approved by the Board of Directors.
Management has considered the possibility that discount rates, long-term growth rates and forecast EBITDA growth could vary and
have concluded that there are no reasonably possible changes in key assumptions that would result in a material impairment of goodwill
for these CGUʼs.
(iv) Value in use calculations for AMC Minerals South America
The recoverable amount of AMC Minerals South America has been determined based on a value in use calculation using cash flow
projections covering a five year period, based on financial forecast models prepared by management and approved by the Imdex
Limited Board.
The following describes each key assumption on which management has based its value in use calculation for AMC Minerals South
America:
The discount rate applied to post tax cash flow projections is 13.47% (2013: 11.62%);
Revenue growth over the five year plan period for AMC Minerals South America has been forecast in line with the expected
rate of recovery of the mining and mineral exploration market within South and Latin America. Projections are based on a five
year forecast model prepared by management and approved by the Board of Directors;
Cash flows beyond the five year period are estimated using a terminal value calculated under standard valuation principles
incorporating a long term growth rate of 2.5% (2013: nil);
The impact of working capital has been assumed to increase in line with revenue growth;
Capital investment required to run the business has been assumed based on a five year forecast model prepared by
management and approved by the Board of Directors.
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. Management has
considered the implications of the key assumptions for the recoverable amount. The two main sensitivities where a reasonably possible
change could lead to further impairment are considered further below, demonstrating the impact of the recoverable amount of a 0.25%
change in these assumptions. A forward looking estimation of this nature is inherently uncertain and these sensitivities may vary by
more or less than this percentage.
Discount rate: the recoverable amount of the AMC Minerals South America CGU would be negatively impacted by
approximately $0.3m if the discount rate increased by 0.25%;
Long term growth rate: the recoverable amount of the AMC Minerals South America CGU would be negatively impacted by
approximately $0.2m if the long term growth rate decreased by 0.25%;
Page 49 of 79
98
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt IMDEX LIMITED
IMDEX LIMITED
IMDEX LIMITED
and its controlled entities
and its controlled entities
and its controlled entities
NOTES TO THE FINANCIAL REPORT
NOTES TO THE FINANCIAL REPORT
13
13
Other Intangible Assets
Other Intangible Assets
Other Intangible Assets
NOTES TO THE FINANCIAL REPORT
13
Intellectual
Intellectual
Property
Property
Intellectual
Property
Technology
Technology
Based
Based
Technology
Based
Contract
Contract
Based
Based
Contract
Based
Customer
Customer
Based
Based
Customer
Based
Development
Development
Costs
Costs
Development
Costs
Trade
Trade
Name
Name
Trade
Name
TOTAL
TOTAL
TOTAL
Gross Carrying Value
Gross Carrying Value
Gross Carrying Value
Balance at 30 June 2012
Balance at 30 June 2012
Balance at 30 June 2012
Capitalised during the year
Capitalised during the year
Capitalised during the year
Recognition on acquisition of ioGlobal
Recognition on acquisition of ioGlobal
Recognition on acquisition of ioGlobal
Impact of exchange rate changes
Impact of exchange rate changes
Impact of exchange rate changes
Balance at 30 June 2013
Balance at 30 June 2013
Balance at 30 June 2013
Impact of exchange rate changes
Impact of exchange rate changes
Impact of exchange rate changes
Balance at 30 June 2014
Balance at 30 June 2014
Balance at 30 June 2014
Accumulated Amortisation and
Accumulated Amortisation and
Accumulated Amortisation and
Impairment
Impairment
Impairment
Balance at 30 June 2012
Balance at 30 June 2012
Balance at 30 June 2012
Amortisation expense
Amortisation expense
Amortisation expense
Impact of exchange rate changes
Impact of exchange rate changes
Impact of exchange rate changes
Balance at 30 June 2013
Balance at 30 June 2013
Balance at 30 June 2013
Amortisation expense
Amortisation expense
Amortisation expense
Impact of exchange rate changes
Impact of exchange rate changes
Impact of exchange rate changes
Impairment losses for the year
Impairment losses for the year
Impairment losses for the year
Balance at 30 June 2014
Balance at 30 June 2014
Balance at 30 June 2014
Net Book Value
Net Book Value
As at 30 June 2013
As at 30 June 2013
As at 30 June 2014
As at 30 June 2014
Net Book Value
As at 30 June 2013
As at 30 June 2014
Notes
Notes
Notes
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
601
601
-
-
1,300
1,300
-
-
1,901
1,901
-
-
1,901
1,901
601
-
1,300
-
1,901
-
1,901
14,080
14,080
14,080
-
-
-
-
-
-
-
-
-
14,080
14,080
14,080
-
-
-
14,080
14,080
14,080
2,258
2,258
-
-
-
-
-
-
2,258
2,258
-
-
2,258
2,258
10,893
10,893
2,258
10,893
-
-
-
-
-
-
-
-
-
-
-
-
10,893
10,893
2,258
10,893
-
-
-
-
10,893
10,893
2,258
10,893
7,366
7,366
996
996
-
-
213
213
8,575
8,575
(34)
(34)
8,541
8,541
7,366
996
-
213
8,575
(34)
8,541
3,887
3,887
-
-
-
-
-
-
3,887
3,887
-
-
3,887
3,887
601
601
173
173
-
-
774
774
260
260
-
-
-
-
1,034
1,034
601
173
-
774
260
-
-
1,034
12,491
12,491
12,491
1,589
1,589
1,589
-
-
-
14,080
14,080
14,080
-
-
-
-
-
-
-
-
-
14,080
14,080
14,080
1,315
1,315
472
472
-
-
1,787
1,787
314
314
-
-
-
-
2,101
2,101
10,488
10,488
1,315
10,488
405
405
472
405
-
-
-
-
10,893
10,893
1,787
10,893
-
-
314
-
-
-
-
-
-
-
-
-
10,893
10,893
2,101
10,893
3,765
3,765
707
707
91
91
4,563
4,563
895
895
(23)
(23)
2,246
2,246
7,681
7,681
3,765
707
91
4,563
895
(23)
2,246
7,681
3,869
3,869
18
18
-
-
3,887
3,887
-
-
-
-
-
-
3,887
3,887
(i)
(i)
(i)
3,887
-
-
-
3,887
-
3,887
39,085
39,085
996
996
1,300
1,300
213
213
41,594
41,594
(34)
(34)
41,560
41,560
39,085
996
1,300
213
41,594
(34)
41,560
3,869
18
-
3,887
-
-
-
3,887
33,290
33,290
3,364
3,364
91
91
35,984
35,984
1,469
1,469
(23)
(23)
2,246
2,246
39,676
39,676
33,290
3,364
91
35,984
1,469
(23)
2,246
39,676
1,127
1,127
867
867
1,127
867
-
-
-
-
-
-
471
471
157
157
471
157
-
-
-
-
-
-
4,012
4,012
860
860
4,012
860
-
-
-
-
-
-
5,610
5,610
1,884
1,884
5,610
1,884
Where relevant, these intangible assets have been tested for impairment as part of the testing of CGUs referred to in note 12, and an annual
Where relevant, these intangible assets have been tested for impairment as part of the testing of CGUs referred to in note 12, and an annual
assessment is performed for impairment indicators.
assessment is performed for impairment indicators.
Where relevant, these intangible assets have been tested for impairment as part of the testing of CGUs referred to in note 12, and an annual
assessment is performed for impairment indicators.
(i) Impairment losses:
(i) Impairment losses:
(i) Impairment losses:
2014
2014
$ʼ000
$ʼ000
2014
$ʼ000
2013
2013
$ʼ000
$ʼ000
2013
$ʼ000
Development costs (Reflex CGU)
Development costs (Reflex CGU)
Development costs (Reflex CGU)
2,246
2,246
2,246
-
-
-
The above impairment charge arises as a result of a decision to cease development of a specific product.
