Infomedia
Annual Report 2002

Plain-text annual report

I n f o m e d a i L t d 2 0 0 2 a n n u a l r e p o r t TM Ltd ABN 63 003 326 243 2002 annual report contents 1 2 4 6 8 16 24 26 28 30 32 33 34 40 41 42 43 67 68 69 71 73 chairman’s letter results at a glance introduction international territories and product timeline achievements - fy2002 views from the team new retail products group acquisition of PartsImager business microcat online infomedia systems outlook - fy2003 fy2002 audited accounts directors’ report statement of financial performance statement of financial position statement of cash flows notes to financial statements directors’ declaration audit report additional information personal notes page corporate directory © 2002 Infomedia Ltd. All rights reserved worldwide. This document may not be reproduced in whole or in part without the express written permission of Infomedia Ltd. chairman’s letter 26th September 2002 Dear Shareholder, It is with pride that I present to you the 2002 Annual Report for Infomedia Ltd. In preparing this document, management has strived to provide a record of your Company's performance during the 2002 financial year, an insight into the work of the Company and an outlook for the year ahead. Throughout the following pages, I trust you will gain a better understanding of your Company - Infomedia Ltd. For the sixth consecutive year, your Company has achieved growth in both its revenue and bottom-line. Company revenue increased $8,342,000 over the course of FY2002 to $44,465,000 and net profit after tax increased to $13,409,000. Our core business of electronic parts catalogues (EPC), increased by 29% from 30,201 subscriptions to 38,830 during the course of the year. The main contributors to the subscription growth were the successful launch of Microcat® for Hyundai and Land Rover. A fully franked final dividend of one and one half cent (1.5¢) was paid to shareholders of record at 4th September 2002. This combined with the earlier interim dividend declared in February brings the total franked dividend for the year to two and three-quarter cents (2.75¢) per share, a growth of 10% over FY2001. In the audited accounts section, you may review in greater detail the financial performance of your Company. I view the hallmark of this past financial year as 'building business certainty'. The 'raw material' of an electronic parts catalogue business is data licensed from original equipment manufacturers (i.e. vehicle makers, whitegoods makers, and others). The more numerous, diverse and enduring the data licenses the more certain the business opportunity. I am happy to confirm that, during or shortly after the end of the financial year, the Company had acquired or renewed ten data licenses, the majority of which are for a period of five years. These are summarised in the 'Achievements FY2002' section of this report. However, while data is critical to production, so is personnel and plant. In these areas too, I believe the Company has invested wisely, providing staff and management with educational opportunities and supportive infrastructure to leverage productivity through the use of professional systems and tools. During the course of the year, our personnel worked diligently in the business. The Electronic Catalogue Division produced 172 editions of our EPC products, as well as continuing to improve products and processes. Our Data Management Division continued to work for its Australia-based automotive and lubricant clients to supply their data management and publications services. The Business Systems Division serviced its customers with a new release update, while furthering the development of its new convergent dealer management system (DMS) product for domestic and international release. In late August 2002 the Company purchased the PartsImager® EPC business and assets of American global services company Electronic Data Systems Inc. (EDS) which will expand Infomedia's presence and scope for its EPC business globally, and in particular North America. The acquisition boosts our subscriptions by more than 4,000 units and our vehicle brands in the Americas now include most of those manufactured by Daihatsu, Ford, General Motors, Hyundai, and Toyota. As part of the arrangement, the EDS Automotive Retail Group took on the role of exclusive distributor for at least three years for both Microcat and PartsImager product lines in North, Central and South America. I believe the professional sales and client-facing skills of EDS combined with our ability to be fast, flexible and nimble in producing industry-leading EPC solutions will expand customer participation with our products. In the coming year we will have keen attention on building custom in the Americas and Europe, through our distribution partners, with our existing clients and potential new customers. If you wish to find more information on your Company’s products, historical financial information or media releases you may do so at the Internet web-site www.infomedia.com.au. On behalf of the Board of Directors, management and staff, I commend this Annual Report to you. Respectfully Yours, Richard David Graham Chairman and CEO www.infomedia.com.au 1 results at a glance 22500 20000 17500 15000 12500 10000 7500 5000 2500 0 22000 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 110 99 88 77 66 55 44 33 22 11 0 50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 14000 12000 10000 8000 6000 4000 2000 0 40000 36000 32000 28000 24000 20000 16000 12000 8000 4000 0 2 www.infomedia.com.au Company revenue increased by 23.1% to $44.5 million. Net profit after tax increased 4.6% over the previous financial year to $13.4 million. SIXTH CONSECUTIVE YEAR OF SOUND FINANCIAL GROWTH Six new or renewed long term data licenses were signed for Microcat and Partfinder®. These relate to international and domestic markets. Since 30th June 2002 a further four data licenses have been renewed. SIX NEW AND RENEWED DATA LICENSES Infomedia EPC subscriptions grew by 28.6% from 30,201 at the beginning of the year, to 38,830 at the close of the year. STRONG SUBSCRIPTION GROWTH Toyota Motor Europe became the first automaker to sign a data license with Infomedia to provide both its traditional Microcat disc based product and the Internet based Microcat FRESH. FIRST AUTOMAKER FOR INTERNET PRODUCTS The Application Hosting Centre was commissioned during the year to facilitate the cost effective delivery of the Company’s online product offerings. APPLICATION HOSTING CENTRE After the year end, the Company acquired the EPC business of EDS Automotive Retail Group, bringing to the Company new automotive brands, thousands of subscriptions and a top notch Pan-American distribution arrangement. GROWTH IN THE AMERICAS The distribution of Microcat and Partfinder has increased from around 100 countries at the beginning of the year, to 144 countries by the end of the year. MICROCAT AND PARTFINDER IN OVER 100 COUNTRIES The 40th year for the Datateck Lubrication & Tune-Up Guide proved to be an encouraging one, with the largest sales since publication began in 1962. LUBE & TUNE GUIDE RECORD YEAR Infomedia acquired the ‘do it yourself ’ EZIMERCHANT electronic catalogue product line from Australian software development company Australian Windows Publishing Pty. Ltd. (AWP) to establish format diversification in its product revenue stream. RETAIL PRODUCTS GROUP ESTABLISHED www.infomedia.com.au 3 introduction "As the Company's market acceptance around the world expands, so too does its team of youthful management and specialists." 4 www.infomedia.com.au This Annual Report stands as a record of your Company’s achievements during the 2002 financial year. This year’s report is intended to leave you well informed on the progress of Infomedia during its second year in the public arena. The sentiment for FY2002 is best expressed by the words ‘building business certainty’. The financial year was one where we worked simultaneously on three commercial fronts. The first was the competitive activity of securing data licence assets for incorporation in our products. The second was the regular production and delivery of our products. The third was enhancing our current products and developing new products or derivatives for future growth. We were successful with achievements on all three fronts. We established or renewed 10 data licenses during or shortly after the close of FY2002. Most were for a 5 year term. We manufactured all of our divisions’ products to their schedules, and increased sales for all released products over the previous year. In all our divisions, we made market-requested enhancements to our products and each division also progressed on new development projects for future release. We welcome you to this FY2002 Annual Report. This year we intend that in addition to giving you the key financial information you require about your Company, this year’s report also presents an opportunity to meet some of the people behind the scenes. People who help to make Infomedia the company that it is and who help turn our corporate goals into successful results. We trust you will find it informative. WELCOME TO THE 2002 ANNUAL REPORT OF INFOMEDIA LTD www.infomedia.com.au 5 international territories and product timeline "Published in 24 languages, used in 144 countries, Microcat is the most international EPC in the world." 6 www.infomedia.com.au microcat speaks the customers’ language Chinese Czech Danish Dutch English Finnish Flemish French German Greek Hungarian Indonesian Italian Japanese Korean Norwegian Polish Portuguese Russian Spanish Swedish Thai Turkish Vietnamese Dialects Canadian French Traditional Chinese Mexican Spanish www.infomedia.com.au 7 achievements - fy2002 "In 144 countries around the world, 'hello' starts with a handshake and a copy of Microcat." 8 www.infomedia.com.au electronic catalogues division (ECD) ECD continued to develop EPC technology and product features that made a tangible difference to thousands of automotive dealers worldwide. In all, Infomedia announced six new or renewed data licence agreements in FY2002. Below are the highlights from these announcements. Daihatsu Market Expansion – July 2001 – New – 3 Years Infomedia has supplied a Daihatsu version of Microcat since 1996. During this time, the markets supported by Microcat have steadily increased from Australia to almost global coverage. We view the addition of the South American, Central American and Caribbean Daihatsu markets as recognition by Daihatsu of the success their dealers have enjoyed using Microcat. The dealers in these regions appreciate Microcat due to the localisation of the vehicle information, local language support and after-sales backup. Mitsubishi Australia - November 2001 – Renewal – 3 Years Infomedia continued its proud association with Mitsubishi Australia when it renewed its original data licence agreement for three years. Infomedia has been supplying its Partfinder EPC to Mitsubishi dealers in Australia since 1998. During that time dealers have reported enjoying the productivity benefits that come with using an Infomedia EPC system. Toyota Europe – December 2001 – New – 5 Years Toyota Europe signed a five-year data licence with Infomedia. Under the terms of this agreement, Infomedia has the opportunity to supply Microcat to more than 3,000 Toyota dealers within Europe. Toyota Europe is a tier one automaker with a strong reputation for quality products and after sales service. Management believes to be chosen as the EPC technology provider, in what was an internationally competitive contest, is further evidence that Infomedia and Microcat are recognised for EPC leadership and valued customer service. This new agreement with Toyota Europe is anticipated to take the relationship with Infomedia beyond the traditional DVD-ROM based delivery system to Internet deliverable products including Microcat FRESH. Microcat FRESH will enable Toyota Europe dealers to establish a closer business relationship with their parts trade customers and expand genuine parts sales. Ford Australia – December 2001 – Renewal – 3 Years Ford Australia, Infomedia’s original Microcat data licensor in 1991, renewed its data licence for an additional three years. Infomedia has been supplying Microcat to Australian Ford dealers on CD-ROM since its inception. Over the years, Ford Australia and its dealers have seen Infomedia make continuous improvements to the Microcat system. The current version of Microcat is the third generation released in Australia since 1991, with each new release bringing additional functionality and advanced technology. The continued improvement of Microcat during the next three years, as well as the scheduled release of Microcat FRESH in FY2003, will ensure that Australian Ford dealers receive further productivity gains from Microcat products and services, just as they have for more than a decade. Toyota USA & Mexico – February 2002 – New – 5 Years Toyota USA (Toyota) granted Infomedia a non-exclusive data licence for the United States and an exclusive data licence for the newly opened Mexico market. This enables the 1,200 Toyota dealers in the United States to subscribe, if they choose, to Microcat on DVD-ROM or via the Internet. While there are existing competitive products in this market, the Company believes Microcat will offer a clear and distinctive choice to the Toyota dealers and that many will prefer Microcat to the alternatives. www.infomedia.com.au 9 achievements - fy2002 Mexico was a new market for Toyota when operations officially in April 2002. Toyota opened management that operations got off to a good start for quick and accurate parts interpretation, so Microcat was chosen for the Mexican dealer network. it critical felt Toyota dealers in Mexico are already using Microcat and the United States version is due for release in the second quarter of FY2003. Hyundai North America – January 2002 – New – 3 Years Infomedia is the second EPC supplier authorised by Hyundai to develop EPC products for its American dealers. Hyundai dealers in the United States began subscribing to Microcat on in June 2002. The DVD-ROM agreement allows Infomedia access to the American market and follows on from the agreement signed last year with Hyundai corporate management in Korea. Since signing that agreement in May 2001, Microcat acceptance amongst Hyundai dealers has increased significantly, with thousands of new subscriptions worldwide. Infomedia management believes that Hyundai Motor America’s 500 plus dealers will prefer the clear and distinctive alternative that Microcat offers. The release of the Microcat system for Hyundai was the fourth Microcat product in the USA for Infomedia. Multi-franchise dealers who already use Microcat to perform parts interpretation for other vehicle brands are also likely to prefer this new release. 