Infomedia Annual Report 2005

Plain-text annual report

�� Contents Results at a Glance Chairman’s Letter Company Profile History The Year in Review Financial Review Directors’ Report Statement of Financial Performance Statement of Financial Postion Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Audit Report Corporate Governance Statement Additional Information Corporate Directory 01 02 04 05 06 11 13 23 24 25 26 58 59 60 70 71 © 2005 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. Results at a Glance �� ‘98 3.81 ‘99 10.93 ‘00 21.08 ‘05 59.14 �� ‘05 5.47 ‘98 0.78 ‘99 4.08 ‘00 7.66 ‘01 34.45 ‘04 20.69 ‘01 12.83 ‘04 69.57 ‘02 43.85 ‘03 18.33 ‘02 13.41 ‘03 61.81 �� ‘98 0.90 ‘99 6.06 ‘05 27.33 ‘00 12.64 ‘05 46,732 �� ‘98 7,934 ‘99 12,392 ‘04 35.68 ‘01 19.96 ‘02 20.88 ‘04 51,524 ‘03 30.63 ‘03 46,580 ‘00 24,057 ‘01 30,201 ‘02 38,830 Results at a Glance 01 Chairman’s Letter Richard Graham Chairman Dear Fellow Shareholders, The 2005 ﬁnancial year mirrored our start-of- exploration, their management will rediscover the excellence and all-inclusive-value that Microcat® year expectations; this being a year having its chal- represents, and the genuine added value of rapid lenges which we would have to manage well, and professional results and ease of engagement that its opportunities that we would have to imbue with our people bring to the whole-of-business solution. skill and conﬁdence. As you will recall, the signiﬁ- cant challenges for the Company in FY2005 were the rising strength of the Australian dollar and managing the transition to trading in a non-exclusive environment with our largest body of customers. However, despite these challenges, it is pleasing to report that, overall, our business continued to perform strongly and is better for the experi- ence. While our adjusted net proﬁt after tax before signiﬁcant items, of $14.5 million declined by $6.1 In terms of the transition to non-exclusive in Europe, our many years of good product develop- ment and customer support were acknowledged with the retention of more than 50% of our paying subscriptions overall, and more than 60% in several key inﬂuential countries. This strong retention and 12% organic growth in the rest of our EPC portfolio meant we ended the ﬁnancial year with a strong showing of 46,732 subscriptions, a decline of only 9%. million over the previous year, Infomedia’s currency Bolstering these results was the establishment hedging policy insulated us from the greatest of our European subsidiary which is now directly impacts of the stronger A$. Even so, currency supporting our European customers with a fresh still accounted for approximately 60% of the and genuine engagement of service and new busi- normalised NPAT decline. The most signiﬁcant challenge to arise this year to our traditional business model was the move by Ford Europe and later by General Motors in North America to become more directly involved in their Electronic Parts Catalogues (EPC). We view this as a genuine desire on the part of the large automakers to explore and conﬁrm “best value” for their deal- ness development. At the forefront of their work has been to successfully introduce Superservice MenusTM into a growing number of European vehicle distributors. IFM Europe is a great asset of the Company that will accelerate our product acceptance and hence our dividend potential there. You will read more about the Company’s positive work in the Year in Review, following. ers and themselves. In this context we stand with In terms of dividends to shareholders this year, a them as partners, as we are conﬁdent that after this fully franked dividend of three point four cents 02 Chairman’s Letter (3.4¢) was declared, comprised of half-year and I look forward to seeing you at the Annual ﬁnal year dividends of one point seven cents (1.7¢) General Meeting and commend this Annual each time. The Board also took the decision this Report to you. Richard David Graham Chairman of the Board year to write-down $10.4 million in non-cash assets associated with acquired intellectual property. This is further explained in the Chief Financial Ofﬁcer remarks and ﬁnancial statements that follow. In looking forward to FY2006, the marketplace will continue to present challenges of a similar na- ture to those that we have seen this year. How- ever, we will reap the beneﬁts in further new and organic growth of our EPC and Superservice Menus product lines. From my vantage point, Infomedia continues to be the leader in delivering high quality turn-key parts and service productivity products and we are committed to a future where we build upon our good qualities. Through- out FY2006, our teams around the world will strengthen our relationships with users and licensors alike and strive to identify and develop new market opportunities. For these reasons and its overall ﬁnancial performance, which you will read about herein, you can see why I continue to view Infomedia as both a good growth investment and a good yield investment. Chairman’s Letter 03 Company Proﬁle Infomedia development division was established in 1990 as a leading supplier of Electronic Parts Catalogues for the automotive industry. Infomedia’s Electronic Parts Catalogues have become the global standard for the automotive Green is the Colour This year Infomedia is creating a fresh corporate identity. The refreshed corporate identity is a symbol of our drive to adapt and meet the challenges of a rapidly changing information age. industry, shipping to more than 46,000 subscribers The inspiration for our new logo comes from a in over 160 countries and 25 languages. variety of sources: In 2000, Infomedia acquired Datateck Publishing recognised as the colour for going forward • The green colour symbolises growth and is Pty Ltd, a data management company, and Online Computing Pty Ltd, an integrated business systems developer, resulting in an immediate broadening of the Infomedia product and service range. and being switched on. • It stands for our 15 years of positive environmental impact by eliminating the use of millions of tonnes of white paper, ﬁlm and processing chemicals, previously used to deliver parts catalogues. Since then, the Company has worked steadily • The stylised human ﬁgure ‘i’ represents both on both consolidating its position as an our Company name and symbolises the genuine importance we place on considering the Electronic Parts Catalogue provider of choice for human dimension in both our technology the global automotive industry, and exploring opportunities in other complex parts and service dependent industries. developments and our social obligations to our customers and our staff. Our new corporate identity covers everything from stationery to a new website. As a result, Infomedia products have an international reputation for ease of use, productivity gains, high quality and mission critical reliability. Infomedia is an Australian publicly listed company with headquarters in Sydney and support centres in Australia, Europe, Japan and North America. The new Infomedia website Infomedia’s areas of expertise include: • Electronic Parts Catalogues • Integrated business management systems • Integrated service menu system • Client-branded pricing, service and accessories guides • Client-branded user manuals • Technical illustration and documentation • Analytical consulting and data interpretation • Software programming and project management 04 Company Profile History 2005 • Superservice MenusTM for Hyundai Sweden and Daihatsu UK released • Microcat® MARKETTM for Toyota Australia released • Lubrication & Tune-Up GuideTM released on CD-ROM • Awarded Australian Government Export Finance and Insurance Corporation Trailblazers award 2003 • Superservice Menus for Toyota Australia and Mitsubishi Australia released • Internet version of Lubrication & Tune-Up Guide released • Awarded NSW Exporter of the Year (Information & Communications Technology) • Awarded Australian Exporter of the Year (Information & Communications Technology) 2001 • Microcat for Daihatsu Rest of World, Ford Asia Paciﬁc, GM Asia Paciﬁc, Hyundai Global and and Land Rover Global released • Awarded Australian Manufacturing Exporter of the Year • Awarded Australian Manufacturing Company of the Year • Awarded Australian Manufacturing Best Use of New Technology 1999 1997 1994 • Microcat for Daewoo Australia, Daihatsu Europe and Ford North America released • Partﬁnder for Suzuki Australia and Microcat for Ford Europe released • Company sells wholesale operations to concentrate on developing and distributing software for the automotive industry and changed its name to Infomedia Australia Pty Ltd 1990 • Infomedia division formed to add software development capability to Infomagic • Microcat for Ford Australia released 2004 • Microcat MARKET for Toyota Europe and Ford Europe released • Microcat® LIVETM for Toyota Germany released • Superservice Menus for Ford Australia, Daihatsu Australia, Hyundai Australia and Holden Australia released • Established ofﬁce in Europe – IFM Europe Limited • Established corporate headquarters in Australia • Established multi-lingual international customer service centre • Awarded NSW Exporter of the Year (Information & Communications Technology) 2002 • Microcat® for Hyundai USA, Toyota North America and Toyota Europe released • Acquired PartsImager® EPC from EDS and commenced supporting GM and Saturn dealers in North America • Holden Service and Maintenance Information CD-ROM released • Awarded NSW Exporter of the Year (Information & Communications Technology) • Awarded Australian Exporter of the Year (Information & Communications Technology) 2000 • Acquisition of Datateck Publishing Pty Ltd (publisher of the Lubrication & Tune-Up Guide) • Listing on Australian Stock Exchange • Acquisition of Online Computing Pty Ltd (integrated business systems developer) • Microcat for Honda Australia and Hyundai Australia released and Partﬁnder® for Isuzu Australia released • Awarded NSW Exporter of the Year (Information & Communications Technology) • Finalist Australian Exporter of the Year (Emerging Exporter) 1998 1996 1992 1988 • Partﬁnder for Mitsubishi Australia and Microcat for Toyota Australia released • Microcat for Daihatsu Australia and Nissan Australia released • Partﬁnder for Holden version released • Software and peripherals importer and distributor Infomagic Australia Pty Ltd formed Corporate History 05 The Year in Review Gary Martin Chief Executive Ofﬁ cer I iam pleased to report that our team at Infomedia imet the signiﬁ cant challenges of the 2005 ﬁ nancial year and achieved our guidance goals. Electronic Parts Catalogue (EPC) and our new leading edge Microcat® LIVETM and Microcat® MARKETTM electronic parts selling products. Toyota subscriptions will continue to grow throughout FY2006. We are Several events during the course of the year were grateful to Toyota Europe management for their particularly outstanding to me: continued support in the region. • the successful establishment of our European The realignment of Ford Europe’s business model subsidiary; to a competitive marketplace has attracted its share • the loyalty and retention of the majority of our of investor interest during the year. I am pleased Microcat® European Ford subscriptions; to say that more than half of our loyal subscribers • continued global expansion and organic growth; have thus far chosen to stay with Microcat. In fact, • outstanding Superservice MenusTM acceptance; we are now seeing dealers who chose to try the • further product advancements through Research competitive EPC offering returning to Microcat, and Development; and exercising their right to choose the product best • the successful generational transition of the suited to their business requirements. We continue Company’s senior management. to experience a positive and respectful relationship Our European subsidiary team had its ﬁ rst full year of with Ford Europe. independent operation. Led by Managing Director, Despite the reduction of subscriptions in the Andrew Pattinson, it delivered Infomedia’s marketing European Ford customer base, it is pleasing to report messages and support directly to our European that the rest of the Company’s EPC subscription product users and licensors for the ﬁ rst time. Our portfolio experienced 12% growth over the course customer service team was busy ensuring that our of the year. Microcat and Superservice Menus customers were well supported in their local language and enjoying the many beneﬁ ts of our products. In North America, the Company continued to increase sales. A major milestone was reached with the transition from the PartsImager® EPC Throughout the year, IFM Europe has been busy system for American and Canadian GM and Saturn working with the new Toyota territories and dealers to our ﬂ agship EPC, Microcat. Our teams dealers who are coming online with the Microcat in North America and Australia ensured that the Microcat LIVE is the online parts selling system that provides auto dealerships with manufacturer parts information either straight from the internet in real time or from the latest DVD, helping deal- erships remain as well informed and empowered as possible. The ﬂ exibility for dealers to retrieve data from the internet means that Infomedia can work with manufacturers to provide parts data that is updated more often than the current monthly cycle whilst ensuring that the dealers always have the certainty of the DVD. Microcat LIVE’s underlying tech- nology also allows integration with other software applications. Microcat MARKET is the online parts ordering system that provides 24/7 internet connectiv- ity between independent auto trade repairers and their genuine parts dealers. With trade repairers able to identify and order parts instantly and dealerships focused on parts supply, Microcat MARKET creates new efﬁ ciencies in supply chain management, saving administration time and costs, reducing human error, and increasing order turnaround. 06 The Year in Review ONLINE PARTS ORDERING SYSTEM transition went smoothly. The Company acquired In November, Infomedia announced that it had PartsImager from EDS in 2002. entered into a three year agreement with Daitec While on the topic of North America, the Company secured the renewal of the Ford Canada and Ford Mexico agreement for the supply of the Microcat system to their respective dealers. The successful renewal process involved many months of preparation and presentations. In another win for the team, Hyundai Motors America extended its agreement with Infomedia to supply Microcat through to March 2008. The Company appreciates the growth Hyundai contributes to our subscription numbers and is committed to supporting Hyundai customers with our best in class EPC. Hyundai Motors America Co Ltd. of Japan for the provision of distributor services for Microcat in Japan. Daitec currently performs technical information solution services to a wide range of different industries and has operations in Hiroshima, Kyoto, Fukuoka, Tokyo and Yokohama. In the ﬁeld of automotive parts engineering information solution services, Daitec has an excellent reputation among the world’s most demanding car manufacturers. Infomedia chose Daitec for its commitment, professionalism and reputation in serving the automotive industry in Japan and the relationship is already realising good results for us. management are proactive in their interaction with The growth from Superservice Menus continued our staff. This environment provides a platform its positive forward momentum in the European from which real advances and achievements are and domestic markets. The product achieved a made and the beneﬁts realised by the dealership subscription increase of 370% over the prior year. customers of Microcat. In Latin and South America, the Company continued to strengthen its offerings to customers in the region. Through a support and The Company provided the product for six different franchises (Daihatsu, Ford, Holden, Hyundai, Mitsubishi and Toyota) with further franchise coverage scheduled for FY2006. business development agreement with Lazar Infomedia’s Superservice Menus is the service International Inc., customers are now receiving quoting system for busy dealership service excellent local language support. We expect this departments and contains a range of service, repair focused service into the market will increase and accessory management tools that provide business in the region and add further data fast, accurate and reliable quotations. Our system license agreements. replaces the typical manual or semi-automated Superservice Menus is the tool that provides fast, accurate and reliable quotes for franchised automotive service departments and showrooms. It contains a range of management tools, service schedules, repair times and accessory information. Taking the guesswork out of quoting and the paperwork out of processing, Superservice Menus requires little technical knowledge to operate, so accurate bookings can be made with conﬁdence by anyone in the dealership. Developed to meet the speciﬁc complex business management needs of large multi-franchise dealers, AutoLedgers is a secure online dealership management system that resides either on the dealership’s local area network (LAN) or on Infomedia’s secure server network. The system is made up of inter- dependent modules, that form an integrated accounting and business management system. With AutoLedgers, dealers can manage their ﬁnancials, report- ing, debtors, creditors, servicing, vehicle sales, vehicles and parts inventory and more. The Year in Review 07 ‘in-house’ service menu compilation methods that can In a ﬁ rst for the Company, Infomedia and Telstra leave dealers exposed to under-quoting and losing eBusiness Services announced their collaboration proﬁ t, or over-quoting and losing the service sale to deliver the online solution, Microcat MARKET, altogether. Improvement and development of our core to the Australian auto industry. The agreement between the companies saw the ﬁ rst online parts ordering EPC delivered to Australian Toyota products continued throughout the year. New dealers and their trade customers in May 2005. generation systems and production platforms For the subscribing dealers, Microcat MARKET will helped the Company remain commercially increase parts sales and trade customer satisfaction competitive and able to capitalise on opportunities by providing online access to interpreted parts with our new and prospective users. Our Sydney, information and illustrations, and the ability to place Melbourne, Brisbane and Perth based developers and receive orders 24 hours a day, 7 days a week. and industry experts applied responsive can-do attitudes in programming product improvements for both our users and for our internal production processes. I am truly proud of their efforts. Microcat MARKET bridges the gap between dealers and their trade customers (including panel beaters and suburban vehicle repairers) and makes their interaction and parts ordering processes seamless. Our new and comprehensive enterprise accoun- Combining Telstra’s strength in offering e-business ting and customer management system will solutions with Infomedia’s recognised knowledge enhance the ability for our people to successfully of the retail automotive IT industry, Microcat and economically: MARKET assists both parties to run more proﬁ table • manage the accounts of the growing number businesses. of international customers; The AutoLedgers® and NOVATM dealer management • be more targeted with marketing and sales systems (DMS) continued to support hundreds programs; of retail automotive dealers to operate their • gain greater depth and insight into our businesses efﬁ ciently and proﬁ tably. Every working customers and their needs; day dealers beneﬁ t from this in-depth and highly • build faster and leaner production processes; and specialised software, as well as the industry • have more robust and integrated ﬁ nancial and knowledge and know-how that the Company’s reporting structures. DMS staff provides. NOVA is the low-cost dealer management system that’s suit- able for small to medium sized automotive dealers. Easy-to-learn and use, NOVA provides integrated sales, service, parts, accounting and payroll functionality. Whether operated as a stand- alone package or across multiple locations from a single server, NOVA has proven particularly popular with rural-based auto- motive and agriculture dealers, as well as motorcycle dealerships. Data Analysis and Technical Communication Working from engineering drawings, design speciﬁ cations, manuals and even raw parts, Infomedia’s data researchers, analysts, manufacturing experts, illustrators and software devel- opers produce data to exacting speciﬁ cations and deadlines. As well as working on Infomedia-branded products, staff also work on a wide range of client-branded technical projects for the auto, defence and petroleum industries. Projects have included the compilation and production of pricing, service and accessories guides for everything from trucks to tanks, submarines, radars, data interpretation and illustration for auto manufacturers’ service manuals and parts catalogues. 