Infomedia Annual Report 2013

Plain-text annual report

ANNUAL REPORT 2013 TABLE OF CONTENTS RESULTS AT A GLANCE EXECUTIVE CHAIRMAN’S LETTER CFO REPORT: ACCOUNTING FOR THE FUTURE BUSINESS REPORT: SELLING THE FUTURE ONE DAY AT A TIME RESEARCH REPORT: THE COMING ERA OF THE SERVICE CUSTOMER DEVELOPMENT REPORT: INFOMEDIA’S DIGITAL HIGHWAY TO THE FUTURE DIRECTORS’ REPORT AUDITOR’S INDEPENDENCE DECLARATION STATEMENT OF PROFIT & LOSS AND OTHER COMPREHENSIVE INCOME STATEMENT OF FINANCIAL POSITION STATEMENT OF CASH FLOWS STATEMENT OF CHANGES IN EQUITY NOTES TO THE FINANCIAL STATEMENTS DIRECTORS’ DECLARATION INDEPENDENT AUDIT REPORT CORPORATE GOVERNANCE ADDITIONAL INFORMATION CORPORATE DIRECTORY 1 3 7 10 13 17 19 28 29 30 31 32 33 67 68 70 75 76 © 2013 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. INFOMEDIA.COM RESULTS AT A GLANCE KEY FIGURES Financial Year 2009 2010 2011 2012 2013 Sales Revenue ($m) 54.3 NPAT ($m) EBITDA ($m) DPS (¢) EUR Average FX Spot Rate (¢) USD Average FX Spot Rate (¢) 10.5 15.9 2.8 54 76 45.3 11.3 18.2 2.4 63 88 44.1 10.0 18.8 2.4 72 98 45.7 8.5 17.7 2.4 77 48.7 10.1 20.1 2.8 80 104 103 SUPERSERVICE.COM 1. EXECUTIVE CHAIRMAN’S LETTER 2. INFOMEDIA.COM.AU EXECUTIVE CHAIRMAN’S LETTER FELLOW SHAREHOLDERS, DURING THE PAST YEAR, Over the course of the past three years, we have YOUR COMPANY CONTINUED TO SUCCESSFULLY strengthened our products, furthered our client INVIGORATE ALL ASPECTS OF ITS OPERATION, relationships, built an infrastructure that is once again PERFORMANCE AND PRESENCE. SALES REVENUE GREW, leading edge, and increased goodwill inside as well as NET PROFIT INCREASED, PRODUCT AND DELIVERY outside the Company. For the Leadership Team, these PLATFORMS STRENGTHENED, CUSTOMER GOODWILL achievements have facilitated further opportunities to look ADVANCED AND PLANNING FOR THE FUTURE EVOLVED. deeper into the future of our market, consider our place in I take pleasure in bringing you this year’s Annual Report on the performance of your company during FY 2013. During the year our teams have continued to build upon that future, and initiate actions for greater achievement and desirable outcomes. Of those matters, I share a few with you here. the good progress of recent years and deliver all-round The Future of Aftersales I.T.: Further in this Annual Report, good results. Results that we believe are sustainable and you will learn about the research interviews the Company will create further ﬁ nancial and market leadership growth. conducted last year with leading OEM Parts and Service In addition to the audited accounts and ﬁ nancial reports (‘Aftersales’) leaders in North America, Europe and Asia. We contained in this Annual Report, you will gain insights embarked upon the research to: 1 ) construct an industry into the commercial and technical areas of your company composite view of Aftersales in the year 2020; 2) identify too. You will learn about a market research project we technology trends, commitments, and goals of automakers performed during the year and how we will use the results for their dealers and vehicle owners; and 3 ) further detail of that research to guide Infomedia’s product and market Infomedia’s R&D direction and priorities. development for the decade to come. If I were to distil that future into just two words, it would But ﬁ rst, let me acknowledge our team for the outstanding be ‘Big Data’1. This concept – Big Data – will positively ﬁ nancial performance they achieved during the year. In the transform the relationship between vehicle owners and face of yet another year of adverse currency headwinds, Aftersales dealers. It will be revolutionary. It will transform the Company broke loose of its grip and increased Sales the way Aftersales departments are organised and Revenue by $3,012,000 and NPAT by $1,605,000. operated. It will stem service customer attrition rates This was an increase over FY 2012 results of 7% and provide higher levels of customer engagement and 19% respectively. and satisfaction. In keeping with Company policy, the Directors declared a For the Leadership Team, the research validated that the ﬁ nal dividend of 1.55¢ per share, bringing the total dividend Company’s Superservice™ strategy, introduced during the for FY 2013 to 2.82¢; an increase of 17.5% over the previous previous year, is tracking toward the future envisioned by year. You can read more about our ﬁ nancial performance in the industry leaders. In fact, it is helping to shape it. Jonathan Pollard’s CFO report. KPI Sales Revenue EBITDA NPAT Cashﬂ ow Subscriptions Deﬁ nition 1 http://en.wikipedia.org/wiki/Big_data FY 2012 FY 2013 Improvement $45.7 $17.7 $8.5 $9.7 70,516 $48.7 $20.1 $10.1 $11.2 73,464 6.6% 13.6% 19.0% 15.5% 4.2% SUPERSERVICE.COM 3. EXECUTIVE CHAIRMAN’S LETTER Investor Communications: As I stated in last year’s Annual Sales Model Expansion: The focus of the Leadership Team Report, the Company has solid fundamentals and is more in recent years has concentrated on the development resilient, able, and focused now than at any time in its past. During the year, the investment community took a greater interest in reassessing the Company, its underlying performance, and its future potential. of a technically superior product line and a strong back- end production and publishing platform. We are satisﬁ ed with the achievements on those fronts. Now, with that foundation in place, our focus is on revolutionising the Management took opportunities in media releases, the commercial side of the business. Annual General Meeting (AGM) and in discussions with research analysts to reiterate our business fundamentals and how to assess them. As that clarity into our business grew, so did the market’s appreciation for the Company and its place in its market sector. Many of the Infomedia investors I have met value the reliable and high dividend returns from our Company, and this year have beneﬁ ted from substantial capital appreciation. It’s been well reported in previous annual reports the adversity on our performance results that a Your company’s go-to-market model has remained constant for 23 years and its core tenet of recurring subscriptions will be here for years to come still. With the advent of Big Data, there is great potential in Leadership’s goal of product- ubiquity by 2020 and future environment of cooperation between I.T. suppliers. Accordingly, the Company is evolving a broader go-to-market strategy than just direct product marketing by its sales personnel. At the core of our sales expansion will be: 1 ) the decade of currency appreciation has had. While we are in establishment of professional third party sales no position to predict the future, we are in a strong position representatives; 2) the licensing of Superservice solution to beneﬁ t from any retraction of the Australian Dollar components for integration into third party systems; and 3) against the U.S. Dollar and Euro. I believe this new appreciation of the overall business dynamics of the Company has contributed to an increase in our share price and the return of IFM shares into the All the licensing of some of Infomedia’s proprietary capital and platform assets to empower targeted third party solutions. This broader strategy of engaging with the expanding future of automotive I.T. will keep the Company leading the Ordinary Index on the 13th of March, 2013. industry’s innovation curve. 4. INFOMEDIA.COM.AU EXECUTIVE CHAIRMAN’S LETTER Our Superservice solution strategy has opened up these The program that was established in 2000 had become new opportunities to allow third parties to participate with low-proﬁ le for a number of years, but now, with the us in strategic alliances; extending the reach and scope resurgence of the Company, the Directors want to instil beyond what we could do alone. Development Strength: On the heels of our Software-as-a- Service (SaaS)2 or Cloud-based product implementations, our development teams continued innovating throughout FY 2013 delivering major upgrades to our online applications. These provided our customers with new features, performance improvements and a streamlined an experience of ownership participation with personnel whose commitment and performance represented exemplary merit. The ﬁ rst of the newest round of options were granted to personnel primarily at the Senior Management and Team Leader levels of our organisation. Options were granted with vesting occurring over 3 years, and execution hurdles user experience; further strengthening our product off ering. tied to the IFM share price. For example, the new user interface for Microcat LIVE was designed to improve its performance and visual appeal. Improvements were made to integration tools to support more third party deployment options and the conversion of all disc-based products to SaaS. It is the Directors’ intention to progressively extend the grants to further members of the organisation for the same reasons already mentioned. Regrettably, the ATO tax treatment of employee options, is in my view, harsh and punitive, and works against motivating the people in the best position to exert themselves to make Australia a more FY 2013 saw a signiﬁ cant advancement of our back-end prosperous country to do so. automated testing, data processing, and production systems. As a result, our teams have transitioned from monthly information publication to weekly publication. The volume of online users grew substantially over levels at the end of FY 2012, and key application code was consolidated for more streamlined maintenance. Collectively, these achievements have resulted in higher productivity through greater levels of output. Research and Development: The Company continues with its strong investment in technology research and development. The Board plans to increase R&D spending/ expenditure in dollar terms, while, as a percentage of revenue, it may decrease. The Directors and the Leadership Team feel that the Company is in a good position to beneﬁ t from the future of Big Data and has insights into the evolution of its Superservice product line to meet the growing needs of automakers, dealers, legislators and vehicle owners. As I write to you, your company is healthy, forward-looking, and has an economic business model that is sound, competitive, and sustainable. As I’ve written to you before, business isn’t without its risks. The Leadership Team at Infomedia is invested to do all it can to grow the Company’s assets and opportunities. As the founder and Chairman of the Company, I am proud of our people and the business we have created together. Infomedia has a respected position in our ﬁ eld and I believe our goals are realistic and achievable. I believe that the Company has endured challenges in recent years and came out the other side as a stronger and more mature enterprise. As I often do in closing this Chairman’s Report, I want to reaffi rm that Infomedia’s main goal is straightforward: to contribute to our customers’ success. By so doing, we will continue our own success and deliver value to our shareholders. I commend this Annual Report to you and look forward to seeing you at the Annual General Meeting We estimate that the demand for capital investment to at our headquarters in Frenchs Forest on October 30th, if bring about the future envisioned by industry leaders you are able to attend in person. will be tremendous, and, in the current state of global economic uncertainty, will lead automakers away from in-house development and third parties toward collaborative cooperation. Employee Share Option Program: In May 2012, the Directors rekindled the Employee Share Option Scheme. RICHARD GRAHAM Executive Chairman Deﬁ nition: 2 http://en.wikipedia.org/wiki/Software_as_a_service SUPERSERVICE.COM 5. CFO REPORT: ACCOUNTING FOR THE FUTURE 6. INFOMEDIA.COM.AU CFO REPORT: ACCOUNTING FOR THE FUTURE FOR THE 2013 FINANCIAL YEAR INFOMEDIA ACHIEVED development under a single workﬂ ow platform, whereas SALES REVENUE (SALES) OF $48.7M AND NET PROFIT previously the Company’s EPC and Superservice tasks AFTER TAX (PROFIT) OF $10.1M. THIS COMPARES TO were recorded separately. FINANCIAL YEAR 2012 WHERE SALES TOTALLED $45.7M AND PROFIT WAS $8.5M. OPERATING CASH FLOW INCREASED BY $1.5M TO $11.2M. The tight cost control that has been exercised during the year is the result of careful management combined with a rigorous budgeting process. The budgeting process As previously reported, a fully franked ﬁ nal dividend of 1.55 has improved substantially over the last two years as cents was paid to shareholders of record as at 2 September management began to capitalise on improvements to the 2013, bringing the total dividends for the year to 2.82 cents Company’s reporting structures and systems. (2.05 cents franked). This represents a payout ratio of 85% of Proﬁ t. At 30 June 2013, the Company remained debt free, with $9.3m in cash on the balance sheet. FINANCIAL PERFORMANCE FY 2013 delivered a solid set of results across all key OPERATIONAL PERFORMANCE During FY 2013, the Company undertook signiﬁ cant work on its core infrastructure which is expected to deliver ﬁ scal and operational beneﬁ ts in future reporting periods. For example, the Company completed our online price book project during the year, which established the foundation to enable self-serve ordering and billing of our subscription products. As the customer base and subscriptions grow, it is increasingly important to streamline order processing and