10 www.infomedia.com.au Ford Europe, North America, Asia / Pacific, Australia / New Zealand – July 2002 – Renewal – 5 Years The renewal of the data licence between Ford Europe and Infomedia continues the long business relationship between the two companies. Infomedia began supplying Microcat to Ford Europe in 1997 during which time it has become an invaluable business tool for over 18,000 users on a daily basis. The commercial environment for the automotive industry in Europe has changed significantly over the past five years. Three major changes which have occurred include: computer sophistication in the dealerships pervasiveness of the Internet removal of Block Exemption by the European Union for the automotive industry. The European Union Block Exemption is a body of legislation that affects the organisation, representation and delivery of automotive products and services throughout the European Union. Removing Block Exemption is expected to materially change the consumer face of the automotive industry in Europe by requiring automakers, amongst other things, to provide non-dealers with the same vehicle documentation previously reserved only for their dealership franchisees. During the seven months of discussion and analysis leading up to the renewal of the data licence agreement with Ford, it was not possible to predict or model with certainty how removal of Block Exemption would reshape the role of workshop documentation and automotive productivity tools like Microcat. Removal of Block Exemption may cause a material growth in demand for such tools. As such, both parties wanted to maintain flexibility in order to respond to whatever opportunities needed to be addressed in the future. Taking this into consideration, an arrangement was created to renew the agreement for the term of five years. The first two years of the agreement are exclusive and the latter three years of the agreement provide for the possibility of developing an exciting competitive market to service a much larger and diverse audience than exists today. In addition, Ford Europe became the second European supplier to add Infomedia’s Internet products to its agreement. Microcat FRESH includes the additional benefit to Ford of providing scope for their dealers to work with the independent motor trade. Ford North America, Ford Asia/Pacific and Ford Australia/New Zealand also renewed their individual data licenses with Infomedia for a concurrent five-year term. 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 www.infomedia.com.au 11 ● ● ● ● ● ● achievements - fy2002 "Information and mechanical skills form a partnership to service vehicles right the first time." 12 www.infomedia.com.au data management division (DMD) The Data Management Division continues to hold its place as one of the premier automotive data suppliers in Australia. It provides services to many automotive importers, suppliers and all of the local automotive manufacturers (Ford, GM-Holden, Mitsubishi and Toyota) as well as providing researched data and technical expertise to the Electronic Catalogues and Business Systems Divisions of the Company. DMD’s services include: technical illustration; parts and service data creation, maintenance and evaluation; lubricant specification services; and general automotive knowledge. In addition to the services offered to both internal and external customers, DMD also produced a number of publications during the year. These include Company owned publications and those created under licence on behalf of customers. A sampling of the publications that have been produced are noted below. Holden Service and Maintenance Information CD-ROM Replacing the large volumes of printed publications that were previously released to the independent motor trade, the Holden Service and Maintenance Information CD-ROM was released in March 2002. It covers the VT/VX Commodore models and their derivatives. Produced in conjunction with Holden and available for sale through the Holden authorised retail dealer network, the DMD team converted the format from paper to electronic medium, and added an intelligent linking system. This allows the customer to have rapid access to the appropriate sections of the information within the system. Holden Light Commercial and Recreational Vehicle (LCRV) Service Information Package The Holden LCRV Service Information Package is similar in content to the Holden Service and Maintenance Information CD, but it is designed for the authorised Holden dealer, rather than the independent motor trade. This means that warranty information, service bulletins and other authorised dealer information are included in the package, as well as the warranty repair information. The Frontera, Jackaroo and Rodeo range of vehicles are also included in the Service Information Package, circulated by Holden to their entire authorised dealer network on a quarterly basis. Datateck Lubrication & Tune-Up Guide 2002 is a landmark year for the industry standard Lubrication & Tune-Up Guide (LTG) being the 40th year of publication. This year’s Guide took on a new look with the inclusion of a new section covering the fitting of timing belts for the complete model range. This year the Guide also contains popular Internet updates. These were introduced last year to allow LTG users to keep up-to-date information on new model releases. The feedback received from the users has been positive and it is believed to be a beneficial addition to the Guide. The introduction of advertising to the LTG also proved popular last year, with most of the original advertisers listing again in the 2002 edition, along with new customers. Daihatsu YRV Crash List Produced in conjunction with Daihatsu Australia, the Crash List is a publication that assists dealers in quickly selecting the appropriate parts when working with panel repair shops. The Crash List aids in the analysis of collision repair requirements such as panel damage, trim, bumper or head/tail light selection. www.infomedia.com.au 13 achievements - fy2002 "When vision and tools converge, the future doesn't just arrive, it becomes." 14 www.infomedia.com.au business systems division (BSD) In late 2000 Infomedia acquired a mature and robust dealer management system (DMS) for the purpose of giving the Company a developmental head start to create what it envisioned as the next generation in DMS. The first half of this creative vision was based on the concept of converging many of the different dealership process, control and enquiry applications into a single user interface. The second half of the vision was to deliver the new DMS as an online information utility rather than as the traditionally deployed mainframe system. With this vision, the original DMS and a team of talented and committed developers and engineers, the division commenced a three-year development initiative that would be performed in parallel with support and maintenance of the original customers. AutoLedgers® was conceived. The new development activity was designed to be modular in construction so that elements of the ultimate product would be delivered progressively. Throughout FY2002, the first four key elements of the new system began to take shape: AutoTerm® AutoOffice™ - office productivity suite AutoShop™ - service workshop scheduler AutoVision® - customer management and prospecting - smart terminal emulation In July and August 2002, the first two elements, AutoTerm and AutoOffice, had a controlled and limited release in order to field trial their application and integration with the new and more expansive DMS code. At the time of preparing this Annual Report, the user response from these trials has been very encouraging, validating that both the concept and implementation are on-track. Also in July and August the Company commenced a limited number of new dealer field trials for Infomedia’s new timeshare (ASP) facilities and low-cost virtual private network, which in time will replace its older fixed-line network that criss-crosses the country. Here again, the initial responses are very positive and management expects to open this timeshare opportunity to more automotive dealerships and accelerate its rollout during the second half of FY 2003. Product development and component releases will continue throughout FY2003. Co-operative development and technology sharing between the Company’s three divisions and retail products group will pay creative dividends that will be clearly demonstrable when the whole AutoLedgers vision becomes evident. Dealers are already expressing enthusiasm for AutoLedgers timeshare (ASP) because it saves the dealership from high start-up capital expenditures and ongoing maintenance, allowing them to pay just one low-cost fee per user to have Infomedia deliver a complete DMS utility to their door. Infomedia takes care of the central processing equipment, security, maintenance and system personnel issues, from its Application Hosting Centre. AutoOffice, is an office productivity suite specially designed for dealership staff to easily search, create and share information utilising a windows visual metaphor. The suite includes Infomedia’s AutoTerm smart terminal emulator, word processor, electronic spreadsheet, email, web browser, task manager, calculator, reporting wizard, Microcat FRESH (optional) and more. It is built with easy navigational features to move around the main business applications. For example, it can build an electronic spreadsheet based on data extracted directly from the DMS database. www.infomedia.com.au 15 views from the team "Behind every great company, there is a great team." 16 www.infomedia.com.au peter adams chief financial officer “It is refreshing to see that passion and innovation can sit comfortably with strong corporate governance. At least, that’s how I see it. “Infomedia is not a bureaucracy or a place where there is a lot of politics. I believe everyone here is geared to achieving the corporate goals so there is little waste. We continuously review our processes and refine them for the benefit of the company and the individual. of and “I’ve been with Infomedia for almost two years and in this time we’ve built a strong and enthusiastic Finance team to attend to the variety treasury financial responsibilities faced by a new and expanding public company. I’m committed to managing corporate growth and believe the Company has an excellent recurring revenue business model. I see continuous product development and appropriate acquisitions as fuelling the Company’s growth, market position and business certainty. in “Having previously worked larger corporate accounting environments, I find the inclusive and proactive attitudes at Infomedia a refreshing change. Infomedia differentiates itself from other corporations in its ability to respond quickly to decision-making processes. The corporate structure is very transparent and administratively very efficient. At Infomedia, people feel good about themselves and their abilities, and have fun at the same time as producing professional and competent results. “I believe that my time at Infomedia has facilitated my own personal growth. I have particularly developed new skills in the areas of shareholder communication and market analysis. I’ve observed that this kind of growth is typical of the Infomedia personal development experience. Communicating what Infomedia is about to shareholders is important to me. I want them to have a clear understanding of our strengths and direction so they can choose to invest or not from a sound and informed foundation. “In the next five years, my personal view is that Infomedia will continue to grow because it has the right business formula and the right people. We are successful in part because we do things transparently and there is a lot of respect amongst the staff and between departments. I believe we all recognise that in order for our customers to admire and respect our work and people, we must do so first.” www.infomedia.com.au 17 views from the team ian davison production manager electronic catalogues division “I’m responsible for the management of 12 production staff who handle all the graphical elements of Microcat, the monthly Microcat production processes and who make sure all deadlines are met for all products. “Mutual respect amongst colleagues goes a long way when you work under the intensity of 15 publication deadlines each month. We have a goal to get the products out on time each month, and if any barriers show up we break them down to achieve this. “I feel very proud to be part of the team here at Infomedia. I also feel very proud to be an important part of the chain in creating these amazing innovative products. We are an international company and people use Infomedia’s products in every corner of the world. They are used in our hometown of Narrabeen, on the other side of the world in Marrakech, and most places in between. “I’m very sure that what makes Infomedia attractive to customers is its innovation and commitment in creating products which are much better than its competitors. Our dedication to excellence doesn’t hurt either. “If it was just the products that were improving each year I’d be concerned that the business might outgrow us as individuals but, through the Company’s annual education scholarship support, all of us are able to grow our skills as the business grows. It’s just a magical thing really – I’ve never worked anywhere like this before. It’s easy to grow with the Company and the responsibility that comes with it.” 18 www.infomedia.com.au jenni gardiner assistant project manager, electronic catalogues division “Working with a product as good as Microcat brings a considerable sense of achievement. After the recent hailstorms in Sydney, a local dealer whose area was particularly hard hit called me afterwards to say that ‘Without Microcat I would have been lost handling so much business’ and that Microcat put him in front of all his competition. “I’ve been with Infomedia for more than five years and I love handling the numerous details my role as Assistant Project Manager requires. I see my future with Infomedia as a long and stimulating one. I believe that the Company to be creative, encourages people innovative their boundaries. expand and to “I’m sure it’s the Company’s attitude towards its staff that gives it the edge. The philosophy does not limit someone purely on previous academic achievement, but also takes into account what skills people can bring to the Company or their willingness to learn more. Genuine passion for our products and loyalty to our goals are important qualities. “I feel my passion for what I do gives our clients satisfaction too. I received an email the other day that says it all. One of our European automaker representatives asked if something could go into the next product release. After checking with the development and production teams, I said ‘Yes, we can do that’. The client emailed back and said, ‘that’s what I love about you guys, you always come back with the right answer’. “Our team here at Infomedia is very customer focused, and we will do whatever we can to ensure customer satisfaction. To put it in my words, I believe that Infomedia’s success can be put down to innovation, inspiration and passion. It’s the ethos of the Company… inspiring you to be as great as you can be.” www.infomedia.com.au 19 views from the team chris huxley quality assurance manager electronic catalogues division “I’m ultimately responsible for approving the quality of the products. I love to improve whatever I do, whether it be at work or in my other favourite pursuits of surfing and bike-riding. I guess you’d say I have a desire for excellence – that is something essential in any Quality Assurance person. I like getting into the detail, and I like the fact that QA work is challenging to make sure that it’s right every time. “I’m an automotive parts interpreter by original training. I’m not a ‘car fanatic’ but I am interested in the way they are put together and how they work – in other words, the detail. I first crossed paths with Infomedia many years ago when I was a parts interpreter at a Ford dealership that used Microcat. I was obsessed by it and wanted to work with the people who designed it. “The challenge and indeed the satisfaction for the QA team is getting it right within tight time constraints so that manufacturing doesn’t have to be rescheduled. Achieving this requires real teamwork that might involve development and production staff, as well as QA personnel. It’s the team of people in the organisation that makes it a great place to work. They are inspirational, talented, hardworking, creative and experienced people… this is a recipe for drawing each of us beyond what we think are our limits. “Infomedia continues to improve its products and the processes that go into making them. Each monthly release brings greater maturity and experience to the QA team and with that comes wisdom and strength that makes the next release better and more intuitive. “I guess I’d say that quality improvement doesn’t stop at our products either, because I think that management allows you to express yourself and encourages you to excel. Management is interested in you becoming a better person and your contributions are valued no matter how small or great. “I’d say that in five years time Infomedia could achieve anything. I expect that in five years, most automotive manufacturers will be using Microcat worldwide, and it will have found its way into a variety of new markets.” 