08 The Year in Review Lubrication & Tune-Up GuideTM Used every day by many thousands of workshop operators, mechanics and parts and supplies buyers, the Lubrication & Tune- Up Guide has been established for over forty years as the essential technical lubrication and tune-up reference book. The Guide is a comprehensive compilation of valuable servicing data and diagrams covering the previous ﬁ fteen years for passenger cars, utilities and light commercials and popular diesels. Consisting of 900+ pages, the printed Guide is published on an annual basis. Catering for regular updates, the Guide is also available on the internet and on CD-ROM. Toward the end of the ﬁ nancial year, we moved to establish our wholly owned subsidiary in North America, IFM North America Inc. The team will work directly with our automaker partners and dealership customers, just as IFM Europe does in its territory. From the experience of opening our European subsidiary in April 2004, we expect North American customers to experience levels of satisfaction not normally associated with North American EPC providers. I am optimistic about the near and long term outlook for the Company and the increased subscription opportunities our new business teams in Europe and North America will create for our suite of parts and service solutions – Microcat LIVE, Microcat MARKET and Superservice Menus. Focus on protecting and fortifying our client base, resource management and expense control set the tone for FY2005. Our challenges are not over; however I know that we are equipped to meet them head-on, rising to a new level of recognition Advertising for Microcat MARKET The ASP (online) platform used to deliver AutoLedgers without the requirement and cost for in-dealership servers, continued to gain even- greater acceptance by dealers wanting to lower their overall computing costs. The ASP service allows them to focus on their core business of selling and servicing vehicles rather than running in-house data processing centres. Our NOVA DMS achieved its ﬁ rst international and success for the Company. sale and installation this year with Red Baron Motorcycles in Auckland, New Zealand. Red Baron I believe the Company is now in a good position to also uses NOVA in its locations in Australia, and commence extending the reach of its products to was adamant that the system be installed in their new franchises, territories and industries. Auckland operation. The Year in Review 09 In closing, I would like to pay tribute to Richard Graham. Richard had served as the Company’s Chairman and CEO for more than 17 years when, at the end of December, he retired as CEO. Microcat MARKET goes racing! In 2005 Infomedia has joined forces with a team and several drivers in the V8 Richard’s vision, passion and drive have made Supercars series. Both John Bowe and Brad Jones, from Brad Jones Racing, Infomedia what it is today. Richard continues are driving cars emblazoned with the Microcat® MARKET TM logo. to serve the Company and shareholders as the In the V8 Development Series, Infomedia is also supporting talented young Chairman of the Board and his contributions in this driver Grant Denyer, from the Dick Johnson racing group. Outside of the capacity continue to guide our Company’s forward growth trajectory. racing world, Denyer moonlights as the weatherman on Channel 7’s popular Sunrise breakfast program. A second car from the Dick Johnson team (driven by Dean Canto) also carries the Microcat MARKET logo. I look forward to the year ahead and growing your Aligning the Microcat MARKET brand with a team and drivers in a motor Company and the return on your investment. racing event is a critical platform in the Company’s marketing strategy. In an industry that tends not to perceive software as a ‘tangible’, the association has provided massive grass-roots exposure for the product in a high-powered and high-performance environment. Gary Martin Chief Executive Ofﬁcer 10 The Year in Review Financial Review Peter Adams Chief Financial Ofﬁcer The Company achieved 2005 ﬁnancial year sales revenue of $59.1 million and net proﬁt after tax before signiﬁcant items of $14.5 million. These results are at the higher end of the guidance provided earlier this year. As anticipated, higher currency exchange rates and the introduction of competition within the Ford Europe dealer market had an adverse impact on the results. Operating cash ﬂows remain strong with $19.9 million in cash generation. customers to Microcat® and the likely redundancy of the PartsImager intellectual property. The 2005 ﬁnancial year was characterised by two distinct halves. The ﬁrst half of the year saw Electronic Parts Catalogue subscription numbers decline for the ﬁrst time in the Company’s history as we transitioned from a Ford European dealer market where we had 100% market share to a competitive landscape. At the commencement of A fully franked final dividend of one point seven the ﬁnancial year, we were anticipating a decline cents (1.7¢) will be paid to shareholders of though could not materially determine the record at 8 September 2005, bringing the total size. The second half of the 2005 ﬁnancial year franked dividends for the year to three point had more certainty in that subscription losses four cents (3.4¢); a payout ratio of 76% based began to level off to a point where modest upon pre-significant item profit. growth returned. The ﬁnancial year ended with 46,732 EPC subscriptions versus 51,524 at the end the previous ﬁnancial year. This decrease is a direct result of the realignment of Ford Europe’s business model to a competitive marketplace. However, it is pleasing to “...it is pleasing to report that the Company’s other EPC subscriptions experienced 12% growth over the course of the year.” report that the Company’s other EPC subscriptions The Company continues to enjoy strong cash ﬂow experienced 12% growth over the course of generation despite some changes to the business the year. The Company recorded net signiﬁcant items after tax charge of $9.1 million, resulting in reported model. The year commenced with much higher accounts receivable administration and collection exposure, with the Company becoming responsible for billing Ford European dealers directly, in multiple proﬁt from ordinary activities after tax of $5.5 currencies and multiple languages. Whilst there was million. These included a $10.4 million non-cash an initial build up of working capital, we believe write-down of the PartsImager® intellectual property that our accounts receivable processes have settled necessitated by the migration of PartsImager to a satisfactory level. At year end, the Company’s Financial Review 11 day sales in debtors stood at 40 days. I attribute As detailed in the ﬁnancial report in note 32, this achievement both to our third party collection the Company is well prepared to transition to the agent in Europe and our internal ﬁnance team new standards. back home. The 2005 ﬁnancial year also marked a change in the Company’s risk management process. The Company has now moved to a documented risk management system that is broadly based upon the Australian/New Zealand Standard 4360:2004 on “Risk Management”. The Company has a Board Despite all of the Company developments in recent time, some caution needs to be taken with regard to the outlook for the 2006 ﬁnancial year. The outlook for sales revenue is relatively ﬂat as underlying organic sales growth is offset by the potential impact of higher currency exchange rates. endorsed risk management policy and a Board We anticipate that meaningful growth in the 2006 endorsed risk management plan which form the ﬁnancial year, will be geared toward the end of underlying backbone to our risk management the second half. During the ﬁrst half of the 2006 process. For information, a summary of the risk ﬁnancial year, management will focus on management policy is available on the Company’s completing the transitionary process of replacing website. Risk management is a continuous process the third party distribution relationship in and we look forward to improving our risk North America with direct representation. This management systems in the 2006 ﬁnancial year direct representation in North America will and beyond. provide another catalyst to stronger growth in the future. “The Company continues to enjoy strong cash ﬂow generation despite some changes to the business model.” The 2006 ﬁnancial year will represent the ﬁrst year where the Company’s ﬁnancial reports will be prepared under the new Australian equivalents to International Financial Reporting Standards (AIFRS). Peter Adams Chief Financial Ofﬁcer 12 Financial Review Directors’ Report Left to right: Myer Herszberg, Gary Martin, Frances Hernon, Andrew Moffat, Richard Graham and Geoffrey Henderson Directors’ Report 13 Directors Richard Graham Chairman of the Board Your Directors submit their report for the year ended 30 June 2005. 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 Graham has held senior management positions in the American and Australian computer industry since 1977. Mr Graham co-founded the Company in 1988 and was its Chairman and Managing Director/CEO from its establishment. Since he retired as CEO in December 2004, Mr Graham has continued as Chairman of the Board. Myer Herszberg Non-executive Director Myer Herszberg has been a Director of Infomedia since 1992. Mr Herszberg is the founder of Mel- bourne’s Denman Audio chain and has extensive consumer electronics experience. He was active in bringing home computers to Australia in the early 1980s and has also brought many other leading edge electronic products to Australia. He has extensive experience in the commercial property market and is active in a number of community service organisations. Mr Herszberg serves on the Company’s Audit & Risk, Corporate Governance, and Remuneration & Nomination Committees. Mr Herszberg was last re-elected to the Board in October 2003. Frances Hernon Non-executive Director (Chairman of Remuneration & Nomination Committee) Frances Hernon was appointed to the Infomedia Board of Directors in June 2000. Ms Hernon has extensive experience in media, publishing, marketing and technology. She has held senior editorial positions at News Ltd and Murdoch Magazines and was General Manager, Harrison Communications, Director of Pub- licity at Channel Ten, Managing Editor of the NRMA’s member magazine The Open Road, Manager, Business Communications for NRMA, and Senior Account Manager, Group IT&T for the Insurance Australia Group (IAG). Ms Hernon is currently Corporate Affairs Manager for Nestlé Australia Ltd. Ms Hernon also serves on Infomedia’s Corporate Governance Committee. Ms Hernon was last re-elected to the Board in October 2004. Geoffrey Henderson was appointed to the Infomedia Board of Directors in February 2003. Mr Henderson is a qualiﬁed accountant and has had an extensive career spanning positions in Australia, New Zealand, Europe and North America. He worked in a number of ﬁnancial positions for Olympic Tyres in Melbourne for eight years and then for the Ford Motor Company for 30 years. During his time with Ford, Mr Henderson worked not only in the Finance Division but also held senior positions in the Supply and Parts and Service Divisions. Immediately prior to his retirement from Ford, Mr Henderson headed the up the company’s Asia Paciﬁc Parts and Service operation which covered Ford’s parts and service activities in 12 countries including Japan, South Africa, China, India and Australia. Mr Henderson also serves on Infomedia’s Audit & Risk Committee. Mr Henderson was elected to the Board in October 2004. Geoffrey Henderson Non-executive Director (Chairman of Corporate Governance Committee) 14 Directors’ Report Gary Martin was promoted to the position of Chief Executive Ofﬁcer on 1 January 2005. Mr Martin has extensive experience in the automotive industry. He has been with Infomedia since 1998, when he Gary Martin Chief Executive Ofﬁcer joined the Company as International Sales Manager. Mr Martin was appointed General Manager, Electronic Catalogues Division in August 2001. Prior to joining Infomedia, Mr Martin spent a combined total of 12 years at automotive dealerships. Mr Martin was elected to the Board in October 2004. Andrew Moffat was appointed to the Infomedia Board of Directors in March 2005. Mr Moffat has more than 20 years of corporate and investment banking experience and is the sole principal of Cowoso Capital Pty Ltd, a company providing strategic corporate advisory services. Prior to establishing Cowoso Capital Pty Ltd, Mr Moffat was a Director of Equity Capital Markets and Advisory for BNP Paribas Equities (Australia) Limited where he took principal responsibility for mergers and acquisition advisory services and a range of equity capital raising mandates including placements, initial public offerings, rights issues and dividend reinvest- ment plan underwritings. Mr Moffat’s corporate banking experience was gained whilst working in the United Kingdom and Australia with Standard Chartered Bank Group, National Westminster Banking Group and BNP Paribas. Andrew Moffat Non-executive Director (Chairman of Audit & Risk Committee) Nick Georges is a qualiﬁed lawyer, admitted to the Supreme Courts of Victoria in 1991 and New South Wales in 1999. Prior to joining Infomedia and becoming its General Counsel and Company Secretary in 1999, Mr Georges worked in general practice as a solicitor in Victoria before moving to Sydney to take up an executive role with Altium Limited (previously known as Protel International Pty Ltd) where he obtained Nick Georges General Counsel, Company Secretary and Alternate Director extensive experience in the information technology industry. Mr Georges acted as alternate Director for Mr Martin and for Mr Herszberg at two separate Board meetings during the year. Andrew Pattinson was an Executive Director until his resignation on 28 October 2004. Barry Ford was a Non-executive Director until his resignation on 31 March 2005. Directors were in ofﬁce from the beginning of the ﬁnancial year until the date of this report, unless otherwise stated. Directors’ Report 15 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: Infomedia Ltd Ordinary Shares Fully Paid Options Over Ordinary Shares Wiser Laboratory Pty Limited Yarragene Pty Limited Wiser Centre Pty Limited Richard Graham Gary Martin (a) Frances Hernon Geoffrey Henderson Andrew Moffat 100,277,501 39,421,599 1,000,000 926,559 74,257 5,000 - - - - - - - - - - Richard Graham is the sole Director and beneﬁ cial 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. Myer Herszberg is a Director and major shareholder of Yarragene Pty Limited. (a) 1,000,000 options have been granted to Gary Martin per employment contract subject to Annual General Meeting approval. 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 signiﬁ cant changes in the nature of those activities during the year. EMPLOYEES The company employed 203 (2004: 205) full time employees as at 30 June 2005. DIVIDENDS Dividends paid or declared during the year: • Interim dividend – 1.7 cents per share – fully franked • Final dividend – 1.7 cents per share – fully franked NET TANGIBLE ASSETS PER SECURITY The company’s net tangible assets per security are as follows: • Net tangible assets per share at 30 June 2005 • Net tangible assets per share at 30 June 2004 $’000 5,527 5,533 Cents 11.2 8.6 REVIEW AND RESULTS OF OPERATIONS The adjusted proﬁ t from ordinary activities after tax excluding signiﬁ cant items was $14,547,000 and is at the higher end of the guidance provided by the Company earlier this year. Cash ﬂ ows from operations remain strong with $19,875,000 in cash generation. Total FY2005 dividends (ie interim and ﬁ nal) amounted to $11,060,000 representing a payout ratio of 76% of the adjusted proﬁ t from ordinary activities after tax excluding signiﬁ cant items. 