invoicing in order to maintain administrative cost control and improve proﬁ t margins. The Company has also installed enhanced time recording systems. These will provide better tracking and reporting of project costs, and enabling improved ﬁ nancial modelling. A further beneﬁ t of this work is the alignment of all business drivers: SALES Sales revenue increased $3.0m or 6.6%. This was driven by growth in both the Parts and Service solutions, across all regions. The Company reported record levels of subscription equivalents of 73,464 as of 30th June, 2013. Microcat® LIVE EPC continued to grow its user base during the year, demonstrating consumer conﬁ dence in the Company’s ability to deliver market leading software and provide mission critical functionality in dealerships all around the world. Superservice® Menus™ continued its strong growth trajectory as more dealers come to realise the beneﬁ ts of precision quoting for service operations. The following chart shows the geographical split and growth of Sales for FY 2012 and FY 2013. SUPERSERVICE.COM 7. CFO REPORT: ACCOUNTING FOR THE FUTURE OPERATIONAL COSTS Operational costs remained virtually ﬂ at as the Company However, despite the impacts of foreign exchange, the Company’s NPAT increased 19% or $1.6m to $10.1m. maintained tight cost control and took advantage of its The chart below demonstrates how these factors have leveraged software business model. This is especially impacted the results. pleasing to see given the publishing frequency for some of our Microcat LIVE franchises has increased fourfold this THE YEAR AHEAD year. This is a testament to the constant focus on improving Looking forward, the Company anticipates further infrastructure and processes over the past three years. These improvements are enabling the Company to grow whilst maintaining a ﬁ rm hold on ﬁ nancial KPIs. RESEARCH & DEVELOPMENT subscription and sales revenue growth from both Parts and Service solutions. The Company expects a measured increase in operational costs to support the product and sales expansion, however, cost management will remain a core focus. We expect to maintain our investment in We maintained our investment in R&D as we continued R&D and see an increase in amortisation as the eff ects of to work on commercialising the new Superservice suite. products released part way through FY 2013, and from the We successfully released online versions for each of anticipated release of products in FY 2014 are realised. our legacy disc-based solutions which has been a Given the Company’s foreign exchange hedging, it is likely long-standing ambition for the Company. The amortisation that the relative FX impact will be neutral or positive for the charge increased in FY 2013 as we commercially released year compared with FY 2013 although the exact quantum is more online versions of our products. diffi cult to predict. Accordingly, the Company has provided FOREIGN EXCHANGE guidance that it anticipates its FY 2014 sales revenue will be 8% – 12% higher and NPAT to be between 10% – 19% The average Australian dollar spot rates versus the USD higher than FY 2013. and EUR through FY 2013 were marginally stronger than FY 2012. This contributed to a small adverse variance in proﬁ t compared to the prior year. The Company achieved a hedging gain of nearly $1.0m during FY 2013 but this was $1.6m lower than the previous year. The combination of spot and hedging eff ects created a signiﬁ cant adverse JONATHAN POLLARD foreign exchange variance compared with FY 2012. Chief Financial Offi cer 8. INFOMEDIA.COM BUSINESS REPORT: SELLING THE FUTURE ONE DAY AT A TIME SUPERSERVICE.COM 9. BUSINESS REPORT: SELLING THE FUTURE ONE DAY AT A TIME LAST YEAR WE DISCUSSED THE COMPANY’S Our ﬂ agship EPC, Microcat LIVE, continues to grow each OBJECTIVES OF PRODUCT INNOVATION, A ONE WORLD year. This year, a new market, Toyota Great Britain selected OPERATIONAL MODEL AND A VISION THAT INCLUDED A Microcat LIVE to be the EPC for all their dealers. Other BROADER SOLUTION SUITE; ALL FOCUSED ON GREATER Toyota markets in Europe are migrating to fully online REVENUE GROWTH AND PROFITABILITY. IN ADDITION, catalogues for all the beneﬁ ts that it provides too. OUR CHAIRMAN COMMITTED TO RELEASING MORE PRODUCTS WITH THE AIM OF IMPROVING THE SALES AND SERVICE EXPERIENCE, AS HE WROTE TO YOU IN HIS 2012 ANNUAL LETTER. THIS COMMITMENT INCLUDED SUPERSERVICE FOR CHRYSLER, GENERAL MOTORS AND TOYOTA IN NORTH AMERICA, MICROCAT LIVE FOR TOYOTA GREAT BRITAIN AND EXPANSION OF PRODUCTS In the United States, Microcat LIVE was recently launched for Chrysler and Fiat dealers. This is a great opportunity for Infomedia to serve these dealers. We are excited to be expanding our Microcat LIVE and Superservice off erings to Chrysler dealers in Canada, Australia and Mexico in FY 2014. IN RUSSIA, CHINA AND LATIN AMERICA. On the Microcat platform, we have expanded our Auto Today, I have the privilege of conﬁ rming that these objectives have been accomplished. Sales revenue has grown in excess of 6.6%, and more importantly, it has grown across all products, in all regions. The full Superservice suite was introduced in all our market regions. We now have productivity solutions for the Aftersales divisions of dealerships, supporting booking, inspection, quoting, parts ordering, service history, B2B, and satisfaction surveying. It is a global solution suite unsurpassed by any other provider. As committed, we have launched Superservice for Chrysler, Fiat, General Motors and Toyota. In addition, we have released the multi-point inspection functionality for all of our existing Superservice Menus franchises in all PartsBridge (APB) subscriptions throughout North America. No competitive business-to-business parts solution is built with the assurance of a high-ﬁ delity SaaS EPC at its core. APB provides opportunity for franchised dealers to increase conquest part sales over non-genuine aftermarket parts. We are now seeing interest in APB from automakers wanting to advance their wholesale parts programs to a new level of supply chain effi ciency. Toyota and Honda APB subscriptions have increased signiﬁ cantly and we are pleased to have Hyundai and KIA Canada implementing APB now, with others joining soon. Across the globe, we have continued to strengthen our commercial relationships at all levels as evidenced by the languages. Late this year we completed the online booking number of renewals, extensions and new data license capability to Superservice, providing self-serve appointment agreements. There has been an increased level of interest scheduling to the service experience. We now stand poised and inquiry regarding Infomedia’s expanded Superservice to sell these solutions into our existing base of subscribers product lines from existing and new customers. Our current as well as to new users and through new channels. The next EPC customers want to leverage the interoperability year will see an expansion to our sales model through Superservice provides. We are seeing a concerted focus third party VAR channels, system integration and strategic by automakers to critically look at dealership Aftersales alliances. Superservice empowers dealers’ customers’ processes. This is to increase the competitiveness of experiences. It can also enhance third party solutions. their dealers in the face of non-genuine aftermarket Superservice provides the opportunity to extend the reach service and parts suppliers. This presents opportunities and scope of our technology and services beyond our for our Superservice platform that speak to the needs of traditional sales model. automakers, dealers and their customers, alike. 10. INFOMEDIA.COM BUSINESS REPORT: SELLING THE FUTURE ONE DAY AT A TIME Regardless of franchise and location, all dealers share the can play in realising that vision. Our product direction same objectives: quality relationships, operations effi ciency, fully aligns with what Aftersales leaders are requiring: customer retention, and proﬁ tability. Superservice is the fully online self-serve applications; cross-application resounding solution to support their objectives. Dealers interoperability; in-depth visibility of operations through want and need a solution that supports their processes analytics; and Big Data enrichment. In their own ways, from appointment booking to job follow-up. Superservice they describe Superservice! has grown from VIN-speciﬁ c precision service price quoting to now encompassing service booking, vehicle inspection, service history, repair follow-up and satisfaction surveying. Superservice is ready for all our markets with expansion of the solutions into the BRIC* markets underway for Ford, Jaguar and Land Rover. In the following section, Peter Petrovski, Director of Product Strategy, describes the research we undertook with a number of automotive industry leaders from all parts of the globe regarding the vision for Parts and Service in the next decade. The research was conducted to listen to the Our Commercial Team is managing the opportunities to apply our full suite of off erings in support of dealers’ Aftersales goals. Infomedia’s fully integrated Parts and Service solutions are leading product innovation and Aftersales process improvement around the Globe. The future of super service is being built NOW! needs and wants of our clients and partners in order to KAREN BLUNDEN understand their vision for the future and the role Infomedia Director Global Business Development; CEO IFM Americas * Brazil, Russia, India and China SUPERSERVICE.COM 11. WELCOME TO THE ERA OF RESEARCH REPORT: THE COMING ERA OF THE SERVICE CUSTOMER THE CUSTOMER EXPERIENCE 12. INFOMEDIA.COM RESEARCH REPORT: THE COMING ERA OF THE SERVICE CUSTOMER INFOMEDIA’S RESEARCH REVEALS automation projects or tools, to a world of continuously THE FUTURE OF AFTERSALES AT INFOMEDIA WE HAVE A GOAL OF MAKING OUR PRODUCTS THE STANDARD FOR DEALERSHIP FIXED OPERATIONS AROUND THE GLOBE. WE CALL THIS PRODUCT- UBIQUITY. ONE WAY WE ARE WORKING TO ACHIEVE PRODUCT-UBIQUITY IS BY DISCOVERING OUR CLIENTS’ VISION OF THEIR FUTURE, IN ORDER TO HONE OUR STRATEGIES AND LEADING EDGE. connected digital business. In the main, Aftersales technology has focused in the areas of diagnostics, inventory management and siloed operational apps like EPC. The interviewees concluded that the next challenge for the industry is to apply new technology eff orts to improve customer engagement processes, which they believe can have a big impact on improving customer retention and brand loyalty. As our Chairman outlined earlier in this report, over the past As one contributor commented, “We have real diffi culties year we carried out a project to assess what automotive in getting the right market intelligence to understand what leaders think about the current state of Parts and Service is important from a customer perspective. There’s data (‘Aftersales’) and what they imagine the business of everywhere and all throughout the industry, but there’s just the future will look like. After engaging in meaningful no information. There’s nobody connecting the dots.” discussions with 26 participants/interviewees, we came away with many valuable insights. The vision for 2020 points to the industry utilising computer power, data, and analytics in increasingly diverse ways. The By gaining perspective into what the future will look like, access to “Big Data” will make it possible and necessary to Infomedia is positioning itself to be at the forefront of begin to address customers as individuals, rather than as solving upcoming challenges and delivering relevant and marketing categories. I.T. advancements in data collection, innovative technology solutions. The results of this research improved alliances between automakers and dealers, and a are part of the guideposts that we will use as we plan for focus on process control will facilitate a new level of service the future, both in terms of our Superservice™ product customer engagement. strategy and the tactical execution of our go-to-market plans. Infomedia will be part of the future, because we will be making the future come about. Dealers and their service departments will be focused on building relationships with the customer, fostering trust and tailoring the dealership and service experience to each The cornerstone question of the interview was, “What will individual customer. Customer engagement will increasingly Parts and Service operations look like in the year 2020?” be online and automated: Self-Service Appointment While many responses ﬂ owed from that simple question, Booking, Parts Purchasing, Information Capturing, it was clear that in 2020, Parts and Service departments Performance Comparisons and Vehicle Record Keeping will be doing business in the “service customer” era to mention a few. Automakers and dealers will achieve and technology and information will play a big role. This a greater level of co-operation on strategic and tactical presents a future full of exciting and rewarding possibilities initiatives, redeﬁ ning the service chain processes and for our company. customer experience to combat aftermarket competition. The distilled view of the current situation was that Aftersales is progressing from an era of selective ‘silo’ Ten major categories emerged from the interviews that give insight into what the Aftersales business of 2020 will look SUPERSERVICE.COM 13. RESEARCH REPORT: THE COMING ERA OF THE SERVICE CUSTOMER like and how we will get there from here. These were: Another interviewee explained, “We have already made 1. The Customer 2. Future Vehicle Technology 3. Data, Information, Empowerment 4. Connectivity and the Role of the Internet the eff ort of assessing the most productive way to run a dealership, such as how to greet the customers, treat staff , and run the service departments. We want to know if there are any areas where we can improve the process or improve the technology so that it will improve productivity 5. Customer Experience – Growth and Retention and reduce the cost of running a dealership.” 