The above impairment charge arises as a result of a decision to cease development of a specific product.
The above impairment charge arises as a result of a decision to cease development of a specific product.
14
14
14
Trade and Other Payables
Trade and Other Payables
Trade and Other Payables
Trade pay ables
Trade pay ables
A c c ruals and other pay ables
A c c ruals and other pay ables
Trade pay ables
A c c ruals and other pay ables
Note s
Note s
Note s
(i)
(i)
(i)
2014
2014
$ʼ000
$ʼ000
2014
$ʼ000
2013
2013
$ʼ000
$ʼ000
2013
$ʼ000
13,791
13,791
3,515
3,515
17,306
17,306
13,791
3,515
17,306
19,768
19,768
6,008
6,008
25,776
25,776
19,768
6,008
25,776
(i) Trade pay ables are interes t free for periods ranging from 30 to 180 day s . Thereafter interes t is c harged at c om m erc ial rates .
(i) Trade pay ables are interes t free for periods ranging from 30 to 180 day s . Thereafter interes t is c harged at c om m erc ial rates .
The c ons olidated entity has financ ial ris k m anagem ent polic ies in plac e to ens ure that all pay ables are paid within the c redit
The c ons olidated entity has financ ial ris k m anagem ent polic ies in plac e to ens ure that all pay ables are paid within the c redit
tim efram e.
tim efram e.
(i) Trade pay ables are interes t free for periods ranging from 30 to 180 day s . Thereafter interes t is c harged at c om m erc ial rates .
The c ons olidated entity has financ ial ris k m anagem ent polic ies in plac e to ens ure that all pay ables are paid within the c redit
tim efram e.
Page 50 of 79
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Page 50 of 79
99
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
15
Borrowings
Current borrow ings
Secured
At amortised cost
Club Facility - AUD Tranche
Club Facility - USD Tranche
Club Facility - CAD Tranche
Hire purchase liabilities
Non-current borrow ings
Secured
At amortised cost
Club Facility - AUD Tranche
Club Facility - USD Tranche
Club Facility - CAD Tranche
Hire purchase liabilities
Notes
2014
$ʼ000
2013
$ʼ000
(i,a)
(i,b)
(i,c)
(ii),23
(i,a)
(i,b)
(i,c)
(ii),23
4,476
255
1,983
188
6,902
26,004
14,420
2,643
172
43,239
7,056
5,372
2,065
245
14,738
21,089
23,082
4,817
260
49,248
On 7 October 2011 a clubbed banking facility involving Westpac Banking Corporation and HSBC was put in place. This facility replaced
commercial bills and Canadian bank loans in place at that date. In December 2013, this facility was renewed for a further three years.
As at 30 June 2014:
(i,a)
(i,b)
AUD denominated borrowings includes an amortising facility that is repayable in equal monthly installments of $373,000 to 31
December 2016 on which date the balance remaining is payable, and a revolving facility that is fully repayable on 31
December 2016. Both facilities bear interest at floating rates.
USD denominated borrowings includes an amortising facility that is repayable in equal monthly installments of $21,000 to 31
December 2016 on which date the balance remaining is payable, and a revolving facility that is fully repayable on 31
December 2016. Both facilities bear interest at floating rates.
(i,c)
CAD denominated borrowings include an amortising facility that bears interest at a floating rate and is repayable in equal
monthly installments of $165,000 to 31 December 2016 on which date the balance remaining is payable.
The club facility is secured by the assets of entities in Australia, Canada, Chile, South Africa and Europe.
At 30 June 2014, the Group had unused banking facilities totalling AUD$3.3 million, comprising AUD$2.5 million and ZAR7.9 million
(AUD$0.8 million).
(ii) 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 5.98% (2013: 6.52%).
100
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2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
16
Provisions
Current provisions
Employee entitlements
Other provisions (see below)
(ii) Other provisions
Balance at 1 July 2013
Provsions recognised
Balance at 30 June 2014
Notes
(i)
2014
$ʼ000
2013
$ʼ000
4,011
12,174
16,185
4,681
-
4,681
Kazakhstan
business closure
provision (ii)
$ʼ000
Office closure
provision (iii)
$ʼ000
Origin product
containment
provision (iv)
$ʼ000
-
2,434
2,434
-
1,240
1,240
-
8,500
8,500
Total
$ʼ000
-
12,174
12,174
(i) The provision for employee entitlements represents annual leave with the majority of these entitlements expected to be taken during the coming year.
(ii) The Kazakhstan business closure provison relates to the estimated costs of the closure of the Kazakhstan business (Suay Energy Services LLP).
(iii) The office closure provison relates to the estimated costs of the closure of the Osborne Park premises.
(iv) The Origin product containment provison relates to the estimated costs made by Management to settle with affected parties following notification that certain
batches of imported product were contaminated.
Non-current provisions
Employee entitlements
2014
$ʼ000
2013
$ʼ000
2,153
1,071
Page 52 of 79
101
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
17
Issued Capital and Shares reserved for Performance Rights Plan
Issued and Paid Up Capital - Fully paid ordinary shares
(i) Fully paid ordinary shares carry one vote per share and the right to dividends.
Notes
(i)
2014
$ʼ000
2013
$ʼ000
90,259
89,269
Ordinary shares
Notes
Number
$'000
Number
$'000
2014
2013
Balance at beginning of the financial year
210,473,188
89,269
208,235,426
86,069
Issue of shares as part consideration for the acquisition of
System Mud Industria e Comercio Ltda
18
1,637,180
990
-
-
Issue of shares as part consideration for the acquisition of
ioGlobal
25(a)
-
-
2,237,762
Closing balance at end of the financial year
212,110,368
90,259
210,473,188
3,200
89,269
(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 2014 (2013: nil), executives, directors and staff have no options over ordinary
shares.
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.
Shares reserved for Performance Rights Plan
Balance at beginning of the period
Net movement of shares
Balance at the end of the period
Notes
2014
$ʼ000
2013
$ʼ000
(952)
952
-
(3,740)
2,788
(952)
At balance date, the Company, through a Trustee, holds nil shares in Trust for employees under the Performance Rights Plan.
102
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2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
18 Reserves
Fore ign Curre ncy Tra nsla tion Re se rve
Balance at beginning of the financial year
Translation of foreign operations
Balance at the end of the financial year
Note s
2014
$ʼ000
2013
$ʼ000
(11,167)
(595)
(11,762)
(17,703)
6,536
(11,167)
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.
Inve stm e nt Re va lua tion Re se rve
Balance at beginning of the financial year
Net gain arising on revalution of SEH shares to market value
Income tax relating to gain arising on revalution of SEH shares to market value
Cumulative profit reclassified to profit or loss on sale of SEH shares, net of tax
Balance at the end of the financial year
5(b)
13,754
17,107
(5,132)
(17,172)
8,557
10,227
5,038
(1,511)
-
13,754
The investment revaluation reserve records increases in the market value of the SEH investment net of deferred tax. Refer note 9 for
details of the SEH investment.
Em ploye e Equity-Se ttle d Be ne fits Re se rve
Balance at beginning of the financial year
Performance rights expensed
Amounts transferred to shares reserved for performance rights plan
Amounts transferred to retained earnings
Balance at the end of the financial year
4
6,087
845
(1,416)
750
6,266
6,385
1,331
(2,788)
1,159
6,087
The employee equity-settled benefits reserve arises on the grant of performance rights to Directors and employees. Amounts
transferred to shares reserved for performance rights plan relates to the cost of performance rights issued to Directors and
employees during the year. Further information regarding the Performance Rights Plan is contained in note 33.
Ma nda tory Issua ble Ca pita l
Mandatory Issuable Capital
17
-
990
In May 14, a total of 1,637,180 shares were issued as the final payment for the acquisition of System Mud (refer to note 17).