16 Directors’ Report As anticipated, the Company experienced a decrease in sales and proﬁ ts over the prior year as it transitioned from exclusive to non-exclusive in its largest Electronic Parts Catalogue (EPC) market – European Ford dealers – and as higher currency exchange rates had an adverse effect on the Company’s revenues and proﬁ ts. As a result, revenue from ordinary activities decreased by 12%. Proﬁ t from ordinary activities after income tax expense decreased by 74% which includes several signiﬁ cant one-off items aggregating to a net after tax proﬁ t charge of $9,078,000 (refer note 2(vi)). SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There has been no signiﬁ cant change in the state of affairs of the Company since the last Directors’ report. SIGNIFICANT EVENTS AFTER THE BALANCE DATE In 2002, Infomedia entered into a three year non-exclusive Agreement with General Motors Service and Parts Operations of North America (GMSPO) (refer Company announcement 29 August 2002). It was a condition of the Agreement that in the event of non-renewal by GMSPO the parties would enter into a ‘Transition Period’ during which time GMSPO would continue to provide the data under the same terms and conditions for a further three years, albeit only for the purpose of maintaining continuity of supply to Infomedia’s existing EPC customer base. Infomedia has a good working relationship with General Motors and its dealers. The latest version of the Microcat® EPC for General Motors dealers was developed according to GMSPO management speciﬁ cations during the past year. Microcat’s recent release has been well received by dealers in the market. Infomedia had anticipated that the Agreement would be renewed. However, GMSPO has now advised the Company that it does not intend to renew the Agreement but rather intends to let it enter into the Transition Period for the next three years. The Company remains conﬁ dent in the North American market with the recent establishment of its own subsidiary in the region. For the General Motors dealers who are using Microcat today, it is their EPC of choice. Throughout the Transition Period, the Company will continue to provide its customers with the highest level of customer support and continuous product improvement, including new versions of the Microcat system. General Motors has also communicated to its North American dealers that it intends to offer its own EPC solution beginning in September 2006. The ﬁ nancial consequences of moving into the Transition Period are not readily determinable at this time and can be inﬂ uenced by many dynamics. The current quantity of subscriptions relating to this Agreement is material as it represents 13% of the total Company’s EPC subscriber base. There has been no other matter or circumstance that has arisen since the end of the ﬁ nancial year that has signiﬁ cantly affected the operations of the Company, the results of those operations, or the state of affairs of the Company. LIKELY DEVELOPMENTS AND EXPECTED RESULTS The Directors anticipate the overall outlook for sales revenue to be relatively ﬂ at as underlying organic growth is offset by the potential impact of higher currency exchanges rates and intensiﬁ ed market competition. Opportunities for subscription growth are in the pipeline for the Company’s parts and service solutions. Meaningful growth in the 2006 ﬁ nancial year will be geared toward the end of the second half. During the ﬁ rst half of FY2006, management will focus on completing the transitionary process of replacing the third party distribution relationship in North America with direct representation. This direct representation in North America will provide a platform for stronger growth. ENVIRONMENTAL REGULATION AND PERFORMANCE The consolidated entity is not subject to any particular or signiﬁ cant environmental regulation under a law of the Commonwealth of Australia or of a State or Territory. SHARE OPTIONS Unissued shares At the date of this report, there were 500,000 unissued ordinary shares under options. Gary Martin was offered 1,000,000 options at an exercise price of ﬁ fty cents. These options include appropriate performance hurdles. The option Directors’ Report 17 allotment to Gary Martin is subject to approval at the Annual General Meeting to be held in October 2005. Refer to notes 25 and 27 for further details on the movement in options during the 2005 ﬁ nancial year. Shares issued as a result of the exercise of options There were no options exercised by the employees during the year ended 30 June 2005. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS During the year, the Company paid a premium in relation to insuring Directors and other ofﬁ cers against liability incurred in their capacity as a Director or ofﬁ cer of the Company. The insurance contract speciﬁ cally prohibits the disclosure of the nature of the policy and amount of premium paid. REMUNERATION REPORT This report outlines the remuneration arrangements in place for Directors and executives of the Company. Remuneration Philosophy The performance of the Company depends upon the quality of its Directors and executives. To prosper, the Company must attract, motivate and retain highly skilled Directors and executives. To this end, the Company embodies the following principles in its remuneration framework: • Provide competitive rewards to attract high calibre executives • Link executive rewards to shareholder value • Establish appropriate performance hurdles in relation to variable executive remuneration Remuneration Committee The Remuneration & Nomination Committee (Remuneration Committee) of the Board of Directors is responsible for recommending to the Board the Company’s remuneration and compensation policy arrangements for the Directors and the ﬁ ve most senior executives. The Remuneration Committee assesses the appropriateness of the nature and amount of these emoluments on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder beneﬁ t from the retention of a high quality board and executive team. Remuneration Structure In accordance with best practice corporate governance recommendations, the structure of non-executive Director and senior executive remuneration is separate and distinct. Non-executive Director Remuneration Objective The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain Directors of appropriate calibre, whilst incurring a cost which is acceptable to shareholders. Structure The Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive Directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the Directors as agreed. The latest determination was at the Annual General Meeting held on 30 October 2002 when shareholders approved an aggregate remuneration of $450,000 per year. The Board has historically considered the advice from external consultants, as well as the fees paid to non-executive Directors of comparable companies when undertaking a review process. Senior Executive and Executive Director Remuneration Objective The Company aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the Company so as to: • reward executives for Company and individual performance against targets set by reference to appropriate benchmarks; • align the interests of executives with those of shareholders; • link reward with the strategic goals and performance of the Company; and • ensure total remuneration is competitive by market standards. Structure In determining the level and make-up of executive remuneration, the Remuneration Committee engaged an external consultant to provide independent advice in the form of a written report detailing market levels of remuneration for comparable executive roles. 18 Directors’ Report Remuneration consists of the following key elements: - Fixed Remuneration - Variable Remuneration - Short Term Incentive (‘STI’); and - Long Term Incentive (‘LTI’). The actual proportion of ﬁ xed remuneration and variable remuneration (potential short term and long term incentives) is established for the four highest positions of seniority by the CEO in conjunction with the Remuneration Committee, and in the case of the CEO, by the Chairman of the Board in conjunction with the Remuneration Committee. Other executive salaries are determined by the CEO with reference to market conditions. Fixed Remuneration Objective The level of ﬁ xed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position and is competitive in the market. Fixed remuneration is reviewed periodically by the CEO in conjunction with the Remuneration Committee for the four highest positions of seniority, and in the case of the CEO, by the Chairman of the Board in conjunction with the Remuneration Committee. All other executive positions are reviewed periodically by the CEO. As noted above, the Committee has access to external advice independent of management. Structure Executives are given the opportunity to receive their ﬁ xed (primary) remuneration in a variety of forms including cash or other designated employee expenditure such as motor vehicles. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Company. Variable Remuneration – Short Term Incentive (STI) Objective The objective of short term remuneration is to link the achievement of both individual performance and Company performance with the remuneration received by the executive. Structure The structure of short term remuneration is moving toward a cash bonus dependent upon a combination of individual performance objectives and Company objectives being met. This reﬂ ects the Company wide adoption during the course of the ﬁ nancial year of new ‘Performance Planning & Review’ (PPR) procedures. Individual performance objectives centre around key focus areas. Company objectives include achieving budgetary targets that are set at the commencement of the ﬁ nancial year, adjusted where necessary for currency ﬂ uctuations. These performance conditions were chosen, in the case of individual performance objectives, to promote and maintain the individual’s focus on their own contribution to the Company’s strategic objectives through individual achievement in key result areas (KRAs) which include, for example, ‘leadership’, ‘decision making’, ‘results’ and ‘risk management’. In the case of Company objectives, budgetary performance conditions were chosen to promote and maintain a collaborative, Company wide focus on the achievement of those targets. In assessing whether an individual performance condition has been satisﬁ ed, pre-agreed key performance indicators (KPIs) will be used. In assessing whether Company objectives have been satisﬁ ed, Board level pre-determined budgetary targets will be used. These methods have been chosen to create clear and measurable performance targets. Variable Remuneration – Long Term Incentive (LTI) Objective The objective of the LTI plan is to reward executives in a manner which aligns this element of remuneration with the creation of shareholder wealth. As such, LTI grants are made to executives who are able to inﬂ uence the generation of shareholder wealth and thus have a direct impact on the Company’s performance against the relevant long term performance hurdle. Structure The structure of long term remuneration is in the form of share options pursuant to the employee option and employee share plans. Performance hurdles have been introduced for all share options issued after 31 December 2004 and are determined upon grant of those share options. These hurdles typically relate to the Company’s share price reaching or exceeding a particular level. These methods were chosen to create clear and measurable performance expectations. Directors’ Report 19 Employment Contracts The table and notes below summarise current executive employment contracts with the Company as at the date of this report: Gary Martin Andrew Pattinson Nick Georges Peter Adams Michael Roach Commencement Date per Latest Contract 1 January 2005 5 April 2004 3 April 2000 1 January 2005 12 November 2001 Damon Fieldgate 10 March 2003 Linda Scott 6 November 2002 Duration 3 years 3 years continuing 3 years continuing 3 years 3 years Notice Period – Company Notice Period - Executive 6 months* 3 months 3 months 6 months* 5 weeks 1 month 3 months 6 months 3 months 3 months 6 months 5 weeks 1 month 3 months The Company may terminate each of the contracts at any time without notice if serious misconduct has occurred. Options that have not yet vested upon termination will be forfeited. * In the event of redundancy, in addition to six months notice, the Company will provide the individual with a severance payment equivalent to three weeks’ base salary for each completed year of continuous service with the Company provided, however, that the minimum severance payment will be 26 weeks’ base salary and the maximum severance payment will not exceed 52 weeks’ base salary. Details of the nature and amount of each element of the emolument of each Director of the Company and each of the ﬁ ve executive ofﬁ cers of the Company and the consolidated entity receiving the highest emolument for the ﬁ nancial year are as follows: Financial Year: 2005 Primary Post Employment Equity Other Total Salary and Fees Cash Bonus Non Monetary Beneﬁ ts Superannuation Options Employee Share Plan Termination beneﬁ ts $ Speciﬁ ed Directors Richard Graham (a) 314,570 100,000 37,982 331,069 247,436 155,543 42,000 42,000 42,000 31,338 10,823 - 35,200 10,000 - - - - - - - - - - - - - 13,815 29,796 24,445 13,910 3,780 3,780 3,780 2,997 974 - 30,997 30,997 30,997 - - - - - - 1,000 1,000 2,000 - - - - - 1,216,779 145,200 37,982 97,277 92,991 4,000 - - - - - - - - - - 466,367 392,862 339,078 212,450 45,780 45,780 45,780 34,335 11,797 1,594,229 185,691 192,548 135,742 131,238 100,132 10,000 32,800 10,000 10,957 5,000 3,548 - - - - 16,676 19,255 11,705 11,617 8,885 30,364 4,793 3,196 - 3,196 2,000 2,000 2,000 2,000 2,000 46,500 294,779 - - - - 251,396 162,643 155,812 119,213 745,351 68,757 3,548 68,138 41,549 10,000 46,500 983,843 Andrew Pattinson Gary Martin Nick Georges Myer Herszberg Geoffrey Henderson Frances Hernon Barry Ford Andrew Moffat Total Remuneration: Speciﬁ ed Directors Speciﬁ ed Executives Guy Bryant Peter Adams Michael Roach Damon Fieldgate Linda Scott Total Remuneration: Speciﬁ ed Executives 20 Directors’ Report (a) Salary and fees for Richard Graham includes $176,819 of leave entitlements paid upon resignation as CEO effective 31 December 2004. (b) The value attributed to the employee share plan is calculated as the total number of shares allotted multiplied by the weighted average market price of the ﬁ ve trading days on the Australian Stock Exchange preceding ﬁ rst date of offer. (c) Options granted as part of remuneration have been valued using a binomial option-pricing model with the following weighted average assumptions used for grants made in the 2004 ﬁ nancial year. There were no grants to speciﬁ ed executives or speciﬁ ed Directors in the 2005 ﬁ nancial year. Financial Year: 2004 Dividend yield Expected and historic volatility Risk-free interest rate Expected life of option 5% 31% 5.4% Three years DIRECTORS’ MEETINGS The number of meetings of Directors (including meetings of committees of Directors) held during the year and the number of meetings attended by each Direc- tor were as follows: Directors’ Meetings Audit & Risk Corporate Governance Remuneration & Nomination Committee Meetings Number of meetings held: Number of meetings attended: Richard Graham Gary Martin* Geoffrey Henderson Myer Herszberg Frances Hernon Andrew Moffat** Andrew Pattinson*** Barry Ford**** Nick Georges (Alternate) 14 14 9 14 13 12 6 3 8 2 3 – – 3 3 – 1 – 2 – 3 – – 3 3 2 – – – – 4 – – – 3 4 2 – 1 – * ** *** **** Gary Martin was elected to the Board at the 2004 Annual General Meeting Andrew Moffat was appointed to the Board effective 31 March 2005 Andrew Pattinson resigned as a Director on 28 October 2004 Barry Ford retired from the Board effective 31 March 2005 ROUNDING The amounts contained in this report and in the ﬁ nancial 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. TAX CONSOLIDATION Effective 1 July 2002, for the purposes of income taxation, Infomedia Ltd and its 100% owned Australian subsidiaries have formed a tax consolidated group. Members of the group have entered into a tax sharing arrangement in order to allocate income tax expense to the wholly-owned subsidiaries on a pro-rata basis. In addition, the agreement provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. CORPORATE GOVERNANCE In recognising the need for high standards of corporate behaviour and accountability, the Directors of Infomedia Ltd support and have adhered to the principles of good corporate governance. The Company’s Corporate Governance Statement begins on page 60. Directors’ Report 21 AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES The directors received the following declaration from the auditor of the Company: Auditor’s Independence Declaration to the Directors of Infomedia Ltd In relation to our audit of the ﬁ nancial report of Infomedia Ltd for the ﬁ nancial year ended 30 June 2005, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. Ernst & Young J K Haydon Partner Sydney Date: 24 August 2005 NON-AUDIT SERVICES The following non-audit services were provided by the Company’s auditor, Ernst & Young. The Directors are satisﬁ ed that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act. The nature and scope of the non-audit service provided means that auditor independence was not compromised. Ernst & Young received or are due to receive the following amounts for the provision of non-audit services: Indirect tax advisory services: $20,280 Signed in accordance with a resolution of the Directors. Richard David Graham Chairman of the Board Sydney, 24 August 2005 22 Directors’ Report Statement of Financial Performance YEAR ENDED 30 June 2005 Notes CONSOLIDATED INFOMEDIA LTD Revenue from ordinary activities Expenses from ordinary activities excluding borrowing costs Borrowing costs expense Proﬁ t from ordinary activities before income tax expense Income tax expense relating to ordinary activities Proﬁ t from ordinary activities after income tax expense 2(i) 2(ii) 2(iii) 3 5 Net exchange difference on translation of ﬁ nancial statements of foreign controlled entity 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 2005 $’000 64,250 (55,310) (97) 8,843 (3,374) 5,469 (28) (28) 2004 $’000 73,005 (42,994) (283) 29,728 (9,042) 20,686 9 9 2005 $’000 56,333 (48,015) (97) 8,221 (2,917) 5,304 - - 2004 $’000 68,817 (38,361) (283) 30,173 (9,074) 21,099 - - 5,441 20,695 5,304 21,099 Basic earnings per share (cents per share) Diluted earnings per share (cents per share) Franked dividends per share (cents per share) 22 22 4 1.68 1.68 3.40 6.37 6.36 3.80 Statement of Financial Performance 23 Statement of Financial Position AT 30 June 2005 Notes CONSOLIDATED INFOMEDIA LTD CURRENT ASSETS Cash Receivables Inventories Property held for resale Other TOTAL CURRENT ASSETS NON-CURRENT ASSETS Receivables Investments Property, plant and equipment Intangible assets Deferred research and development costs Deferred tax assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Payables 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 TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Retained proﬁ ts TOTAL EQUITY 24 Statement of Financial Position 2005 $’000 10,821 6,042 88 - 540 2004 $’000 6,887 9,389 95 1,534 364 2005 $’000 8,803 4,607 44 - 434 2004 $’000 6,333 8,565 68 - 328 17,491 18,269 13,888 15,294 1,260 - 22,582 8,791 3,657 988 37,278 54,769 3,640 1,971 1,215 810 7,636 - 534 1,338 1,872 9,508 45,261 17,488 (19) 27,792 45,261 - - 23,026 23,671 3,708 748 51,153 69,422 5,103 1,140 1,673 1,503 9,419 4,173 704 3,605 8,482 17,901 51,521 23,303 247 5,263 5,289 3,657 779 38,538 52,426 2,994 1,294 1,080 367 5,735 - 460 1,097 1,557 7,292 45,134 23,180 247 5,344 19,547 3,708 678 52,704 67,998 4,713 950 1,673 1,057 8,393 4,173 296 3,605 8,074 16,467 51,531 