6. Automaker and Dealership Promise Partnership Our study showed that data is one of the best tools that 7. Breaking Down the Walls in Dealerships 8. Parts Inventory and Logistics 9. Improving Dealership Service Process 10. Social Media. Aftersales enterprises can use to improve the customer experience, but currently it is underutilized by the industry. Interviewees acknowledged that the amount of customer and vehicle data available in dealerships will increase considerably by 2020. They also acknowledged that The research validates our Superservice product strategy removing the data silos between and within automakers, is on the centreline of the future described, but we see dealerships, and third parties is essential to unlocking this as only the beginning. As the industry moves its potential for dealership productivity and customer focus to improve customer engagement and increase retention beneﬁ ts. sales automation, there is a valuable place for Infomedia in shaping dealership Aftersales of 2020. Our innovative approach to technology extends beyond knowing what machines will be capable of doing to, more importantly, For Infomedia, the increasing future importance of Big Data plays to our strength. We will have new opportunities to build unique capabilities into our Superservice product lines through capturing, processing and converting data into information that programming them with the psychology and expectations dealer and customers need to perform 21st century business. of the customers who will be the focus of their tasks. Delivering all this in a way that makes it useful to support Delivering on these distinctions will keep Infomedia at the buying and selling transactions requires the intelligence, vision forefront of aff ordably solving dealer and customer needs. and creativity that Infomedia has demonstrated. 14. INFOMEDIA.COM RESEARCH REPORT: THE COMING ERA OF THE SERVICE CUSTOMER Respondents also noted the prevalence of Big Data will This research has provided the Company with important be further leveraged by increasing the use of vehicle insights about how Infomedia can continue to lead telematics and continuous internet connectivity. Many of the the industry in the coming years and achieve the goal OEM leaders speculated that in the future, vehicles with full of product-ubiquity. Now that we have some thought- digital connectivity will be the norm. This will help build new provoking ideas about what the Aftersales Fixed connections between the vehicle and customer, customer Operations department of 2020 will look like, it’s our job to and dealer, and customer and automaker. As one comment shows, vehicle connectivity is an idea that is already gathering momentum: “The trends we are seeing and aiming for right now are more to do with connectivity and how cars communicate with the customer and help transition our customers to this new reality with cutting edge solutions. As a company, we aspire to be seen as more than just providers of excellent technology solutions, but also as innovators and thought-leaders, anticipating needs and helping to grow dealership businesses. communicate with the workshop before they even come As part of this research, we have prepared a whitepaper into the workshop for their repair or accessory.” The future organisation of Parts and Service departments was another recurring topic amongst the industry leaders who were interviewed. The vision expressed by leaders suggests Parts and Service processes may be aligned under a uniﬁ ed Aftersales or Customer Support department and I.T. systems, allowing seamless collaboration between the two functions. It was noted that service processes will operate diff erently in the future. Technological and personnel processes will be overhauled so they are more effi cient and responsive to customer needs. Standardised information will be housed on common platforms, allowing the information to be easily harnessed and used by that will be shared with the automotive leaders who participated. The whitepaper helps to answer the question of how we help the industry move from its current state to the one predicted for 2020. It will serve as a written demonstration of our credibility and understanding of important issues facing the industry. Establishing certainty and trust in the sales process, and improving the overall customer experience will be the framework of successful Parts and Service departments in the future. Infomedia’s role in 2020 will be to continue helping automotive dealerships build key relationships by capitalising on our innovative approach to technology, ability to use Big Data, and our Superservice platform for systems, dealers, and by customers to make better buying process control guidance. and selling decisions. Technology providers, including Infomedia, will deliver the tools that facilitate this dealership transformation. Solutions will support new, more interactive workﬂ ows. The strategies of how to retain service customers will evolve to suit the needs of a new generation of vehicle owners. Infomedia is well placed to take advantage of such changes. Our Superservice platform is built using the principles of interoperability, allowing Parts and Service staff to exchange information that supports a more productive Great product innovation and reasonable commercial terms have played a large role in our success for over 23 years. In 2020, Aftersales departments may look and work diff erently than they do today, but I believe Infomedia will be their technology partner of choice around the world. and proﬁ table sales process for the dealer, and a more Peter Petrovski rewarding and transparent experience for the customer. Director of Product Strategy SUPERSERVICE.COM 15. DEVELOPMENT REPORT: INFOMEDIA’S DIGITAL HIGHWAY TO THE FUTURE 16. INFOMEDIA.COM.AU DEVELOPMENT REPORT: INFOMEDIA’S DIGITAL HIGHWAY TO THE FUTURE THE PAST YEAR HAS BEEN A VERY PRODUCTIVE ONE so well. Such thinking is central to the goals we have set FOR INFOMEDIA’S OPERATIONS, PRODUCTION, AND for ourselves in the areas of production automation, quality SYSTEMS DEPARTMENTS. WE HAVE MADE GREAT control, and online product publishing systems. This results STRIDES IN CONCLUDING THE TRANSITION OF OUR in the innovative products we have created that contain PRODUCTS FROM DVD-ROM DISCS TO TODAY’S many industry ﬁ rsts. SOFTWARE-AS-A-SERVICE (SAAS) IMPLEMENTATIONS. WE HAVE ALSO SEEN THE RELEASE OF OUR SUPERSERVICE SUITE OF PRODUCTS IN EUROPE, ASIA PACIFIC AND NORTH AMERICA. ALL OF THIS PROGRESS IS A TESTAMENT TO THE HARD WORK AND DEDICATION OF THE OPERATIONAL GROUPS AT INFOMEDIA. BUT, THESE ‘FRONT END’ PRODUCT RELEASES ARE ONLY PART OF THE STORY. THE SECOND HALF OF THE STORY HAS BEEN TAKING PLACE BEHIND THE SCENES, AT THE BACK-END OF THE BUSINESS. To build something substantial, you need a solid foundation to build on. While our back-end operational improvements may not be greeted with the same fanfare as Infomedia’s product releases, they are just as signiﬁ cant. Our internal operations and systems do the hard work that enables our customer-facing products to perform at their high standard. The technology and process improvements discussed below are all part of preparation work that is setting the foundation for our vision of Infomedia in the year 2020. In FY 2013, many of our OEM licensors released their catalogue data once a week while elements such as pricing could have changed every day. During the year, we have continued to invest in new processes and systems to synchronise our SaaS publishing cycles with the OEM data release cycles. Being online brings a new set of expectations for our products and it is our technology infrastructure that empowers their achievement. To ensure accurate, on-time delivery, we have invested in process and quality automation to allow us to receive, verify and process data, as well as compile editions of our products with little staff intervention. Once an edition is compiled, the Quality Assurance Team conducts automated ‘usability’ tests and then signs off the release as being ready for publication. With these new processes and tools in place, we have been able to meet our partners’ desire for more frequent publication, without needing to proportionally increase personnel numbers to do so. We view these back-end productivity and infrastructure The ﬁ nal step of deploying a product release for publication improvements as being vital to the overall success of our has also beneﬁ ted from our Development and Systems product plans. When Infomedia commenced its EPC business in 1990, one of the key diff erentiators of our Microcat product was that we set new records for publishing times. In the 1990s, many automotive OEMs were still producing their parts catalogues via books and microﬁ che on a six or twelve- groups collaborating to further automate the processes involved. This started with our move away from rigid hosting environments to using ﬂ exible computing services. This is both technically and economically better for our products, our customers and our shareholders. This has allowed us to create a suite of processing and publishing month cycle. Competitive EPC vendors of the day generally tools based on I.T. services, that have given us more control had an eight to ten week production cycle. This meant that over the entire online publishing process. It has reduced by the time the catalogues arrived at a dealership, it was the time and eff ort required to release each product, already two or three months old. At the time, Infomedia set ensures higher quality standards, and reduces downtime about producing an updated version of Microcat that put when performing system maintenance. Whilst the initial the latest CD-ROM in the dealers’ hands every month, and focus has been on our most widely used Microcat products, within two weeks of receiving the data from the OEM. our architectural designs have been planned with all of the A lot has changed since then in terms of the available data, processing and publishing tools, and infrastructure, but we Superservice products in mind. These improvements are being migrated across the entire product range. continue to tackle today’s issues with the same ‘outside of There are Development, Production, I.T. Systems, and the box’ thinking that serves Infomedia and its customers Customer Support tasks being carried out in Sydney and SUPERSERVICE.COM 17. DEVELOPMENT REPORT: INFOMEDIA’S DIGITAL HIGHWAY TO THE FUTURE Melbourne in Australia, Plymouth in the United States, and ability to provide industry leading uptime and availability in a Cambridge in the United Kingdom on a daily basis. During robust infrastructure continues to improve. As at June 2013, the course of the year, we established a new European the number of accesses to our EPC products each week Customer Service Centre and European headquarters exceded 15 million. We anticipate that to triple in FY 2014. in Cambridge, United Kingdom. The expanded local operations will eff ectively support our strong user community and our growth strategies for the EMEA* region going forward. The signiﬁ cant improvements Infomedia has made to its technology infrastructure in the last year shows we understand that to be a company built to last, we must deliver great products that meet the needs and To further support the operational requirements of our expectations of today, while at the same time investing in business in the international arena, we are upgrading our the infrastructure, research, and product development that internal network to support high-traffi c data ﬂ ow. This is needed for the future. upgrade has been carefully planned over a number of months and is due to be completed in 2013. Aside from assisting in more rapid data transfer to support quicker production processes, the network also supports Management’s rapid disaster recovery risk objectives for our non-publishing (internal) business systems. In last year’s Annual Report, our Director of Global I.T. and Development, Nic Fogg, talked about some of the technical challenges we faced in moving our product suites into the online world. I’m pleased to say that during the past The work we are doing, both behind the scenes and on the front lines of product innovation, supports our customers and ensures we will get them to their 2020 digital future destination, on a highway we know is safe, fast, and eff ective. We’ll know that because we will have built it. year, we have made signiﬁ cant progress in this area of the ANDREW PATTINSON business. Our online user-base continues to grow, and our Director of Global Solutions and Systems * Europe, Middle East and Africa 18. INFOMEDIA.COM DIRECTORS’ REPORT RICHARD GRAHAM Executive Chairman FRANCES HERNON Non-Executive Director MYER HERSZBERG Non-Executive Director “Corporate governance is a solemn “Shareholders are entitled to expect “The role of corporate governance is trusteeship held on behalf of each and that the companies in which they to protect all shareholders equally, every stakeholder of the Company. invest are managed eff ectively and regardless of the size of their It’s about trust and it’s about subject honestly. Corporate governance shareholding. matter competence. It’s about the provides the framework for ethical Now, and it’s about the Future. It’s leadership, sustainable business about Balance, and it’s about being strategies and reliable ﬁ nancial out on the edge. Shareholders aren’t statements. It is about assessing and looking for politically correct seat- mitigating risks such that performance warmers. They want real people like is optimised. It is not a tick the box themselves looking after their interest. approach but rather must strike the They want Directors who know the right balance between vigilance diff erence between governance and and cost effi ciency. Simply put, good management; so they can get the corporate governance equals good best from each.” business.” Mr Graham has been a Director Ms Hernon has been a Director since since 1988 and was last re-elected 2000 and was last re-elected to the to the Board in October 2008. His Board in 2011. Her strengths are in the strengths are in the areas of business areas of publishing, marketing and development, product deﬁ nition and technology. innovation, and change. “As directors, we have a responsibility to act on behalf of, and try to create wealth for, all our shareholders. At Infomedia we are fortunate to have a long-standing team who have delivered consistent returns whilst continually seeking out new products and ideas to grow the business. This team has all the shareholders’ interests at heart and, I would suggest, has the balance right.” Mr Herszberg has been a Director since 1992 and was last re-elected to the Board in 2012. His strengths are in the areas of business development, electronics and real-estate. SUPERSERVICE.COM 19. DIRECTORS’ REPORT Interests in the shares and options of the Company and related bodies corporate As at the year ending 30th June 2013, the interests of the Directors in the shares and options of the Company were: Wiser Equity Pty Limited Yarragene Pty Limited Yarragene Pty Ltd atf Yenzick Trust Rentamobile Pty Ltd Wiser Centre Pty Limited Richard Graham Frances Hernon Infomedia Ltd Ordinary Shares fully paid 101,464,342 23,421,589 10 15,000 1,000,000 926,559 5,000 Options over Ordinary Shares - - - - - - - Richard Graham is the sole Director and beneﬁ cial shareholder of Wiser Equity 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 and Rentamobile Pty Ltd. 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 group were: • • developer and supplier of electronic parts catalogues and service solutions for the automotive industry globally; and information management, analysis and creation for the domestic automotive and oil industries. There have been no signiﬁ cant changes in the nature of those activities during the year. EMPLOYEES The company employed 235 (2012: 231) full time employees as at 30 June 2013. DIVIDENDS Final dividends recommended: On ordinary shares – ﬁ nal – fully franked Dividends paid in the year: Cents $’000 1.55 4,713 On ordinary shares – 2013 interim – franked to 0.5c 1.27 3,855 Final for the 2012 year: On ordinary shares – as recommended in the 2012 report, fully franked 1.37 4,155 NET TANGIBLE ASSETS PER SECURITY The Company’s net tangible assets per security are as follows: · Net tangible assets per share at 30 June 2013 · Net tangible assets per share at 30 June 2012 Cents 1.3 0.7 20. INFOMEDIA.COM DIRECTORS’ REPORT REVIEW AND RESULTS OF OPERATIONS The following table presents sales revenue and proﬁ t after tax. There were no non-recurring signiﬁ cant items during the 2013 or 2012 ﬁ nancial years: Sales revenue Foreign exchange movement on hedges closed out during the period Proﬁ t after tax CONSOLIDATED 2013 $’000 48,689 989 49,678 10,066 2012 $’000 45,677 2,620 48,297 8,461 The results for the year ending 30 June 2013 show that the Company’s Net Proﬁ t After Tax (NPAT) grew by 19.0% to $10,066,000 and Sales revenues grew by 6.6% to $48,689,000. The Company’s NPAT exceeded previously advised guidance by $566,000, while Sales Revenue was in the middle of FY2013 guidance range. The achievement of NPAT beyond guidance is attributed to sales growth combined with tight cost control and some beneﬁ t from a weaker Australian dollar towards the end of the year. The increase in Sales Revenue was driven by growth in all product lines. Electronic Parts Catalogue Solutions (EPC) revenue grew $1.7m, Superservice revenue grew $1.2m and other revenue grew $0.1m. Subscription Equivalents increased to an all-time high of 73,464 with Superservice products increasing 15% to 16,742 subscriptions, and EPC subscriptions by 1.5% to 56,722. In constant currency terms, sales revenue rose by $3.3m and operating costs remained virtually ﬂ at. Foreign currency translations adversely aff ected constant currency EBITDA over the prior year by $1.9m. Despite this, the Company achieved an EBITDA (excluding capitalisation of research and development) of $12.7m, a 12.7% increase of $1.4m. The Company saw increased capitalisation and amortisation during the year and a lower tax expense. Overall, NPAT increased $1.6m or 19% to $10.1m. Cash ﬂ ows from operations increased $1.5m to $11.2m primarily due to higher sales off set by adverse foreign currency translations. The Company is debt free and had $9.3m of cash as at 30 June 2013. The Board has declared a fully franked ﬁ nal dividend payment of 1.55 cents per share. This, together with the interim dividend of 1.27 cents, results in a total dividend of 2.82 cents for the full year which is 17.5% higher than the prior year and represents a payout ratio of 85% of NPAT. The record date to determine entitlements to the dividend distribution is 2 September 2013 and the date on which the dividend is payable is 20 September 2013. With regards to FY2014, the Company advises that it expects both constant currency and reported AUD growth. Accordingly, the Company provides guidance today that it anticipates continuing double-digit growth with Sales Revenue to grow by 8% – 12% and NPAT to grow by 10% – 19% in FY2014. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There has been no signiﬁ cant change in the state of aff airs of the Company since the last Directors’ Report. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR There has been no matter or circumstance that has arisen since the end of the ﬁ nancial year that has signiﬁ cantly aff ected the operations of the Company, the results of those operations, or the state of aff airs of the Company. LIKELY DEVELOPMENTS AND EXPECTED RESULTS In the year ahead the Company expects to continue to release its internet-based products. The company expects to continue increasing Superservice™ revenue. ENVIRONMENTAL REGULATION AND PERFORMANCE The Company 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. SUPERSERVICE.COM 21. DIRECTORS’ REPORT SHARE OPTIONS Unissued shares At the date of this report, there were 5,850,000 unissued ordinary shares under options. Refer to Note 19 of the ﬁ nancial statements for further details of the options outstanding. Shares issued as a result of the exercise of options There were 300,000 shares issued as a result of the exercise of options during the year. Since the end of the ﬁ nancial year there have been 526,300 options exercised. 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 – AUDITED This remuneration report outlines the director and executive remuneration arrangements of the Company and the Group in accordance with the requirements of the Corporations Act 2001 and its regulations. For the purposes of this report, key management personnel (KMP) of the Group are deﬁ ned as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company. Details of Key Management Personnel (i) Directors Richard Graham Executive Chairman Frances Hernon Non-executive Director Myer Herszberg Non-executive Director Geoff rey Henderson Non-executive Director* (ii) Executives Karen Blunden Director of Global Business Development, and CEO IFM North America Nick Georges Company Secretary and Legal Counsel Andrew Pattinson Director of Global Solutions and Systems Jonathan Pollard Chief Financial Offi cer Michael Roach Director of Operations, and General Manager Asia Paciﬁ c *resigned 3 January 2013 Compensation 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 compensation framework: • Provide competitive rewards to attract high calibre executives; • Link executive rewards to shareholder value; and • Establish appropriate performance hurdles in relation to variable executive compensation. Remuneration Decisions Ms. Hernon, in her capacity as lead director for all matters that formally fell within the former Remuneration & Nomination Committee of the Board of Directors is responsible for recommending to the Board the Company’s remuneration and compensation policy arrangements for all Key Management Personnel. Ms. Hernon, together with the non-executive members of the Board assess 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. Compensation Structure In accordance with best practice corporate governance recommendations, the structure of non-executive Director and senior executive compensation is separate and distinct. 22. INFOMEDIA.COM DIRECTORS’ REPORT REMUNERATION REPORT (CONTINUED) – AUDITED Non-executive Director Compensation Objective The Board seeks to set aggregate compensation 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 compensation of non-executive Directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then available between the Directors as appropriate (for the year ended 30 June 2013 non-executive Directors’ compensation totalled $153,335 (2012: $176,210). The latest determination was at the Annual General Meeting held on 30 October 2002 when shareholders approved a maximum aggregate compensation 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 Compensation Objective The Company aims to reward executives with a level and mix of compensation commensurate with their position and responsibilities within the Company and 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 compensation is competitive by market standards. Structure In determining the level and make-up of executive compensation, the Remuneration Committee engages an external consultant from time to time to provide independent advice in the form of a written report detailing market levels of compensation for comparable executive roles. Compensation consists of the following key elements: • Fixed Compensation; • Variable Compensation - Short Term Incentive (‘STI’); and • Variable Compensation - Long Term Incentive (‘LTI’). The actual proportion of ﬁ xed compensation and variable compensation (potential short term and long term incentives) is established for Key Management Personnel (excluding the CEO and non-executive Directors) by the CEO in conjunction with the lead director (Ms. Hernon) for all remuneration matters, and in the case of the CEO, by the Chairman of the Board in conjunction with Ms. Hernon. Other executive salaries are determined by the CEO with reference to market conditions. Fixed Compensation Objective The level of ﬁ xed compensation is set so as to provide a base level of compensation which is both appropriate to the position and is competitive in the market. Fixed compensation is reviewed periodically by the CEO or Executive Chairman in conjunction with Ms. Hernon for the Key Management Personnel (excluding the CEO and non-executive Directors), and in the case of the CEO, by the Chairman of the Board in conjunction with Ms. Hernon. All other executive positions are reviewed periodically by the CEO or Executive Chairman. As noted above, Ms. Hernon has access to external advice independent of management. Structure Executives are given the opportunity to receive their ﬁ xed (primary) compensation 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. SUPERSERVICE.COM 23. DIRECTORS’ REPORT REMUNERATION REPORT (CONTINUED) - AUDITED Variable Compensation – Short Term Incentive (STI) Objective The objective of short term compensation is to link the achievement of both individual performance and Company performance with the compensation received by the executive. Structure The structure of short term compensation is a cash bonus dependent upon a combination of individual performance objectives and Company objectives being met. This reﬂ ects the Company wide practice of ‘Performance Planning & Review’ (PPR) procedures. Individual performance objectives centre on 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) are used. In assessing whether Company objectives have been satisﬁ ed, Board level pre-determined budgetary targets are used. These methods have been chosen to create clear and measurable performance targets. Variable Compensation – Long Term Incentive (LTI) Objective The objective of the LTI plan is to reward executives in a manner which aligns this element of compensation 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 compensation 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. Contract for Services The table and notes below summarise current executive employment contracts with the Company as at the date of this report: Commencement date per latest contract Karen Blunden 15 January 2012 Nick Georges 15 January 2012 Andrew Pattinson 15 January 2012 Jonathan Pollard 15 January 2012 Michael Roach 15 January 2012 Duration Notice Period – Company Notice Period – Executive 3 years 3 years 3 years 3 years 3 years 3 months 3 months 3 months 3 months 3 months 3 months 3 months 3 months 3 months 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. 