The final payment was subject to the issue of 330,000 shares at a guaranteed issued price of $3. As the share price on the
two year anniversary date was below the guaranteed price then the previous owners were appropriately compensated with
the issue of an extra 1,307,180 shares.
Page 54 of 79
103
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
19
(Loss)/earnings Per Share
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
(a) Basic (loss)/earnings per share
The (loss)/earnings and weighted average number of ordinary shares used in
the calculation of basic (loss)/earnings per share are as follows:
(Loss)/earnings
Weighted average number of ordinary shares for the purposes of basic
(loss)/earnings per share
2014
2013
Cents per share Cents per share
(2.50)
(2.50)
9.24
9.14
2014
2013
$'000
$'000
(5,277)
19,383
Shares
Shares
210,751,284
209,712,962
(b) Diluted (loss)/earnings per share
2014
2013
The (loss)/earnings and weighted average number of ordinary shares used in
the calculation of diluted (loss)/earnings per share are as follows:
(Loss)/earnings
Weighted average number of ordinary shares for the purposes of diluted
(loss)/earnings per share (i)
(i) The weighted average number of ordinary shares for the purposes of diluted
(loss)/earnings per share reconciles to the weighted average number of
ordinary shares used in the calculation of basic (loss)/earnings per share as
follows:
Weighted average number of ordinary shares used in the calculation of basic
(loss)/earnings per share
Shares deemed to be issued for no consideration in respect of performance
rights
Weighted average number of ordinary shares used in the calculation of
diluted (loss)/earnings per share
$'000
$'000
(5,277)
19,383
Shares
Shares
212,320,016
212,115,734
Shares
Shares
210,751,284
209,712,962
1,568,732
2,402,772
212,320,016
212,115,734
104
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2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
20 Dividends
Recognised amounts
Notes
2014
Cents per
share
2014
Total
$ʼ000
2013
Cents per
share
2013
Total
$ʼ000
Fully paid ordinary shares - interim dividend franked to 30%
(i)
Unrecognised amounts
Fully paid ordinary shares - final dividend franked to 30%
(ii)
-
-
-
-
2.50
5,262
0.40
842
(i) In the prior year, the interim, fully franked dividend was paid on 22 March 2013. The record date for determining the entitlement to the
interim dividend was 8 March 2013. There are no dividend reinvestment plans in operation.
(ii) In the prior year, the final fully franked dividend was declared on 16 August 2013 with an entitlement date of 11 October 2013 and a
payment date of 25 October 2013. The financial effect of this dividend was not recognised in the financial statements at 30 June 2013.
Adjusted franking account balance
Impact on franking account of dividends not recognised
Income tax consequences of unrecognised dividends
21 Commitments for Expenditure
(a) Capital expenditure commitments
2014
$'000
2013
$'000
52,733
-
-
56,112
(361)
-
At 30 June 2014 the Group had capital expenditure commitments amounting to $2,683,000 (2013: $3,145,000). These commitments
relate to the purchase of Minerals and Oil and Gas rental equipment and the final payments of the Balcatta premises.
(b) Lease commitment
Hire purchase liabilities and non-cancellable operating lease commitments are disclosed in note 23.
22 Contingent Liabilities and Contingent Assets
The Group is party to legal proceedings and claims which arise in the normal course of business. Any liabilities may be mitigated by
legal defences, insurance, and third party indemnities. Unless recognised as a provision (refer Note 16), management do not consider it
to be probable that they will require settlement at the Groupʼs expense. Whilst the outcome of these claims are, by their nature,
uncertain, the directors do not currently anticipate that the outcome of the proceedings either individually, or in aggregate, will have a
material adverse effect upon the Groupʼs financial position.
A provision is recognised related to pending litigation or other outstanding claims where probable and estimable. Actual costs can differ
from estimates for many reasons. For instance, settlement costs for claims and litigation can vary from estimates based on differing
interpretations of laws, opinions on responsibility and assessments of the amount of damages. Our in-house legal counsel regularly
assesses contingent liabilities and in certain circumstances, outside legal counsel is utilised.
As at 30 June 2014, the main contingent liability relates to potential costs associated with the product containment incident which have
been provided for based on managementʼs estimate of the costs to remediate (as detailed in note 16). In making this assessment a
forward looking estimate has been made of future cash flows and the likely outcome of remediation negotiations. Because of the
inherent uncertainty in this evaluation process, actual losses may be different from the originally estimated provision.
Page 56 of 79
105
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
23 Leases
(a ) Hire Purcha se s
Hire purcha se a rra nge m e nts
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.
Minim um future
le a se pa ym e nts
2014
$ʼ000
2013
$ʼ000
Pre sent va lue of
m inim um future
le a se pa ym e nts
2014
$ʼ000
2013
$ʼ000
Hire purcha se com m itm e nts
Hire purchase commitments are payable as follows. Due:
W ithin one year
Between one and five years
Later than five years
Minimum lease payments
Less: future finance charges
199
252
189
293
-
-
545
388
(28) (40)
505
360
Hire purchase liabilities provided for in the Financial Report
Current – Note 15
Non current – Note 15
188
172
-
360
-
360
188
172
360
245
260
-
505
-
505
245
260
505
(b) Ope ra ting Le a se s
Ope ra ting le a sing a rra nge m e nts
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-ca nce lla ble ope ra ting le a se pa ym e nts
W ithin one year
Between one and five years
Later than five years
2014
$ʼ000
2013
$ʼ000
5,946
12,331
8,094
26,371
4,474
4,966
1,560
11,000
106
Page 57 of 79
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
24 Subsidiaries
Parent Entity
Imdex Limited
Controlled Entities
Notes
Country of
Incorporation
Ownership Interest
2014
2013
%
%
(i),(ii),(iii)
Australia
Australian Mud Company Pty Ltd
Samchem Drilling Fluids & Chemicals (Pty) Ltd
Imdex International Pty Ltd
Imdex Sweden AB
Reflex Instruments Asia Pacific Pty Ltd
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
Reflex Technology International Pty Ltd
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
AMC Oil & Gas Rom SRL
Australian Drilling Specialties Pty Ltd
Imdex USA Inc
Imdex Technologies USA LLC
AMC USA LLC
Reflex USA LLC
AMC Oilfield Services Pte Ltd (formerly Mud Systems Pte Ltd)
System Mud Industria e Comercio Ltda
Imdex Global Coöperatie U.A
Imdex Global B.V.
AMC Oil & Gas International Limited
ioGlobal Pty Ltd
ioGlobal Solutions Inc
ioAnalytics Pty Ltd
AMC Drilling Fluids & Products - Mexico S. de RL de C.V. Mexico
AMC Myanmar Limited
(ii),(iii)
(ii),(iii)
(ii),(iii)
(ii)
(ii),(iii)
(ii),(iii)
(ii)
(ii)
(ii)
(ii)
25(a),(ii)
25(a)
25(a),(ii)
(iv)
Australia
South Africa
Australia
Sweden
Australia
Sweden
Canada
Chile
United Kingdom
South Africa
Sweden
Australia
Kazakhstan
Canada
Chile
Chile
Australia
Australia
Argentina
Peru
Germany
Brazil
India
Australia
Australia
Australia
Germany
Romania
Australia
United States of America
United States of America
United States of America
United States of America
Singapore
Brazil
Netherlands
Netherlands
British Virgin Islands
Australia
Canada
Australia
Mexico
Myanmar
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
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,
Reflex Technology International Pty Ltd on 28 April 2011 and Wildcat Chemicals Australia Pty Ltd on 7 September 2011.
(iv) This entity was incorporated on 10 March 2014.