17,488 17,488 17,488 9 34,024 51,521 - 27,646 45,134 - 34,043 51,531 6 7 8 9 10 12 13 14 15 16 17 18 19 20 21 5 5 Statement of Cash Flows YEAR ENDED 30 June 2005 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 23(a) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment Proceeds from sale of property, plant and equipment Purchase of shares in controlled entity NET CASH FLOWS USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings Repayment of borrowings Loan to controlled entity for property purchase 2005 $’000 64,097 (38,065) 272 (97) (6,332) 19,875 (1,801) 1,734 - (67) 1,000 (5,173) - 2004 $’000 67,616 (36,879) 428 (283) (4,441) 26,441 (21,101) 2,515 - 2005 $’000 48,754 (22,557) 255 (97) (6,332) 20,023 (1,679) - - (18,586) (1,679) 7,000 (14,982) - 1,000 (5,173) - Dividends paid on ordinary shares (11,701) (12,338) (11,701) Proceeds from exercise of options by employees Finance lease principal NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES NET (DECREASE)/INCREASE IN CASH HELD Add opening cash brought forward - - (15,874) 3,934 6,887 CLOSING CASH CARRIED FORWARD 23(b) 10,821 14 (14) (20,320) (12,465) 19,352 6,887 - - (15,874) 2,470 6,333 8,803 2004 $’000 63,771 (32,592) 410 (283) (4,384) 26,922 (3,262) 1,770 (247) (1,739) 7,000 (14,982) (17,531) (12,338) 14 (14) (37,851) (12,668) 19,001 6,333 Statement of Cash Flows 25 Notes to the Financial Statements 30 June 2005 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of accounting The ﬁ nancial statements have been prepared in accordance with the historical cost convention. The ﬁ nancial report is a general purpose ﬁ nancial 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 with the exception of the accounting policy for cost of sales. Cost of sales includes direct wages and salaries which relate directly to the sale of the product. The comparative numbers have not been restated. This reclassiﬁ cation has no impact on proﬁ t from ordinary activities (refer note 2(ii) for details). (c) Principles of consolidation The consolidated ﬁ nancial 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 ﬁ nancial statements of subsidiaries is included from the date the parent company obtains control until such time as control ceases. Where there is loss of control of a subsidiary, the consolidated ﬁ nancial 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 ﬁ nancial statements of subsidiaries are prepared for the same reporting period as those of 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 unrealised proﬁ ts 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 ﬁ nancial year. Except for certain speciﬁ c hedges and hedges of foreign currency operations, all resulting exchange differences arising on settlement or re-statement are brought to account in determining the proﬁ t or loss for the ﬁ nancial 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 speciﬁ ed amounts of foreign currencies in the future at a predetermined exchange rate. The objective is to match the contract with anticipated future cash ﬂ ows from sales and purchases in foreign currencies, to protect the consolidated entity against the possibility of loss from future exchange rate ﬂ uctuations. The forward exchange contracts are usually for no longer than 12 to 24 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 proﬁ t and loss except those relating to hedges of speciﬁ c commitments which are deferred and included in the measurement of the sale or purchase. Translation of ﬁ nancial reports of overseas operations All overseas operations are deemed self-sustaining, as each is ﬁ nancially and operationally independent of Infomedia Ltd. 26 Notes to the Financial Statements 30 June 2005 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The ﬁ nancial reports of overseas operations are translated using the current rate method and any exchange differences are taken directly to the foreign currency translation reserve. (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 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 ﬁ rst-in-ﬁ rst-out basis; and Work-in-progress – cost of direct labour and materials. (i) Property held for resale Freehold property and other assets held for resale are valued at the lower of cost or net realisable value. (j) Recoverable amount Non-current assets are not carried at an amount above their recoverable amount, and where carrying values exceed this recoverable amount, assets are written down. (k) 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: 2005 40 years 5 to 20 years 3 to 15 years 3 years 2004 40 years 5 to 20 years 3 to 15 years 3 years (l) Leases Leases are classiﬁ ed at their inception as either operating or ﬁ nance leases based on the economic substance of the agreement so as to reﬂ ect the risks and beneﬁ ts incidental to ownership. Operating leases The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and beneﬁ ts 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 ﬁ nancial year in which they are incurred. Finance leases Leases which effectively transfer substantially all of the risks and beneﬁ ts 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 proﬁ t 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. Notes to the Financial Statements 27 30 June 2005 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (m) Intangibles Goodwill Goodwill represents the excess of the purchase consideration over the fair value of identiﬁ able 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 beneﬁ ts are expected to be received. This is taken as being 10 years. Intellectual property Intellectual property relates to copyright and software codes over key products. Intellectual property is amortised over its useful life, being 10 years. (n) 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. (o) Provisions Provisions are recognised when the economic entity has a legal, equitable or constructive obligation to make a future sacriﬁ ce of economic beneﬁ ts to other entities as a result of past transactions or other past events, it is probable that a future sacriﬁ ce of economic beneﬁ ts will be required and a reliable estimate can be made of the amount of the obligation. A provision for dividends is not recognised as a liability unless the dividends are declared, determined or publicly recommended on or before the reporting date. (p) 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. (q) Loans and borrowings All loans are measured at the principal amount. Interest is charged as an expense as it accrues. (r) Contributed equity Contributed equity 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. (s) Revenue recognition Revenue is recognised to the extent that it is probable that the economic beneﬁ ts will ﬂ ow to the entity and the revenue can be reliably measured. The following speciﬁ c recognition criteria must also be met before revenue is recognised: Subscriptions Subscription revenue is recognised when the copyright article has passed to the buyer with related support revenue being recognised over the service period. Where the copyright article 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. (t) Cost of sales Cost of sales includes the direct cost of raw materials, direct salary and wages, and agency costs associated with the manufacture and distribution of the product. (u) 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 proﬁ t after allowing for permanent differences. To the extent timing differences occur between the time items are recognised in the ﬁ nancial statements and when items are taken into account in determining taxable income, the net related taxation beneﬁ t or liability, calculated at current rates, is disclosed as a future income tax beneﬁ t or a provision for deferred income tax. The net future income tax beneﬁ t relating to tax losses is not carried forward as an asset unless the beneﬁ t is virtually certain of being realised. 28 Notes to the Financial Statements 30 June 2005 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 ﬂ ows are included in the Statement of Cash Flows on a gross basis and the GST component of cash ﬂ ows arising from investing and ﬁ nancing activities, which is recoverable from, or payable to, the taxation authority are classiﬁ ed as operating cash ﬂ ows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. Tax consolidation Members of the group have entered into a tax sharing arrangement in order to allocate income tax expense to the wholly-owned subsidiaries on a pro-rata basis. In addition, the agreement provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. (v) Employee entitlements Provision is made for employee entitlement beneﬁ ts accumulated as a result of employees rendering services up to the reporting date. These beneﬁ ts 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 12 months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled. All other employee entitlement liabilities are measured at the present value of the estimated future cash outﬂ ow to be made in respect of services provided by employees up to the reporting date. In determining the present value of future cash outﬂ ows, the interest rates attaching to government bonds 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 beneﬁ ts, annual leave, long service leave and other leave entitlements; and • other types of employee entitlements, are charged against proﬁ ts on a net basis in their respective categories. The value of shares issued under the employee share scheme described in note 25 is not being charged as an employee entitlement expense. In respect of the consolidated entity’s accumulated beneﬁ ts superannuation plans, any contributions made to the superannuation funds by entities within the consolidated entity are charged against proﬁ ts when due. (w) Research and development costs Research and development costs are expensed as incurred, except where the future beneﬁ ts 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 beneﬁ ts. Unamortised costs are reviewed at each balance date to determine the amount (if any) that is no longer recoverable and any amount identiﬁ ed is written off. (x) Earnings per share Basic earnings per share (EPS) is determined by dividing the proﬁ t from ordinary activities after related income tax expense by the weighted average number of ordinary shares outstanding during the ﬁ nancial year. Diluted EPS is calculated as net proﬁ t 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. Notes to the Financial Statements 29 30 June 2005 Notes CONSOLIDATED INFOMEDIA LTD 2005 $’000 2004 $’000 2005 $’000 2004 $’000 2. PROFIT FROM ORDINARY ACTIVITIES Proﬁ t from ordinary activities before income tax expense includes the following revenues and expenses whose disclosure is relevant in explaining the ﬁ nancial performance of the entity: (i) Revenues from ordinary activities Sales revenue Interest revenue - Wholly owned group - Other persons/corporations Total interest revenue Gross proceeds on sale of property held for resale Gross proceeds on sale of non current assets Foreign currency exchange gain Proceeds from settlement of legal claims Other revenue Revenues from ordinary activities (ii) Expenses from ordinary activities excluding borrowing costs Cost of sales – direct wages Cost of sales – other Salaries and wages (including on-costs) Redundancies and associated costs Non-cancellable surplus lease space Depreciation of non-current assets - Buildings - Leasehold improvements - Ofﬁ ce equipment - Furniture and ﬁ ttings - Plant and equipment 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 Decrement in value of non-current assets: - Research and development - Goodwill - Intellectual property Total decrement in value of non-current assets Net book value of assets disposed Management fee paid to controlled entities Bad and doubtful debts Operating lease rental Foreign currency exchange loss Foreign currency contract costs amortised Costs incurred in establishing European operations (iv) (iv) (vi) (vi) (vi) (vi) (iv) Legal costs incurred in enforcement of contractual rights (vi) Other expenses Expenses from ordinary activities 30 Notes to the Financial Statements 59,137 69,567 52,628 65,715 - 272 272 1,734 - - 2,489 618 64,250 7,832 9,572 17,404 9,109 475 178 345 495 998 46 354 2,238 1,238 1,702 729 3,669 812 351 11,589 12,752 1,541 - 737 667 134 316 - 1,227 4,863 55,310 - 428 428 - 2,515 193 - 302 73,005 - 14,604 14,604 15,191 - - 267 571 1,022 68 293 2,221 1,276 1,829 771 3,876 - - - - 1,893 - 103 563 - 345 487 - 3,711 42,994 961 255 1,216 - - - 2,489 - 56,333 6,377 8,164 14,541 7,898 475 178 - 455 908 43 354 1,760 767 1,552 729 3,048 812 351 11,589 12,752 - 917 422 1,162 110 316 - 1,227 3,209 48,015 726 411 1,137 - 1,770 195 - - 68,817 - 13,980 13,980 12,291 - - 5 531 904 64 293 1,797 805 1,679 771 3,255 - - - - 1,214 1,097 103 903 - 345 - - 3,376 38,361 30 June 2005 Notes CONSOLIDATED INFOMEDIA LTD 2005 $’000 2004 $’000 2005 $’000 2004 $’000 2. PROFIT FROM ORDINARY ACTIVITIES (CONTINUED) (iii) Borrowing costs Interest expense - other corporations Borrowing costs (iv) Proﬁ t on sale of assets Gross proceeds from the sale of property held for resale Gross proceeds from the sale of non current assets Net book value of assets disposed Proﬁ t on sale of assets (v) Research and development costs (included within item 2(ii) above) Total research and development costs incurred during the period Less: research and development costs deferred 14 Net research and development costs expensed (vi) Net signiﬁ cant items (included within item 2(ii) above) Signiﬁ cant items charged to proﬁ t from ordinary activities: Decrement in value of non current assets (vii) Legal costs incurred in enforcement of contractual rights Redundancies and associated costs Non-cancellable surplus lease space Less: Signiﬁ cant items credited to proﬁ t from ordinary activities: Proceeds from settlement of legal claims Net signiﬁ cant items charged to proﬁ t from ordinary activities before tax Tax effect on signiﬁ cant items Net signiﬁ cant items charged to proﬁ t from ordinary activities after tax (vii) Decrement in value of non-current assets (included within item 2(ii) and 2(vi) above) Discontinued use of intellectual property as the result of product substitution and market transition Writedown of assets to net recoverable amount associated with the Business Systems division 30 30 97 97 1,734 - (1,541) 193 3,482 (1,490) 1,992 12,752 1,227 475 178 (2,489) 12,143 (3,065) 9,078 10,405 2,347 12,752 283 283 - 2,515 (1,893) 622 97 97 - - - - 3,551 (1,731) 1,820 3,482 (1,490) 1,992 - - - - - - - - - - - 12,752 1,227 475 178 (2,489) 12,143 (3,065) 9,078 10,405 2,347 12,752 283 283 - 1,770 (1,214) 556 3,551 (1,731) 1,820 - - - - - - - - - - - Notes to the Financial Statements 31 30 June 2005 Notes CONSOLIDATED INFOMEDIA LTD 3. INCOME TAX The prima facie tax on operating proﬁ t differs from the income tax provided in the ﬁ nancial statements as follows: Prima facie tax on operating proﬁ t Tax effect of permanent differences Legal expense Entertainment Non-deductible depreciation Amortisation of intangible assets Additional research and development deduction Intellectual property – copyright deduction Decrement in value of non-current assets Tax losses utilised Other Over provision of previous year Income tax expense attributable to operating proﬁ t 4. DIVIDENDS PROPOSED OR PAID (a) Dividends paid during the year: Franked interim - 1.70 cents (2004:1.90) per share Prior year ﬁ nal franked dividend – 1.90 (2003: 1.90 cents) per share Total dividends paid during the year (b) Dividends proposed and not recognised as a liability: 2005 $’000 2004 $’000 2005 $’000 2004 $’000 2,653 8,918 2,466 9,052 17 24 104 427 (283) (24) 577 64 63 (248) 3,374 152 35 80 470 (421) (24) - - (2) (166) 9,042 17 21 - 277 (283) (24) 577 - 71 (205) 2,917 152 32 2 319 (421) (24) - - - (38) 9,074 5,527 6,174 11,701 6,170 6,168 12,338 5,527 6,174 11,701 6,170 6,168 12,338 Final franked dividend - 1.70 cents (2004: 1.90) per share 5,533 6,174 5,533 6,174 The tax rate at which dividends were franked is 30% The amount of franking credits available for the subsequent ﬁ nancial year are: – – franking account balance as at the end of the ﬁ nancial year franking credits that will arise from the payment of income tax payable as at the end of the ﬁ nancial year The tax rate at which paid dividends have been franked is 30% (2004: 30%). Dividends proposed will be franked at the rate of 30% (2004: 30%). 11,730 9,216 1,215 12,945 1,673 10,889 32 Notes to the Financial Statements 30 June 2005 Notes CONSOLIDATED INFOMEDIA LTD 5. RETAINED PROFITS AND RESERVES (a) Retained proﬁ ts Balance at the beginning of the year Proﬁ t from ordinary activities after income tax expense Total available for appropriation Dividends provided for or paid Balance at the end of the year (b) Foreign currency translation reserve (i) Nature and purpose of reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the ﬁ nancial statements of self-sustaining operations. (ii) Movement in reserve Balance at the beginning of the year Gain/(loss) on translation of overseas controlled entity Balance at end of the year 6. RECEIVABLES (CURRENT) Trade debtors Provision for doubtful debts Other debtors Net foreign currency forward contracts receivable 2005 $’000 2004 $’000 2005 $’000 2004 $’000 34,024 5,469 39,493 (11,701) 27,792 25,676 20,686 46,362 (12,338) 34,024 34,043 5,304 39,347 (11,701) 27,646 25,282 21,099 46,381 (12,338) 34,043 9 (28) (19) 6,464 (877) 5,587 455 - 6,042 - 9 9 8,486 (140) 8,346 278 765 9,389 - - - 4,717 (562) 4,155 452 - 4,607 - - - 7,653 (140) 7,513 287 765 8,565 (a) Terms and conditions relating to the above ﬁ nancial instruments are set out in Note 31. Notes to the Financial Statements 33 30 June 2005 Notes CONSOLIDATED INFOMEDIA LTD 2005 $’000 2004 $’000 2005 $’000 2004 $’000 7. INVENTORIES (CURRENT) Raw materials At cost Total inventories at the lower of cost and net realisable value 8. OTHER CURRENT ASSETS Prepayments 9. RECEIVABLES (NON-CURRENT) Wholly-owned group – subsidiary entities Other 10. INVESTMENTS (NON-CURRENT) Investments at cost comprise: Controlled entities – unlisted 11 Total investments at lower of cost and recoverable amount 11. INTERESTS IN SUBSIDIARIES Name Country of incorporation Percentage of equity interest held by the consolidated entity IFM Europe Ltd - ordinary shares United Kingdom Infomedia Investments Pty Ltd 2005 % 100 - ordinary shares - $2 only Australia 100 Datateck Publishing Pty Ltd 2004 % 100 100 - ordinary shares - $4 only Australia 100 100 AutoConsulting Pty Ltd - ordinary shares - $1 only Australia 100 100 IFM North America Inc - ordinary shares United States of America 100 - 34 Notes to the Financial Statements 88 88 540 540 - 1,260 1,260 - - 95 95 364 364 - - - - - 44 44 434 434 68 68 328 328 22,043 1,260 23,303 23,180 - 23,180 247 247 247 247 247 247 - - - - - - - - 247 247 30 June 2005 Notes CONSOLIDATED INFOMEDIA LTD 2005 $’000 2004 $’000 2005 $’000 2004 $’000 12. PROPERTY, PLANT AND EQUIPMENT Freehold land and buildings At cost Provision for depreciation Leasehold improvements At cost Provision for amortisation 17,531 (555) 16,976 3,039 (901) 2,138 17,531 (210) 17,321 2,664 (419) 2,245 Total land and buildings 19,114 19,566 Ofﬁ ce equipment At cost Provision for depreciation Furniture and ﬁ ttings At cost Provision for depreciation Plant and equipment At cost Provision for depreciation 5,772 (3,580) 2,192 554 (167) 387 2,512 (1,623) 889 4,691 (2,582) 2,109 471 (121) 350 2,325 (1,324) 1,001 - - - 2,764 (725) 2,039 2,039 4,995 (3,038) 1,957 529 (151) 378 2,512 (1,623) 889 - - - 2,391 (283) 2,108 2,108 4,024 (2,130) 1,894 449 (108) 341 2,325 (1,324) 1,001 Total plant and equipment 3,468 3,460 3,224 3,236 Total property, plant and equipment At cost Provision for depreciation and amortisation Total written down amount 29,408 (6,826) 22,582 27,682 (4,656) 23,026 10,800 (5,537) 5,263 9,189 (3,845) 5,344 (a) Valuations The fair values of freehold land and buildings have been determined by reference to an independent valuation performed on a market value basis being the estimated amounts for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of land and buildings at the valuation date, being 7 June 2004, was $17,500,000. Notes to the Financial Statements 35 30 June 2005 Notes CONSOLIDATED INFOMEDIA LTD 2005 $’000 2004 $’000 2005 $’000 2004 $’000 12. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) (b) Reconciliation of property, plant and equipment carrying values Freehold land and buildings Carrying amount – opening balance Additions Disposals Transfer to property held for resale Depreciation Carrying amount – closing balance Leasehold improvements Carrying amount – opening balance Additions Disposals Transfer to property held for resale Depreciation Carrying amount – closing balance Ofﬁ ce equipment Carrying amount – opening balance Additions Depreciation Carrying amount – closing balance Furniture and ﬁ ttings Carrying amount – opening balance Additions Depreciation Carrying amount – closing balance Plant and equipment Carrying amount – opening balance Additions Disposals Depreciation Carrying amount – closing balance 36 Notes to the Financial Statements 17,321 - - - (345) 16,976 2,245 388 - - (495) 2,138 2,109 1,081 (998) 2,192 350 83 (46) 387 1,001 249 (7) (354) 889 2,741 17,531 (1,247) (1,437) (267) 17,321 1,066 1,945 (98) (97) (571) 2,245 2,050 1,081 (1,022) 2,109 371 47 (68) 350 854 498 (58) (293) 1,001 - - - - - - 2,108 386 - - (455) 2,039 1,894 971 (908) 1,957 341 80 (43) 378 1,001 242 - (354) 889 616 - (611) - (5) - 910 1,827 (98) - (531) 2,108 1,910 888 (904) 1,894 358 47 (64) 341 808 498 (12) (293) 1,001 30 June 2005 Notes CONSOLIDATED INFOMEDIA LTD 13. INTANGIBLE ASSETS Goodwill – at cost Writedown of goodwill Accumulated amortisation Intellectual property – at cost Writedown of intellectual property Accumulated amortisation 2005 $’000 2004 $’000 2005 $’000 2004 $’000 12,680 (351) (4,700) 7,629 18,019 (11,589) (5,268) 1,162 8,791 12,680 - (3,462) 9,218 18,019 - (3,566) 14,453 23,671 7,968 (351) (2,328) 5,289 16,519 (11,589) (4,930) - 5,289 7,968 - (1,562) 6,406 16,519 - (3,378) 13,141 19,547 14. DEFERRED RESEARCH AND DEVELOPMENT COSTS Balance at beginning of year 5,648 3,917 5,648 3,917 Research and development costs incurred during the year and deferred Writedown of research and development Accumulated amortisation Balance at end of year 15. DEFERRED TAX ASSETS Future income tax beneﬁ t 16. PAYABLES (CURRENT) Trade creditors Other creditors 1,490 (812) 6,326 (2,669) 3,657 988 988 1,598 2,042 3,640 1,731 - 5,648 (1,940) 3,708 748 748 2,038 3,065 5,103 1,490 (812) 6,326 (2,669) 3,657 779 779 1,113 1,881 2,994 1,731 - 5,648 (1,940) 3,708 678 678 1,961 2,752 4,713 (a) Terms and conditions relating to the above ﬁ nancial instruments are set out in note 31. Notes to the Financial Statements 37 30 June 2005 Notes CONSOLIDATED INFOMEDIA LTD 2005 $’000 2004 $’000 2005 $’000 2004 $’000 17. PROVISIONS EXCLUDING TAX LIABILITIES (CURRENT) Employee entitlements 18. DEFERRED REVENUE (CURRENT) Revenue in advance Deferred gain on foreign currency forward contracts 25 1,971 1,971 1,140 1,140 777 726 1,503 4,173 4,173 704 - 704 - - - 1,294 1,294 367 - 367 - - 282 178 460 - 178 178 950 950 331 726 1,057 4,173 4,173 296 - 296 - - - 810 - 810 - - 356 178 534 - 178 178 19. INTEREST-BEARING LIABILITIES (NON-CURRENT) Bank loans 20. PROVISIONS EXCLUDING TAX LIABILITIES (NON-CURRENT) Employee entitlements Provision for non-cancellable surplus lease space 25 (a) (a) Movement in non-cancellable surplus lease space provision: Carrying amount at the beginning of the year Additional provision Carrying amount at the end of the year The provision for non-cancellable lease space has been made as the space will not be used. 38 Notes to the Financial Statements 30 June 2005 Notes CONSOLIDATED INFOMEDIA LTD 21. CONTRIBUTED EQUITY Issued and paid up capital – Shares fully paid 325,156,205 (2004: 324,762,959) Movement in shares on issue Beginning of the ﬁ nancial year Issued during the ﬁ nancial year: - Employee Share Plan - Conversion of employee options End of the ﬁ nancial year (a) Employee Option Plan 2005 $’000 2004 $’000 2005 $’000 2004 $’000 17,488 17,488 17,488 17,488 17,488 17,488 17,488 17,488 2005 2004 Number of Shares $’000 Number of Shares $’000 324,762,959 17,488 324,422,732 17,474 25 393,246 - - - 324,227 16,000 - 14 325,156,205 17,488 324,762,959 17,488 A total of 100,000 options were issued to eligible employees during the year at an average exercise price of $0.67. Refer to Note 25. (b) Terms and conditions of contributed equity Ordinary shares have the right to receive dividends as declared and, in the event of the winding up of the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company. 22. EARNINGS PER SHARE The following reﬂ ects 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 2005 $’000 5,469 2004 $’000 20,686 2005 Number of Shares 2004 Number of Shares Weighted average number of ordinary shares used in calculating basic earnings per share 325,037,011 324,666,639 Effect of dilutive securities Share options Employee Share Plan shares 1,198 7,416 372,599 94,216 Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share 325,045,625 325,133,454 Notes to the Financial Statements 39 30 June 2005 Notes CONSOLIDATED INFOMEDIA LTD 2005 $’000 2004 $’000 2005 $’000 2004 $’000 23. STATEMENT OF CASH FLOWS (a) Reconciliation of proﬁ t after tax to the net cash ﬂ ows from operations Proﬁ t from ordinary activities after income tax expense Depreciation of non-current assets Amortisation of non-current assets Provision for doubtful debts Decrement in value of non-current assets Net proﬁ t from sale of assets Changes in assets and liabilities Trade receivables and other debtors Deferred research and development costs Trade and other creditors Provision for employee entitlements Other provisions Tax provision Deferred income tax liability Future income tax beneﬁ t Prepayments Inventories Revenue in advance 5,469 2,238 3,669 737 12,752 (193) 595 (1,489) (1,463) 483 178 (458) (2,267) (240) (176) 7 33 20,686 2,221 3,876 91 - (622) (2,254) (1,731) 806 201 - 497 1,601 458 521 10 80 5,304 1,760 3,048 422 12,752 - 2,685 (1,489) (1,719) 330 178 (593) (2,508) (101) (106) 24 36 21,099 1,797 3,255 91 - (556) (851) (1,731) 545 84 - 517 1,628 362 546 18 118 Net cash ﬂ ow from operating activities 19,875 26,441 20,023 26,922 (b) Reconciliation of cash Cash balance comprises: – Cash at bank – Cash on deposit (c) Financing facilities available At reporting date, the following ﬁ nancing facilities had been negotiated and were available: Total Facilities: 8,189 2,632 10,821 4,832 2,055 6,887 6,171 2,632 8,803 4,278 2,055 6,333 USD$13 million multi-currency cash advance facility 17,060 18,832 17,060 18,832 Facilities used at reporting date: Bank loans Facilities unused at reporting date: Bank loans 40 Notes to the Financial Statements - 4,173 - 4,173 17,060 14,659 17,060 14,659 30 June 2005 Notes CONSOLIDATED INFOMEDIA LTD 2005 $’000 2004 $’000 2005 $’000 2004 $’000 24. EXPENDITURE COMMITMENTS (a) Lease expenditure commitments Operating leases (non-cancellable): Minimum lease payments – Not later than one year – Later than one year and not later than ﬁ ve years – Aggregate operating lease expenditure contracted for at balance date (b) Assets which are the subject of operating leases include ofﬁ ce space. 25. EMPLOYEE ENTITLEMENTS AND SUPERANNUATION COMMITMENTS Employee entitlements The aggregate employee entitlement liability is comprised of: Provisions (current) Provisions (non-current) Employee Option Plan 505 117 622 540 625 1,165 334 117 451 337 500 837 17 20 1,971 356 2,327 1,140 704 1,844 1,294 282 1,576 950 296 1,246 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 speciﬁ ed on the option certiﬁ cate or, if not speciﬁ ed, the volume weighted average price for shares of the Company for the ﬁ ve 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 Board, which must be within four years of the option being granted. Information with respect to the number of options granted under the employee share incentive scheme is as follows: Balance at beginning of year - Granted - Forfeited - Exercised Balance at end of year Notes 2005 2004 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price 25(a) 25(b) 25(c) 25(d) 6,908,000 100,000 (6,281,000) $0.86 $0.67 $0.88 8,891,583 550,000 (2,517,583) - - (16,000) 727,000 $0.73 6,908,000 $1.07 $0.76 $1.57 $0.88 $0.86 Notes to the Financial Statements 41 25. EMPLOYEE ENTITLEMENTS AND SUPERANNUATION COMMITMENTS (CONTINUED) (a) Options held at the beginning of the reporting period: The following table summarises information about options held by employees at 1 July 2004 Number of Options 18,000 30,000 5,933,000 477,000 450,000 Grant Date Earliest Vesting Date 8/10/2001 8/10/2002 12/11/2001 12/11/2002 Expiry Date 8/10/04 12/11/04 5/7/2002 1/7/2002 26/3/2004 20/5/2005 1/7/2003 1/8/2005 24/5/2004 24/5/2005 31/5/2007 Weighted Average Exercise Price $1.29 $1.43 $0.88 $0.73 $0.75 (b) Options granted during the reporting period: The following table summarises information about options granted by Infomedia Ltd to employees during the year Number of options 100,000 Grant Date Earliest Vesting Date Expiry Date Weighted Average Exercise Price 20/9/2004 20/9/2005 20/9/2007 $0.67 (c) Options exercised during the reporting period: There were no options exercised during the year ended 30 June 2005. The following table summarises information about options exercised by employees during the year ended 30 June 2004: Number of Options Grant Date Exercise Date Expiry Date Weighted Average Exercise Price Proceeds from Shares Issued Number of Shares Issued Issue Date Fair Value of Shares Issued 16,000 5/7/2002 4/8/2003 20/5/2005 0.88 $14,080 16,000 18/8/2003 $16,320 Fair value of shares issued during the reporting period is estimated to be the market price of shares of Infomedia Ltd on the ASX as at the close of trading on their respective issue dates. (d) Options held at the end of the reporting period: The following table summarises information about options held by employees at 30 June 2005 Number of options 477,000 150,000 100,000 Grant Date 1/7/2002 24/5/2004 20/9/2004 Earliest Vesting Date 1/7/2003 24/5/2005 20/9/2005 Expiry Date 1/8/2005 31/5/2007 20/9/2007 Weighted Average Exercise Price $0.73 $0.75 $0.67 42 Notes to the Financial Statements 25. EMPLOYEE ENTITLEMENTS AND SUPERANNUATION COMMITMENTS (CONTINUED) 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 12 months and not more than twice in each ﬁ nancial year. Each 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 Board. Shares may not be offered to employees who are ineligible, being employees with legal or beneﬁ cial interest in more than 5% of the Company or who 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 1,488,912 (2004: 973,114). The following table lists the number of shares issued by tranche since the inception of the plan. Date of Issue Number of Shares 5/2/2001 5/10/2001 21/1/2002 19/7/2002 6/2/2003 21/7/2003 23/1/2004 15/7/2004 20/1/2005 18/7/2005 Total 60,168 64,872 74,765 125,280 130,986 169,644 154,583 192,816 200,430 315,368 1,488,912 Rounded Unit Price $ 1.81 1.57 1.27 0.77 0.87 0.79 0.93 0.75 0.76 0.50 Value of Tranche $’000 109 102 95 96 114 134 144 145 153 158 1,250 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 2005 were 9% (2004: 9%) of employee’s wages and salaries which are legally enforceable in Australia. The superannuation plans provide accumulation beneﬁ ts. Notes to the Financial Statements 43 26. CONTINGENT LIABILITIES (a) Interlocking guarantees The bank loan drawings have been made pursuant to a multi-currency cash advance facility. The facility has been provided on the condition of interlocking guarantees between the Parent entity and its controlled entities (the guarantors). 27. DIRECTOR AND EXECUTIVE DISCLOSURES (a) Details of speciﬁ ed directors and speciﬁ ed executives (i) Speciﬁ ed Directors Richard Graham1 Gary Martin2 Andrew Pattinson3 Barry Ford (resigned 31 March 2005) Myer Herszberg Geoffrey Henderson Frances Hernon Andrew Moffat (appointed 31 March 2005) Nick Georges (ii) Speciﬁ ed Executives Guy Bryant Peter Adams Michael Roach Damon Fieldgate Linda Scott Chairman Chief Executive Ofﬁ cer Managing Director – IFM Europe Ltd Non-executive Director Non-executive Director Non-executive Director Non-executive Director Non-executive Director Company Secretary, Legal Counsel and Alternate Director Director Of Technology4 Chief Financial Ofﬁ cer General Manager – Electronic Catalogue and Data Management General Manager – Business Systems Human Resources Manager 1. Retired from the position of CEO effective 31 December 2004. 2. Appointed as an Executive Director on 31 October 2004 and promoted to the position of Chief Executive Ofﬁ cer effective 1 January 2005. 3. Resigned as a Director on 31 October 2004. Continues in capacity as an executive. 4. Position made redundant on 30 June 2005. 44 Notes to the Financial Statements 27. DIRECTOR AND EXECUTIVE DISCLOSURES (CONTINUED) (b) Remuneration of speciﬁ ed Directors and speciﬁ ed executives The Remuneration & Nomination Committee (Remuneration Committee) of the Board of Directors is responsible for recommending to the Board the Company’s remuneration and compensation policy arrangements for the Directors and the ﬁ ve most senior executives. The Remuneration Committee assesses the appro- priateness of the nature and amount of these emoluments on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder beneﬁ t from the retention of a high quality Board and executive team. In determining the level and make-up of executive remuneration, the Remuneration Committee engaged an external consultant to provide independent advice in the form of a written report detailing market levels of remuneration for comparable executive roles. Remuneration consists of the following key elements: - Fixed Remuneration - Variable Remuneration - Short Term Incentive (‘STI’); and - Long Term Incentive (‘LTI’). The actual proportion of ﬁ xed remuneration and variable remuneration (potential short term and long term incentives) is established for the four highest posi- tions of seniority by the CEO in conjunction with the Remuneration Committee, and in the case of the CEO, by the Chairman of the Board in conjunction with the Remuneration Committee. Other executive salaries are determined by the CEO with reference to market conditions. Each Executive Director and ofﬁ cer has an employment contract with the Company. The contracts provide a notice period not exceeding six months. Financial Year: 2005 Primary Post Employment Equity Other Total Salary and Fees Bonus Non Monetary Beneﬁ ts Superannuation Options Employee Share Plan Termination beneﬁ ts $ Speciﬁ ed Directors Richard Graham1 314,570 100,000 37,982 Andrew Pattinson2 331,069 - Gary Martin3 Nick Georges 247,436 35,200 155,543 10,000 Myer Herszberg Geoffrey Henderson Frances Hernon Barry Ford Andrew Moffat 42,000 42,000 42,000 31,338 10,823 - - - - - - - - - - - - - 13,815 29,796 24,445 13,910 3,780 3,780 3,780 2,997 974 - 30,997 30,997 30,997 - 1,000 1,000 2,000 - - - - - - - - - - Total Remuneration: Speciﬁ ed Directors 1,216,779 145,200 37,982 97,277 92,991 4,000 - - - - - - - - - - 466,367 392,862 339,078 212,450 45,780 45,780 45,780 34,335 11,797 1,594,229 Notes to the Financial Statements 45 27. DIRECTOR AND EXECUTIVE DISCLOSURES (CONTINUED) Financial Year: 2004 Primary Post Employment Equity Other Total Salary and Fees Bonus Non Monetary Beneﬁ ts Superannuation Options Employee Share Plan Termination beneﬁ ts $ Speciﬁ ed Directors Andrew Pattinson 237,445 18,000 - Richard Graham 197,697 42,800 42,800 42,800 42,800 - - - - - 28,554 - - - - 21,033 17,635 3,875 3,875 3,875 3,875 33,760 - - - - - Barry Ford Myer Herszberg Geoffrey Henderson Frances Hernon Total Remuneration: Speciﬁ ed Directors 606,342 18,000 28,554 54,168 33,760 - - - - - - - - - - - - - - 310,238 243,886 46,675 46,675 46,675 46,675 740,824 Footnotes to preceding two tables: 1. Salary and fees for Richard Graham includes $176,819 of leave entitlements paid upon resignation as CEO effective 31 December 2004. 2. Andrew Pattinson was an Executive Director until 28 October 2004 and continues as an executive. The amount shown in the table represents total remuneration for the full ﬁ nancial year. The total remuneration received during the ﬁ nancial year whilst in the capacity as a Director was $126,726. 