20 www.infomedia.com.au andrew pattinson vice-ceo “I think I have one of the longest associations with Infomedia, having joined the Company in 1988. I started with the Company when it was distributing third party software, and I’ve held many positions in the opera- tions side of the business. I have just recently returned to Sydney from my role as General Manager of the Data Management Division in Melbourne where I guided the division through the sensitive post-acquisition transition period. “I believe that the values and personal qualities of the staff in the formative stages of the Infomedia business were fundamental to the success achieved in more recent times. A combination of inspiration, co- operation, determination and large amounts of personal exertion laid the platform for business growth. These qualities are still what drive the business today, even though it is on a much larger scale. “All staff are encouraged to see themselves as owners in the business. Whilst we work hard to encourage personal development and growth amongst the staff, the end goal is to be a profitable, well run business – that’s in everyone’s interest. I think we have a great balance between succesful commercial operations and personal well-being – that makes Infomedia a business that makes money. We will continue to grow… it’s a very positive story. “I would describe Infomedia as a company being ‘built to last’. For me, that term isn’t an advertisers’ sales pitch for tools or machinery, but rather it is a core business value that Infomedia’s staff see consistently demonstrated through the Company’s policies and practices. As a member of the management team, I can confirm that we have a clear vision of where we are going, backed up by a strong team of committed men and women in all our divisions to get us there. “I’m confident the future holds a greater range of possibilities for the Company. There are still many IT opportunities in the automotive industry that are yet to be covered. Additionally, there are other market sectors where there is plenty of potential growth for Infomedia’s products and services. Today, when you see our revenue dissections, they are heavily weighted towards electronic catalogues. I believe these will be more balanced in the future. “As the decade unfolds, I’m certain I’ll be right here with a stronger and more broadly successful Infomedia. I’m looking forward, as I know the rest of the team is, to supporting Infomedia to be all it can be. I’m committed to the long-term future of Infomedia; treating customers and staff with respect and building all of our relationships with integrity.” www.infomedia.com.au 21 views from the team hieu vu van senior programmer business systems division “It is refreshing and energising for me working for Infomedia. There is a sense of continous growth within Infomedia and I’ve enjoyed the challenges I have faced. In the last 18 months since the acquisition, I’ve learnt new ways to see things and to solve problems. It has been very rewarding to bring two decades of IT industry experience to the new AutoLedgers DMS development. There’s a genuine enthusiasm for the direction the Company is heading amongst my colleagues, here in Perth. “I think one of the key strengths of the Company is its ethical business dealings which, combined with youthful enthusiasm, place Infomedia in a unique position in the industry. It’s an organisation with integrity and that’s the way my colleagues and I program too – with integrity. After so many years of programming, I know that the customers can tell the difference between something that is just patched together quickly and something that is inventive, well-considered and programmed with integrity. Obviously that is our goal. “The vision and commitment of Richard Graham has been particularly evident with the integration of the Business Systems Division within Infomedia. That vision, commitment and belief in our abilities brings out the best in us programmers. “You don’t have to be a business guru to see that staff participation and commitment to the business are also reasons behind Infomedia’s growth. Our environment is one that encourages personal growth at all levels. The Company cares about its people and for offers many employees to grow and reach their full potential. opportunities and guide “The confident youthfulness of the Company enables it to see the future opportunities us developers to rendezvous our results with that future. I believe that management’s willingness to invest for the future, the corporate vision, ethical practices and valuing staff commitment to the organisation, place Infomedia in an enviable position for the future. “For me, the future for Infomedia also holds in store the nurturing of new leadership and creative talent. This is an exciting possibility and I am keen to be a part of it.” 22 www.infomedia.com.au michael roach general manager data management division “I have seen the printing and catalogue industries develop, from the perspective of Datateck, for more than two decades. However, I’m the first to admit that the speed of change has been most evident in the past two years since the Company became part of Infomedia and more recently since my promotion to divisional General Manager. “The division has changed from a single point of management to a more structured operation with a youthful and enthusiastic team. Many of us at DMD come directly from the automotive and printing industries. I’d say we are the most diverse division of the Company. “Infomedia has breathed enthusiasm and potential into the business here. The culture that Infomedia promotes gives you a feeling of something you really want to get involved in. The greater diversity of developmental work, as well as new DMD commercial contracts, adds to the feeling that things are on the move. “The working environment also leadership, individualism encourages personal development. For me, harmony and teamwork are key motivators in the new division and I’m not alone in this opinion. and “You don’t have to pretend. There’s no façade. It’s just a great place to work. I believe in the strategy of selecting staff on the basis of their leadership abilities, their talent, their respect for others and their honesty. It has brought together a group of highly committed people, people who are working towards the same goal and who enjoy what they are doing. “For me, a large aspect of Infomedia’s culture is the human element. It’s important to what we are about and it shows in our products and services and how our customers perceive them. It not only makes us feel good, it also makes sales. “I’d say that in the next five years Infomedia will be the global leader in its fields. I admit that this is a pretty broad statement, but Infomedia is already a world leader in electronic parts cataloguing and that this is just the tip of the iceberg. Other companies are watching Infomedia as it shapes up to be a key player worldwide. I think it will be a company admired by its competitors and a lot of people would like to be a part of it”. www.infomedia.com.au 23 new retail products group 24 www.infomedia.com.au In early 1998, Australian Windows Publishing Pty Ltd (AWP) saw the potential growth in online transactions would create a huge demand for a simple and inexpensive e-commerce tool to enable thousands of small businesses to become online merchandise traders. AWP foresaw that only larger organisations would be able to afford the services of professional web developers, and that smaller businesses and sole proprietors would be better served by a simple ‘do it yourself ’ (DIY) website tool -- an ‘online business in a box’ solution. They developed a range of such products under the EZI brand name. Currently, the majority of EZI customers are Australia-based, however, due to two international distributor relationships effectively established in 2002, we expect this balance to shift in favour of international customers during the next 24 months. Infomedia acquired the business of AWP in July 2002. This acquisition has provided Infomedia with a foundation of reputable DIY electronic catalogue and e-commerce software products, which are applicable to small-to-medium-enterprises (SME) as well as the existing Infomedia automotive customer base. With this foundation, the Company starts its new Retail Products Group (RPG). In addition to the suite of products, the acquisition expands Infomedia’s e-commerce software development expertise. It also assures the Infomedia Retail Product Group starts its existence with Australia’s leading SME e-commerce packages; consumer experience; distribution networks; blue chip alliances; and support systems. The RPG suite of products offers both continuity and diversity to Infomedia’s existing products. The retail ‘shrink wrap’ product range opens a new and ubiquitous customer channel, while the nature of the flagship product, ezimerchant professional yields an ongoing subscription, upgrade and transaction revenue path, which is compatible with Infomedia’s recurring revenue model. www.deanwoods.com.au ©2002 Dean Woods Direct Pty Limited www.crocodilehunter.com.au ©2002 Australia Zoo Pty Limited ezimerchant professional helps small-to-medium-enterprises to easily create e-commerce enabled web-sites. Above are two fine examples. "In a future world that will require millions of electronic catalogues, you either leverage DIY or you miss the main game." www.infomedia.com.au 25 acquisition of PartsImager business "Lasting growth comes from co-operatively engaging with the world, not conquering it." 26 www.infomedia.com.au Infomedia announced on 29 August 2002 that it had acquired the PartsImager EPC business and assets of American global services company Electronic Data Systems Inc. (EDS). The EDS developed PartsImager services the needs of thousands of end-users at dealerships predominantly in North America representing many major automotive brands. The purchase will expand Infomedia’s presence and scope for its EPC business globally, and in particular North America. The acquisition is consistent with Infomedia’s core strategy of specialising in providing information technology solutions for automotive dealerships around the world. As part of the arrangement, the EDS Automotive Retail Group (ARG) will take on the role of exclusive distributor for at least three years for both Microcat and PartsImager product lines in the Americas. ARG will be responsible for sales, marketing, delivery/installation, customer support, training and administration services for both Microcat and PartsImager EPCs. ARG is based in Troy, Michigan and specialises in the provision of IT solutions and services to all levels of the global automotive industry. Microcat and PartsImager have already proved to be valuable business tools for car and truck dealers around the world. The professional sales and client-facing skills of EDS combined with Infomedia’s ability to be fast, flexible and nimble in designing and producing industry-leading software solutions will certainly deliver new value to clients in these markets. As a distribution partner EDS brings great skill, experience and resources to support Infomedia’s objectives for managed growth in the Americas and high customer satisfaction. Infomedia and its existing distributors will service the PartsImager customers in all the regions outside of the Americas. The business relationship between EDS and Infomedia is a good fit for both sides. The automotive retail experience of EDS in sales, marketing and client support combined with Infomedia’s high quality product development and user-friendly designs, makes this is a best-in-breed arrangement. Concurrent with the acquisition, the Company entered into a data licence agreement with General Motors Corporation SPO (USA) that includes vehicle brands such as Buick, Cadillac, Chevrolet, GMC Trucks, Oldsmobile, Pontiac and Saturn. microcat online 28 www.infomedia.com.au During the 2002 financial year, the first data licenses to include Infomedia’s breakthrough Internet implementations were signed. Microcat FRESH is intended to be released to some European Ford and Toyota customers during the 2003 financial year. Microcat FRESH is an EPC that delivers data and graphics to users via a standard dial-up Internet connection. This allows dealers to offer key customers the ability to purchase parts from the dealer over the Internet 24 hours a day, seven days a week. Microcat FRESH has a smart design that allows any dealer to have a powerful Internet based, e-business solution for trade customers. With the benefits of accurate data and up-to-date pricing, Microcat FRESH allows the trade customer to order directly from their nominated dealer without having to wait on the telephone to check parts applicability, availability and price - in other words, FRESH facilitates ‘self-service’ parts ordering. Dealership parts salespeople will be able to better serve their customers by reviewing the orders for completeness rather than having to do time-consuming telephone order taking. This will result in an enhanced customer experience, higher productivity for dealership personnel and better cost