Page 58 of 79
107
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
24
Subsidiaries (continued)
The consolidated income statement of income 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
Gain on the disposal of shares in SEH
Foreign exchange (loss)/gain
Raw materials and consumables used
Employee benefit expenses
Depreciation and amortisation expense
Finance costs
Auditors and accounting fees
Commissions
Consultancy fees
Legal and professional expenses
Rent and premises costs
Travel and accommodation
Motor vehicle costs
Product containment
Research and Development costs
Bad debts
Other expenses
(Loss)/profit before income tax expense
Income tax benefit/(expense)
Loss for the year
Other comprehensive income
Fair value adjustment on investment in SEH
Income tax relating to components of other comprehensive income
Cumulative profit reclassified to profit or loss on sale of SEH shares, net of tax
Other comprehensive income for the year
Total comprehensive income for the year
2014
$ʼ000
2013
$ʼ000
97,003
398
97,401
1,459
24,094
(473)
(52,277)
(28,044)
(9,900)
(2,405)
(653)
(909)
(887)
(5,418)
(2,509)
(2,550)
(1,018)
(9,080)
(4,219)
(1,578)
(9,051)
(8,017)
1,654
(6,363)
17,107
(5,132)
(17,172)
(5,197)
(11,560)
117,162
1,420
118,582
2,005
-
882
(54,143)
(31,404)
(13,680)
(2,996)
(1,039)
(1,148)
(840)
(3,422)
(2,052)
(2,838)
(1,082)
-
-
(930)
(1,605)
4,290
(6,840)
(2,550)
5,038
(1,511)
-
3,527
977
108
Page 59 of 79
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
24
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
Current Tax Assets
Other
Financial Asset Held for Sale
Total Current Assets
Non Current Assets
Other Financial Assets
Property, Plant and Equipment
Other Intangible Assets
Deferred Tax Assets
Other Receivables
Total Non Current Assets
Total Assets
Current Liabilities
Trade and Other Payables
Other Financial Liabilities
Borrowings
Current Tax Payables
Provisions
Total Current Liabilities
Non Current Liabilities
Borrowings
Provisions
Deferred Tax Liabilities
Total Non Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed Capital
Shares Reserved for Performance Rights Plan
Employee Equity-Settled Benefits Reserve
Investment Revaulation Reserve
Retained Earnings *
Total Equity
* Retained Earnings at the beginning of the financial year
Net Loss
Dividends Received/(Paid)
Amounts transferred from employee equity-settled benefits reserve
Retained Earnings at the end of the financial year
2014
$ʼ000
2013
$ʼ000
446
51,286
21,743
-
441
73,916
14,705
88,621
165,447
19,124
875
9,215
957
195,618
284,239
16,867
80
4,664
1,288
12,696
35,595
39,684
1,781
3,061
44,526
80,121
204,118
90,259
-
6,266
8,557
99,036
204,118
101,383
(6,363)
4,766
(750)
99,036
-
51,507
35,247
1,749
732
89,235
26,450
115,685
164,238
12,793
2,258
6,061
-
185,350
301,035
28,084
-
10,961
-
3,586
42,631
40,972
699
7,192
48,863
91,494
209,541
89,269
(952)
6,087
13,754
101,383
209,541
118,683
(2,550)
(13,591)
(1,159)
101,383
Page 60 of 79
109
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IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
25
Acquisition of Businesses
(a) 2013 Acquisition of entity - ioGlobal Pty Ltd and ioAnalytics Pty Ltd
With effect from 1 November 2012, Imdex Limited acquired 100% of the issued share capital of ioGlobal Pty Ltd and ioAnalytics Pty Ltd
(together ioGlobal). ioGlobal provides innovative cloud-based data management solutions for the mining and mineral exploration industries. The
numbers presented below have been accounted for using the acquisition method of accounting.
Details of the assets, liabilities and goodwill:
Book value
Notes
$ʼ000
Fair value
adjustments
$ʼ000
Fair value on
acquisition
$ʼ000
Trade and other receivables
Property, plant and equipment
Intangibles (Intellectual Property)
Trade and other payables
Deferred tax
Provisions
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
Issue of ordinary shares
1,441
175
-
(1,654)
-
(155)
(193)
-
-
1,300
-
(390)
-
910
(iii)
(iii)
(i)
(ii)
(ii)
17
Operating results of ioGlobal included in the Consolidated Income Statement of Imdex
Revenue
Total expenses (including income tax)
Loss after tax for the period
1,441
175
1,300
(1,654)
(390)
(155)
717
6,357
7,074
4,800
(926)
3,200
7,074
8 months to
30 June 2013
$ʼ000
2,826
(3,478)
(652)
(i) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire ioGlobal. 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 ioGlobal. 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. ioGlobal has been assessed for impairment as part of the Reflex CGU.
(ii) The Consolidated Cash Flow Statement for the year ended 30 June 2013 records the payment for the acquisition of ioGlobal as $3.9 million
being the cash purchase consideration of $4.8 million paid net of the $0.9 million of cash acquired.
(iii) Intangible assets of $1.3 million comprise the fair value of the intellectual property and know-how associated with ioGlobal. The discounted
present value of expected future cash flows on a relief from royalty method has 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 $0.4 million was raised on this asset.
(iv) Had the acquisition of ioGlobal been effected on 1 July 2012, the beginning of the current year, the ioGlobal financial results included in the
Imdex consolidated results would have been revenue of approximately $4.2 million with a loss of $1.0 million. The results of ioGlobal 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.
110
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IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26
Investment in Associates
VES International (VES) is registered in the British Virgin Islands and operates an oil and gas services business based in
Dubai using the technology licensed to it by Imdex Limited. The shares of VES are not publicly listed on a stcok
exchange and hence published priced quotes are not available.
Effective 1 January 2012 VES purchased the business of Vaughn Energy Services, a US based oil & gas services
provider. Following this transaction Imdex Limitedʼs shareholding in VES decreased from 50% to 30%. The investment is
accounted for under the equity method and has a reporting date of 31 December 2013.
Financia l informa tion in re spe ct of the Associate is se t out be low :
Note
2014
$ʼ000
2013
$ʼ000
Total Revenue
69,451
55,498
Total profit/(loss) for the Period
(i)
1,425
(7,114)
Total profit/(loss) for the Period includes the following:
Depreciation
Amortisation
Income Tax Expense
Current Assets
Non Current Assets
Total Assets
Current Liabilities
Non Current Liabilities
Total Liabilities
Net Assets
Share of Net Assets of Associate
(8,245)
(8,485)
(6,483)
(5,912)
(10,570)
(6,838)
23,321 21,807
96,968 104,308
120,289
126,115
(6,269)
(11,996)
(18,265)
102,024
31,219
(5,059)
(20,457)
(25,516)
100,599
30,180
The Inve stme nt in Associa te comprise s the follow ing:
Opening cost of investment in Associate
Share of profit of Associate
Closing cost of investment in Associate
(i)
25,555
715
26,270
24,255
1,300
25,555
(i) The prior period share of Associateʼs profit reflects 30% of the underlying profit of VES, the effect of adjustments to eliminate unrealised
intercompany profits and fair value adjustments related to the acquisition of Vaughn Energy Services, including a $3m gain arising on
dilution and an adjustment to the amortisation of intangibles.
(ii) At 30 June 2014, VES had no significant commitments or contingencies (2013: nil).
(iii) VES has no material items of other comprehensive income, and has paid no dividends in the year.
Page 62 of 79
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IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
27 Segment Information
Reportable Segments
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a
reasonable basis. Unallocated items mainly comprise income earning assets and interest revenue, interest bearing loans, borrowings
and expenses, and corporate assets and expenses. Segment capital expenditure is the total cost incurred during the period to acquire
segment assets that are expected to be used for more than one period.
The Group comprises the following reportable segments which are based on the Group's internal management reporting system:
(i) Minerals Division: This segment comprises the manufacture, sale and rental of down hole instrumentation, the manufacture and sale
of drilling fluids and chemicals and related equipment and the provision of innovative cloud-based data management solutions 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 & gas and geothermal industries globally.