24. INFOMEDIA.COM DIRECTORS’ REPORT REMUNERATION REPORT (CONTINUED) - AUDITED Key Management Personnel and the ﬁ ve highest remunerated speciﬁ ed executives for the year ended 30 June 2013 and 30 June 2012. Short-Term Post Employment Share Based Payments Long Service leave Termination payments Total Percentage Performance Related Percentage Attributable to Options 2013 Financial Year: Salary & Fees Bonus Non Monetary Beneﬁ ts Superannuation Options $ $ $ $ $ $ $ $ % % Directors: Richard Graham 115,000 Myer Herszberg 56,300 Frances Hernon 56,250 Geoff Henderson* 28,125 Executives: - - - - - - - - 10,350 5,067 5,062 2,531 - - - - Karen Blunden 256,056 44,890 968 - 10,061 - - - - - Nick Georges 202,000 38,380 Andrew Pattinson 292,000 55,480 Jonathan Pollard 234,000 44,460 Michael Roach 212,000 40,280 - - - - 18,227 10,061 3,367 26,280 10,061 4,867 21,060 10,061 3,120 19,080 10,061 3,533 1,451,731 223,490 968 107,657 50,305 14,887 2012 Financial Year: Directors: Richard Graham 115,000 Myer Herszberg 56,300 Frances Hernon 56,250 Geoff Henderson* 49,111 Executives: - - - - - - - - 10,350 5,067 5,062 4,420 - - - - Karen Blunden 208,155 47,121 707 - 8,871 - - - - - Nick Georges 202,000 32,595 Andrew Pattinson 285,769 46,261 Jonathan Pollard 228,462 37,182 Michael Roach 204,795 33,169 - - - - 18,808 6,983 25,719 20,562 7,473 7,394 3,367 4,867 2,730 18,519 7,409 3,533 1,405,842 196,328 707 108,507 38,130 14,497 *Resigned 3rd January 2013 - - - - - - - - - - - - - - - - - - - 125,350 61,367 61,312 30,656 311,975 272,035 388,688 312,701 284,954 1,849,038 125,350 61,367 61,312 53,531 264,854 263,753 370,089 296,330 267,425 1,764,011 - - - - 14% 14% 14% 14% 14% - - - - 18% 12% 12% 13% 12% - - - - 3% 4% 3% 3% 4% - - - - 3% 3% 2% 2% 3% The amounts above are based on individual contracts with each person. The proportion of remuneration that is based on performance is dependent on their individual achievement of KPI’s. SUPERSERVICE.COM 25. DIRECTORS’ REPORT REMUNERATION REPORT (CONTINUED) - AUDITED Compensation options: Vested during the year 30 June 2013 Terms and Conditions for each Grant Vested Exercised Executives Options Issued No. Grant date Fair value per option at grant date ($) Exercise price per option ($) Expiry date No. % No. % Andrew Pattinson 450,000 15/01/2012 Nick Georges 450,000 15/01/2012 Michael Roach 450,000 15/01/2012 Karen Blunden 450,000 15/01/2012 Jonathan Pollard 450,000 15/01/2012 Total 2,250,000 0.050 0.050 0.050 0.050 0.050 0.19 0.19 0.19 0.19 0.19 14/03/2015 150,000 33.3% - 0.0% 14/03/2015 150,000 33.3% 150,000 33.3% 14/03/2015 150,000 33.3% - 0.0% 14/03/2015 150,000 33.3% 150,000 33.3% 14/03/2015 150,000 33.3% - 750,000 33.3% 300,000 0.0% 40% Compensation options: Vested during the year 30 June 2012 Terms and Conditions for each Grant Vested Exercised Executives Options Issued No. Grant date Fair value per option at grant date ($) Exercise price per option ($) Expiry date No. % No. % Andrew Pattinson 450,000 15/01/2012 Nick Georges 450,000 15/01/2012 Michael Roach 450,000 15/01/2012 Karen Blunden 450,000 15/01/2012 Jonathan Pollard 450,000 15/01/2012 Total 2,250,000 0.050 0.050 0.050 0.050 0.050 0.19 0.19 0.19 0.19 0.19 14/03/2015 14/03/2015 14/03/2015 14/03/2015 14/03/2015 - - - - - - 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% - - - - - - 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Additional information Executive rewards are linked to the creation of shareholder value by providing incentives that positively impact the earnings of the company. The earnings of the consolidated entity for the ﬁ ve years to 30 June 2013 are summarised below: 2009 $’000 2010 $’000 2011 $’000 2012 $’000 2013 $’000 EBITDA EBIT 15,857 18,175 18,788 17,653 20,104 12,415 14,430 13,172 11,087 11,974 Proﬁ t after income tax 10,536 11,336 10,039 8,461 10,066 The factors that are considered to aff ect total shareholders return (‘TSR’) are summarised below: 2009 $’000 2010 $’000 2011 $’000 2012 $’000 2013 $’000 Dividends per share (cents) Share price at ﬁ nancial year end (cents) 2.80 30.0 2.40 28.0 2.40 22.0 2.40 20.0 2.82 47.0 This concludes the remuneration report, which has been audited. 26. INFOMEDIA.COM DIRECTORS’ MEETINGS The number of meetings of Directors (including meetings of committees of Directors) held during the year and the numbers of meetings attended by each Director were as follows: DIRECTORS’ REPORT Committee Meetings Directors’ Meetings Audit, Risk & Governance** Number of meetings held: Number of meetings attended: Richard Graham Myer Herszberg Frances Hernon Geoff rey Henderson* *Resigned 3rd January 2013 9 9 8 9 5 2 - 2 2 2 ** Functions of the Audit, Risk & Governance Committee were assumed by the Board on 3 January 2013 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. INDEMNITY AND INSURANCE OF AUDITOR The company has not, during or since the ﬁ nancial year, indemniﬁ ed or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor. During the ﬁ nancial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity. NON-AUDIT SERVICES Details of the amounts paid or payable to the auditor for non-audit services provided during the ﬁ nancial year by the auditor are outlined in note 22 to the ﬁ nancial statements. The directors are satisﬁ ed that the provision of non-audit services during the ﬁ nancial year, by the auditor (or by another person or ﬁ rm on the auditor’s behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are of the opinion that the services as disclosed in note 22 to the ﬁ nancial statements do not compromise the external auditor’s independence for the following reasons: all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor, and none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards. AUDITOR INDEPENDENCE The Directors received an auditor’s independence declaration from the auditor of the Company (refer page 28). Signed in accordance with a resolution of the Directors. Richard David Graham Chairman Sydney, 21 August 2013 SUPERSERVICE.COM 27. 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(cid:37)(cid:39)(cid:50)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:69)(cid:85)(cid:68)(cid:81)(cid:71)(cid:3)(cid:81)(cid:68)(cid:80)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:39)(cid:50)(cid:3)(cid:81)(cid:72)(cid:87)(cid:90)(cid:82)(cid:85)(cid:78)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:72)(cid:68)(cid:70)(cid:75)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:39)(cid:50)(cid:3)(cid:80)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:85)(cid:80)(cid:86)(cid:17)(cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:20)(cid:22)(cid:3) STATEMENT OF PROFIT & LOSS AND OTHER COMPREHENSIVE INCOME YEAR ENDED 30 June 2013 Notes CONSOLIDATED Sales revenue Foreign exchange movement on hedges closed out during the period Cost of sales Gross Proﬁ t Finance revenue Employee beneﬁ ts expense Depreciation and amortisation Finance costs Operating lease rental Capitalisation of research & development costs Other expenses Proﬁ t before income tax Income tax expense Proﬁ t after income tax Other comprehensive income Items that may be subsequently reclassiﬁ ed to proﬁ t or loss Foreign currency translation diff erences for foreign operations Eff ective cashﬂ ow hedges movement recognised in equity Other comprehensive income for the period, net of tax Total comprehensive income for the period Basic earnings per share (cents per share) Diluted earnings per share (cents per share) Dividends per share - ordinary (cents per share) The notes of pages 33 to 66 form part of these ﬁ nancial statements 2013 $’000 48,689 989 49,678 (19,299) 30,379 76 (10,908) (8,130) - (1,208) 7,417 (5,576) 12,050 (1,984) 10,066 854 (1,240) (386) 9,680 3.32 3.29 2.82 3(i) 3(ii) 3(iii) 3(iv) 4 5 5 6 2012 $’000 45,677 2,620 48,297 (19,278) 29,019 151 (10,674) (6,567) (50) (1,197) 6,396 (5,890) 11,188 (2,727) 8,461 (192) (978) (1,170) 7,291 2.79 2.79 2.40 SUPERSERVICE.COM 29. STATEMENT OF FINANCIAL POSITION AT 30 June 2013 Notes CONSOLIDATED CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Prepayments Derivatives TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, plant and equipment Intangible assets and goodwill TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Derivatives Provisions Income tax payable Deferred revenue TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Provisions Deferred tax liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Retained proﬁ ts TOTAL EQUITY The notes of pages 33 to 66 form part of these ﬁ nancial statements 17(b) 7 8 26 9 10 12 26 13 14 15 4 16 16 2013 $’000 9,299 5,304 1 1,214 - 15,818 1,438 34,359 35,797 51,615 2,634 2,193 2,039 611 668 8,145 448 4,854 5,302 13,447 38,168 10,855 147 27,166 38,168 2012 $’000 6,646 4,033 7 1,015 693 12,394 1,389 34,106 35,495 47,889 2,901 - 1,812 835 564 6,112 425 5,107 5,532 11,644 36,245 10,798 337 25,110 36,245 30. INFOMEDIA.COM STATEMENT OF CASH FLOWS YEAR ENDED 30 June 2013 Notes CONSOLIDATED CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Interest paid Income tax paid NET CASH FLOWS FROM OPERATING ACTIVITIES 17 (a) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment Payment for purchase of business, net of cash acquired NET CASH FLOWS USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of share options Dividends paid on ordinary shares Proceeds of borrowings Repayment of borrowings NET CASH FLOWS USED IN FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH HELD Add opening cash brought forward CLOSING CASH CARRIED FORWARD The notes of pages 33 to 66 form part of these ﬁ nancial statements 16 6 17 (b) 2013 $’000 49,128 (36,012) 76 - (1,944) 11,248 (642) - (642) 57 (8,010) - - (7,953) 2,653 6,646 9,299 2012 $’000 48,250 (35,464) 151 (50) (3,148) 9,739 (534) (4,616) (5,150) - (6,763) 3,748 (3,748) (6,763) (2,174) 8,820 6,646 SUPERSERVICE.COM 31. STATEMENT OF CHANGES IN EQUITY YEAR ENDED 30 June 2013 CONSOLIDATED Contributed equity Retained earnings Employee equity beneﬁ ts reserve Cashﬂ ow hedge reserve Foreign currency translation reserve Total $’000 10,798 - - - 57 - - $’000 25,110 10,066 - 10,066 - - (8,010) 10,855 27,166 $’000 $’000 $’000 $’000 56 - - - - 196 - 252 485 - (1,240) (1,240) - - - (204) 36,245 - 854 854 - - - 10,066 (386) 9,680 57 196 (8,010) (755) 650 38,168 At 1 July 2012 Proﬁ t for the year Other comprehensive income Total comprehensive income for the year Transactions with owners in their capacity as owners Share options exercised Share based payments Equity dividends At 30 June 2013 YEAR ENDED 30 June 2012 CONSOLIDATED Contributed equity Retained earnings Employee equity beneﬁ ts reserve Cashﬂ ow hedge reserve At 1 July 2011 Proﬁ t for the year Other comprehensive income Total comprehensive income for the year Transactions with owners in their capacity as owners Transfer Share buy back Equity dividends At 30 June 2012 $’000 10,798 - - - - - - 10,798 $’000 22,206 8,461 - 8,461 1,206 - (6,763) 25,110 $’000 1,210 - - - (1,206) 52 - 56 The notes of pages 33 to 66 form part of these ﬁ nancial statements Foreign currency translation reserve $’000 (12) - (192) (192) - - - Total $’000 35,665 8,461 (1,170) 7,291 - 52 (6,763) 36,245 $’000 1,463 - (978) (978) - - - 485 (204) 32. INFOMEDIA.COM NOTES TO THE FINANCIAL STATEMENTS 30 June 2013 1. CORPORATE INFORMATION The ﬁ nancial report of Infomedia Ltd for the year ended 30 June 2013 was authorised for issue in accordance with a resolution of the Directors on 21 August 2013. Infomedia Ltd is a company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on the Australian stock exchange (ASX:IFM). The nature of the operations and principal activities of the Company are described in the Directors’ Report. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of preparation 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 and Australian Accounting Standards and Interpretations as appropriate for proﬁ t oriented entities. The ﬁ nancial report has also been prepared on an historical cost basis, except for derivative ﬁ nancial instruments that have been measured at fair value. (b) Statement of compliance This ﬁ nancial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards Board. This ﬁ nancial report also complies with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. New, revised or amending Accounting Standards and Interpretations adopted The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period. Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Any signiﬁ cant impact on the accounting policies of the consolidated entity from the adoption of these Accounting Standards and Interpretations are disclosed below. The adoption of these Accounting Standards and Interpretations did not have any signiﬁ cant impact on the ﬁ nancial performance or position of the consolidated entity. The following Accounting Standards and Interpretations are most relevant to the consolidated entity: AASB 2011-9 Amendments to Australian Accounting Standards - Presentation of Items of Other Comprehensive Income The consolidated entity has applied AASB 2011-9 amendments from 1 July 2012. The amendments requires grouping together of items within other comprehensive income on the basis of whether they will eventually be ‘recycled’ to the proﬁ t or loss (reclassiﬁ cation adjustments). The change provides clarity about the nature of items presented as other comprehensive income and the related tax presentation. The amendments also introduced the term ‘Statement of proﬁ t or loss and other comprehensive income’ clarifying that there are two discrete sections, the proﬁ t or loss section (or separate statement of proﬁ t or loss) and other comprehensive income section. New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2013. The consolidated entity’s assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out below. AASB 9 Financial Instruments, 2009-11 Amendments to Australian Accounting Standards arising from AASB 9, 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 and 2012-6 Amendments to Australian Accounting Standards arising from AASB 9 This standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1 January 2015 and completes phase I of the IASB’s project to replace IAS 39 (being the international equivalent to AASB 139 ‘Financial Instruments: Recognition and Measurement’). This standard introduces new classiﬁ cation and measurement models for ﬁ nancial assets, using a single approach to determine whether a ﬁ nancial asset is measured at amortised cost or fair value. The accounting for ﬁ nancial liabilities continues to be classiﬁ ed and measured in accordance with AASB 139, with one exception, being that the portion of a change of fair value relating to the entity’s own credit risk is to be presented in other comprehensive income unless it would create an accounting mismatch. The consolidated entity will adopt this standard from 1 July 2015. Once phase 2 and 3 of this standard are completed is likely to impact the hedge SUPERSERVICE.COM 33. NOTES TO THE FINANCIAL STATEMENTS 30 June 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) accounting treatment of forward exchange contracts held by the consolidated entity, as the mark to market value of both intrinsic and timing elements of open hedge instruments shall be recognised in other comprehensive income rather than proﬁ t or loss. (c) Basis of consolidation The consolidated ﬁ nancial statements comprise the ﬁ nancial statements of Infomedia Ltd and its subsidiaries (‘the Company’). The ﬁ nancial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that 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. Subsidiaries are consolidated from the date on which control is transferred to the Company and cease to be consolidated from the date on which control is transferred out of the Company. 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 Infomedia Ltd has control. (d) Signiﬁ cant accounting judgments, estimates and assumptions Signiﬁ cant accounting estimates and assumptions The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a signiﬁ cant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are: • Impairment of goodwill The Company determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash generating units to which the goodwill and intangibles with indeﬁ nite useful lives are allocated. The assumptions used in this estimation of recoverable amount and the carrying amount of goodwill and intangibles with indeﬁ nite useful lives are discussed in Note 11. • Share-based payment transactions The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an external valuer using a binomial model, using the assumptions detailed in Note 19. • Research & Development Development costs are only capitalised by the Group when it is assessed that the technical feasibility of completing the intangible asset is valid so that the asset will be available for use or sale. Refer to note 2(k) for further discussion. (e) Foreign currency translation Translation of foreign currency transactions Transactions in foreign currencies of the Company are converted to local currency at the rate of exchange ruling at the date of the transaction. Amounts payable to and by the Company 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 reporting period. All currency exchange diff erences in the consolidated ﬁ nancial report are taken to the income statement. Translation of ﬁ nancial reports of overseas operations Both the functional and presentation currency of Infomedia Ltd is Australian dollars (A$). Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. The functional currency of the overseas subsidiaries is as follows: IFM Europe Ltd Great British Pounds (GBP) IFM Germany GmbH Euros (EUR) IFM North America Inc United States Dollars (USD) Diff erent Aspect Software Ltd Great British Pounds (GBP) 34. INFOMEDIA.COM NOTES TO THE FINANCIAL STATEMENTS 30 June 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) As at the reporting date the assets and liabilities of these overseas subsidiaries are translated into the presentation currency of Infomedia Ltd at the rate of exchange ruling at the balance sheet date and the income statements are translated at the weighted average exchange rates for the period. The exchange diff erences arising on the retranslation are taken directly to a separate component of equity. (f) 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 three months, net of outstanding bank overdrafts. (g) Trade and other receivables Trade receivables, which generally have 30-60 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An allowance for doubtful debts is made when there is objective evidence that the Company will not be able to collect the debts. Bad debts are written off when identiﬁ ed. (h) Investments and other ﬁ nancial assets Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classiﬁ ed as either ﬁ nancial assets at fair value through proﬁ t or loss, loans and receivables, held-to-maturity investments, or available-for-sale investments, as appropriate. For the Company the relevant categories are listed below: Loans and receivables Loans and receivables are non-derivative ﬁ nancial assets with ﬁ xed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the eff ective interest method. Gains and losses are recognised in proﬁ t or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process. Investments in Subsidiaries Investments in subsidiaries are recorded at cost. (i) Inventories 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 ( j) Goodwill Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Company’s interest in the net fair value of the acquiree’s identiﬁ able assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company’s cash-generating units, or groups of cash generating units, that are expected to beneﬁ t from the synergies of the combination, irrespective of whether other assets or liabilities of the Company are assigned to those units or groups of units. Each unit or group of units to which the goodwill is so allocated: • represents the lowest level within the Company at which the goodwill is monitored for internal management purposes; and • is not larger than a segment based on either the Company’s primary or the Company’s secondary reporting format determined in accordance with AASB 8 Operating Segments. Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units), to which the goodwill relates. When the recoverable amount of the cash-generating unit (group of cash-generating SUPERSERVICE.COM 35. NOTES TO THE FINANCIAL STATEMENTS 30 June 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) units) is less than the carrying amount, an impairment loss is recognised. When goodwill forms part of a cash-generating unit (group of cash-generating units) and an operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this manner is measured based on the relative values of the operation disposed of and the portion of the cash generating unit retained. Impairment losses recognised for goodwill are not subsequently reversed. (k) Intangible assets Intangible assets acquired separately or in a business combination are initially measured at cost. The cost of an intangible asset acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is charged against proﬁ ts in the year in which the expenditure is incurred. Research costs are expensed as incurred. Development costs are capitalised and an intangible asset for development expenditure on an internal project is recognised only when the Company can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic beneﬁ ts, the availability of resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible asset during its development. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Any expenditure so capitalised is amortised over the period of expected beneﬁ ts from the related project commencing from the commercial release of the project. The carrying value of an intangible asset arising from development expenditure is tested for impairment annually when the asset is not yet available for use or more frequently when an indication of impairment arises during the reporting period. Gains or losses arising from derecognition of an intangible asset are measured as the diff erence between the net disposal proceeds and the carrying amount of the asset and are recognised in proﬁ t or loss when the asset is derecognised. The useful lives of intangible assets are assessed to be either ﬁ nite or indeﬁ nite. Intangible assets with ﬁ nite lives are amortised over the useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a ﬁ nite useful life is reviewed at least at each ﬁ nancial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic beneﬁ ts embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, which is a change in accounting estimate. The amortisation expense on intangible assets with ﬁ nite lives is recognised in proﬁ t or loss in the expense category consistent with the function of the intangible asset. Intangible assets with indeﬁ nite useful lives are tested for impairment annually either individually or at the cash-generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indeﬁ nite life is reviewed each reporting period to determine whether indeﬁ nite life assessment continues to be supportable. If not, the change in the useful life assessment from indeﬁ nite to ﬁ nite is accounted for as a change in an accounting estimate and is thus accounted for on a prospective basis. (l) Impairment of assets The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inﬂ ows that are largely independent of those from other assets or groups of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash- generating unit is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash ﬂ ows are discounted to their present value using a pre-tax discount rate that reﬂ ects current market assessments of the time value of money and the risks speciﬁ c to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease). An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is 36. INFOMEDIA.COM NOTES TO THE FINANCIAL STATEMENTS 30 June 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) estimated. A previously recognised impairment loss is reversed (with the exception of goodwill) only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in proﬁ t or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. (m) Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Land and buildings are measured at cost less accumulated depreciation on buildings and less any impairment losses recognised. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows: Major depreciation periods are: 2013 2012 Leasehold improvements: 5 to 20 years 5 to 20 years Other plant and equipment: 3 to 15 years 3 to 15 years The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each ﬁ nancial year end. (i) Derecognition and disposal An item of property, plant and equipment is derecognised upon disposal or when no further future economic beneﬁ ts are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the diff erence between the net disposal proceeds and the carrying amount of the asset) is included in proﬁ t or loss in the year the asset is derecognised. (n) Leases Operating lease payments are recognised as an expense in the statement of proﬁ t & loss and other comprehensive on a straight-line basis over the lease term. Lease incentives are recognised in the statement of proﬁ t & loss and other comprehensive income as an integral part of the total lease expense. (o) Trade and other payables Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Company prior to the end of the ﬁ nancial year that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services. (p) Provisions Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outﬂ ow of resources embodying economic beneﬁ ts will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost. (q) Deferred revenue 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. (r) Contributed equity Ordinary shares are classiﬁ ed as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. (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 SUPERSERVICE.COM 37. NOTES TO THE FINANCIAL STATEMENTS 30 June 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. Interest is recognised using the eff ective interest method. (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) Derivative ﬁ nancial instruments and hedging Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. Derivative ﬁ nancial instruments are measured at fair value. Any gains or losses arising from changes in the fair value of derivatives, except for those that qualify as cash ﬂ ow hedges, are taken directly to proﬁ t or loss for the year. The fair value of forward currency contracts are calculated by reference to current forward exchange rates for contacts with similar maturity proﬁ les. For the purpose of hedge accounting, hedges are classiﬁ ed as cash ﬂ ow hedges when they hedge the exposure to variability in cash ﬂ ows that is attributable either to a particular risk associated with a recognised asset or liability or to a highly probable forecast transaction. Infomedia Ltd currently has cash ﬂ ow hedges attributable to highly probable future foreign currency sales. Cash ﬂ ow hedges Cash ﬂ ow hedges are hedges of the Group’s exposure to variability in cash ﬂ ows that is attributable to a particular risk associated with anticipated future sales that could aff ect proﬁ t or loss. The eff ective portion of the gain or loss on the hedging instrument is recognised directly in equity, while the ineff ective portion is recognised in proﬁ t or loss. Amounts taken to equity are transferred out of equity and included in the measurement of the hedged transaction when the forecast transaction occurs. The Group tests each of the designated cash ﬂ ow hedges for eff ectiveness on a monthly basis both retrospectively and prospectively using the “matched terms” principle. At each balance date, hedge eff ectiveness is measured in the ﬁ rst instance by determining whether there have been any changes to these “matched terms”. When there have been no changes to these “matched terms”, the hedge is considered to be highly eff ective. Where there has been a change to these terms, eff ectiveness is measured using the hypothetical derivative method. The parent entity (Infomedia Ltd) sells software to its customers and uses its subsidiary companies (i.e. IFM North America Inc and IFM Europe Ltd) to act as billing agents and provide sales and support services. Sales are denominated in USD and Euros. The Group hedges foreign exchange exposure on sales (net of sales and support service costs) as this exposure aff ects consolidated proﬁ t when the sale is made to the external customer. (v) Income tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date. Deferred income tax is provided on all temporary diff erences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for ﬁ nancial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary diff erences except: • when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, aff ects neither the accounting proﬁ t nor taxable proﬁ t or loss; or • when the taxable temporary diff erence is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary diff erence can be controlled and it is probable that the temporary diff erence will not reverse in the foreseeable future. 38. INFOMEDIA.COM NOTES TO THE FINANCIAL STATEMENTS 30 June 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Deferred income tax assets are recognised for all deductible temporary diff erences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable proﬁ t will be available against which the deductible temporary diff erences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: • when the deferred income tax asset relating to the deductible temporary diff erence arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, aff ects neither the accounting proﬁ t nor taxable proﬁ t or loss; or • when the deductible temporary diff erence is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary diff erence will reverse in the foreseeable future and taxable proﬁ t will be available against which the temporary diff erence can be utilised. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Income taxes relating to items recognised directly in equity are recognised in equity and not in proﬁ t or loss. Deferred tax assets and deferred tax liabilities are off set only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. The tax consolidated current tax liability and other deferred tax assets are required to be allocated to the members of the tax consolidated group in accordance with Interpretation 1052 – Tax Consolidation Accounting. The group uses a group allocation method for this purpose where the allocated current tax payable, deferred tax assets and other tax credits for each member of the tax consolidated group is determined as if the company is a stand-alone taxpayer but modiﬁ ed as necessary to recognise membership of a tax consolidated group. Recognition of amounts allocated to members of the tax consolidated group has regard to the tax consolidated groups future tax proﬁ ts. (w) Other taxes Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (“GST”) except: • when 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 cost of acquisition of the asset or as part of the expense item as applicable; and • receivables and payables, which 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 net basis. The GST relating to sales and purchases is included in payments to employees and suppliers. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. (x) Employee leave beneﬁ ts (i) Wages, salaries and annual leave Liabilities for wages and salaries, including non-monetary beneﬁ ts, and annual leave expected to be settled within 12 months of the reporting date are recognised in other payables and current provisions respectively in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. (ii) Long service leave The liability for long service leave is recognised in the provision for employee beneﬁ ts and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures, and period of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cashﬂ ows. SUPERSERVICE.COM 39. NOTES TO THE FINANCIAL STATEMENTS 30 June 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (iii) Post employment and termination beneﬁ ts A Superannuation expense at 9% of salaries is recognised on a straight line basis. Termination beneﬁ ts are recognised at the point of being incurred where relevant. (y) Share-based payment transactions The Company provides beneﬁ ts to employees in the form of share-based payment transactions, whereby employees render services in exchange for shares or options over shares (‘equity-settled transactions’). There are currently two plans in place to provide these beneﬁ ts: (i) the Employee Share Plan (ESP), and (ii) the Employee Option Plan (EOP). The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an external valuer using a binomial model. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Infomedia Ltd (‘market conditions’). The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulﬁ lled, ending on the date on which the relevant employees become fully entitled to the option (‘vesting date’). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reﬂ ects (i) the extent to which the vesting period has expired and (ii) the number of options that, in the opinion of the Directors of the Company, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the eff ect of these conditions is included in the determination of fair value at grant date. Where the terms of an equity-settled option are modiﬁ ed, as a minimum an expense is recognised as if the terms had not been modiﬁ ed. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modiﬁ cation, as measured at the date of modiﬁ cation. Where an equity-settled option is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the option is recognised immediately. However, if a new option is substituted for the cancelled option, and designated as a replacement option on the date that it is granted, the cancelled and new option are treated as if they were a modiﬁ cation of the original option, as described in the previous paragraph. The dilutive eff ect, if any, of outstanding options is reﬂ ected as additional share dilution in the computation of diluted earnings per share. (z) Earnings per share Basic earnings per share is determined by dividing the proﬁ t attributed to members of the parent after related income tax expense by the weighted average number of ordinary shares outstanding during the ﬁ nancial year. Diluted earnings per share is calculated as net proﬁ t attributable to members, adjusted for: • cost of servicing equity (other than dividends); • the after tax eff ect 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. (aa) Business combinations The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired. The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either 40. INFOMEDIA.COM NOTES TO THE FINANCIAL STATEMENTS 30 June 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) fair value or at the proportionate share of the acquiree’s identiﬁ able net assets. All acquisition costs are expensed as incurred to proﬁ t or loss. On the acquisition of a business, the consolidated entity assesses the ﬁ nancial assets acquired and liabilities assumed for appropriate classiﬁ cation and designation in accordance with the contractual terms, economic conditions, the consolidated entity’s operating or accounting policies and other pertinent conditions in existence at the acquisition-date. Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the diff erence between the fair value and the previous carrying amount is recognised in proﬁ t or loss. Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of contingent consideration classiﬁ ed as an asset or liability is recognised in proﬁ t or loss. Contingent consideration classiﬁ ed as equity is not remeasured and its subsequent settlement is accounted for within equity. The diff erence between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identiﬁ able net assets acquired, being a bargain purchase to the acquirer, the diff erence is recognised as a gain directly in proﬁ t or loss by the acquirer on the acquisition-date, but only after a reassessment of the identiﬁ cation and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer’s previously held equity interest in the acquirer. Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value. SUPERSERVICE.COM 41. NOTES TO THE FINANCIAL STATEMENTS 30 June 2013 3. EXPENSES (i) Cost of sales Direct wages Other Total cost of sales (ii) Employee beneﬁ t expense Salaries and wages (including on-costs) Share based payment expense Total employee beneﬁ t expense (iii) Depreciation and amortisation Depreciation of non-current assets: - Leasehold improvements - Offi ce equipment - Furniture and ﬁ ttings - Plant and equipment Total depreciation of non-current assets Amortisation of non-current assets - Intellectual property - Deferred development costs Total amortisation of non-current assets Total depreciation and amortisation (iv) Research & development costs Total research & development costs incurred during the period Less: development costs capitalised Net research and development costs expensed Notes CONSOLIDATED 2013 $’000 2012 $’000 12,032 7,267 19,299 10,712 196 10,908 5 476 41 71 593 359 7,178 7,537 8,130 12,601 (7,417) 5,184 19 10 12,000 7,278 19,278 10,622 52 10,674 5 431 44 90 570 421 5,575 5,996 6,567 11,081 (6,396) 4,685 42. INFOMEDIA.COM NOTES TO THE FINANCIAL STATEMENTS 30 June 2013 4. INCOME TAX Notes CONSOLIDATED 2013 $’000 2012 $’000 The major components of income tax expense are: Income statement Current income tax Current income tax charge Adjustments in respect of current income tax of previous years. Deferred income tax Relating to origination and reversal of temporary diff erences Income tax expense reported in the income statement (b) Disclosure of tax eff ects relating to each component of other comprehensive income Movement in cash ﬂ ow hedges 2,404 (711) 291 1,984 (542) (542) 2,809 (183) 101 2,727 (419) (419) A reconciliation between tax expense and the product of accounting proﬁ t before in- come tax multiplied by the Company’s applicable income tax rate is as follows: Accounting proﬁ t before income tax 12,050 11,189 At the Company’s statutory income tax rate of 30% (2012: 30%) Adjustments in respect of income tax of previous years Additional research and development deduction Expenditure not allowable for income tax purposes Income tax expense reported in the income statement 3,615 (487) (1,214) 70 1,984 3,357 (158) (531) 59 2,727 SUPERSERVICE.COM 43. NOTES TO THE FINANCIAL STATEMENTS 30 June 2013 4. INCOME TAX (CONTINUED) Deferred income tax Deferred income tax at 30 June relates to the following: CONSOLIDATED Deferred tax liabilities Derivatives Deferred development costs Intellectual property Notes STATEMENT OF FINANCIAL POSITION INCOME STATEMENT 2013 $’000 2012 $’000 2013 $’000 2012 $’000 658 (6,382) - (208) (6,310) - (324) 72 - Gross deferred income tax liabilities (5,724) (6,518) CONSOLIDATED Deferred tax assets Allowance for doubtful debts Other payables Employee entitlement provisions Other provisions Currency exchange Gross deferred income tax assets Deferred tax income/ (expense) 18 76 567 68 141 870 27 93 616 418 259 1,411 9 17 49 350 118 291 - 245 (37) (8) 24 (121) 2 (4) 101 Net deferred income tax liabilities (4,854) (5,107) 5. EARNINGS PER SHARE Basic earnings per share amounts are calculated by dividing net proﬁ t for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the net proﬁ t attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year (adjusted for the eff ects of dilutive options). The following reﬂ ects the income and share data used in the total operations basic and diluted earnings per share computations: Net proﬁ t attributable to equity holders from continuing operations Notes CONSOLIDATED 2013 $’000 10,066 2012 $’000 8,461 Number of shares Number of shares Weighted average number of ordinary shares for basic earnings per share 303,382,350 303,276,855 Eff ect of dilution: Share options 2,801,407 347,329 Adjusted weighted average number of ordinary shares for diluted earnings per share 306,183,757 303,624,184 Total equivalent shares outstanding on out-of-the-money options that were not dilutive for the respective periods but could potentially dilute earnings per share in the future were 0 (2012: 250,000). 