3. Gary Martin was appointed as an Executive Director on 28 October 2004. The amounts shown in the table represents total remuneration for the full ﬁ nancial year. The total remuneration received during the ﬁ nancial year whilst in the capacity as a Director was $239,544. Financial Year: 2005 Primary Post Employment Equity Other Total Salary and Fees Bonus Non Monetary Beneﬁ ts Superannuation Options Employee Share Plan Termination beneﬁ ts $ Speciﬁ ed Executives Guy Bryant 185,691 10,000 3,548 Peter Adams 192,548 32,800 Michael Roach 135,742 10,000 Damon Fieldgate 131,238 10,957 Linda Scott 100,132 5,000 - - - - 16,676 19,255 11,705 11,617 8,885 30,364 4,793 3,196 - 3,196 2,000 2,000 2,000 2,000 2,000 46,500 - - - - 294,779 251,396 162,643 155,812 119,213 Total Remuneration: Speciﬁ ed Executives 745,351 68,757 3,548 68,138 41,549 10,000 46,500 983,843 46 Notes to the Financial Statements Financial Year: 2004 Primary Post Employment Equity Other Total Salary & Fees 147,616 158,304 140,929 145,104 108,114 Bonus 24,000 24,000 12,000 12,000 6,000 Non Monetary Beneﬁ ts 19,650 1,497 - - - Superannuation Options Employee Share Plan Termination beneﬁ ts $ 13,113 13,947 12,519 12,816 9,619 33,760 8,149 33,760 5,220 3,480 2,000 2,000 2,000 2,000 2,000 - - - - - - 240,139 207,897 201,208 177,140 129,213 955,597 700,067 78,000 21,147 62,014 84,369 10,000 Speciﬁ ed Executives Gary Martin Guy Bryant Nick Georges Peter Adams Michael Roach Total Remuneration: Speciﬁ ed Executives (c) Remuneration options: granted and vested during the year There were no options granted to speciﬁ ed Directors and speciﬁ ed executives during the year. As at 30 June 2005, all options granted in prior years to speciﬁ ed Directors and speciﬁ ed executives have expired with the exception of 150,000 options granted to Guy Bryant on 24 May 2004. These options have vested with a strike price of 75 cents and last exercise date of 31 May 2007. (d) Shares issued on exercise of remuneration options No options were exercised during the year by either speciﬁ ed Directors or speciﬁ ed executives. (e) Option holdings of speciﬁ ed Directors and speciﬁ ed executives Balance at Beginning of Period 1 July 2004 582,000 582,000 582,000 540,000 90,000 60,000 2,436,000 Speciﬁ ed Directors Andrew Pattinson Gary Martin Speciﬁ ed Executives Nick Georges Guy Bryant Peter Adams Michael Roach Granted as Remuneration Options Exercised Net Change Other Balance at End of Period 30 June 2005 Vested at 30 June 2005 Total Not Exercisable Exercisable - - - - - - - - - - - - - - (582,000) (582,000) (582,000) - - - - - - (390,000) 150,000 150,000 (90,000) (60,000) - - - - (2,286,000) 150,000 150,000 - - - - - - - - - - 150,000 - - 150,000 Notes to the Financial Statements 47 (f) Shareholdings of speciﬁ ed Directors and speciﬁ ed executives Shares held in Infomedia Ltd (number) Balance 1 July 2004 Granted as Remuneration On Exercise of Options Net Change Other Balance 30 June 2005 Speciﬁ ed Directors Richard Graham Myer Herszberg Andrew Pattinson Gary Martin Barry Ford Nick Georges Frances Hernon Speciﬁ ed Executives Damon Fieldgate Michael Roach Peter Adams Linda Scott Guy Bryant Total 102,204,060 39,421,599 4,407,716 707,918 116,666 16,776 5,000 20,000 9,276 6,776 6,776 4,801 - - 1,310 1,339 - 2,649 - 2,649 2,649 2,649 2,649 2,649 146,927,364 18,543 - - - - - - - - - - - - - - - (1,863,455) (635,000) - 3,000 - - 4,800 - (1,188) - 102,204,060 39,421,599 2,545,571 74,257 116,666 22,425 5,000 22,649 16,725 9,425 8,237 7,450 (2,491,843) 144,454,064 All equity transactions with speciﬁ ed Directors and speciﬁ ed executives other than those arising from the exercise of remuneration options and remuneration shares have been entered into under terms and conditions no more favourable than those the entity would have adopted if dealing at arm’s length. (g) Loans to speciﬁ ed Directors and speciﬁ ed executives There were no loans at the beginning or the end of the reporting period to Speciﬁ ed Directors and Speciﬁ ed Executives. No loans were made available during the reporting period to speciﬁ ed Directors or speciﬁ ed executives. (h) Other transactions and balances with speciﬁ ed Directors and speciﬁ ed executives (i) Infomedia Ltd rents ofﬁ ce 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 2005 of $185,075 (2004: $256,044) were on commercial terms. (ii) Infomedia Ltd rents ofﬁ ce space from Richard Graham. The total rent payments for the year ended 30 June 2005 of $168,144 (2004: $163,382) were on commercial terms. (iii) Infomedia Ltd rented ofﬁ ce space during the year ended 30 June 2004 to Wiser Laboratory Pty Limited, a company in which Richard Graham is a Director. The total rent receipts for the year ended 30 June 2004 of $8,600 were on commercial terms. There were no further transactions during the year ended 30 June 2005. (iv) Infomedia Ltd received ﬁ nancial consulting services from Cowoso Capital Pty Limited, a company in which Andrew Moffat is a Director. The total consulting services paid for the year ended 30 June 2005 of $15,250 were on commercial terms. 48 Notes to the Financial Statements 30 June 2005 Notes CONSOLIDATED INFOMEDIA LTD 2005 $ 2004 $ 2005 $ 2004 $ 28. AUDITORS’ REMUNERATION Amounts received or due and receivable by the auditors of Infomedia Ltd for: – an audit or review of the ﬁ nancial report of the entity and any other entity in the consolidated entity 170,075 143,000 152,675 113,050 – other services in relation to the entity and any other entity in the consolidated entity 20,280 190,355 41,077 184,077 20,280 172,955 41,077 154,127 29. RELATED PARTY DISCLOSURES Ultimate Parent Infomedia Ltd is the ultimate Australian parent company Wholly-owned group transactions (a) An unsecured, interest bearing loan of $17,137,846 (2004: $18,987,298) remains owing from Infomedia Investments Pty Limited to Infomedia Ltd. Interest is charged at commercial rates. (b) An unsecured, interest free loan of $146,818 was repaid to Infomedia Investments Pty Limited by Infomedia Ltd. (c) An unsecured, interest free loan of $2,217,581 (2004: $2,753,338) remains owing from Datateck Publishing Pty Limited to Infomedia Ltd. The loan is repayable in seven days upon demand. (d) An unsecured, interest free loan of $1,231,967 (2004: $1,350,873) remains owing from AutoConsulting Pty Limited to Infomedia Ltd. The loan is repayable in seven days upon demand. (e) An unsecured, interest free loan of $1,456,912 (2004: $104,304) remains owing from IFM Europe Ltd to Infomedia Ltd. (f) During the year, a management fee of $917,484 (2004: $1,097,484) was paid to Datateck Publishing Pty Limited by Infomedia Ltd. (g) During the year, Infomedia Ltd received $9,171,249 from IFM Europe Ltd for intra-group sales. (h) During the year, Datateck Publishing Pty Limited received $80,451 from IFM Europe Ltd for intra-group sales. (i) During the year, IFM Europe Ltd received $1,425,621 from Infomedia Ltd for intra-group distribution services. Notes to the Financial Statements 49 30. SEGMENT INFORMATION PRIMARY SEGMENT 30 June 2005 Business Segments REVENUE Sales revenue Other revenue Intersegment revenue Total segment revenue Unallocated revenue: Interest revenue Electronic Catalogue Division Notes $’000 Other Divisions $’000 52,299 2,489 10,597 65,385 6,838 618 560 8,016 Eliminations $’000 - - (11,157) (11,157) Proceeds on sale of property held for resale Total consolidated revenue 2(i) RESULTS Segment result before signiﬁ cant items Signiﬁ cant items Segment result Unallocated items: Interest revenue Borrowing costs Consolidated entity proﬁ t from ordinary activities before income tax expense Income tax expense 3 Consolidated entity proﬁ t from ordinary activities after income tax expense ASSETS Segment assets Unallocated assets: Cash Total Assets LIABILITIES Segment liabilities Other segment information: Acquisition of property, plant and equipment, intangible assets and other non-current assets Depreciation Amortisation Decrement in value of non-current assets 2(ii) 2(ii) 2(ii) 50 Notes to the Financial Statements 22,617 (9,273) 13,344 (1,806) (2,870) (4,676) 40,016 3,932 7,779 1,729 1,703 1,741 2,833 10,405 98 497 836 2,347 - - - - - - - - - Total $’000 59,137 3,107 - 62,244 272 1,734 64,250 20,811 (12,143) 8,668 272 (97) 8,843 (3,374) 5,469 43,948 10,821 54,769 9,508 1,801 2,238 3,669 12,752 30. SEGMENT INFORMATION (CONTINUED) PRIMARY SEGMENT (CONTINUED) 30 June 2004 Business Segments REVENUE Sales revenue Other revenue Intersegment revenue Total segment revenue Unallocated revenue: Interest revenue Electronic Catalogue Division Notes $’000 62,868 495 - 63,363 Other Divisions $’000 6,699 - 717 7,416 Eliminations $’000 - - (717) (717) Total $’000 69,567 495 - 70,062 428 2,515 73,005 Proceeds on sale of non current assets Total consolidated revenue 2(i) RESULTS Segment result Unallocated items: Interest revenue Borrowing costs Consolidated entity proﬁ t from ordinary activities before income tax expense Income tax expense 3 Consolidated entity proﬁ t from ordinary activities after income tax expense ASSETS Segment assets Unallocated assets: Cash Total assets LIABILITIES Segment liabilities Other segment information: Acquisition of property, plant and equipment, intangible assets and other non-current assets Depreciation Amortisation 2(ii) 2(ii) 32,091 (2,508) - 29,583 428 (283) 29,728 (9,042) 20,686 62,535 6,887 69,422 17,901 21,101 2,221 3,876 55,879 6,656 16,724 1,177 20,569 1,597 2,824 532 624 1,052 - - - - - Notes to the Financial Statements 51 30. SEGMENT INFORMATION (CONTINUED) SECONDARY SEGMENT 30 June 2005 Geographical segments Notes Australia $’000 Europe $’000 Eliminations $’000 Total $’000 Segment revenue (a) 62,294 13,113 (11,157) 64,250 Segment assets 52,381 2,388 Acquisition of property, plant and equipment, intangible assets and other non-current assets 1,762 39 - - SECONDARY SEGMENT 30 June 2004 Geographical segments Notes Australia $’000 Europe $’000 Eliminations $’000 54,769 1,801 Total $’000 Segment revenue (a) 73,465 257 (717) 73,005 Segment assets 69,043 379 Acquisition of property, plant and equipment, intangible assets and other non-current assets 21,091 10 - - 69,422 21,101 (a) While the products of the consolidated entity are used globally, the Company has two distinguishable geographical segments, Australia and Europe. The geographic segmental revenue is classiﬁ ed according to the originating source as opposed to customer destination. 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, PartsImager, and Partﬁ nder 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 provides 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 group 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 ﬁ nancial year, there were no changes in segment accounting policies that had a material effect on the segment information. 52 Notes to the Financial Statements e t a R t e e h S e c n a a B l t s e r e t n I e v i t c e f f E e h t r e p s a t n u o m A g n i r a e B e t a R 4 0 0 2 % 5 0 0 2 % 4 0 0 2 0 0 0 ’ $ 5 0 0 2 0 0 0 ’ $ 4 0 0 2 0 0 0 $ ’ 5 0 0 2 0 0 0 ’ $ 4 0 0 2 0 0 0 ’ $ 5 0 0 2 0 0 0 $ ’ 4 0 0 2 0 0 0 ’ $ 5 0 0 2 0 0 0 $ ’ 4 0 0 2 0 0 0 ’ $ 5 0 0 2 0 0 0 ’ $ 4 0 0 2 0 0 0 ’ $ 5 0 0 2 0 0 0 ’ $ e g a r e v A d e t h g e W i g n i y r r a C l a t o T t s e r e t n i - n o N s r a e Y 5 n a h t e r o M s r a e Y 5 o t 1 r e v O s s e L r o r a e Y 1 t s e r e t n I g n i t a o F l s t n e m u r t s n I l a i c n a n F i : n i g n i r u t a m e t a r t s e r e t n i d e x F i e r a e t a d e c n a a b e h t l t a s e i t i l i b a i l l i a c n a n ﬁ d n a s t e s s a l i a c n a n ﬁ f o s e t a r t s e r e t n i e v i t c e f f e e h t d n a s k s i r e t a r t s e r e t n i o t e r u s o p x e s ’ y t i t n e d e t a d i l o s n o c e h T : s w o l l o f s a S T N E M U R T S N I I L A C N A N I F . 1 3 k s i r e t a r t s e r e t n I ) a ( 1 3 5 2 . 4 / A N 5 9 . 4 / A N 7 8 8 , 6 6 4 3 , 8 1 2 8 , 0 1 - - 7 8 5 , 5 6 4 3 , 8 7 8 5 , 5 / A N / A N 5 6 7 - 5 6 7 - 8 9 9 , 5 1 8 0 4 , 6 1 1 1 1 , 9 7 8 5 , 5 / A N 4 6 . 3 / A N 8 6 . 2 / A N / A N / A N / A N - - 3 0 1 , 5 3 7 1 , 4 - - - - - - - - - 0 4 6 , 3 3 0 1 , 5 0 4 6 , 3 6 7 2 , 9 0 4 6 , 3 3 0 1 , 5 0 4 6 , 3 - - - - - - - - - - - - - - - - - - - - - - - - - 3 7 1 , 4 3 7 1 , 4 - - - - - - - - - - - - - - - - - - - - - - - - - - - 7 8 8 , 6 1 2 8 , 0 1 h s a C s t e s s a l a i c n a n F i ) i ( - - - - e d a r t – l s e b a v e c e R i y c n e r r u c i n g e r o f t e N s t c a r t n o c d r a w r o f 7 8 8 , 6 1 2 8 , 0 1 s t e s s a l i a c n a n ﬁ l a t o T - - - 3 7 1 , 4 ) 3 7 1 , 4 ( - - - - - s e i t i l i b a i l l a i c n a n F i ) i i ( s r o t i d e r c r e h t o d n a e d a r T y t i l i b a i l e s a e l e c n a n F i p a c e t a r t s e r e t n I s n a o l k n a B s e i t i l i b a i l l i a c n a n ﬁ l a t o T . s t n e m u r t s n i l i a c n a n ﬁ g n i r a e b t s e r e t n i - n o n r o f l e b a c i l p p a t o n – A N / Notes to the Financial Statements 53 FINANCIAL INSTRUMENTS (CONTINUED) 31 (b) Terms, conditions and accounting policies (i) The consolidated entity’s policies, including the terms and conditions of each class of ﬁ nancial asset, ﬁ nancial liability and equity instrument, both recognised at balance date, are as follows: Recognised Financial Instruments Balance Sheet Notes Accounting Policies Terms and Conditions (i) Financial Assets Receivables – trade 6 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 probable. Credit sales are on terms up to 30 days. Unlisted shares 10,11 Unlisted shares are carried at the lower of cost or recoverable amount. Dividend income is recognised when dividends are declared by the investee. The unlisted shares held at balance date are ordinary shares. (ii) Financial Liabilities Trade and other creditors 16 (iii) Equity Ordinary shares 22 (iv) Derivatives Forward exchange contracts 31(d) Liabilities are recognised for amounts to be paid in the future for goods ad services received, whether or not billed to the Company. Trade liabilities are normally settled in 30 day terms. Ordinary share capital is recognised at the fair value of the consideration received by the Company. Details of shares issued at balance date are set out in note 21. The consolidated entity enters into forward exchange contracts where it agrees to sell speciﬁ ed 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 ﬂ uctuations. The forward exchange contracts are charged to the proﬁ t and loss except those relating to hedges of speciﬁ c commitments which are deferred and included in the measurement of speciﬁ c commitments which are deferred and included in the measurement of the sale or purchase. 31 (c) Net fair values All ﬁ nancial assets and ﬁ nancial liabilities have been recognised at the balance date at their net fair values. There were no unrecognised ﬁ nancial assets or ﬁ nancial liabilities at the balance date. 54 Notes to the Financial Statements 31. FINANCIAL INSTRUMENTS (CONTINUED) 31 (d) Credit risk exposure The consolidated entity’s maximum exposures to credit risk at balance date in relation to each class of recognised ﬁ nancial 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 ﬁ nancial instruments in question. In relation to derivative ﬁ nancial 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 maxi- mum 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 $nil (2004: $765,000). 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; subscribers must sign a standard user agreement, accepting terms and conditions. 32. IMPACT OF ADOPTING AASB EQUIVALENTS TO IASB STANDARDS Infomedia Ltd is in the process of transitioning its accounting policies and ﬁ nancial reporting from current Australian Accounting Standards (AGAAP) to Australian equivalents to International Financial Reporting Standards (AIFRS) which will be applicable for the ﬁ nancial year ended 30 June 2006. In 2004, the Company allocated internal resources and engaged expert consultants to conduct impact assessments to identify key areas that would be impacted by the transi- tion to AIFRS. As a result, Infomedia established a project team to address each of the areas in order of priority. Priority has been given to the preparation of an opening balance sheet in accordance with AIFRS as at 1 July 2004, Infomedia’s transition date to AIFRS. This will form the basis of accounting for AIFRS in the future, and is required when Infomedia prepares its ﬁ rst fully AIFRS compliant annual ﬁ nancial report for the year ended 30 June 2006. Set out below are the key areas where accounting policies are expected to change on adoption of AIFRS and our best estimate of the quantitative impact of the changes on total equity as at the date of transition and 30 June 2005 and on net proﬁ t for the year ended 30 June 2005. The ﬁ gures disclosed are management’s best estimates of the quantitative impact of the changes as at the date of preparing the 30 June 2005 ﬁ nancial report. The actual effects of transition to AIFRS may differ from the estimates disclosed due to (a) ongoing work being undertaken by the AIFRS project teams; (b) potential amendments to AIFRS and interpretations thereof being issued by the standard-setters and IFRIC; and (c) emerging accepted practice in the interpretation and application of AIFRS and UIG Interpretations. Under AASB 1, First Time Adoption of the Australian Equivalents to International Financial Reporting Standards the Company has elected to apply the exemption available and not to comply with the requirements of AASB 132 Financial Instruments: Disclosure and Presentation and, AASB 139 Financial Instruments: Recognition and Measurement, for the comparative period ending 30 June 2005. These standards will be complied with from 1 July 2005. The main area which would have been affected had the entity applied the above standards from 1 July 2004 would be the Company’s hedging activities in respect of sales revenue under forward exchange contracts. Notes to the Financial Statements 55 32. IMPACT OF ADOPTING AASB EQUIVALENTS TO IASB STANDARDS (CONTINUED) (a) Reconciliation of equity as presented under AGAAP to that under AIFRS 30 June 2005 CONSOLIDATED INFOMEDIA LTD Total equity under AGAAP Adjustment to retained earnings (net of tax) 30 June 2005 1 July 2004 30 June 2005 1 July 2004 Notes $’000 45,261 $’000 51,521 $’000 45,134 $’000 51,531 Write-back of goodwill amortisation Impairment of assets including goodwill (i) (ii) Recognition of share based payment expense (iii) Adjustment to other reserves (net of tax) Recognition of share based payment expense (iii) 1,238 (30) (725) 483 725 725 - - (395) (395) 395 395 767 (30) (725) 12 725 725 - - (395) (395) 395 395 Total equity under AIFRS 46,469 51,521 45,871 51,531 (b) Reconciliation of net proﬁ t under AGAAP to that under AIFRS CONSOLIDATED INFOMEDIA LTD 30 June 2005 30 June 2005 Net proﬁ t as reported under AGAAP Amortisation of goodwill Impairment of assets including goodwill Share-based payment expense Net proﬁ t under AIFRS Notes (i) (ii) (iii) $’000 5,469 1,238 (30) (330) 6,347 $’000 5,304 767 (30) (330) 5,711 (i) Under AASB 3 Business Combinations, goodwill would not be permitted to be amortised but instead is subject to impairment testing on an annual basis or upon the occurrence of triggers which may indicate impairment. This will result in a change in the group’s current accounting policy which amortises goodwill over its useful life but not exceeding 10 years. The Company has not elected to apply AASB 3 retrospectively and hence, prior amortisation would not be writ- ten-back as at the transition date. (ii) Under AASB 136 Impairment of Assets, the recoverable amount of an asset is determined as the higher of net selling price and value in use. This will result in a change in the group’s current accounting policy which determines the recoverable amount of an asset on the basis of discounted cash ﬂ ows. The Company’s assets, including goodwill, were tested for impairment on transition and each subsequent reporting date as part of the cash generating unit to which they belong. This would result in impairment losses being recognised under AIFRS. (iii) Under AASB 2 Share based Payments, the Company would recognise the fair value of options granted to employees as remuneration as an expense on a pro- rata basis over the vesting period in the income statement with a corresponding adjustment to equity. This standard is not limited to options and also extends to other forms of equity based remuneration such as Infomedia’s Employee Share Plan. Share-based payment costs are not recognised under AGAAP. 