(a) Segment Revenues
Minerals
Oil & Gas
Total of all segments
Unallocated
Total revenue
(b) Segment Results
Minerals
Oil & Gas (i)
Total of all segments
Central administration costs (ii)
Gain on the disposal of shares in SEH
(Loss)/profit before income tax expense
Income tax expense
(Loss)/profit attributable to ordinary equity holders of Imdex Limited
(i) Includes the share of profit of Associate
(ii) Central administration costs comprise net financing costs for the Group and the
corporate portion of head office costs. Head office costs attributable to operations are
allocated to reportable segments in proportion to the revenues earned from those
segments.
(c) Segment Assets and Liabilities
2014
$'000
2013
$'000
125,317
58,168
183,485
72
183,557
182,681
50,110
232,791
130
232,921
430
(21,540)
(21,110)
(10,046)
24,094
(7,062)
1,785
(5,277)
44,314
(5,080)
39,234
(10,724)
-
28,510
(9,127)
19,383
Minerals
Oil & Gas
Total of all segments
Unallocated (i)
Consolidated
Assets
Liabilities
2014
$'000
2013
$'000
2014
$'000
2013
$'000
176,001
72,081
248,082
14,705
262,787
182,412
77,004
259,416
26,450
285,866
23,464
12,261
35,725
50,140
85,865
11,616
21,812
33,428
63,986
97,414
(i) Unallocated assets comprise the investment in SEH. Unallocated liabilties comprise commerical bills, bank loans and hire pruchase
liabilities.
112
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IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
27
Segment Information (continued)
Minerals
Oil & Gas
Unallocated
Total
2014
$'000
2013
$'000
2014
$'000
2013
$'000
2014
$'000
2013
$'000
2014
$'000
2013
$'000
4,881
1,155
2,623
5,138
6,171
2,593
-
14,856
2,120
314
1,123
7,610
1,070
771
-
8,936
574
-
4,243
487
-
-
528
7,575
1,469
3,746
16,991
7,728
3,364
-
24,320
676
1,065
169
266
-
-
845
1,331
Depreciation
Amortisation
Impairment
Acquisition of segment assets
Significant non cash expenses
other than depreciation and
amortisation
Geographical Segments
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/Middle East: 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/Middle East
Americas
Total
(e) Information about major customers
Revenue from
external customers
2014
$'000
2013
$'000
Segment assets
(non-current)
Acquisition of segment
assets
2014
$'000
2013
$'000
2014
$'000
2013
$'000
91,377
24,865
26,263
41,052
183,557
113,980
28,300
34,128
56,513
232,921
130,351
9,002
2,851
10,296
152,500
122,428
6,825
1,505
11,522
142,280
9,028
1,347
2,157
4,459
16,991
9,568
2,783
1,858
10,111
24,320
The Group has a broad range of customers across its global operations with no single customer making up more than 10% of revenue.
Page 64 of 79
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IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
28 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
2014
$ʼ000
10,070
2013
$ʼ000
9,979
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 $10,070,184 (2013: $9,978,758).
(b) Non cash financing and investing activities
During the year the Group provided non cash consideration to complete the acquisition of System Mud. This
transaction is disclosed in note 17.
(c) Reconciliation from the (Loss)/profit for the Year to Net Cash Provided by Operating Activities
(Loss)/profit for the year
(5,277)
19,383
Adjustments for non-cash and non-operational items
Gain on the disposal of shares in SEH
Depreciation of non-current assets
Amortisation of intangible assets
Impairment expense
W rite down of fixed assets
Interest received disclosed as investing activities
Share options and performance rights expensed
Loss on sale of non-current assets
Share of profit of Associate
Interest on hire purchase liabilities
Increase in other provisions (note 16)
Other
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
Net Cash Provided by Operating Activities
(24,094)
7,575
1,469
3,746
3,803
(72)
845
206
(715)
33
12,174
-
58
10,725
3,039
(10,687)
412
(326)
2,914
-
7,728
3,364
-
-
(130)
1,331
58
(1,300)
68
-
(118)
20,368
(1,250)
5,386
(6,680)
1,436
(10,674)
38,970
114
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2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
28 Notes to the Cash Flow Statement (continued)
(d) Fina ncing fa cilitie s
Total fac ilities available
Club Fac ility - A UD Tranc he
Club Fac ility - US D Tranc he
Club Fac ility - CA D Tranc he
ZA R Overdraft
E quipm ent financ e fac ility
Fac ilities utilis ed at balanc e s heet date
Club Fac ility - A UD Tranc he
Club Fac ility - US D Tranc he
Club Fac ility - CA D Tranc he
ZA R Overdraft
E quipm ent financ e fac ility
Fac ilities not utilis ed at balanc e s heet date
Club Fac ility - A UD Tranc he
Club Fac ility - US D Tranc he
Club Fac ility - CA D Tranc he
ZA R Overdraft
E quipm ent financ e fac ility
2014
$ʼ000
2013
$ʼ000
34,197
14,676
4,626
1,838
360
55,697
31,719
14,676
4,626
1,038
360
52,419
2,478
-
-
800
-
3,278
33,395
33,442
6,882
1,951
505
76,175
31,475
28,454
6,882
419
505
67,735
1,920
4,988
-
1,532
-
8,440
Page 66 of 79
115
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
29
Financial Instruments
(a) Capital Risk Management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the
return to stakeholders through the optimisation of the debt and equity balance.
The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 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 17
and 18. Management and the Board review the capital structure regularly. The treasury function presents 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 Groupʼs overall capital management strategy remains unchanged from prior years.
Debt (i)
Cash and bank balances
Net debt
Equity (ii)
Net debt divided by debt plus equity
(i) Debt includes commercial bills, bank loans and hire purchase liabilities .
(ii) Equity includes all capital and reserves of the Group that are managed as capital.
2014
$ 000's
2013
$ 000's
50,141
(10,070)
40,071
63,986
(9,979)
54,007
176,922
188,452
18.5%
22.3%
(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
Financial Asset Held for Sale
Financial Liabilities
Amortised cost
2014
$ 000s
2013
$ 000s
10,070
39,744
14,705
9,979
45,231
26,450
67,527
89,762
116
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2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
29
Financial Instruments (continued)
(d) Financial risk management objectives
The Groupʼs 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
Groupʼs treasury policies which are approved by the Board of Directors. These policies describe the Groupʼs 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 Groupʼs 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 Groupʼs 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 Groupʼs 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
British Pound
Euro
Chilean Pesos
Other
Liabilities
Assets
2014
$ 000s
2013
$ 000s
2014
$ 000s
2013
$ 000s
18,298
794
5,335
539
3,326
1,164
1,793
37,078
969
8,642
969
2,177
5,792
2,327
14,638
771
3,654
953
4,088
1,488
6,825
23,233
2,092
1,227
1,276
3,939
2,317
7,217
Page 68 of 79
117
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IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
29
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 Groupʼs sensitivity to a 10% (2013: 10%) increase and decrease in the Australian Dollar against the
relevant foreign currencies. The sensitivity rate of 10% (2013: 10%) is the rate used when performing regular reporting on foreign
currency risk internally. Foreign exchange risk is reported regularly to key management personnel and the Board. The estimated
movement of 10% (2013: 10%) represents managementʼs 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% (2013: 10%) 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.
Profit or (loss)
Other equity
Profit or (loss)
Other equity
United States Dollar Impact
South African Rand Impact
2014
$ 000's
2013
$ 000's
2014
$ 000's
2013
$ 000's
1,079
(713)
1,586
(184)
(i)
(ii)
-
2
11
(121)
European Dollar Impact
2014
$ 000's
2013
$ 000's
Canadian Dollar Impact
2014
$ 000's
2013
$ 000's
60
(136)
206
(378)
(i)
(ii)
6
163
449
296
(i) Profit and loss impacts are mainly attributable to exposure on outstanding receivables and payables at year end denominated in the
applicable foreign currency
(ii) Equity movements are attributable to the net investment in a foreign operation denominated in the applicable foreign currency
(g) Interest rate risk management
The Company and the Group are exposed to interest rate risk as entities in the Group borrow funds at floating interest rates. Interest
rate risk is managed within defined treasury policy guidelines. This is achieved by the Group by maintaining an appropriate mix between
fixed and floating rate borrowings.