to sales ratios. Today’s business environment is all about increasing sales by increasing customer satisfaction and delivering value for money services. Microcat FRESH is one of the tools that will deliver benefits to modern customer focused dealerships. The parts data, VIN data, illustrations and prices are updated regularly as automakers’ data changes are recorded. For the automakers, this allows the flexibility to update parts and service data as required rather than in single monthly ‘batches’. For the dealer it means they always have access to the most up-to-date data. Microcat FRESH is designed specifically for trade users to make real time savings. "Successful innovation is about knowing what to keep, what to throw away and what to invent." www.infomedia.com.au 29 infomedia systems 30 www.infomedia.com.au Infomedia management has supported a high level of information technology infrastructure for its enterprise and commercial computing requirements. Good personnel skills and smart thinking are leveraged by the power of computing, software and telecommunications systems. The Corporate Systems Group is responsible for the architecture, implementation, maintenance and security of four distinct systems. These are: the internal enterprise network the development and production network the commercial systems network the telecommunications network (voice, data, video, security). Each aspect of this infrastructure is intended to provide the optimal: personnel productivity leverage, where and when it is needed cost of ownership to productivity performance systems health, surety, and up- time performance internal and external transparency of time and distance. As a result of the year 2000 acquisitions, all three divisions of the Company moved closer toward transparent integration. Systems architecture and bandwidth supply arrangements were updated to improve certainty of infrastructure performance and costs for the next four to eight years. Guy Bryant Director of Technical Operations Central to the Infomedia systems infrastructure plan was the commissioning of the Application Hosting Centre (AHC) in early 2002. The primary purpose of this centre is to provide hosting requirements for Infomedia’s Internet-delivered products as well as the AutoLedgers timeshare (ASP) dealer management system. When the Company acquired the business of Australian Windows Publishing Pty Ltd in July it anticipated cost savings by being able to easily move the EZIMERCHANT Global Transaction Server (GTS) facilities to the AHC too. This move would reduce the costs and increase the security over the previous GTS hosting arrangements. Another facet of the plan was the successful implementation of a new company-wide telephone system. Along with the benefit of having a consistent and more professional level of service for customers contacting the Company, there have been cost savings resulting from the integration of voice and data systems. The architecture allows the routing of Infomedia’s internal phone calls over the Company’s secure Internet infrastructure, which has led to reduced costs for both local and interstate telephone calls. Good project planning and extra effort by the systems team made down-time for staff and customers inconsequential and ensured that service levels were maintained throughout the implementation. "Telecommunications is the highway of the future - Microcat and AutoLedgers are our vehicles." www.infomedia.com.au 31 ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● outlook - fy2003 The 2003 financial year outlook is healthy with continuing revenue growth and an optimising cost base. The primary activities for realising this year’s growth involves building on the FY2002 subscriber numbers. The Company will continue to expand the subscriber base by: increasing the penetration rate of products in the existing user base launching versions of Microcat in respect of data licenses entered into during the FY2002 ● negotiating and completing more automaker data licence agreements commercially launching Microcat FRESH negotiating and completing agreements to expand existing data licenses into new markets. The Company expects that continued revenue growth would initially come from its European operations, and later in the year North American operations would begin to make a strong impact with growth coming from General Motors, Hyundai, Land Rover and Toyota. In particular, FY2003 will be a year to focus on building our market share in the Americas. With the newly formed EDS Automotive Retail Group distributor relationship there will be good opportunities to extend the business with our existing clients in the region, being Daihatsu, Ford, Hyundai Land Rover and Toyota. Infomedia will also be looking to expand business opportunities with our newly acquired customers from General Motors and Lexus through the PartsImager EPC acquisition. We will leverage the industry contacts available through this new relationship to expand our product user base. There will be activities to realise further opportunities in the European Union for our EPC products. As with the situation in the Americas, we will pursue opportunities with existing as well as new clients. Infomedia may also continue to make selective acquisitions in order to build on the Company’s product, intellectual property, market share and personnel asset bases. The type of business targeted for acquisition will generally have the following benefits: access to additional data licence agreements intellectual property to enhance or expand the existing product range access to markets currently not available to Infomedia additional EPC, Service Information Package or DMS product subscriber agreements. 32 www.infomedia.com.au ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● fy2002 audited accounts www.infomedia.com.au 33 directors’ report Back left to right: Barry Ford Myer Herszberg Fran Hernon Front left to right: Richard Graham Andrew Pattinson 34 www.infomedia.com.au your fy2002 directors Your Directors submit their report for the year ended 30 June 2002. The names and details of the Directors of the Company in office during the financial year and until the date of this report are: Richard David Graham, Chairman and CEO - Richard Graham has held senior management positions in the American and Australian computer industry since 1977. Mr Graham has been Managing Director of Infomedia since 1988. He commenced his technology career at ComputerLand Corp (USA) and ComputerLand Australia Pty Ltd, where he held the positions of Marketing Director and General Manager respectively. In 1982 he founded Wiser-Microsoft, Microsoft’s first full service distributor in Australia. Barry Raymond Ford, Non-Executive Director (Chairman of Audit and Corporate Governance Committee) Barry Ford was appointed to the Infomedia Board of Directors on 19 June 2000. Mr Ford was Director of Finance and Chief Financial Officer of Goodman Fielder Ltd from 1997 to 1999 and has sat on a number of boards, including the Island Food Company and Yallourn Energy where he was Chairman of the Audit Committee. Mr Ford held various financial management positions at General Motors Corporation between 1964 and 1989 including Director, Overseas Financial Planning & Analysis at GM Corp USA from 1984 to 1986 and Director of Finance and Strategic Planning at General Motors-Holden from 1987 to 1989. Andrew Pattinson, Executive Director and Vice-CEO - Andrew Pattinson was appointed to the Board of Directors on 31 October 2001. He has played a leading role in Infomedia for over 14 years, with 6 of these as Director of Production and Operations in Sydney and more recently 2 years as General Manager of the Data Management Division in Melbourne. He moved back to Sydney in January 2002 to take on the role of Infomedia’s Vice-CEO. Fran Mary Hernon, Non-Executive Director (Chairman of Remuneration Committee) - Fran Hernon was appointed to the Infomedia Board of Directors on 19 June 2000. Ms Hernon has a background in media, publishing, marketing and technology. She has senior editorial experience at News Ltd and was Editor of New Woman at Murdoch Magazines, General Manager of Harrison Communications and Director of Publicity at Channel 10. Since joining NRMA in 1993 as Managing Editor of The Open Road magazine she has held several senior positions including Manager, Business Communications and most recently, Senior Account Manager, Shared Services, Group IT&T for the Insurance Australia Group. Myer Herszberg, Non-Executive Director - Myer Herszberg has been a Director of Infomedia since 1992. Mr Herszberg has extensive consumer electronics experience and was active in bringing home computers to Australia in the early 1980s. As founder and proprietor of Melbourne’s Denman Audio chain 25 years ago, he has also brought many leading edge electronic products to Australia. Directors were in office from the beginning of the financial year until the date of this report, unless otherwise stated. Ian Michael Joicey was an Executive Director until his retirement on 31 October 2001. www.infomedia.com.au 35 directors’ report INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY AND RELATED BODIES CORPORATE As at the date of this report, the interests of the Directors in the shares and options of the Company were: Wiser Laboratory Pty Limited Rentamobile Pty Limited Yarragene Pty Limited Andrew Pattinson Wiser Centre Pty Limited Richard Graham Myer Herszberg Barry Ford Fran Hernon INFOMEDIA LTD ORDINARY SHARES FULLY PAID 100,277,501 28,577,154 45,844,445 4,407,716 1,000,000 926,559 - 116,666 5,000 OPTIONS OVER ORDINARY SHARES - - - 648,000 - 450,000 450,000 133,334 200,000 Richard Graham is the sole Director and beneficial shareholder of Wiser Laboratory Pty Limited. Richard Graham is a Director of Wiser Centre Pty Limited, trustee for the Wiser Centre Pty Ltd Superannuation Fund (formerly Sidford Superannuation Fund). Myer Herszberg is a Director and major shareholder of both Rentamobile Pty Limited and Yarragene Pty Limited. PRINCIPAL ACTIVITIES Infomedia Ltd is a Company limited by shares that is incorporated and domiciled in Australia. The principal activities during the year of entities within the consolidated entity were: developer and supplier of electronic parts catalogues for the automotive industry globally; information management, analysis and creation for the domestic automotive and oil industries; and the provision of dealer management systems for the automotive industry. There have been no significant changes in the nature of those activities during the year. EMPLOYEES The consolidated entity employed 135 (2001: 121) full time employees as at 30 June 2002. DIVIDENDS Dividends paid or declared during the year: Interim dividend – 1.25 cents per share – fully franked Final dividend – 1.5 cents per share – fully franked $'000 4,036 4,864 REVIEW AND RESULTS OF OPERATIONS The consolidated entity experienced improvement in sales and profits over the prior year. Revenue from ordinary activities increased by 23% and profit from ordinary activities after income tax expense increased by 5%. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There has been no significant change in the state of affairs of the Company since the last Directors’ Report. SIGNIFICANT EVENTS AFTER THE BALANCE DATE There has been no matter or circumstance that has arisen since the end of the financial year that has significantly affected the operations of the Company, the results of those operations, or the state of affairs of the Company other than the matters disclosed in Note 35: Events Subsequent To Balance Date. 36 www.infomedia.com.au ● ● ● ● ● ● LIKELY DEVELOPMENTS AND EXPECTED RESULTS The Directors foresee that the 2003 financial year will be a period of managed growth of its traditional business and maximizing the integration success of its acquisitions made. The most significant area for change will be in: continued expansion of subscription revenues for Infomedia’s products; continued development of Infomedia’s software including delivery via the Internet; and organisation of an enhanced product range arising from the acquisition of new businesses. It is anticipated that the 2003 financial year would show continued improvement in profits. ENVIRONMENTAL REGULATION AND PERFORMANCE The consolidated entity is not subject to any particular or significant environmental regulation under a law of the Commonwealth of Australia or of a State or Territory. SHARE OPTIONS Unissued shares Andrew Pattinson received 66,000 options on 9 July 2001 pursuant to the Employee Option Plan. No other options were granted to Directors during the financial year ended 30 June 2002. At the date of this report, there were 10,359,584 unissued ordinary shares under options (3,840,584 at balance date). Refer to notes 26 and 31 for further details. Selective Share Plan At the date of this report, 8,400,805 shares have been offered to selected persons pursuant to the Selective Share Plan. There are no remaining shares to be offered under the plan. The consideration for each share offered was nil. Refer to note 26 for further details. All Selective Share Plan shares allotted during the financial year ended 30 June 2002 were made in accordance with the plan and pursuant to the Initial Public Offering (IPO) document dated 14 July 2000. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS During the year the Company paid a premium in relation to insuring Directors and other officers against liability incurred in their capacity as a Director or officer of the Company. The insurance contract specifically prohibits the disclosure of the nature of the policy and amount of premium paid. www.infomedia.com.au 37 ● ● ● ● ● ● directors’ report DIRECTORS’ AND OTHER OFFICERS’ EMOLUMENTS The Remuneration Committee of the Board of Directors is responsible for determining and reviewing compensation arrangements for the Directors and the executive team. The Remuneration Committee assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality board and executive team. To assist in achieving these objectives, the Remuneration Committee links the nature and amount of Executive Directors’ and officers’ emoluments to the Company’s financial and operational performance. Details of the nature and amount of each element of the emoluments of each Director of the Company and the consolidated entity: EMOLUMENTS OF DIRECTORS OF INFOMEDIA LTD ANNUAL EMOLUMENTS LONG-TERM EMOLUMENTS Base Fees Other (a) Superannuation Selective Share Plan (pursuant to IPO) Richard Graham Andrew Pattinson Myer Herszberg Barry Ford Fran Hernon Ian Joicey $ 192,653 138,510 40,000 40,000 40,000 17,355 $ 10,091 - - - - - $ 15,412 11,039 3,200 3,200 3,200 1,340 No. 308,853 62,406 - - - 123,541 Cost to Company $ - - - - - - Market Value $ (b) 562,112 113,421 - - - 224,845 EMOLUMENTS OF EXECUTIVES OF INFOMEDIA LTD ANNUAL EMOLUMENTS LONG-TERM EMOLUMENTS Base Fees Other (a) Super- annuation Redundancy Payments Selective Share Plan (pursuant to IPO) and Employee Share Plan Options granted (c) Michael Connor Nick Georges Gary Martin Guy Bryant Peter Adams $ 151,654 115,796 111,511 105,989 105,448 $ - - 7,709 8,925 7,603 $ 10,728 9,193 8,820 8,400 8,965 $ 35,373 - - - - No. 636 279,391 742,671 - 1,423 Cost to Company $ - - - - - Market Value $ (b) 1,000 507,902 824,785 - 2,000 No. - 66,000 66,000 - - $ - 7,170 7,170 - - (a) The category ‘Other’ includes the value of any non-cash benefits provided. (b) The value attributed to the Selective Share Plan and Employee Share Plan is calculated as the total number of shares allotted multiplied by the weighted average market price of the five trading days on the Australian Stock Exchange preceding first date of offer. (c) Options granted as part of remuneration have been valued using an option pricing model which takes into account factors such as the exercise price, the current level of volatility of the underlying share price and the time to maturity of the option. There was no cost to the Company in issuing the options. 