56 Notes to the Financial Statements 33. SUBSEQUENT EVENTS In 2002, Infomedia entered into a three year non-exclusive Agreement with General Motors Service and Parts Operations of North America (GMSPO) (refer Company announcement 29 August 2002). It was a condition of the Agreement that in the event of non-renewal by GMSPO the parties would enter into a ‘Transition Period’ during which time GMSPO would continue to provide the data under the same terms and conditions for a further three years, albeit only for the purpose of maintaining continuity of supply to Infomedia’s existing EPC customer base. Infomedia has a good working relationship with General Motors and its dealers. The latest version of the Microcat® EPC for General Motors dealers was developed according to GMSPO management speciﬁ cations during the past year. Microcat’s recent release has been well received by dealers in the market. Infomedia had anticipated that the Agreement would be renewed. However, GMSPO has now advised the Company that it does not intend to renew the Agreement but rather intends to let it enter into the Transition Period for the next three years. The Company remains conﬁ dent in the North American market with the recent establishment of its own subsidiary in the region. For the General Motors dealers who are using Microcat today, it is their EPC of choice. Throughout the Transition Period, the Company will continue to provide its customers with the highest level of customer support and continuous product improvement including, new versions of the Microcat system. General Motors has also communicated to its North American dealers that it intends to offer its own EPC solution beginning in September 2006. The ﬁ nancial consequences of moving into the Transition Period are not readily determinable at this time and can be inﬂ uenced by many dynamics. The current quantity of subscriptions relating to this Agreement is material as it represents 13% of the total Company’s EPC subscriber base. There has been no other matter or circumstance that has arisen since the end of the ﬁ nancial year that has signiﬁ cantly affected the operations of the Company, the results of those operations, or the state of affairs of the Company. Notes to the Financial Statements 57 Directors’ Declaration In accordance with a resolution of the Directors of Infomedia Ltd, I state that: (1) In the opinion of the Directors: (a) the ﬁ nancial 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 ﬁ nancial position as at 30 June 2005 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. (2) This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the ﬁ nancial period ending 30 June 2005. On behalf of the Board Richard David Graham Chairman of the Board Sydney, 24 August 2005 58 Directors’ Declaration Independent audit report to members of Infomedia Ltd Scope The ﬁnancial report and Directors’ responsibility The ﬁnancial report comprises the statement of ﬁnancial position, statement of ﬁnancial performance, statement of cash ﬂows, accompanying notes to the ﬁnancial statements, and the Directors’ declaration for Infomedia Ltd (the company) and the consolidated entity, for the year ended 30 June 2005. The consolidated entity comprises both the company and the entities it controlled during that year. The Directors of the company are responsible for preparing a ﬁnancial report that gives a true and fair view of the ﬁnancial position and performance of the company and the consolidated entity, and that complies with Accounting Standards in Australia, in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the ﬁnancial report. Audit approach We conducted an independent audit of the ﬁnancial report in order to express an opinion on it to the members of the company. Our audit was conducted in accordance with Australian Auditing Standards in order to provide reasonable assurance as to whether the ﬁnancial report is free of material misstatement. The nature of an audit is inﬂuenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected. We performed procedures to assess whether in all material respects the ﬁnancial report presents fairly, in accordance with the Corporations Act 2001, including compli- ance with Accounting Standards in Australia, and other mandatory ﬁnancial reporting requirements in Australia, a view which is consistent with our understanding of the company’s and the consolidated entity’s ﬁnancial position, and of their performance as represented by the results of their operations and cash ﬂows. We formed our audit opinion on the basis of these procedures, which included: • examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the ﬁnancial report, and • assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of signiﬁcant accounting estimates made by the Directors. While we considered the effectiveness of management’s internal controls over ﬁnancial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls. We performed procedures to assess whether the substance of business transactions was accurately reﬂected in the ﬁnancial report. These and our other procedures did not include consideration or judgement of the appropriateness or reasonableness of the business plans or strategies adopted by the Directors and management of the company. Independence We are independent of the company, and have met the independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the Directors’ Report. In addition to our audit of the ﬁnancial report, we were engaged to undertake the services disclosed in the ﬁnancial report. The provision of these services has not impaired our independence. Audit opinion In our opinion, the ﬁnancial report of Infomedia Ltd is in accordance with: (a) the Corporations Act 2001, including: (i) giving a true and fair view of the ﬁnancial position of Infomedia Ltd and the consolidated entity at 30 June 2005 and of their performance for the year ended on that date; and (ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001; and (b) other mandatory ﬁnancial reporting requirements in Australia. Ernst & Young J K Haydon Partner Sydney, 24 August 2005 Audit Report 59 Corporate Governance Statement Introduction Infomedia Ltd remains committed to corporate governance practices that are compatible with the Company’s age and size, enhance effectiveness and which ensure an appropriate degree of account- ability and transparency to shareholders and other stakeholders. This Corporate Governance Statement, which is current as at the date of the Directors’ Report, addresses the approach adopted by the Company to the ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations1 and has been updated to reﬂ ect the actions taken by the Company since its last annual report. By way of background, the Board ﬁ rst began its consideration of the ASX Corporate Governance Guidelines during the course of the 2003 ﬁ nancial year. To aid the review process, the Board made adjustments to the structure of its Committees so that they comprise the Corporate Governance Committee, the Audit & Risk Committee and the Remuneration & Nomination Committee. Each Committee continues to be chaired by an independent Director with its membership determined by the Board on the basis of greatest expertise in the areas of relevance to each committee. Background details and meeting attendance records during FY2005 for members of each of the Corporate Governance, Audit & Risk and Remuneration & Nomination Committees are set out in the Directors’ Report. The Board and its committees endorse the ‘if not, why not?’ framework adopted by the ASX Corporate Governance Council and in FY2005 the Company continued the process of considering how it will apply the rel- evant ASX CGC Recommendations in light of Infomedia’s particular circumstances. In their approach to the ASX CGC Recommendations, the Board and relevant committees continued to develop the Company’s corporate gover- nance practices in ways which were both pragmatic and appropriate to its age and size. In allocating resources and prioritising tasks, a high level, top down approach continued. Consequently, the various procedures and policies considered appropriate by Infomedia continue at differing stages of development and organisational implementation, as permitted by its resources. Throughout the reporting year, the Board has, through the appropriate committee, monitored the charters, policies and procedures adopted by the Company in support of the ASX CGC Principles and is satisﬁ ed that the Company’s corporate governance practices are consistent with the spirit and intent of the ASX Corporate Governance Guidelines. Some policies have been reﬁ ned, as in the areas of risk management and securities trading. In other areas supporting documents have been adopted, as with Director nomination and induction procedures and the risk management 60 Corporate Governance Statement plan. As noted above, in each instance the Board and relevant committee has continued to apply the ASX Corporate Governance Guidelines in a manner which is appropriate to Infomedia’s circumstances. Summaries of the Company’s various charters, policies and procedures were progressively added to Infomedia’s website during the ﬁ rst half of the ﬁ nancial year and subsequently updated as required by the Board and com- mittees’ ongoing review process. Corporate governance and legal information sessions were held in FY2005 and aimed at providing organisation wide education about the existence, purpose and operating framework of the corporate governance initiatives, including the Company’s Code of Conduct, Risk Management Policy, Market Disclosure Policy and Policy on Share Trading by Company Directors, Ofﬁ cers and Employees. Educational sessions, with a speciﬁ c focus on risk management, were also conducted during the ﬁ nancial year. The material set out in this Corporate Governance Statement has been prepared in accordance with the ASX Listing Rules and, in particular, ASX CGC Recommendations 2.5, 3.3, 4.5, 5.2, 7.3 and 9.5. Unless otherwise indicated, the ASX CGC Recommendations were in place for the whole ﬁ nancial year. ASX CGC Principle 1 – Lay solid foundations for management and oversight Recognise and publish the respective roles and responsibilities of board and management ASX CGC Principle 2 – Structure the board to add value Have a board of an effective composition, size and commitment to adequately discharge its responsibilities and duties ASX CGC Principle 8 – Encourage enhanced performance Fairly review and actively encourage enhanced board and management effectiveness ASX CGC Principle 9 – Remunerate fairly and responsibly Ensure that the level and composition of remuneration is sufﬁ cient and reasonable and that its relationship to corporate and individual performance is deﬁ ned The Company’s Constitution requires a minimum of three and a maximum of seven Directors, of whom at least two must ordinarily be resident in Australia. Under the Company’s Constitution, one third of the Directors, and any other Director not in such one third who has held ofﬁ ce for three years or more, other than the Chief Executive Ofﬁ cer, must retire by rotation each year. If eligible, the retiring Directors may offer themselves for re-election. The Infomedia Board comprises six Directors and details of the names, terms of ofﬁ ce, committee memberships, meeting attendance record, skills, experience and expertise of each, along with photographs, appear in the Directors’ Report. Since listing on the ASX in August 2000 in particular, the composition and size of the Infomedia Board has been shaped by its Constitution and the contribution Directors are able to make, both individually and collectively. An emphasis has been, and through the interaction of the Board and the Remuneration & Nomination Com- Corporate Governance Statement 61 mittee, will continue to be, placed on promoting, among other attributes, an appropriate mix of relevant skills, independence, expertise, business knowledge and executive and non-executive participation. Changes to the composition of the Company’s Board of Directors, Committees and Senior Executives during FY2005 There were a number of changes to the Company’s Board of Directors, committees and senior executives during the 2005 ﬁ nancial year. In relation to Board appointments, each of the Remuneration & Nomination Committee and the Board, as appropriate, considered the nominees both in respect of their individual merits and overall Board composition. Under the Company’s Constitution, Frances Hernon and Geoffrey Henderson retired from ofﬁ ce at the 2004 Annual General Meeting. Frances Hernon and Geoffrey Henderson offered themselves for election, and upon the recommendation of the Board, were elected as Non-executive Directors. Executive Director Andrew Pattinson also retired during that meeting and, although eligible, did not offer himself for re-election given that he had relocated with his family to the United Kingdom to lead the Company’s European operations. To ﬁ ll this vacancy, Gary Martin, who was then General Manager of the Company’s Electronic Catalogues Division, was elected by shareholders upon the recommendation of the Board, as an Executive Director. On 31 December 2004, Richard Graham, who continues as Non-executive Chairman, retired as Chief Executive Ofﬁ cer and, with effect from 1 January 2005, Gary Martin succeeded him as Chief Executive Ofﬁ cer. Andrew Moffat was appointed as a Non-executive Director by the Board with effect from 31 March 2005 as a replacement for Barry Ford, who resigned with effect from 31 March 2005. The appointment was made with the intention that he would then be appointed by the Board as a member of both the Audit & Risk Committee and the Remuneration & Nomination Committee and that he would also be appointed as Chairman of the Audit & Risk Committee by the Chairman of the Board. These committee appointments were conﬁ rmed by the Board and the Chairman of the Board respectively in April 2005. As noted above, details of members of the Board of Directors including skills, experience and expertise appear in the Directors’ Report. ASX CGC Recommendation 1.1 – Formalise and disclose the functions reserved to the board and those delegated to management A formal Charter of the Board of Directors was adopted in early July 2004 following careful and considered deliberation by both the Corporate Governance Committee and the Board itself. As noted in the introduction above, the priority was to document an appropriate division of Board and management responsibilities. The Board’s focus is on the Company’s objectives, determining the strategy for achieving those objectives and set- ting the overall policy framework within which the business of the Company is conducted whilst ensuring that the Company operates in accordance with good management and governance practices. 62 Corporate Governance Statement The Corporate Governance Committee was established to support the Board in the areas not covered by the Audit & Risk and Remuneration & Nomination Committees. The members of the Corporate Governance Com- mittee are Geoffrey Henderson (Chair), Myer Herszberg and Frances Hernon. Each is a Non-executive Director. Under the direction of the Corporate Governance Committee, a series of policy document reviews com- menced during the ﬁ nancial year and as part of the process the Share Trading Policy was reﬁ ned. ASX CGC Recommendation 2.1 – A majority of the board should be independent directors Traditionally, the Board has applied an Executive Director/Non-executive Director classiﬁ cation to its members. Following the appointment of Geoffrey Henderson as an additional Non-executive Director in February 2003, the Infomedia Board then comprised four Non-executive Directors and two Executive Directors until 31 December 2004. The ratio of Executive to Non-executive Directors then altered when, as discussed above, Richard Graham, who continues as Non-executive Chairman, retired as Chief Executive Ofﬁ cer. Since then the Board has comprised ﬁ ve Non-executive Directors and one Executive Director. Neither Gary Martin, in his role as Executive Director, nor Richard Graham, who has only recently retired from his role as Chief Executive Ofﬁ cer, are considered by the Board as independent. However, three of the Company’s Directors, Frances Hernon, Geoffrey Henderson and Andrew Moffat, clearly meet an objective assessment of quantitative, qualitative and cumulative criteria for independence. A fourth Non-executive Director, Myer Herszberg, whilst being a major shareholder, is considered by the Board, having regard to quan- titative, qualitative and cumulative criteria, to operate independently and objectively. As a result, the Board believes it comprises a majority of independent Directors and so complies with ASX CGC Recommendation 2.1. This independence will be reviewed periodically by the Board to ensure its continued good practice in this area. Ultimately, however, the Board accepts that its members remain in ofﬁ ce upon the vote of the Company’s share- holders and that they may elect members to the Board regardless of their standing, independent or otherwise. In order to facilitate the discharge of their duties, including in respect of independent decision making, the Board conﬁ rmed in April 2004 its policy for Directors obtaining independent professional advice at the expense of the Company. ASX CGC Recommendation 2.2 – The chairperson should be an independent director and ASX CGC Recommendation 2.3 – The roles of chairperson and chief executive should not be exercised by the same individual As noted above, Richard Graham continues as Non-executive Chairman, having retired as Chief Executive Ofﬁ cer with effect from 31 December 2004 and consequently splitting the role of Chairman and Chief Executive Ofﬁ cer as proposed by ASX CGC Recommendations 2.2 and 2.3. The Board is of the view that its independence as a whole is not compromised by Richard Graham’s appoint- ment as Non-executive Chairman and that it is in the best interests of the Company for Richard Graham to Corporate Governance Statement 63 continue in the role of Chairman. The Board continues to believe that during this stage of growth, Infomedia is best served by keeping a strong focus on the development and implementation of strategic platforms. It believes that Richard Graham’s industry knowledge, both technological and automotive, uniquely positions him for the kind of strategic thinking required of the Chairman. ASX CGC Recommendation 2.4 – The board should establish a nomination committee and ASX CGC Recommendation 9.2 – The board should establish a remuneration committee The members of the Remuneration & Nomination Committee are Frances Hernon (Chair), Myer Herszberg and Andrew Moffat. Each is a Non-executive Director. Upon the recommendation of the Remuneration & Nomination Committee, in April 2004 the Board adopted an amended Remuneration & Nomination Committee Charter. As noted above, there were a number of changes to the Company’s Board of Directors during FY2005. Each of the Remuneration & Nomination Committee and the Board, as appropriate, considered all nominations both in respect of their individual merits and overall Board composition. In each case the recommendations of the Remuneration & Nomination Committee were endorsed, as appropriate, either by the Board or by shareholders upon the recommendation of the Board. During the reporting period, the Remuneration & Nomination Committee formalised a policy for the nomination and induction of Directors which was adopted by the Board in early July 2005. A summary of the Director Nomination & Induction Policy was made available on the Infomedia website thereafter. In preparing the Director Nomination & Induction Policy, regard was had to the ASX CGC Commentary accompany- ing ASX CGC Recommendation 8.1 and, in particular, the suggestions for an induction program. Both Gary Martin and Andrew Moffat were inducted as Directors of Infomedia under the guidance of the Remuneration & Nomina- tion Committee and in accordance with the Director Nomination & Induction Policy. ASX CGC Recommendation 8.1 – Disclose the process for performance evaluation of the board, its committees and individual directors and key executives and ASX CGC Recommendation 9.1 – Provide disclosure in relation to the company’s remuneration policies to enable investors to understand (i) the costs and beneﬁ ts of those policies and (ii) the link between remuneration paid to directors and key executives and corporate performance. Upon recommendation of the Remuneration & Nomination Committee, a Remuneration and Performance Evalu- ation Policy for Directors and Senior Executives was adopted by the Board in July 2004. The Policy clearly outlines the criteria for assessing the performance of the Board as a whole, the Directors as individuals, the Chairman of the Board and the senior executives, and aims to provide a framework for structuring total remuneration that will facilitate both the short and long term growth and success of the Company, that is competitive with the market place and that is demonstrably linked to the Company’s overall performance as discussed more fully in the Remuneration Report included within the Directors’ Report. 