In the absence of fixed rate debt the Groupʼs policy allows for the use of interest rate swaps. Where the group enters into fixed rate debt
it is understood that this creates a fair value exposure as a by-product of the Groupʼs attempt to manage its cash flow volatility arising
from interest rate changes.
For the 2014 financial year the Group entered into an AUD interest swap at 3.01% maturing in December 2016, in order to protect
against rising interest rates, under which it has a right to receive interest at a variable rates and to pay interest at a fixed rate. The swap
in place has a fair value of $0.08m (liability). This swap covers approximately 40% (2013: nil) of the principal outstanding at reporting
date and is timed to expire at the renewal date of the loans.
The interest rate swap requires settlement of net interest receivable or payable each month. The settlement date coincides with the date
on which interest is payable on the underlying debt. The swap is measured at fair value and all gains and losses attributable to the
hedged risk is taken directly to equity and re-classified into profit or loss when the interest expense is recognised.
118
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IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
29
Financial Instruments (continued)
(g) Interest rate risk management (continued)
Fair value of interest rate swap contracts - cash flow hedges
Notes
(i)
2014
$ʼ000
2013
$ʼ000
80
-
(i) The interest rate swap contract is exposed to fair value movement if interest rates change. Under this contract the Group
is committed to $0.3m interest expense within 12 months (on $12m of notional debt), $0.2m interest expense between 1
year and 2 years on $8m of notional debt), and $0.1m interest expense between 2 years and 5 years (on $4m of notional
debt). The interest expense is calculated at 3.01%.
The Company and the Groupʼs 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 presented in the below paragraph is based on the exposure to interest rates for both derivative and non-derivative
instruments at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant
throughout the reporting period. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key
management personnel and represents managementʼs 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 Groupʼs net profit
would decrease by $0.6 million (2013: $0.6 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 Groupʼs net profit of $0.5 million (2013:
$0.6 million). This is mainly attributable to the Groupʼs exposure to interest rates on its variable rate borrowings.
(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 Groupʼs exposure and the credit ratings of its counterparties are
monitored on a weekly basis and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit
exposure is controlled by counterparty limits that are reviewed regularly by management.
Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit
evaluation is performed on the financial condition of accounts receivable.
The Group does not have any significant credit risk exposure to any single counterparty or group of counterparties having similar
characteristics. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with
high credit-ratings assigned by international credit-rating agencies.
The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Groupʼs
maximum exposure to credit risk without taking account of the value of collateral obtained. At 30 June 2014 no such collateral had been
obtained (2013: nil).
(i) Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, who monitor short, medium and long term liquidity
requirements through the use of financial models. The treasury function reports 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 28(d) is a listing of additional undrawn facilities that the Company/Group has at its disposal to further reduce
liquidity risk.
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119
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IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
29
Financial Instruments (continued)
Liquidity and interest risk tables
The following tables detail the Companyʼs and the Groupʼs remaining contractual maturity for its non–derivative financial liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group
can be required to pay. The table includes both interest and principal cash flows.
Weighted
average
effective interest
rate
%
-
5.98%
4.74%
-
6.52%
4.25%
0-3 months
3 months to 1
year
1-5 years
5+ years
Total
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
12,980
50
1,683
14,713
19,332
64
3,623
23,019
4,326
149
5,049
9,524
6,444
188
10,870
17,502
-
189
43,050
43,239
-
293
48,988
49,281
-
-
-
-
-
-
-
-
17,306
388
49,782
67,476
25,776
545
63,481
89,802
2014
Non-interest bearing
Finance lease liability
Variable interest rate
instruments
2013
Non-interest bearing
Finance lease liability
Variable interest rate
instruments
The following tables detail the Companyʼs and the Groupʼs 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.
Weighted
average
effective interest
rate
%
-
0.25%
-
0.25%
0-3 months
3 months to 1
year
1-5 years
5+ years
Total
$ʼ000
$ʼ000
$ʼ000
$ʼ000
$ʼ000
54,449
10,070
64,519
71,681
9,979
81,660
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
54,449
10,070
64,519
71,681
9,979
81,660
2014
Non-interest bearing
Variable interest rate
instruments
2013
Non-interest bearing
Variable interest rate
instruments
120
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2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
29
Financial Instruments (continued)
(j) Fair value of financial instruments
The fair value of the Groupʼs financial assets and liabilities are determined on the following basis:
Financial Assets and Financial Liabilities that are measured at fair value on a recurring basis
Subsequent to initial recognition, at fair value financial instruments are grouped into Levels 1 to 3 based on the degree to which the fair
value is observable.
Levels are defined as follows:
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 with 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).
At 30 June 2014, the Group has listed equity securities which are classified as level 1 and level 2 fair value measurements. There were
no transfers between levels in the period.
Financial Instruments
Fair value as at
Fair value
hierarchy
Valuation technique and key
inputs
Financial asset held for
sale
30/06/2014
30/06/2013
Listed equity securities in
Sino Gas and Energy
Holdings Ltd (SEH) -
$14,705,000
Listed equity securities in
Sino Gas and Energy
Holdings Ltd (SEH) -
$26,450,000
Level 1
Quoted bid prices in an active
market
Interest rate swap liability
Interest rate swap - $80,000
nil
Level 2
Valued using discounted cash
flow techniques based on forward
interest rates from observable
yield curves at the end of the
reporting period, discounted at a
rate that reflects the credit risk of
the counterparties
Financial Assets and Financial Liabilities that are measured at fair value on a non-recurring basis
At 30 June 2014, the carrying amount of financial assets and financial liabilities for the Group is considered to approximate their fair values.
Page 72 of 79
121
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
30 Related Party Disclosures
(a ) E q u i ty i n te re sts i n re l a te d p a rti e s
D e t a ils o f t h e p e rc e n t a g e o w n e rs h ip o f s u b s id ia rie s a n d t h e w h o lly o w n e d G ro u p is s e t o u t in n o t e 2 4 . Th e w h o lly
o w n e d G ro u p c o n s is t s o f Im d e x L im it e d a n d it s w h o lly o w n e d s u b s id ia rie s .
(b ) T ra n sa c ti o n s w i th k e y m a n a g e m e n t p e rso n n e l
(i ) K e y m a n a g e m e n t p e rso n n e l c o m p e n sa ti o n
D e t a ils o f k e y m a n a g e m e n t p e rs o n n e l c o m p e n s a t io n is s e t o u t in n o t e 3 1 .
(i i ) L o a n s to k e y m a n a g e m e n t p e rso n n e l
N o lo a n s w e re m a d e d u rin g t h e c u rre n t o r p rio r y e a rs t o k e y m a n a g e m e n t p e rs o n n e l o r t h e ir re la t e d p a rt ie s .
(c ) O th e r tra n sa c ti o n s w i th re l a te d p a rti e s o f I m d e x L i m i te d
Th e G ro u p re c e ive s re c h a rg e re ve n u e fro m V E S re la t in g t o w o rk p e rfo rm e d o n t h e re s e a rc h a n d d e ve lo p m e n t o f
t a rg e t t o o ls . S e rvic e s t o V E S a re p ro vid e d o n n o rm a l c o m m e rc ia l t e rm s a n d c o n d it io n s . To t a l re ve n u e a ris in g
fro m V E S w a s $ 9 9 0 , 2 2 0 (2 0 1 3 : $ 1 , 6 2 5 , 3 4 7 )
Tra n s a c t io n s w it h R e la t e d P a rt ie s
P ro fit fro m o rd in a ry a c t ivit ie s b e fo re in c o m e t a x
R e c h a rg e R e ve n u e fro m V E S
2 0 1 4
$
2 0 1 3
$
9 9 0 , 2 2 0
1 , 6 2 5 , 3 4 7
Th e re w e re n o a s s e t s o r lia b ilit ie s a ris in g fro m t ra n s a c t io n s w it h V E S a s a t 3 0 Ju n e 2 0 1 4 o r 2 0 1 3 .