38 www.infomedia.com.au DIRECTORS’ MEETINGS The number of meetings of Directors (and meetings of committees of Directors) held during the year and the number of meetings attended by each Director was as follows: Number of meetings held: Number of meetings attended: Richard Graham Ian Joicey Andrew Pattinson Myer Herszberg Barry Ford Fran Hernon Directors' Meetings 11 MEETINGS OF COMMITTEES Audit & Corporate Governance 3 Remuneration 2 10 2 8 11 11 10 - - - 3 3 3 - - - 2 - 2 ROUNDING The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the Company under ASIC Class Order 98/0100. The Company is an entity to which the Class Order applies. CORPORATE GOVERNANCE In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Infomedia Ltd support and have adhered to the principles of corporate governance. As at the date of this report, the Company had an Audit & Corporate Governance Committee and a Remuneration Committee of the Board of Directors. The members of the Audit & Corporate Governance Committees are Barry Ford, Fran Hernon and Myer Herszberg. The members of the Remuneration Committee are Fran Hernon and Myer Herszberg. Signed in accordance with a resolution of the Directors. Richard David Graham Chairman Sydney, 26 August 2002 www.infomedia.com.au 39 statement of financial performance YEAR ENDED 30 JUNE 2002 NOTES CONSOLIDATED INFOMEDIA LTD 2002 $’000 2001 $’000 2002 $’000 2001 $’000 44,465 36,123 42,395 31,555 (23,859) (11) (16,747) (84) (22,206) (11) (13,209) (18) (1,218) 19,377 (5,968) - (1,218) - 19,292 (6,467) 18,960 (5,661) 18,328 (6,049) 13,409 12,825 13,299 12,279 - - - - 13,409 12,825 13,299 12,279 4.15 4.13 2.75 4.06 3.98 2.50 2(i) 2(ii) 2(iii) 2(iv) Revenue from ordinary activities Expenses from ordinary activities excluding Supreme Court Litigation and borrowing costs Borrowing costs expense Costs incurred in defending and disposing of Supreme Court Litigation Profit from ordinary activities before income tax expense Income tax expense relating to ordinary activities Profit from ordinary activities after income tax expense Total revenues, expenses and valuation adjustments attributable to Infomedia Ltd and recognised directly in equity Total changes in equity other than those resulting from transactions with owners as owners 3 5 23 23 4 Basic earnings per share (cents per share) Diluted earnings per share (cents per share) Franked dividends per share (cents per share) 40 www.infomedia.com.au statement of financial position AT 30 JUNE 2002 NOTES CONSOLIDATED INFOMEDIA LTD CURRENT ASSETS Cash Receivables Inventories Other TOTAL CURRENT ASSETS NON-CURRENT ASSETS Receivables – wholly owned group Investments Property, plant and equipment Intangible assets Deferred research & development costs Deferred tax assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Payables Interest-bearing liabilities Provisions excluding tax liabilities Provision for income tax Deferred revenue TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest-bearing liabilities Provisions excluding tax liabilities Deferred tax liabilities TOTAL NON-CURRENT LIABILITIES 2002 $’000 18,785 5,481 61 228 24,555 - - 6,890 5,573 2,503 603 15,569 2001 $’000 16,852 7,798 185 695 25,530 - - 2,789 6,270 1,778 337 11,174 2002 $’000 18,196 4,871 44 212 23,323 5,965 - 4,248 2,182 2,503 473 15,371 2001 $’000 15,951 6,432 20 125 22,528 5,144 - 2,281 2,442 1,778 235 11,880 40,124 36,704 38,694 34,408 1,845 58 5,902 1,026 605 9,436 14 201 782 997 1,991 101 5,732 1,395 1,112 10,331 85 147 925 1,157 1,611 58 5,612 1,104 406 8,791 14 103 782 899 1,658 101 5,426 1,082 351 8,618 85 131 935 1,151 6 7 8 9 10 12 13 14 15 16 17 18 19 20 21 TOTAL LIABILITIES 10,433 11,488 9,690 9,769 NET ASSETS EQUITY Contributed equity Retained profits TOTAL EQUITY 29,691 25,216 29,004 24,639 22 5 17,474 12,217 17,474 7,742 17,474 11,530 17,474 7,165 29,691 25,216 29,004 24,639 www.infomedia.com.au 41 statement of cash flows YEAR ENDED 30 JUNE 2002 NOTES CONSOLIDATED INFOMEDIA LTD CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Borrowing costs Income tax paid NET CASH FLOWS FROM OPERATING ACTIVITIES 24 (a) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment Proceeds from sale of property, plant and equipment Purchase of business Payment of option to acquire a business NET CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES 35 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of ordinary shares Proceeds from exercise of options from related parties 31 Repayment of borrowings Dividends paid on ordinary shares Finance lease principal NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES 2002 $’000 2001 $’000 2002 $’000 2001 $’000 46,823 (25,066) 575 (11) (6,737) 31,526 (18,229) 912 (85) (5,951) 44,232 (24,766) 689 (11) (6,016) 27,694 (15,176) 922 (18) (5,696) 15,584 8,173 14,128 7,726 (4,617) 15 - (60) (1,092) - (2,170) - (2,849) 15 - (60) (666) - (2,170) - (4,662) (3,262) (2,894) (2,836) - - - (8,874) (115) 19,000 67 (5,000) (3,193) (176) - - - (8,874) (115) 19,000 67 (5,000) (3,193) (176) (8,989) 10,698 (8,989) 10,698 NET INCREASE IN CASH HELD 1,933 15,609 2,245 15,588 Add opening cash brought forward CLOSING CASH CARRIED FORWARD 24 (b) 16,852 18,785 1,243 16,852 15,951 18,196 363 15,951 42 www.infomedia.com.au notes to financial statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of accounting The financial statements have been prepared in accordance with the historical cost convention. The financial report is a general purpose financial report which has been prepared in accordance with the requirements of the Corporations Act 2001 which includes applicable Accounting Standards. Other mandatory professional reporting requirements (Urgent Issues Group Consensus Views) have also been complied with. (b) Changes in accounting policies The accounting policies adopted are consistent with those of the previous year except for the accounting policy with respect to earnings per share. The consolidated entity has adopted the revised Accounting Standard AASB1027 “Earnings Per Share” (EPS) and has for the first time, determined basic and diluted earnings per share in accordance with the revised Standard. Diluted EPS was previously determined by dividing the profit from ordinary activities after tax adjusted for the effect of earnings on potential ordinary shares, by the weighted average number of ordinary shares (both issued and potentially dilutive) outstanding during the financial year. In accordance with AASB1027, diluted EPS is now calculated as net profit attributable to members, adjusted for: cost of servicing equity (other than dividends); the after tax effect of dividends and interest associated with potentially dilutive ordinary shares that have been recognised as expenses; and other non-discretionary changes in revenue or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. (c) Principles of consolidation The consolidated financial statements are those of the economic entity, comprising Infomedia Ltd (the parent entity) and all entities which Infomedia Ltd controlled from time to time during the year and at balance date. Information from the financial statements of subsidiaries is included from the date the parent entity obtains control until such time as control ceases. Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during which the parent company has control. Subsidiary acquisitions are accounted for using the purchase method of accounting. The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies which may exist. All intercompany balances and transactions, including recognised profits arising from intra-group transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered. (d) Foreign currencies Translation of foreign currency transactions Transactions in foreign currencies of entities within the consolidated entity are converted to local currency at the rate of exchange ruling at the date of the transaction. Amounts payable to and by the entities within the consolidated entity that are outstanding at the balance date and are denominated in foreign currencies have been converted to local currency using rates of exchange ruling at the end of the financial year. Except for certain specific hedges and hedges of foreign currency operations, all resulting exchange differences arising on settlement or re- statement are brought to account in determining the profit or loss for the financial year, and transaction costs, premiums and discounts on forward currency contracts are deferred and amortised over the life of the contract. Forward exchange contracts The consolidated entity enters into forward exchange contracts where it agrees to sell specified amounts of foreign currencies in the future at a predetermined exchange rate. The objective is to match the contract with anticipated future cash flows from sales and purchases in foreign currencies, to protect the consolidated entity against the possibility of loss from future exchange rate fluctuations. The forward exchange contracts are usually for no longer than twelve to twenty-four months. Forward exchange contracts are recognised at the date the contract is entered. Exchange gains or losses on forward exchange contracts are charged to the profit and loss except those relating to hedges of specific commitments which are deferred and included in the measurement of the sale or purchase. www.infomedia.com.au 43 ● ● ● ● ● ● notes to financial statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued from previous page (e) Cash and cash equivalents Cash on hand and in banks and short-term deposits are stated at nominal values. For the purposes of the Statement of Cash Flows, cash includes cash on hand and in banks, and money market investments readily convertible to cash within two working days, net of outstanding bank overdrafts. (f) Trade and other receivables Trade receivables are recognised and carried at original invoice amount less a provision for any uncollectable debts. An estimate for doubtful debts is made when collection is no longer probable. Bad debts are written-off as incurred. Receivables from related parties are recognised and carried at the nominal amount due. Interest is taken up as income on an accrual basis. (g) Investments All other non-current investments are carried at the lower of cost and recoverable amount. (h) Inventories Manufacturing Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition are accounted for as follows: Raw materials – purchase cost on a first-in-first-out basis; and ● Work-in-progress – cost of direct labour and materials. (i) Recoverable amount Non-current assets are not carried at an amount above their recoverable amount, and when carrying values exceed this recoverable amount the assets are written down to the recoverable amount. (j) Property, plant and equipment Cost and valuation Property, plant and equipment are carried at cost. Depreciation Depreciation is provided on a straight line basis on all property, plant and equipment, other than freehold land. Major depreciation periods are: Freehold buildings: Leasehold improvements: Plant and equipment: Plant and equipment under lease: 2002 40 years 5 to 20 years 3 to 15 years 3 years 2001 40 years 6 years 3 to 15 years 3 years (k) Leases Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership. Operating leases The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased item, are recognised as an expense on a straight line basis. Contingent rentals are recognised as an expense in the financial year in which they are incurred. Finance leases Leases which effectively transfer substantially all of the risks and benefits incidental to ownership of the leased item to the group are recognised at the present value of the minimum lease payments and disclosed as property, plant and equipment under lease. A lease liability of equal value is also recognised. Capitalised lease assets are depreciated over the estimated useful life of the assets. Minimum lease payments are allocated between interest expense and reduction of the lease liability with the interest expense calculated using the interest rate implicit in the lease and charged directly to profit and loss. The cost of improvements to or on leasehold property is recognised, disclosed as leasehold improvements, and amortised over the unexpired period of the lease or the estimated useful lives of the improvements, whichever is the shorter. 44 www.infomedia.com.au ● ● ● (l) Intangibles Goodwill Goodwill represents the excess of the purchase consideration over the fair value of identifiable net assets acquired at the time of acquisition of a business or shares in a controlled entity. Goodwill is amortised by the straight-line method over the period during which benefits are expected to be received. This is taken as being ten years. Intellectual property Intellectual property relates to copyright over a key product and is amortised over its useful life, being ten years. (m) Trade and other payables Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the consolidated entity. Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is recognised as an expense on an accrual basis. (n) Revenue in advance Certain contracts allow annual subscriptions to be invoiced in advance. The components of revenue relating to the subscription period beyond balance date are recorded as a liability. (o) Loans and borrowings All loans are measured at the principal amount. Interest is charged as an expense as it accrues. Finance lease liability is determined in accordance with the requirements of AASB 1008: Leases. (p) Share capital Ordinary share capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. (q) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: Subscriptions Subscription revenue is recognised when title of licence has passed to the buyer with related support revenue being recognised over the service period. Where title of licence and related support revenue are inseparable then the revenue is recognised over the service period. Interest Control of a right to receive consideration for the provision of, or investment in, assets has been attained. (r) Taxes Income taxes Tax-effect accounting is applied using the liability method whereby income tax is regarded as an expense and is calculated on the accounting profit after allowing for permanent differences. To the extent timing differences occur between the time items are recognised in the financial statements and when items are taken into account in determining taxable income, the net related taxation benefit or liability, calculated at current rates, is disclosed as a future income tax benefit or a provision for deferred income tax. The net future income tax benefit relating to tax losses and timing differences is not carried forward as an asset unless the benefit is virtually certain of being realised. Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST except: where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the acquisition of the asset or as part of the expense item as applicable; and receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position. Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. www.infomedia.com.au 45 ● ● ● ● notes to financial statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued from previous page (s) Employee entitlements Provision is made for employee entitlement benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries, annual leave and long service leave. Liabilities arising in respect of wages and salaries, annual leave and any other employee entitlements expected to be settled within twelve months of the reporting date are measured at their nominal amounts. All other employee entitlement liabilities are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date. In determining the present value of future cash outflows, the interest rates attaching to government guaranteed securities which have terms to maturity approximating the terms of the related liability are used. Employee entitlements expenses and revenues arising in respect of the following categories: wages and salaries, non-monetary benefits, annual leave, long service leave and other leave entitlements; and other types of employee entitlements are charged against profits on a net basis in their respective categories. The value of the employee share scheme described in note 26 is not being charged as an employee entitlement expense. In respect of the consolidated entity’s accumulated benefits superannuation plans, any contributions made to the superannuation funds by entities within the consolidated entity are charged against profits when due. (t) Research and development costs Research and development costs are expensed as incurred, except where the future benefits are recoverable beyond any reasonable doubt. When research and development costs are deferred such costs are amortised over future periods on a basis related to expected future benefits. Unamortised costs are reviewed at each balance date to determine the amount (if any) that is no longer recoverable and any amount identified is written off. (u) Earnings per share (EPS) Basic EPS are determined by dividing the profit from ordinary activities after related income tax expense by the weighted average number of ordinary shares outstanding during the financial year. Diluted EPS is calculated as net profit attributable to members, adjusted for: cost of servicing equity (other than dividends); the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and other non-discretionary changes in revenue or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. 46 www.infomedia.com.au ● ● ● ● ● ● ● ● ● ● 30 JUNE 2002 NOTES CONSOLIDATED INFOMEDIA LTD 2002 $’000 2001 $’000 2002 $’000 2001 $’000 2. PROFIT FROM ORDINARY ACTIVITIES Profit from ordinary activities before income tax expense includes the following revenues and expenses whose disclosure is relevant in explaining the financial performance of the entity: (i) Revenues from ordinary activities Sales revenue Interest revenue - wholly owned group - other persons/corporations Total interest revenue Foreign currency exchange gain Profit on sale of non-current assets Other revenue Revenues from ordinary activities (ii) Expenses from ordinary activities excluding Supreme Court Litigation and borrowing costs Cost of goods sold Salaries & wages (including on-costs) Depreciation of non-current assets - Buildings - Plant & equipment - Plant & equipment under lease - Leasehold improvements Total depreciation of non-current assets Amortisation of non-current assets - Goodwill - Intellectual property - Deferred research and development costs Total amortisation of non-current assets Management fee paid to controlled entities Bad and doubtful debts Operating lease rental Foreign currency exchange loss Other expenses Expenses from ordinary activities excluding Supreme Court Litigation and borrowing costs (iii) Borrowing costs Interest expense - other corporations Finance charges – lease liability Borrowing costs (iv) Significant items Costs incurred in defending and disposing of Supreme Court Litigation 43,846 34,452 41,662 29,875 - 575 575 - 7 37 44,465 - 912 912 577 - 182 36,123 133 556 689 - 7 37 42,395 35 887 922 577 - 181 31,555 8,935 10,031 7,183 7,150 8,351 8,162 6,137 5,844 39 914 12 90 1,055 497 200 315 1,012 - 146 481 312 1,887 6 696 38 41 781 472 117 122 711 - 86 275 - 561 6 807 12 50 875 59 200 315 574 1,750 136 551 312 1,495 6 593 38 27 664 35 117 122 274 - 36 173 - 81 23,859 16,747 22,206 13,209 - 11 11 66 18 84 - 11 11 34 1,218 - 1,218 - 18 18 - www.infomedia.com.au 47 notes to financial statements 30 JUNE 2002 NOTES CONSOLIDATED INFOMEDIA LTD 2002 $’000 2001 $’000 2002 $’000 2001 $’000 2. PROFIT FROM ORDINARY ACTIVITIES continued from previous page (v) Research & development costs (included within item 2(ii) previous page) Total research & development costs incurred during the year Less: research & development costs deferred Net research and development costs expensed 3. INCOME TAX The prima facie tax on operating profit differs from the income tax provided in the financial statements as follows: Prima facie tax on operating profit at 30% (2001: 34%) Tax effect of permanent differences - Legal expense - Entertainment - Depreciation of buildings - Amortisation of intangible assets - Additional research and development deduction - Intellectual property – copyright deduction (Over)/under provision of previous year Adjustment to deferred tax balances Amount attributable to change in income tax rate Income tax expense attributable to operating profit 4. DIVIDENDS PROPOSED OR PAID (a) Dividends proposed Franked - 1.5 cents (2001: 1.5) per share (b) Dividends paid during the year: Franked interim - 1.25 cents (2001:1.0) per share Final 2001 franked dividend – 1.5 cents per share Total dividends paid during the year The tax rate at which dividends were franked is 30% (2001: 34%) The amount of franking credits available for the subsequent financial year are: – franking account balance as at the end of the financial year – franking credits that will arise from the payment of income tax payable as at the end of the financial year – franking debits that will arise from the payment of dividends as at the end of the financial year 1,975 (1,040) 935 1,900 (1,900) - 1,975 (1,040) 935 1,900 (1,900) - 5,813 44 30 2 209 (148) (24) 42 - - 5,968 4,864 4,036 4,838 8,874 6,559 19 15 2 200 (162) (27) (49) (12) (78) 6,467 4,804 3,193 - 3,193 5,688 44 25 2 78 (148) (24) (4) - - 5,661 4,864 4,036 4,838 8,874 6,232 19 15 2 51 (162) (27) 24 (12) (93) 6,049 4,804 3,193 - 3,193 14,620 7,866 2,575 2,100 (4,864) 12,331 (4,804) 5,162 48 www.infomedia.com.au 30 JUNE 2002 NOTES CONSOLIDATED INFOMEDIA LTD 5. RETAINED PROFITS Balance at the beginning of the year Profit from ordinary activities after income tax expense Total available for appropriation Dividends provided for or paid: 2001 Dividends provided for or paid: 2002 Balance at the end of the year 6. RECEIVABLES (CURRENT) Trade debtors Provision for doubtful debts Other debtors Amounts other than trade debts receivable from related parties: Directors and Director-related entities 31 (a) Australian dollar equivalent of amounts receivable in foreign currencies not effectively hedged: New Zealand dollars (b) Terms and conditions relating to the above financial instruments: (i) Credit sales are on terms up to 30 days. (ii) Details of the terms and conditions of related party receivables are set out in Note 31. 7. INVENTORIES (CURRENT) Raw materials At cost Work in progress At cost Total inventories at the lower of cost and net realisable value 2002 $’000 7,742 13,409 21,151 (34) (8,900) 12,217 5,473 (45) 5,428 53 - 5,481 2001 $’000 2,914 12,825 15,739 (7,997) - 7,742 7,573 (86) 7,487 194 117 7,798 2002 $’000 7,165 13,299 20,464 (34) (8,900) 11,530 4,875 (45) 4,830 41 - 4,871 2001 $’000 2,883 12,279 15,162 (7,997) - 7,165 6,157 (36) 6,121 194 117 6,432 14 14 22 22 14 14 13 13 61 - 61 59 126 185 44 - 44 20 - 20 www.infomedia.com.au 49 notes to financial statements 30 JUNE 2002 NOTES CONSOLIDATED INFOMEDIA LTD 8. OTHER CURRENT ASSETS Prepayments Deposit paid on property 9. RECEIVABLES (NON-CURRENT) Wholly-owned group - subsidiary entities 10. INVESTMENTS (NON-CURRENT) Investments at cost comprise: Controlled entities – unlisted Total investments in balance sheet 11. INTERESTS IN SUBSIDIARIES 2002 $’000 2001 $’000 2002 $’000 2001 $’000 228 - 228 - - - 149 546 695 - - - 212 - 212 125 - 125 5,965 5,144 $7 only $7 only $6 only $6 only 31 11 Name Infomedia Investments Pty Ltd – ordinary shares Datateck Publishing Pty Ltd – ordinary shares AutoConsulting Pty Ltd – ordinary shares (a) Country of incorporation % of equity interest held by the consolidated entity 2002 % 100 Australia 2001 % 100 100 $2 only $2 only Australia 100 $4 only $4only Australia 100 - $1 only $7 only - $6 only (a) On 24 January 2002, Infomedia Ltd acquired 100% of the share capital of a newly registered Australian “shelf ” company, AutoConsulting Pty Ltd, for the sum of $1 only. 50 www.infomedia.com.au 30 JUNE 2002 NOTES CONSOLIDATED INFOMEDIA LTD 2002 $’000 2001 $’000 2002 $’000 2001 $’000 12. PROPERTY, PLANT AND EQUIPMENT Freehold land and buildings At cost Provision for depreciation Leasehold improvements At cost Provision for amortisation Total land and buildings Office equipment At cost Provision for depreciation Furniture & fittings At cost Provision for depreciation Plant and equipment At cost Provision for depreciation Plant and equipment under lease At cost Provision for amortisation Total plant and equipment Total property, plant and equipment At cost Provision for depreciation and amortisation Total written down amount (a) Assets pledged as security The Company’s bank holds a mortgage over freehold land and buildings. Lease liabilities are secured by a charge over the leased assets. 2,860 (57) 2,803 1,224 (205) 1,019 3,822 3,514 (1,317) 2,197 520 (152) 368 1,298 (802) 496 165 (158) 7 3,068 647 (18) 629 500 (115) 385 1,014 1,807 (632) 1,175 211 (94) 117 1,073 (618) 455 198 (170) 28 1,775 647 (24) 623 972 (150) 822 1,445 3,088 (1,102) 1,986 505 (145) 360 1,247 (797) 450 165 (158) 7 2,803 647 (18) 629 248 (100) 148 777 1,478 (521) 957 201 (91) 110 1,021 (612) 409 198 (170) 28 1,504 9,581 (2,691) 6,890 4,436 (1,647) 2,789 6,624 (2,376) 4,248 3,793 (1,512) 2,281 www.infomedia.com.au 51 notes to financial statements 30 JUNE 2002 NOTES CONSOLIDATED INFOMEDIA LTD 2002 $’000 2001 $’000 2002 $’000 2001 $’000 12. PROPERTY, PLANT AND EQUIPMENT continued from previous page (b) Reconciliation of property, plant and equipment carrying values Freehold land and buildings Carrying amount – opening balance Additions Depreciation Carrying amount – closing balance Leasehold Improvements Carrying amount – opening balance Additions Depreciation Carrying amount – closing balance Office equipment Carrying amount – opening balance Additions Additions through acquisition of business Transfers in from other categories Disposals Depreciation Carrying amount – closing balance Furniture & fittings Carrying amount – opening balance Additions Additions through acquisition of business Depreciation Carrying amount – closing balance Plant and equipment Carrying amount – opening balance Additions Depreciation Carrying amount – closing balance Plant and equipment under lease Carrying amount – opening balance Transfers out to other categories Depreciation Carrying amount – closing balance 52 www.infomedia.com.au 629 2,213 (39) 2,803 385 724 (90) 1,019 1,175 1,691 - 9 (7) (671) 2,197 117 309 - (58) 368 455 226 (185) 496 28 (9) (12) 7 635 - (6) 629 84 342 (41) 385 470 735 355 - - (385) 1,175 144 14 8 (49) 117 718 - (263) 455 66 - (38) 28 629 - (6) 623 148 724 (50) 822 957 1,595 - 9 (7) (568) 1,986 110 306 - (56) 360 409 226 (185) 450 28 (9) (12) 7 635 - (6) 629 78 97 (27) 148 310 566 355 - - (274) 957 144 4 8 (46) 110 683 - (274) 409 66 - (38) 28 30 JUNE 2002 NOTES CONSOLIDATED INFOMEDIA LTD 2002 $’000 4,968 (1,078) 3,890 2,000 (317) 1,683 5,573 1,900 1,040 2,940 (437) 2,503 603 603 1,095 750 1,845 2001 $’000 4,968 (581) 4,387 2,000 (117) 1,883 6,270 - 1,900 1,900 (122) 1,778 337 337 1,390 601 1,991 2002 $’000 593 (94) 499 2,000 (317) 1,683 2,182 1,900 1,040 2,940 (437) 2,503 473 473 1,062 549 1,611 2001 $’000 593 (34) 559 2,000 (117) 1,883 2,442 - 1,900 1,900 (122) 1,778 235 235 1,361 297 1,658 13. INTANGIBLE ASSETS Goodwill – at cost Accumulated amortisation Intellectual property – at cost Accumulated amortisation 14. DEFERRED RESEARCH & DEVELOPMENT COSTS Balance at beginning of year Research & development costs incurred during the year and deferred Accumulated amortisation Balance at end of year 15. DEFERRED TAX ASSETS Future income tax benefit 16. PAYABLES (CURRENT) Trade creditors Other creditors (a) Terms and conditions relating to the above financial instruments (i) Trade and other creditors are normally settled on 30 day terms. www.infomedia.com.au 53 notes to financial statements 30 JUNE 2002 NOTES CONSOLIDATED INFOMEDIA LTD 2002 $’000 2001 $’000 2002 $’000 2001 $’000 17. INTEREST-BEARING LIABILITIES (CURRENT) Lease liability (a) Terms and conditions relating to the above financial instruments: (i) Finance leases have an average lease term of 3 years with the option to purchase the asset at the completion of the lease term for the asset’s residual value. The average discount rate implicit in the leases is 8% (2001: 8%). Lease liabilities are secured by a charge over the leased assets. 18. PROVISIONS EXCLUDING TAX LIABILITIES (CURRENT) Provision for dividends Employee entitlements 19. DEFERRED REVENUE (CURRENT) Revenue in advance 20. INTEREST-BEARING LIABILITIES (NON-CURRENT) Lease liability 25 58 58 101 101 58 58 101 101 4 26 25 4,864 1,038 5,902 605 605 14 14 4,804 928 5,732 1,112 1,112 85 85 4,864 748 5,612 406 406 14 14 4,804 622 5,426 351 351 85 85 (a) Terms and conditions relating to the above financial instruments (i) Finance leases have an average lease term of 3 years with the option to purchase the asset at the completion of the lease term for the asset’s residual value. The average discount rate implicit in the leases is 8% (2001: 8%). Lease liabilities are secured by a charge over the leased assets. 