64 Corporate Governance Statement In preparing the remuneration information contained in the Remuneration Report, regard was had to the ASX CGC Commentary accompanying ASX CGC Recommendation 9.1 and, in particular, the suggestions for disclosure in box 9.1. ASX CGC Recommendation 9.3 – Clearly distinguish the structure of non-executive directors’ remuneration from that of executives In formulating the Remuneration and Performance Evaluation Policy for Directors and Senior Executives, regard was had to both market practice and to the best practice guidance provided in the ASX CGC Commentary accompanying ASX CGC Recommendation 9.3. In contrast to Executive Directors, Non-executive Directors are remunerated by way of fees and statutory superannuation contributions only: they do not receive any additional retirement beneﬁ ts and nor do they currently participate in any of the Company’s incentive arrangements. Non-executive Directors have previ- ously received options, but this practice was reconsidered with the introduction of the Remuneration and Performance Evaluation Policy for Directors and Senior Executives in FY2004, as a result of Remuneration & Nomination Committee discussion on ASX CGC Recommendation 9.3 and the accompanying ASX CGC Commentary. The Remuneration & Nomination Committee, and in turn the Board, will continue to monitor the issue as each recognises that for smaller companies option-based remuneration may be an appropri- ate method of remunerating Non-executive Directors when accompanied by an appropriate framework and proper disclosure. ASX CGC Recommendation 9.4 – Ensure that the payment of equity based executive remuneration is made in accordance with thresholds set in plans approved by shareholders The Company has two equity-based incentive plans: an Employee Option Plan applicable to certain eligible employees, including senior executives and Executive Directors and an Employee Share Plan, applicable to all permanent employees of one or more years of service, including senior executives but excluding both Executive and Non-executive Directors. These plans were established prior to Infomedia’s listing in August 2000 in accordance with both the Corporations Act and the ASX Listing Rules and were disclosed in the 14 July 2000 prospectus. In anticipation of altered accounting treatment required under the International Financial Reporting Standards, in June 2005 the Board resolved to indeﬁ nitely suspend the Employee Share Plan with effect immediately following the scheduled July 2005 allocation. Given this background, there is no present intention to obtain shareholder approval of the Employee Option Plan (or, if re-activated, the Employee Share Plan) as proposed by ASX CGC Recommendation 9.4 unless otherwise required by the ASX Listing Rules. Further details of senior executive remuneration under these plans is included in the Remuneration Report. Corporate Governance Statement 65 ASX CGC Principle 3 – Promote ethical and responsible decision making Actively promote ethical and responsible decision making ASX CGC Principle 10 – Recognise the legitimate interests of stakeholders Recognise legal and other obligations to all legitimate stakeholders ASX CGC Recommendation 3.1 – Establish a code of conduct to guide the directors, the chief executive ofﬁ cer and any other key executives as to: 3.1.1 the practices necessary to maintain the conﬁ dence in the company’s integrity 3.1.2 the responsibility and accountability of individuals for reporting and investigating reports of unethical practices and ASX CGC Recommendation 10.1 – Establish a code of conduct to guide compliance with legal and other obligations to legitimate stakeholders A formal Code of Conduct was adopted in April 2004 following careful and considered deliberation during the ﬁ nancial year by both the Corporate Governance Committee and the Board itself. The Infomedia Code of Conduct applies to all Infomedia personnel, including Directors, senior executives and employees and was developed having regard to the ASX CGC Commentary accompanying ASX CGC Recom- mendations 3.1 and 10.1. Whilst Infomedia has long held and emphasised personal integrity, respect and ethical business practices as core tenets, the Infomedia Code of Conduct strengthens the Company’s commitment to them by further articulating the cultural values which permeate the Company and better guiding dealings with all non-shareholder stakeholders. Included in the series of corporate governance and legal information sessions conducted during FY2005 were ses- sions focusing on the existence, purpose and operating framework of the Code of Conduct. A key aim was to pro- mote greater awareness and use of enhanced procedures for seeking guidance where areas of concern exist and for the notiﬁ cation of matters which potentially involve a compliance or businessrisk element. A review of the Code of Conduct was commenced by the Corporate Governance Committee as part of its review calendar in the last quarter of the FY2005 and is expected to conclude in the ﬁ rst half of FY2006. ASX CGC Recommendation 3.2 – Disclose the policy concerning trading in company securities by directors, ofﬁ cers and employees A formal Policy on Share Trading by Company Directors, Ofﬁ cers and Employees was originally established in October 2001 and was reviewed, amended and adopted by the Infomedia Board in April 2004, upon the recommendation of the Corporate Governance Committee. It was further reviewed by the Corporate Governance Committee as part of its review calendar and, in turn by the Board, in the last quarter of FY2005. In July 2005, a revised Policy on Securities Trading by Company Directors, Ofﬁ cers and Employees was adopted by the Board and a summary was placed on the Company’s website shortly thereafter. 66 Corporate Governance Statement Principle 4 – Safeguard integrity in ﬁ nancial reporting Have a structure to independently verify and safeguard the integrity of the company’s ﬁ nancial reporting Principle 7 – Recognise and manage risk Establish a sound system of risk oversight and management and internal control Infomedia, as was required by the ASX Listing Rules, fully complied throughout this reporting period with the ASX CGC Recommendations accompanying ASX CGC Principle 4, relating to audit committee composition, operation and responsibility. ASX CGC Recommendation 4.1 – Require the chief executive ofﬁ cer and the chief ﬁ nancial ofﬁ cer to state in writing to the board that the company’s ﬁ nancial reports present a true and fair view, in all material respects of the company’s ﬁ nancial condition and operational results and are in accordance with relevant accounting standards and ASX CGC Recommendation 7.2 – The chief executive ofﬁ cer (or equivalent) and the chief ﬁ nancial ofﬁ cer (or equivalent) should state to the board in writing that: 7.2.1 the statement given in accordance with best practice recommendation 4.1 (the integrity of ﬁ nan- cial statements) is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board 7.2.2 the company’s risk management and internal compliance and control system is operating efﬁ ciently and effectively in all material respects The Company’s ﬁ nancial reporting obligations for FY2005 have been fulﬁ lled, as they have in previous years, in accordance with applicable legal and accounting requirements: see the ﬁ nancial statements and notes contained in the Directors’ Report and the independent Audit Report. Having acted in accordance with the Company’s Board endorsed revised Risk Management Policy and Board endorsed Risk Management Plan, the Chief Executive Ofﬁ cer and the Chief Financial Ofﬁ cer have provided to the Board the certiﬁ cations under ASX CGC Recommendation 7.2 and in turn, the certiﬁ cations under ASX CGC Recommendation 4.1. and the Corporations Act. ASX CGC Recommendation 4.2 – The board should establish an audit committee ASX CGC Recommendation 4.3 – Structure the audit committee so that it consists of only • non-executive directors • a majority of independent directors • an independent chairperson, who is not chairperson of the board • at least three members and ASX CGC Recommendation 4.4 – The audit committee should have a formal charter Infomedia originally established an audit committee prior to its listing on the ASX in August 2000. Today it is Corporate Governance Statement 67 known as the Audit & Risk Committee and its members are Andrew Moffat (Chair), Myer Herszberg and Geoffrey Henderson. Each is a Non-executive Director. As noted above, following Barry Ford’s retirement, Andrew Moffat was appointed by the Board as a member of the Audit & Risk Committee and by the Chairman of the Board as its Chair. The Board ﬁ rmly believes the Audit & Risk Committee is of ‘...sufﬁ cient size, independence and technical expertise to discharge its mandate effectively’. As noted in the discussion around ASX CGC Recommendation 2.1 above, although traditionally the Board has applied an Executive Director/Non-executive Director classiﬁ cation to its mem- bership, the Board believes that Andrew Moffat, Myer Herszberg and Geoffrey Henderson meet an objective assess- ment of quantitative, qualitative and cumulative criteria for independence. As such the Committee meets the require- ments for an independent Chairman and a majority of independent directors under ASX CGC Recommendation 4.3. A formal Audit & Risk Committee Charter was originally adopted in 2000 and an amended version approved by the Board in April 2004 following careful and considered deliberation during the ﬁ nancial year by both the Audit & Risk Committee and the Board itself. Consistent with the Company’s policy, a summary of the Charter was placed on the Company’s website during the ﬁ rst half of the ﬁ nancial year. The Audit & Risk Committee acknowledges the importance of external auditor independence. The Company’s ex- ternal auditor’s engagement partner was rotated in FY2002. In response to both legislative change and to the ASX CGC Commentary, in the last quarter of FY2004 the Audit & Risk Committee began reconsidering the policy for the selection and appointment of the Company’s external auditor and the rotation of engagement partners. The Committee now intends recommending formalised procedures to the Board for consideration and adoption during FY2006, and will make a summary of them available on the Infomedia website shortly thereafter. ASX CGC Recommendation 7.1 – The board or appropriate committee should establish policies on risk oversight and management Upon the recommendation of the Audit & Risk Committee, the Board adopted the Risk Management Policy in July 2004. During the reporting period the Audit & Risk Committee reviewed it closely and recommended that the Board adopt a revised Risk Management Policy and a Risk Management Plan which would better promote the establishment and implementation of an effective and appropriate risk management framework for the Company. The revised Risk Management Policy allocates oversight responsibility to the Board and the Audit & Risk Commit- tee whilst the establishment of risk management procedures, compliance and control rests with the Chief Executive Ofﬁ cer, Chief Financial Ofﬁ cer and Senior Executives and, at a daily operating level, with departmental managers, line managers and individuals as part of regular business conduct. A summary of the Company’s Risk Management Policy is available on the Company’s website, however, given the strategic nature of its content, the Board does not feel it is appropriate for details of the Company’s Risk Management Plan to be made publicly available as contemplated by ASX CGC Recommendation 7.5. 68 Corporate Governance Statement ASX CGC Principle 5 – Make timely and balanced disclosure Promote timely and balanced disclosure of all material matters concerning the company ASX CGC Recommendation 5.1 - Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance. A Market Disclosure Policy was adopted by the Board in April 2004 following careful and considered deliberation during the ﬁ nancial year by both the Corporate Governance Committee and the Board itself. The Market Disclosure Policy was developed having regard to the ASX CGC Commentary and suggested content accompanying ASX CGC Recommendation 5.1. ASX CGC Principle 6 – Respect the rights of the shareholders Respect the rights of shareholders and facilitate the effective exercise of those rights ASX CGC Recommendation 6.1 – Design and disclose a communications strategy to promote effective communication with shareholders and encourage effective participation at general meetings and ASX CGC Recommendation 6.2 – Request the external auditor to attend the annual general meeting and be available to answer shareholder questions about the audit Through a series of initiatives, Infomedia continues to demonstrate its commitment to promoting effective communication with all shareholders. Such initiatives include the continued development of the Company website, where this Corporate Governance Statement, annual, half yearly and quarterly reports, a synopsis of the Infomedia business model, media releases, achievements, share price information and the July 2000 prospectus, along with the 2005 Notice of Annual General Meeting and Explanatory Statement are all available. Infomedia continues to look closely at how it might best and most cost effectively introduce e-communications to shareholders, and in the process, save paper and assist in preserving the environment. Infomedia will carefully consider any e-communication initiative its share registry, or any other provider, introduces in response to ASX CGC Recommendations 6.1 and 6.2. Infomedia also acknowledges, and has considered and adopted as appropriate to its circumstances, the Guidelines for notices of meeting included in the ASX CGC Commentary accompanying ASX CGC Recommendation 6.1. Shareholder participation at general meetings is encouraged and Infomedia’s auditor, Ernst & Young, will attend the Annual General Meeting and be available to answer shareholder questions. 1 The ASX Corporate Governance Guidelines containing the ASX CGC Principles, the ASX CGC Recommen- dations and the ASX CGC Commentary Corporate Governance Statement 69 Additional Information Top 20 Shareholders as at 31 August 2005 Name Shares % of Total Rank WISER LABORATORY PTY LIMITED YARRAGENE PTY LIMITED J P MORGAN NOMINEES AUSTRALIA LIMITED WESTPAC CUSTODIANS ANZ NOMINEES LIMITED NATIONAL NOMINEES LIMITED CITICORP NOMINEES PTY LIMITED MR ANDREW PATTINSON BIG BEAR ENTERPRISES PTY LTD TOM HADLEY ENTERPRISES PTY LTD MR YET-KWONG CHIANG MRS HO YUK LIN CHIANG WISER CENTRE PTY LTD RICHARD GRAHAM WARBONT NOMINEES PTY LTD DAN SALAZAR UBS PRIVATE CLIENTS AUSTRALIA NOMINEES PTY LTD MR SCOTT ANSON TURNER BRAZIL FARMING PTY LTD DR KWAI GAN MR PETER ALEXANDER BROWN Range of shares as at 31 August 2005 Range 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001+ Total 100,277,501 39,421,599 17,099,741 7,147,906 4,987,228 3,980,251 2,831,681 2,547,567 2,000,000 1,500,000 1,300,000 1,000,000 926,559 804,970 641,248 620,166 600,000 500,000 500,000 350,000 30.80 12.11 5.25 2.20 1.53 1.22 0.87 0.78 0.61 0.46 0.40 0.31 0.28 0.25 0.20 0.19 0.18 0.15 0.15 0.11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Shareholders Shares Held % of Total 496 3,013 2,631 3,236 127 418,425 10,062,434 21,864,933 86,365,824 206,759,957 9,503 325,471,573 0.13 3.09 6.72 26.53 63.53 100 As at 31 August 2005 there were 201 shareholders holding less than a marketable parcel of 953 ordinary shares. As at 31 August 2005 there were 201 shareholders holding less than a marketable parcel of 953 ordinary shares. 70 Additional Information Corporate Directory Infomedia Ltd 357 – 373 Warringah Road Frenchs Forest NSW 2086 ABN 63 003 326 243 Telephone: (02) 9454 1500 Facsimile: (02) 9454 1844 Internet: www.infomedia.com.au Directors Richard Graham – Chairman of the Board Myer Herszberg – Non-executive Director Frances Hernon – Non-executive Director Geoffrey Henderson – Non-executive Director Gary Martin – Chief Executive Ofﬁ cer Andrew Moffat – Non-executive Director Company ofﬁ cers Nick Georges – Company Secretary Peter Adams – Chief Financial Ofﬁ cer Auditors Ernst & Young Ernst & Young Centre 680 George Street Sydney NSW 2000 Share registry Computershare Registry Services Pty Ltd GPO Box 7045 Sydney NSW 1115 Lawyers Cowley Hearne Lawyers Pty Limited Level 10 60 Miller Street North Sydney NSW 2060 AutoLedgers, Infomedia, Microcat and PartsImager are registered trademarks, and LIVE, Lubrication & Tune-up Guide, MARKET, NOVA and Superservice Menus are all trademarks of Infomedia Ltd for its business processes, software and documentation products. All other trademarks are the property of their respective owners. Corporate Directory 71 Notes 72 Notes

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