(d ) P a re n t e n ti ty
Th e u lt im a t e p a re n t e n t it y in t h e G ro u p is Im d e x L im it e d , a C o m p a n y in c o rp o ra t e d in W e s t e rn A u s t ra lia .
31
Key Management Personnel Compensation
Ke y m a na ge m e nt pe rson ne l co m pe nsa tion
The aggregate c om pens ation of the k ey m anagem ent pers onnel of the G roup and the Com pany is s et out
below:
S hort-term em ploy ee benefits
P os t-em ploy m ent benefits
O ther long-term benefits
Term ination benefits
S hare-bas ed pay m ents
122
2014
$
2013
$
3,276,391
2,724,775
138,338
282,440
-
39,595
3,736,764
128,350
122,942
-
367,774
3,343,841
Page 73 of 79
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
32
Staff Option Scheme
Share Based Payment Arrangements
There were no options issued or exercised during the current or prior year. There were no outstanding options at the 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) and subsequently renewed at the Annual General Meeting on 18 October 2012. 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.
(b) Performance rights granted in the current year
Staff Performance Rights
Tranche 11 comprising 5,124,070 performance rights was issued to employees on 4 October 2013 and were to be allotted in equal 1/3
lots annually beginning in August 2014. These performance rights were subject to profitability related hurdles as well as ongoing
employment tenure. All of these performance rights expired due to performance hurdles not being met and no expense was incurred in
the current year.
Managing Directorʼs Performance Rights
300,000 performance rights were granted to the Managing Director on 17 October 2013 following approval by the shareholders at the
Annual General Meeting. One fully paid Imdex Limited ordinary share 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 FY14 to FY16. 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 FY16 independent audit report is signed in August 2016.
For the purposes of the FY14 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 300,000 performance rights issued, all will meet the required performance hurdles and will
result in 300,000 fully paid Imdex Limited ordinary shares being issued on or about August 2016 should employment tenure be retained.
The fair value of a performance right at grant date was $0.78 per right. The expected total cost of the estimated 300,000 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 2013 to August 2016, with $0.1 million expensed in the current year.
(c) Performance rights Granted in the prior year
Staff Performance Rights
Tranche 10 comprising 1,261,991 performance rights was issued to employees on 28 September 2012 and are to be allotted in equal
1/3 lots annually beginning in August 2013. These performance rights are subject to profitability related hurdles as well as ongoing
employment tenure. 1,223,528 of these performance rights expired due to performance hurdles not being met. The fair value of a
performance right at grant date was $1.62. The expected total cost of the estimated 38,463 fully paid ordinary shares to be issued in
Imdex Limited will therefore be $62,310. This value will be expensed over the vesting period from October 2012 to August 2015, with
$0.03 million expensed in the current year.
An additional 50,000 performance rights were issued under Tranche 7 to Key Management Personnel with 1/4 to be allotted in August
2014 with the remaining 3/4 to be allotted in August 2015. These performance rights are subject to ongoing employment tenure only.
The fair value of a performance right at grant date was $2.10. The expected total cost of the estimated 50,000 fully paid ordinary shares
to be issued in Imdex Limited will therefore be $0.1 million. This value will be expensed over the vesting period to August 2015, with
$0.2 million expensed in the current year.
Since their granting a number of performance rights have expired by virtue of staff leaving the employment of the Imdex Group, details
of which are contained in the table below. One fully paid Imdex Limited ordinary shares will be issued in satisfaction of each
performance right should specified targets be met.
Page 74 of 79
123
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
33
Performance Rights Plan (continued)
(c) Performance rights Granted in the prior year (continued)
Managing Directorʼs Performance Rights
264,818 performance rights were granted to the Managing Director on 18 October 2012 following approval by the shareholders at the
Annual General Meeting. One fully paid Imdex Limited ordinary share 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 FY13 to FY15. 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 FY15 independent audit report is signed in August 2015.
The fair value of a performance right at grant date was $1.44 per right. The expected total cost of the estimated 264,818 fully paid
ordinary shares to be issued in Imdex Limited will therefore be $0.4 million. This value will be expensed over the vesting period from
October 2012 to August 2015, with $0.1 million expensed in the current year.
(d) Summary of performance rights outstanding
2014
Grant Date Expiry Date Exercise
Price
$
-
-
-
-
-
-
-
-
-
-
Tranche 2
Tranche 4
MD Tranche
MD Tranche
Tranche 7
Tranche 9
Tranche 10
MD Tranche
MD Tranche
Tranche 11
3-Dec-10
10-Jun-11
14-Oct-10
20-Oct-11
5-Sep-11
7-Oct-11
28-Sep-12
18-Oct-12
17-Oct-13
4-Oct-13
Aug-15
Aug-16
Oct-15
Oct-16
Aug-15
Aug-16
Aug-17
Oct-17
Oct-18
Oct-18
2013
Grant Date Expiry Date Exercise
Price
Tranche 1
Tranche 2
Tranche 4
MD Tranche
MD Tranche
Tranche 7
Tranche 8
Tranche 9
Tranche 10
MD Tranche
19-Feb-10
3-Dec-10
10-Jun-11
14-Oct-10
20-Oct-11
5-Sep-11
29-Aug-11
7-Oct-11
28-Sep-12
18-Oct-12
Aug-14
Aug-15
Aug-16
Oct-15
Oct-16
Aug-15
Aug-16
Aug-16
Aug-17
Oct-17
$
-
-
-
-
-
-
-
-
-
-
Estimated
Fair Value
at Grant
Date
$
Opening
balance
Granted
Estimated Number of Performance Rights
Satisfied by
the allocation/
allotment of
shares
Expired ^
Closing
balance
1.395
2.160
1.140
1.910
2.100
1.790
1.620
1.440
0.790
0.810
-
580,117
66,666
196,579
153,318
665,000
437,811
38,463
264,818
- 300,000
- 5,124,070
-
- (536,534) (43,583)
-
- (66,666)
- (128,876) (67,703)
-
- - - 153,318
640,000
- - (25,000)
210,596
- (204,713) (22,502)
- - (38,463)
-
- - - 264,818
- - 300,000
-
- (5,124,070)
Estimated
Fair Value
at Grant
Date
$
Estimated Number of Performance Rights
Opening
balance
Granted
Satisfied by
the issue of
shares
Expired ^
Closing
balance
0.685
1.395
2.160
1.140
1.910
2.100
2.080
1.790
1.620
1.440
-
121,199
1,294,474
133,333
196,579
153,318
615,000 50,000
15,000
813,347
- 1,261,991
- 264,818
-
- (121,199)
580,117
- (661,179) (53,178)
- (66,667)
- 66,666
- - - 196,579
- - - 153,318
- - 665,000
-
- (15,000)
437,811
- (256,667) (118,869)
- (1,223,528)
38,463
- - 264,818
-
^ - Performance rights expire either on failure to maintain employment tenure or on failure to satisfy performance hurdles.
Reinstatements occur from time to time to correct historical errors when noted.
124
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2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
34
Parent Entity Information
The accounting policies of the parent entity, which have been applied in determining the financial information shown below, are the
same as those applied in the consolidated financial statements. Refer to note 2 for a summary of the significant accounting policies
relating to the Group.