21. PROVISIONS EXCLUDING TAX LIABILITIES (NON-CURRENT) Employee entitlements 26 54 www.infomedia.com.au 201 201 147 147 103 103 131 131 30 JUNE 2002 NOTES CONSOLIDATED INFOMEDIA LTD 22. CONTRIBUTED EQUITY Issued and paid up capital – 323,734,073 shares fully paid (2001: 320,289,707) Movement in shares on issue Beginning of the financial year Issued during the financial year: - Initial Public Offering - Selective Share Plan - Employee Share Plan - Options exercised by Directors End of the financial year (a) Initial Public Offering 2002 $’000 2001 $’000 2002 $’000 2001 $’000 17,474 17,474 17,474 17,474 17,474 17,474 17,474 17,474 2002 2001 Number of shares $’000 Number of shares $’000 320,289,707 17,474 296,499,190 480 22(a) 26 26 31 - 3,304,729 139,637 - 323,734,073 - - - - 17,474 19,000,000 4,663,683 60,168 66,666 320,289,707 16,927 - - 67 17,474 On 16 August 2000, 19,000,000 shares were issued at $1.00 each pursuant to the Initial Public Offering document dated 14 July 2000. A total of $2,073,000 in costs associated with the offering was recorded directly against equity. (b) Employee Option Plan A total of 1,336,500 options were issued to eligible employees during the year at an average exercise price of $1.58. 23. EARNINGS PER SHARE The following reflects the income and share data used in the calculations of basic and diluted earnings per share: Earnings used in calculating basic and diluted earnings per share Weighted average number of ordinary shares used in calculating basic earnings per share Effect of dilutive securities Share options Employee Share Plan shares Selective Share Plan shares Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share 2002 $’000 2001 $’000 13,409 12,825 Number of shares Number of shares 322,780,335 255,791 56,963 1,329,168 316,247,239 745,938 36,266 5,338,759 324,422,257 322,368,202 www.infomedia.com.au 55 notes to financial statements 30 JUNE 2002 NOTES CONSOLIDATED INFOMEDIA LTD 2002 $’000 2001 $’000 2002 $’000 2001 $’000 24. STATEMENT OF CASH FLOWS (a) Reconciliation of profit after tax to the net cash flow from operating activities Profit from ordinary activities after income tax expense Depreciation of non-current assets Amortisation of non-current assets Provision for doubtful debts Net (profit)/loss on sale of non current assets Changes in assets and liabilities Trade receivables and other debtors Deferred research and development costs Trade and other creditors Provision for employee entitlements Tax provision Deferred income tax liability Future income tax benefit Prepayments Inventories Revenue in advance Net cash flow from operating activities (b) Reconciliation of cash Cash balance comprises: – cash on hand – cash on deposit (c) Financing facilities available There were no financing facilities in place at balance date. 13,409 1,055 1,012 (41) (7) 2,357 (1,040) (146) 164 (369) (143) (266) (18) 124 (507) 15,584 3,896 14,889 18,785 12,825 781 711 86 - (4,596) (1,900) (704) 116 (170) 677 20 (178) (55) 560 8,173 1,667 15,185 16,852 13,299 875 574 9 (7) 732 (1,040) (47) 98 22 (153) (238) (27) (24) 55 14,128 3,307 14,889 18,196 12,279 664 274 36 - (3,372) (1,900) (913) 97 (355) 683 37 14 (6) 188 7,726 766 15,185 15,951 56 www.infomedia.com.au 30 JUNE 2002 NOTES CONSOLIDATED INFOMEDIA LTD 2002 $’000 2001 $’000 2002 $’000 2001 $’000 25. EXPENDITURE COMMITMENTS (a) Capital expenditure commitments Estimated capital expenditure contracted for at balance date but not provided for – payable not later than one year – property (b) Lease expenditure commitments (i) Operating leases (non-cancellable): Minimum lease payments – not later than one year – later than one year and not later than five years – later than five years – aggregate operating lease expenditure contracted for at balance date (ii) Finance leases: – not later than one year – later than one year and not later than five years – total minimum lease payments – future finance charges – lease liability – current liability – non-current liability – aggregate finance lease expenditure contracted 17 20 for at balance date (c) Assets which are the subject of finance leases include computer hardware and equipment. (d) Operating leases have an average lease term of two years (2001: three years). Assets which are the subject of operating leases include office space. - - - 1,585 - - 531 1,455 213 2,199 60 15 75 (3) 72 58 14 72 188 44 - 232 111 87 198 (12) 186 101 85 186 695 1,449 213 2,357 60 15 75 (3) 72 58 14 72 - - 135 36 - 171 111 87 198 (12) 186 101 85 186 www.infomedia.com.au 57 notes to financial statements 30 JUNE 2002 NOTES CONSOLIDATED INFOMEDIA LTD 2002 $’000 2001 $’000 2002 $’000 2001 $’000 26. EMPLOYEE ENTITLEMENTS AND SUPERANNUATION COMMITMENTS Employee Entitlements The aggregate employee entitlement liability is comprised of: Provisions (current) Provisions (non-current) 18 21 1,038 201 1,239 928 147 1,075 748 103 851 622 131 753 Employee Option Plan The Employee Option Plan entitles the Company to offer ‘eligible employees’ options to subscribe for shares in the Company. Options will be granted at a nil issue price unless otherwise determined by the Directors of the Company and each Option enables the holder to subscribe for one Share. The exercise price for the Options granted will be as specified on the option certificate or, if not specified, the volume weighted average price for Shares of the Company for the five days trading immediately before the day on which the options were granted. The Options may be exercised in accordance with the date determined by the Company, which must be within three years of the option being granted. The total number of Options issued at the date of this report is 10,359,584 (2001: 3,792,584). Please refer to note 35 for further details. Employee Share Plan The Company provides employees, not including Directors, the opportunity to acquire shares in the Company. The scheme applies to employees with at least 12 months service and provides that offers be made to at least 75% of the persons employed by the Company for at least 36 months and not more than twice in each financial year. The offer to each employee cannot exceed a market value of $1,000. The consideration for each share offered will be nil unless otherwise determined by the Directors. Shares may not be offered to employees who are ineligible, being employees with legal or beneficial interest in more than 5% of the Company or that they control or may cast more than 5% of the maximum votes at a general meeting of the Company. The total number of shares issued pursuant to the Employee Share Plan at the date of this report is 325,085 (2001: 60,168). Selective Share Plan Under the Selective Share Plan (SSP) and pursuant to the IPO, the Company will offer shares to selected persons on set offer dates. The participants are limited to 17 individuals named in the schedule to the SSP. As at the date of this report all shares under the plan have been issued. The consideration for each share offered will be nil unless otherwise determined by the Directors. The set offer dates are provided below. Date 1 September 2000 30 March 2001 3 July 2001 30 March 2002 3 July 2002 Number of shares 3,675,352 988,331 2,316,398 988,331 432,393 Status Issued during the 2001 financial year Issued during the 2001 financial year Issued during the 2002 financial year Issued during the 2002 financial year Issued during the 2003 financial year Superannuation Commitments Contributions are made by the Company in accordance with the relevant statutory requirements. Contributions by the Company for the year ended 30 June 2002 were 8% (2001: 8%) of employee’s wages and salaries which are legally enforceable in Australia. The superannuation plans provide accumulation benefits. 27. CONTINGENT LIABILITIES (a) Floating Charge The assets of the Company are used as security for the Company’s liabilities to its bank. The security is in place covering foreign currency contracts. (b) Bank Guarantee A bank guarantee for $10,350 pertaining to leased premises from a non-related party remains on hand at 30 June 2002. 58 www.infomedia.com.au 30 JUNE 2002 NOTES CONSOLIDATED INFOMEDIA LTD 2002 $ 2001 $ 2002 $ 2001 $ 28. REMUNERATION OF DIRECTORS Income paid or payable, or otherwise made available, in respect of the financial year, to all Directors of each entity in the consolidated entity, directly or indirectly, by the entities of which they are Directors or any related party: Income paid or payable, or otherwise made available, in respect of the financial year, to all Directors of Infomedia Ltd, directly or indirectly, from the entity or any related party: The number of Directors of Infomedia Ltd whose income (including superannuation contributions) fell within the following bands is: $10,000 – $19,999 $40,000 – $49,999 $80,000 – $89,999 $90,000 – $99,999 $140,000 – $149,999 $160,000 – $169,999 $210,000 – $219,999 $220,000 – $229,999 In the opinion of the Directors, remuneration paid to Directors is considered reasonable. Directors’ remuneration is determined on the basis of cost to the Company. It therefore excludes any offerings of equity instruments. 516,000 611,432 516,000 611,432 Number Number 1 3 - - 1 - 1 - - 3 1 - - 1 - 1 www.infomedia.com.au 59 notes to financial statements 30 JUNE 2002 NOTES CONSOLIDATED INFOMEDIA LTD 2002 $ 2001 $ 2002 $ 2001 $ 29. REMUNERATION OF EXECUTIVES Remuneration received or due and receivable by executive officers of the consolidated entity whose remuneration is $100,000 or more, from entities in the consolidated entity or a related party, in connection with the management of the affairs of the entities in the consolidated entity whether as an executive or otherwise: Remuneration received or due and receivable by executive officers of the Company whose remuneration is $100,000 or more, from the Company or any related party, in connection with the management of the affairs of the Company whether as an executive or otherwise: Remuneration of executives includes shares allotted under the Selective Share Plan and pursuant to the IPO. The number of executives of Infomedia Ltd whose income (including superannuation contributions) fell within the following bands is: $110,000 – $119,999 $120,000 – $129,999 $190,000 – $199,999 $240,000 – $249,999 $260,000 – $269,999 $270,000 – $279,999 $390,000 – $399,999 $430,000 – $439,999 $640,000 – $649,999 $680,000 – $689,999 $690,000 – $699,999 $780,000 – $789,999 $890,000 – $899,999 $950,000 – $959,999 $3,080,000 – $3,089,999 30. AUDITORS’ REMUNERATION Amounts received or due and receivable by the auditors of Infomedia Ltd for: – an audit or review of the financial report of the entity and any other entity in the consolidated entity – other services in relation to the entity and any other entity in the consolidated entity 60 www.infomedia.com.au 3,340,088 6,580,601 3,340,088 6,198,149 Number Number Number Number - 2 1 1 - 1 - - 1 - - 1 - 1 - $ 1 - - - 1 - 1 1 - 1 1 - 1 - 1 $ - 2 1 1 - 1 - - 1 - - 1 - 1 - $ - - - - - - 1 1 - 1 1 - 1 - 1 $ 112,500 105,700 95,500 89,200 118,994 231,494 118,674 224,374 118,994 214,494 118,674 207,874 31. RELATED PARTY DISCLOSURES Directors The Directors of Infomedia Ltd during the financial year were: Richard Graham; Myer Herszberg; Andrew Pattinson (appointed 31 October 2001); Ian Joicey (retired 31 October 2001); Barry Ford; Fran Hernon. Wholly-owned group transactions (a) An unsecured, interest bearing loan of $2,283,970 (2001: $593,697) remains owing from Infomedia Investments Pty Limited. Interest is charged at the commercial borrowing rate published by Westpac Bank. (b) An unsecured, interest free loan of $88,933 (2001: $nil) remains owing to Infomedia Investments Pty Limited by Infomedia Ltd. The loan is repayable in seven days upon demand. (c) An unsecured, interest free loan of $3,770,506 (2001: $4,550,064) remains owing from Datateck Publishing Pty Limited to Infomedia Ltd. The loan is repayable in seven days upon demand. (d) During the year a management fee of $1,750,000 (2001: $nil) was paid to Datateck Publishing Pty Limited by Infomedia Ltd. (e) On 24 January 2002, Infomedia Ltd acquired all the share capital of AutoConsulting Pty Limited for $1 only. Director and Director-related entity transactions (a) Infomedia Ltd rents office space from Wiser Laboratory Pty Limited, a company in which Richard Graham is a Director. The total rent payments for the year ended 30 June 2002 of $246,833 (2001: $90,000) were on commercial terms. (b) Infomedia Ltd rents office space from Richard Graham. The total rent payments for the year ended 30 June 2002 of $ 47,495 (2001: $nil) were on commercial terms. (c) Infomedia Ltd rents office space to Wiser Laboratory Pty Limited, a company in which Richard Graham is a Director. The total rent receipts for the year ended 30 June 2002 of $5,971 (2001: $nil) were on commercial terms. (d) An amount of $116,768 owing at 30 June 2001 by Wiser Laboratory Pty Limited, Yarragene Pty Limited and Rentamobile Pty Limited, companies associated with Richard Graham and Myer Herszberg, pursuant to an indemnification agreement, was repaid during the year. Equity instruments of Directors and Director related entities (a) Interests in the equity instruments of entities in the consolidated entity held by Directors of the reporting entity and their Director- related entities at balance date, being the number of instruments held are: Ordinary Fully Paid Shares Infomedia Ltd Options Over Ordinary Shares Remaining Entitlement to Shares Under Selective Share Plan 2002 2001 2002 2001 2002 2001 100,277,501 100,277,501 - - - - 1,000,000 28,577,154 45,844,445 617,706 - 4,345,946 5,000 116,666 180,784,418 1,000,000 28,577,154 45,844,445 308,853 - 4,283,540 5,000 116,666 180,413,159 - - - 450,000 450,000 66,000 200,000 133,334 1,299,334 - - - 450,000 450,000 - 200,000 133,334 1,233,334 - - - 308,853 - 61,770 - - 370,623 - - - 617,706 - 123,540 - - 741,246 Wiser Laboratory Pty Limited Wiser Centre Pty Limited Rentamobile Pty Limited Yarragene Pty Limited Richard Graham Myer Herszberg Andrew Pattinson Fran Hernon Barry Ford Total (b) Movements in Directors and Director related entity equity holdings: (i) Richard Graham acquired 308,853 shares on 3 July 2001 in accordance with the Selective Share Plan (SSP) for no consideration. (ii) Andrew Pattinson acquired 61,770 shares on 3 July 2001 in accordance with the Selective Share Plan (SSP) for no consideration. (iii) Andrew Pattinson was granted 66,000 options at a strike price of $1.59 on 9 July 2001 pursuant to the Employee Option Plan. (iv) Andrew Pattinson acquired 636 shares on 28 September 2001 pursuant to the Employee Share Plan. www.infomedia.com.au 61 notes to financial statements 30 JUNE 2002 NOTES CONSOLIDATED 2002 $’000 $’000 $’000 $’000 32. SEGMENT INFORMATION PRIMARY SEGMENT Business Segments REVENUE Sales revenue Other revenue Intersegment revenue Total segment revenue Unallocated revenue: Interest revenue Total consolidated revenue RESULTS Segment result Unallocated items: Interest revenue Costs incurred in defending and disposing of Supreme Court Litigation Borrowing costs Consolidated entity profit from ordinary activities before income tax expense Income tax expense Consolidated entity profit from ordinary activities after income tax expense 2(i) 34 3 ASSETS Segment assets Unallocated assets: Cash Total Assets LIABILITIES Segment liabilities Unallocated liabilities: Provision for dividend Total Liabilities Prior year comparatives are not shown because it is impracticable to do so. Electronic Catalogue Division 38,495 37 184 38,716 Other Divisions 5,351 7 1,750 7,108 Eliminations Total - - (1,934) (1,934) 43,846 44 - 43,890 575 44,465 21,138 (1,107) - 20,031 575 (1,218) (11) 19,377 (5,968) 13,409 15,646 5,693 - 21,339 18,785 40,124 3,926 1,643 - 5,569 4,864 10,433 62 www.infomedia.com.au 32. SEGMENT INFORMATION Continued from previous page SECONDARY SEGMENT While the products of the consolidated entity are used globally, the Company has only one distinguishable geographical segment, Australia. Segment products and locations The consolidated entity’s operating divisions are organised and managed separately according to the nature of the products and the services they provide, with each segment offering different products. Infomedia’s core business involves the production of the Microcat and Partfinder electronic parts catalogues. These systems are specialised business tools designed to make the selection and sale of replacement parts fast, easy and accurate. Included within “other divisions” are the Data Management and Business Systems divisions. Data Management provide a range of specialised data analysis and research services primarily to the automotive industry. Business Systems specialises in the development of business management and accounting systems, electronic automotive trading networks and system integration for retail automotive dealerships. All products are sourced from Australia. Segment accounting policies The consolidated entity generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices. Segment accounting polices are the same as the consolidated entity’s accounting policies described in Note 1. During the financial year, there were no changes in segment accounting policies that had a material effect on the segment information. www.infomedia.com.au 63 notes to financial statements 33. FINANCIAL INSTRUMENTS (a) Interest rate risk The consolidated entity’s exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities, both recognised and unrecognised at the balance date, are as follows: Financial Instruments (i) Financial Assets Cash Receivables - trade Total financial assets (ii) Financial Liabilities Trade and other creditors Finance lease liability Total financial liabilities Floating interest rate 1 year or less Fixed interest rate maturing in: Over 1 to 5 years More than 5 years 2002 $'000 2001 $'000 2002 $'000 2001 $'000 2002 $'000 2001 $'000 2002 $'000 2001 $'000 18,785 - 18,785 16,852 - 16,852 - - - - - - - - - - 58 58 - - - - 101 101 - - - - 14 14 - - - - 85 85 - - - - - - - - - - - - N/A – not applicable for non-interest bearing financial instruments. (b) Terms, conditions and accounting policies The consolidated entity’s policies, including the terms and conditions of each class of financial asset, financial liability and equity instrument, both recognised and unrecognised at balance date, are as follows: RECOGNISED FINANCIAL INSTRUMENTS BALANCE SHEET NOTES ACCOUNTING POLICIES (i) Financial Assets Receivables - trade Unlisted Shares (ii) Financial Liabilities Trade and other creditors 6 10,11 16 Trade receivables are carried at nominal amounts due less any provision for doubtful debts. A provision for doubtful debts is recognised when collection of the full nominal amount is no longer possible. Unlisted shares are carried at the lower of cost or recoverable amount. Dividend income is recognised when dividends are declared by the investee. Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the Company. Finance lease liability 17,20 The lease liability is accounted for in accordance with AASB 1008. (iii) Equity Ordinary Shares (iv) Derivatives Forward Exchange Contracts 22 33(d) Ordinary share capital is recognised at the fair value of the consideration received by the Company. The consolidated entity enters into forward exchange contracts where it agrees to sell specified amounts of foreign currencies in the future at a predetermined rate. The objective is to protect the consolidated entity against the possibility of loss from future exchange rate fluctuations. The forward exchange contracts are charged to the profit and loss except those relating to hedges of specific commitments which are deferred and included in the measurement of specific commitments which are deferred and included in the measurement of the sale or purchase. 64 www.infomedia.com.au Financial Instruments (i) Financial Assets Cash Receivables - trade Total financial assets 2002 $'000 - 5,428 5,428 (ii) Financial Liabilities Trade and other creditors Finance lease liability Total financial liabilities 1,845 - 1,845 TERMS AND CONDITIONS Credit sales are on terms up to 30 days. The unlisted shares held at balance date are ordinary shares. Trade liabilities are normally settled in 30 day terms. As at balance date, the Company had an average finance lease term of three years. The average discount rate implicit in the lease is 8%. The security over finance leases is disclosed in notes 17 and 20. Details of shares issued at balance date are set out in note 22. N/A - not applicable for non-interest bearing financial instruments. Non-interest bearing Total carrying amount as per the balance sheet Weighted average effective interest rate 2001 $'000 - 7,487 7,487 1,991 - 1,991 2002 $'000 2001 $'000 18,785 5,428 24,213 16,852 7,487 24,339 1,845 72 1,917 1,991 186 2,177 2002 % 3.51 N/A - N/A 8.26 - 2001 % 4.56 N/A - N/A 8.10 - (c) Net fair values The aggregate net fair value of financial assets and financial liabilities, both recognised and unrecognised, at balance date are not materially different from their carrying amount in the balance sheet. (d) Credit risk exposure The consolidated entity’s maximum exposures to credit risk at balance date in relation to each class of recognised financial assets, other than derivatives, is the carrying amount of those assets as indicated in the balance sheet. The maximum credit risk does not take into account the value of any collateral or other security held, in the event other entities/parties fail to perform their obligations under the financial instruments in question. In relation to derivative financial instruments, whether recognised or unrecognised, credit risk arises from the potential failure of counterparties to meet their obligations under the contract or arrangement. The consolidated entity’s maximum credit risk exposure in relation to these is as follows: Forward exchange contracts – the full amount of the currency it will be required to pay or purchase when settling the forward exchange contract, should the counterparty not pay the currency it is committed to deliver to the Company. At balance date the net amount was $775,422. Concentrations of credit risk A majority of the consolidated entity’s electronic cataloguing sales are invoiced directly to vehicle manufacturers or their national distributors. Consequently, rather than the consolidated entity collecting individual sales subscriptions from individual subscribers, it receives monthly payments from a small number of credible companies. Credit risk in trade receivables is managed in the following ways: - credit sales are on terms up to 30 days; - an agent acts on the Company’s behalf in foreign locations; and - subscribers must sign a standard user agreement, accepting terms and conditions. www.infomedia.com.au 65 notes to financial statements 30 JUNE 2002 34. COSTS INCURRED IN DEFENDING AND DISPOSING OF SUPREME COURT LITIGATION On Page 95 of its Prospectus dated 14 July 2000, the Company disclosed the existence of litigation being conducted against it in the Supreme Court of NSW by Mr. Wayne Sinclair, a former employee of the Company. The Company denied liability, defended vigorously against Mr. Sinclair’ claim, and commenced cross claims against Mr. Sinclair and others. The disclosure note in the prospectus went on to say that companies associated with Richard Graham and Myer Herszberg (“the indemnifying companies”) had indemnified this Company against any payment it made to Mr. Sinclair. Mr. Graham and Mr. Herszberg were then, and remain, Directors of Infomedia Ltd. The indemnifying companies also agreed to indemnify the Company up to a maximum of $300,000 for the legal costs of that litigation. That litigation has now been settled out of court on confidential terms, but without any admissions of liability by or on behalf of the Company, or any adverse findings against it. Comprehensive mutual releases and discharges have been recorded in a formal deed of settlement. Legal costs were, in fact, significantly less than $300,000. The Company called on the indemnities and has now received from the indemnifying companies all monies payable under those indemnities. The Company has no ongoing liability of any kind to Mr. Sinclair or his estate, and no exposure to legal costs in relation to the former dispute with him. In a separate action Mr Sinclair’s former partner made a claim against the Company. The Company had no reason to expect that any person would have any grounds to make any claim against the Company or its officers. The Company denied liability, defended against the claim, and moved to strike out the claim on a number of grounds well founded in legal principle. The litigation reached a point where the projection of legal costs to see the litigation to a successful outcome made it expedient on purely commercial grounds to negotiate a settlement of the claim. This litigation has also now been settled out of court on confidential terms, without any admissions of liability or any adverse findings by or on behalf of the Company. Comprehensive mutual releases and discharges have been recorded in a formal deed of settlement, and the claim was discontinued. The claimant submitted to permanent injunctions. The Company incurred a one off expense of $1.2 million in defending and disposing of this litigation. 35. EVENTS SUBSEQUENT TO BALANCE DATE Purchase of Business Of Australian Windows Publishing Pty Limited The Company completed the purchase of the business of Australian Windows Publishing Pty Limited on 1 July 2002. The total purchase price for the business was $600,000 including the purchase option that was paid in June 2002 of $60,000. Renewal Of Data Licence Agreement with Ford Europe The Company renewed its data licence agreement with Ford Europe in July 2002 for a further period of five years. Employee Option Plan Pursuant to the Employee Option Plan a total of 6,519,000 options were issued in July 2002 at a weighted average exercise price of $0.87. 66 www.infomedia.com.au directors’ declaration In accordance with a resolution of the Directors of Infomedia Ltd, I state that: In the opinion of the Directors: (a) the financial statements and notes of the Company and of the consolidated entity are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2002 and of their performance for the year ended on that date; and (ii) complying with Accounting Standards and Corporations Regulations 2001; and (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. On behalf of the Board Richard David Graham Chairman Sydney, 26 August 2002 www.infomedia.com.au 67 audit report 68 www.infomedia.com.au www.infomedia.com.au 69 additional information TOP TWENTY SHAREHOLDERS AS AT 3 SEPTEMBER 2002 NAME SHARES % OF ISSUED CAPITAL RANK Wiser Laboratory Pty Limited J P Morgan Nominees Australia Limited Yarragene Pty Limited Citicorp Nominees Pty Limited Rentamobile Pty Limited Westpac Custodian Nominees Ltd Commonwealth Custodial Services Limited MLC Limited National Nominees Limited Mr Andrew Pattinson Mr Ian Joicey ANZ Nominees Limited Mr Gary Martin Cogent Nominees Pty Limited Colonial Investment Services Limited HSBC Custody Nominees (Australia) Limited Wiser Centre Pty Ltd Mr Richard Graham Queensland Investment Corporation Bond Street Custodians Limited 100,277,501 52,837,226 45,844,445 30,696,821 28,577,154 8,877,992 4,887,893 4,614,964 4,449,417 4,407,716 4,010,229 3,060,652 2,051,422 1,866,228 1,510,752 1,001,603 1,000,000 926,559 912,916 908,442 30.92 16.29 14.14 9.47 8.81 2.74 1.51 1.42 1.37 1.36 1.24 0.94 0.63 0.58 0.47 0.31 0.31 0.29 0.28 0.28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 INFOMEDIA LTD - RANGE OF SHARES AS AT 3 SEPTEMBER 2002 RANGE HOLDERS UNITS % OF ISSUED CAPITAL 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - Over Total 263 869 222 249 63 1,666 196,558 2,632,724 1,871,625 7,577,428 312,013,411 324,291,746 0.06 0.81 0.58 2.34 96.21 100.00 70 www.infomedia.com.au "We are part of a much bigger machine." www.infomedia.com.au 71 personal notes page 72 www.infomedia.com.au www.infomedia.com.au 73 corporate directory PHOTOGRAPHIC INDEX page 4 page 8 Andrew Pattinson, Vice-CEO L to R : Gary Martin, General Manager, ECD Sydney City Toyota - Greg Thompson, General Sales Manager Sean Parmenter, Group Parts Manager page 10 David Lonie, Account Manager, ECD page 12 page 14 page 16 page 17 page 18 page 19 page 20 page 21 page 22 Kate Richards - Lexus Receptionist Ian Downs - Sydney City Toyota Technician Sydney City Toyota - Romit Naidoo, Parts Salesperson Bernie Parmenter, Parts Sales Representative Sydney based Staff Peter Adams, Chief Financial Officer; Emma Watson, Assistant to GM, ECD Ian Davison, Production Manager, ECD Jenni Gardiner, Assistant Project Manager, ECD Chris Huxley, Quality Assurance Manager, ECD Andrew Pattinson, Vice-CEO Hieu Vu Van, Senior Programmer, BSD Paul Turbett, Senior Programmer, BSD Jen Nee Smith, Documentation Manager, BSD Fred Lambert, Expertise Centre Manager, BSD page 23 Michael Roach, General Manager, DMD Cailey King, Assistant to GM, DMD page 24 Kerry Plowright, Business Development Manager, RPG Richard Graham, CEO L to R : David Harrop, Systems Technical Lead Troy Lucas, Systems Administrator Guy Bryant, Director of Technical Operations Company Directors FY 2002 Workshop at Sydney City Toyota page 26 page 30 page 31 page 34 page 70 INFOMEDIA LTD Registered Head Office 1300 Pittwater Road Narrabeen NSW 2101 Telephone: (02) 9913 4500 Facsimile: (02) 9913 4799 Internet: www.infomedia.com.au DIRECTORS Mr Richard David Graham, Chairman and CEO Mr Andrew Pattinson, Executive Director and Vice-CEO Mr Barry Raymond Ford, Non-executive Director Ms Fran Mary Hernon, Non-executive Director Mr Myer Herszberg, Non-executive Director COMPANY OFFICERS Mr Nick Georges, Company Secretary Mr Peter John Adams, Chief Financial Officer AUDITORS Ernst & Young The Ernst & Young Building 321 Kent Street Sydney NSW 2000 SHARE REGISTRY Computershare Registry Services Pty Limited GPO Box 7045 Sydney NSW 1115 LAWYERS Cowley Hearne Level 10 60 Miller Street North Sydney NSW 2060 Microcat, Partfinder, AutoLedgers, PartsImager, Datateck, Infomedia, SIP, AutoTerm, AutoVision and the ‘parts rainbow device’ are registered trademarks, and ezimerchant, ezifoto, eziwebsite, my first store, FRESH, LIVE, Lubrication & Tune-up Guide, AutoOffice and AutoShop are all trademarks of Infomedia Ltd for its business processes, software and documentation products. All other trademarks are the property of their respective owners. 74 www.infomedia.com.au I n f o m e d a i L t d 2 0 0 2 a n n u a l r e p o r t 

Continue reading text version or see original annual report in PDF format above