Financial Position
Asse ts
Current Assets
Non Current Assets
Total Assets
Liabilitie s
Current Liabilities
Non Current Liabilities
Total Liabilities
Net Assets
Equity
Issued Capital
Shares Reserved for Performance Rights Plan
Investment Revaulation Reserve
Employee Equity-Settled Benefits Reserve
Retained Earnings
Tota l Equity
Financial Performance
Loss for the year
Other comprehensive income, net of income tax
Total comprehensive loss
30 June 2014 30 June 2013
$ʼ000
$ʼ000
73,296
75,014
149,141
165,298
222,437
240,312
13,147
11,923
41,292
54,439
40,712
52,635
167,998
187,677
90,259
-
-
6,266
71,473
89,269
(952)
396
6,087
92,877
167,998
187,677
Ye a r Ende d
Ye ar Ende d
30 June 2014 30 June 2013
$ʼ000
$ʼ000
(22,425)
(20,672)
(396)
102
(22,821)
(20,570)
Retained Earnings/(Accumulated Losses) at the beginning of the financial year
92,877
(12,009)
Loss for the year
(22,425)
(20,364)
Amounts transferred from employee equity-settled benefits reserve
(396)
(1,159)
Dividend received
Retained Earnings at the end of the financial year
1,417
126,409
71,473
92,877
Page 76 of 79
125
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
34
Parent Entity Information (continued)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
Guarantee provided under the deed of cross guarantee
80,121
91,494
30 June 2014 30 June 2013
$ʼ000
$ʼ000
Contingent liabilities of the parent entity
-
Com mitments for the aquisition of property, plant and equipment by the
parent entity
Pla nt a nd e quipme nt
W ithin one year
Between one and five years
Later than five years
1.176
4.704
5.880
11,760
-
-
-
-
-
35
Subsequent Events
Subsequent to year end, the Group sold the remaining 91.9 million shares of its Sino Gas and Energy Holdings Ltd shareholdings at a
share price of 18.5 cents per share to realise gross cash proceeds of $17.0 million at a book profit before tax of $14.2 million. Amounts
shown within the Investment Revaluation Reserve at 30 June 2014 will be recycled to the Income Statement as a result of this sale.
126
Page 77 of 79
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
ADDITIONAL SECURITIES EXCHANGE INFORMATION
AS AT 31 AUGUST 2014
(a)
Distribution of Shareholders
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Holding less than a marketable parcel
(b)
Substantial Shareholders
Ordinary Shareholders
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
(c)
Twenty Largest Holders of Quoted Equity Securities
Ordinary Shareholders
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
National Nominees Limited
Citicorp Nominees Pty Limited
Citicorp Nominees Pty Limited (Colonial First State Inv Account)
RBC Investor Services Australia Nominees Pty Ltd (Pi Pooled Account)
BNP Paribas Noms Pty Ltd (DRP)
Mr Richard Karl Hill (Icena Account)
ABN Amro Clearing Sydney Nominees Pty Ltd (Custodian Account)
UBS Nominees Pty Ltd (TP00014 15 Account)
Aust Executor Trustees Ltd (Charitable Foundation)
Telic Alcatel (Australia) Pty Ltd (Middendorp Directors SF Account)
RBC Investor Services Australia Nominees Pty Limited (BKcust Account)
Keeble Nominees Pty Ltd (Ridgeway Super Fund Account)
Wear Services Pty Ltd
Warbont Nominees Pty Ltd (Accumulation Entrepot Account)
Mr David Charles Lawie (COG Family Account)
SAO Group Pty Ltd (The Springbank Family Account)
Dimana Holdings Pty Ltd
Vanward Investments Limited
Number of
Fully Paid
Ordinary
Shareholders
Number of
Performance
Rights Holders
476
1,076
642
940
101
3,235
274
70
50
3
20
2
145
-
Fully Paid
Number
Percentage
55,007,045
41,464,746
25.93%
19.55%
Fully Paid
Number
Percentage
55,007,045
41,464,746
18,894,854
10,172,917
5,702,219
4,073,920
4,010,846
3,000,000
2,323,676
2,195,550
1,781,067
1,514,076
1,288,705
1,226,737
987,893
983,598
978,042
978,042
880,000
775,958
25.93%
19.55%
8.91%
4.80%
2.69%
1.92%
1.89%
1.41%
1.10%
1.04%
0.84%
0.71%
0.61%
0.58%
0.47%
0.46%
0.46%
0.46%
0.41%
0.37%
158,239,891
74.60%
127
2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
IMDEX LIMITED
and its controlled entities
ADDITIONAL SECURITIES EXCHANGE INFORMATION
AS AT 31 AUGUST 2014
(d)
Director and Company Secretary Shareholdings
Number of
Shares
Number of
Options
380,000
2,343,506
150,000
562,000
260,000
396,044
4,091,550
-
-
-
-
-
-
-
Number of
Performance
Rights
-
718,136
-
-
-
12,120
730,256
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
216 Balcatta Road
Balcatta
Western Australia
6021
Phone: (08) 9445 4010
(g)
Share Registry
Computershare Investor Services
Level 2
45 St Georges Terrace
Perth WA 6000
Phone: (08) 9323 2000
128
2014 Imdex LImIted AnnuAL RepoRt2014 Imdex LImIted AnnuAL RepoRtFY2014 FInAncIAL RepoRt
Company History
17 December 1980
Australian company Pilbara Gold NL incorporated
21 July 1985
Pilbara Gold NL changed name to Imdex Limited
24 September 1987
Imdex Limited listed on the ASX
1988
1997
2001
Formation of Australian Mud Company
Acquisition of Surtron Technologies Pty Ltd and Ace Drilling Supplies
Joint venture formed with Imdex and Rashid Trading Establishment (RTE) in Saudi
Arabia
1 July 2005
Sale of Imdex Minerals
1 August 2005
Acquisition of African based company Samchem
1 August 2006
Acquisition of Swedish based REFLEX Group of Companies and United Kingdom
based company Chardec
1 May 2007
Acquisition of Swedish based company Flexit
1 July 2007
Ace merged with REFLEX. Imdex finalised the sale of its interest in Imdex Arabia to
RTE. Acquisition of Canadian based Poly-Drill and a 75% interest in Kazakhstan based
Suay Energy Services
31 October 2007
Sale of Surtron Technologies
1 November 2007
Acquisition of Chilean based company Southernland
1 January 2008
Acquisition of German based company System Entwicklungs
1 July 2008
Acquisition of the remaining 25% of Kazakhstan based Suay Energy Services
1 September 2008
Acquisition of Australian based company Wildcat Chemicals Australia
1 July 2010
New regional structure implemented and business reporting streamlined into
Minerals and Oil & Gas Divisions
1 September 2010
Acquisition of Australian based companies Fluidstar and Ecospin
1 March 2011
Acquisition of German based company Mud-Data
1 July 2011
Formation of DHS Services joint venture
1 July 2011
Acquisition of Australian based company Australian Drilling Specialties Pty Ltd
1 August 2011
Acquisition of Brazilian based company System Mud Indústria e ComércioLtda
1 January 2012
Acquisition of Vaughn Energy Services (VES) by Imdex’s DHS Services joint venture
1 November 2012
Acquisition of ioGlobal Pty Ltd, ioAnalytics Pty Ltd and ioGlobal Solutions Inc.
(together ioGlobal)
1 December 2012
DHS Services and Vaughn Energy Services rebranded as VES International
3
2014 IMDEX LIMITED ANNUAL REPORTIMDEX GROUP AT A GLANCE Innovative Technologies
Integrated Solutions
Global Support
Imdex delivers leading innovative technologies
to the global minerals industry and select oil and
gas markets, focusing on integrated solutions that
enhance customers’ operations and deliver value for
shareholders. The company achieves this through its
extensive industry knowledge and commitment to
product development, ensuring innovative, simple to
use and fit-for purpose technologies.
Imdex Limited
ABN 78 008 947 813
Head Office
216 Balcatta Road, Balcatta,
Western Australia 6021
T: +61 8 9445 4010
F: +61 8 9445 4042
E: imdex@imdexlimited.com
imdexlimited.com