44. INFOMEDIA.COM 30 June 2013 Notes CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS 6. DIVIDENDS PROPOSED OR PAID (a) Dividends paid during the year: Interim dividend – 1.27 cents franked to 0.5c (2012: 1.03 cents fully franked) per share Prior year ﬁ nal dividend – 1.37 cents fully franked (2012: 1.2 cents, unfranked) per share Total dividends paid during the year (b) Dividends proposed and not recognised as a liability: Final dividend – 1.55 cents fully franked. (2012: 1.37 cents, fully franked) per share (c) Franking credit balance: – – 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 If fully franked, the tax rate on dividends is 30% (2012: 30%). 30 June 2013 7. TRADE AND OTHER RECEIVABLES (CURRENT) Trade debtors Allowance for impairment loss (a) Other debtors (a) Allowance for impairment loss 2013 $’000 3,855 4,155 8,010 2012 $’000 3,124 3,639 6,763 4,713 4,155 217 656 873 927 685 1,612 CONSOLIDATED 2013 $’000 2012 $’000 5,459 (224) 5,235 69 5,304 4,203 (210) 3,993 40 4,033 Trade receivables are non-interest bearing and are generally on 30-60 day terms. A provision for impairment loss is recognised when there is objective evidence that an individual trade receivable is impaired. An impairment loss of $76,000 (2012: $121,000 loss) has been recognised by the group in the current year. These amounts have been included in the other expenses item. The amount of the allowance/impairment loss is recognised as the diff erence between the carrying amount of the debtor and the estimated future cash ﬂ ows expected to be received from the relevant debtors. Movements in the provision for impairment loss were as follows: At 1 July Charge/(release) for the year Foreign exchange translation Amounts written off At 30 June 210 76 10 (72) 224 136 121 (10) (37) 210 At 30 June the aging analysis of trade receivables is as follows: Total 0-60 days NI* 0-60 days CI* 61-120 days NI* 61-120 days CI* 121+ days NI* 121+ days CI* 2013 Consolidated ($’000) 5,459 2012 Consolidated ($’000) 4,203 4,795 3,652 30 36 296 281 43 30 144 76 151 128 * Not impaired (NI) Considered impaired (CI) All trade receivables over 60 days are considered past due. SUPERSERVICE.COM 45. NOTES TO THE FINANCIAL STATEMENTS 30 June 2013 8. INVENTORIES Raw materials At cost Total inventories at the lower of cost and net realisable value Notes CONSOLIDATED 2013 $’000 2012 $’000 1 1 7 7 30 June 2013 Notes CONSOLIDATED 9. PROPERTY, PLANT & EQUIPMENT (a) Leasehold improvements At cost Accumulated amortisation Offi ce equipment At cost Accumulated depreciation Furniture and ﬁ ttings At cost Accumulated depreciation Plant and equipment At cost Accumulated depreciation Total property, plant and equipment At cost Accumulated depreciation and amortisation Total carrying amount 2013 $’000 481 (413) 68 8,455 (7,300) 1,155 446 (287) 159 3,301 (3,245) 56 12,683 (11,245) 1,438 2012 $’000 434 (407) 27 7,871 (6,784) 1,087 399 (237) 162 3,287 (3,174) 113 11,991 (10,602) 1,389 46. INFOMEDIA.COM NOTES TO THE FINANCIAL STATEMENTS 30 June 2013 9. PROPERTY, PLANT & EQUIPMENT (CONTINUED) (b) Reconciliation of property, plant and equipment carrying values CONSOLIDATED 2013 $’000 2012 $’000 Leasehold Improvements Carrying amount – opening balance Additions Disposals Depreciation Carrying amount – closing balance Offi ce equipment Carrying amount – opening balance Additions Disposals Depreciation Carrying amount – closing balance Furniture and ﬁ ttings Carrying amount – opening balance Additions Disposals Depreciation Carrying amount – closing balance Plant and equipment Carrying amount – opening balance Additions Depreciation Carrying amount – closing balance Total property, plant and equipment Carrying amount – opening balance Additions Disposals Depreciation Carrying amount – closing balance 27 46 - (5) 68 1,087 544 - (476) 1,155 162 38 - (41) 159 113 14 (71) 56 1,389 642 - (593) 1,438 26 6 - (5) 27 1,028 492 (2) (431) 1,087 187 19 - (44) 162 167 36 (90) 113 1,408 553 (2) (570) 1,389 SUPERSERVICE.COM 47. NOTES TO THE FINANCIAL STATEMENTS 30 June 2013 CONSOLIDATED 10. INTANGIBLE ASSETS AND GOODWILL $000 $’000 $’000 $’000 $’000 Development costs1 Intellectual Property2 Other Intangibles2 Goodwill 2 Total At 1 July 2012 Cost (gross carrying amount) Accumulated amortisation Net carrying amount Year ended 30 June 2013 At 1 July 2012, net of accumulated amortisation and impairment Additions Foreign exchange movements Amortisation At 30 June 2013, net of accumulated amortisation and impairment At 30 June 2013 Cost (gross carrying amount) Accumulated amortisation Net carrying amount 40,312 (19,280) 21,032 3,115 (2,656) 459 21,032 7,417 - (7,178) 21,271 459 - 28 (145) 342 47,729 (26,458) 21,271 3,167 (2,825) 342 1,071 (179) 892 892 - 60 (214) 738 1,167 (429) 738 11,723 - 11,723 11,723 - 285 - 56,221 (22,115) 34,106 34,106 7,417 373 (7,537) 12,008 34,359 12,008 - 12,008 64,071 (29,712) 34,359 1. Internally generated 2. Purchased as part of business/territory acquisition Development costs that meet the recognition criteria as an intangible asset have been capitalised at cost. This intangible asset has been assessed as having a ﬁ nite life and is amortised using the straight-line method over a period not exceeding four years commencing from the commercial release of the project. If an impairment indication arises, the recoverable amount is estimated and an impairment loss is recognised to the extent that the recoverable amount is lower than the carrying amount. Intellectual property includes intangible assets acquired through business or territory acquisition and relates primarily to copyright and software code over key products. Intellectual property is amortised over its useful life being 3 years. 30 June 2013 CONSOLIDATED 10. INTANGIBLE ASSETS AND GOODWILL (CONTINUED) At 1 July 2011 Cost (gross carrying amount) Accumulated amortisation Net carrying amount Year ended 30 June 2012 At 1 July 2011, net of accumulated amortisation and impairment Additional amounts recognised from purchase of subsidiary occurring during the year (note 27) Additions Amortisation At 30 June 2012, net of accumulated amortisation and impairment At 30 June 2012 Cost (gross carrying amount) Accumulated amortisation Net carrying amount Development costs1 Intellectual Property2 Other Intangibles2 Goodwill 2 Total $000 $’000 $’000 $’000 $’000 33,916 (13,705) 20,211 2,537 (2,414) 123 20,211 123 - 6,396 (5,575) 21,032 40,312 (19,280) 21,032 578 - (242) 459 3,115 (2,656) 459 - - - - 1,071 - (179) 892 1,071 (179) 892 8,541 - 8,541 44,994 (16,119) 28,875 8,541 28,875 3,182 - - 4,831 6,396 (5,996) 11,723 34,106 11,723 - 11,723 56,221 (22,115) 34,106 48. INFOMEDIA.COM NOTES TO THE FINANCIAL STATEMENTS 30 June 2013 11. IMPAIRMENT TESTING OF GOODWILL Goodwill acquired through business combinations or territory acquisition have been allocated to four individual cash generating units, each of which is a reportable segment (refer note 24) for impairment testing as follows: • Asia Paciﬁ c; • Europe; • North America; and • Latin and South America The recoverable amount of each cash generating unit has been determined based on a value in use calculation using cash ﬂ ow projections as at 30 June 2013 based on ﬁ nancial budgets approved by The Board for the 2014 ﬁ nancial year extrapolated for a ﬁ ve year period on the basis of 5% growth together with a terminal value. The discount rate applied to cash ﬂ ow projections is 14% (2012: 14%). The discount rate reﬂ ects management estimate of the time value of money and the rates speciﬁ c to the unit. Carrying amount of goodwill allocated to each of the cash generating units is as follows: Asia Paciﬁ c Europe, Middle East & Africa North America Latin and South America $’000 $’000 $’000 $’000 CONSOLIDATED Carrying amount of goodwill 2012 Foreign exchange movement Carrying amount of goodwill 2013 2,660 65 2,725 5,592 135 5,727 2,682 19 2,701 789 66 855 Total $’000 11,723 285 12,008 Key assumptions used in value in use calculations: The following describes each key assumption on which management has based its cash ﬂ ow projections when determining the value in use of its cash generating units: • The Company will continue to have access to the data supply from automakers over the budgeted period; • The Company will not experience any substantial adverse movements in currency exchange rates; • The Company’s research and development program will ensure that the current suite of products remain leading edge; • The Company is able to maintain its current gross margins; • The discount rates estimated by management are reﬂ ective of the time value of money; and • Management has used an AUD/USD exchange rate of $0.920 and an AUD/EUR exchange rate of $0.705 in its cash ﬂ ow projections. Sensitivity to changes in assumptions: Growth rate assumptions – Management notes if negative growth rates are applied to revenues, by 5% over the ﬁ ve year period, this still yields a recoverable amount to be above its carrying amount. Discount rate assumptions – Management recognises that the time value of money may vary from what they have estimated. Management notes that applying a discount rate of double the current rate still yields the recoverable amount to be above its carrying amount. Foreign exchange rate assumptions – Management notes that applying an AUD/USD exchange rate of $1.20 and an AUD/EUR exchange rate of $0.85 still yields the recoverable amount to be above its carrying amount. SUPERSERVICE.COM 49. NOTES TO THE FINANCIAL STATEMENTS 30 June 2013 Notes CONSOLIDATED 12. TRADE AND OTHER PAYABLES (CURRENT) Trade creditors Other creditors (a) Trade creditors are non-interest bearing and are normally settled on 30 day terms. Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value. 13. PROVISIONS (CURRENT) Employee beneﬁ ts 14. DEFERRED REVENUE (CURRENT) Revenue in advance 15. PROVISIONS (NON-CURRENT) Employee beneﬁ ts (a) Movement in employee beneﬁ t provision: Carrying amount at the beginning of the year Utilised Arising during the year Carrying amount at the end of the year Current Non-current 12(a) 2013 $’000 411 2,223 2,634 15(a) 2,039 2,039 668 668 448 448 2,239 (1,208) 1,456 2,487 2,039 448 2,487 13 2012 $’000 467 2,434 2,901 1,812 1,812 564 564 425 425 2,165 (1,320) 1,392 2,237 1,812 425 2,237 50. INFOMEDIA.COM NOTES TO THE FINANCIAL STATEMENTS 30 June 2013 Notes CONSOLIDATED 16. CONTRIBUTED EQUITY AND RESERVES Ordinary shares 2013 $’000 10,855 10,855 2012 $’000 10,798 10,798 Fully paid ordinary shares carry one vote per share and carry the right to dividends. Movement in ordinary shares on issue: At 1 July 2011 Shares repurchased At 30 June 2012 Share options exercised At 30 June 2013 Capital management Notes Number $’000 303,276,855 - 303,276,855 300,000 303,576,855 10,798 - 10,798 57 10,885 When managing capital, the company’s objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and beneﬁ ts for other stakeholders. Subject to the company’s ﬁ nancial position and future ﬁ nancial performance, the company’s current dividend policy is to distribute, in the order of 75 – 85% of proﬁ t after tax. During the 2013 ﬁ nancial year, the company paid dividends of $8.0 million (2012: $6.8 million). SUPERSERVICE.COM 51. NOTES TO THE FINANCIAL STATEMENTS 16. CONTRIBUTED EQUITY AND RESERVES (CONTINUED) Employee Option Plan There were 600,000 (2012: 5,670,000) options granted during the current year at an average exercise price of $0.28 (2012: $0.19). 30 June 2013 CONSOLIDATED Employee equity beneﬁ ts reserve Foreign currency translation reserve Cashﬂ ow hedge reserve $’000 1,210 - 52 (1,206) - 56 - 196 - 252 $’000 (12) (192) - - - (204) 854 - - 650 $’000 1,463 - - - (978) 485 - - (1,240) (755) Movement in reserves: At 1 July 2011 Currency translation diff erences Share based payments Transfer to retained proﬁ t Derivatives marked to market At 30 June 2012 Currency translation diff erences Share based payments Derivatives marked to market At 30 June 2013 Nature and purpose of reserves Employee equity beneﬁ ts reserve Total $’000 2,661 (192) 52 (1,206) (978) 337 854 196 (1,240) 147 This reserve is used to record the value of equity beneﬁ ts provided to employees and Directors as part of their compensation. Refer to Note 19 for further details. Foreign currency translation reserve The foreign currency translation reserve is used to record exchange diff erences arising from the translation of the ﬁ nancial statements of foreign subsidiaries. It is also used to record the eff ect of hedging net investments in foreign operations. Cashﬂ ow hedge reserve The derivatives reserve is used to record the mark to market valuation of forward currency contracts at the balance sheet date that are considered eff ective hedges. 52. INFOMEDIA.COM 30 June 2013 Notes CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS 17. 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 Amortisation of employee options Derivative (interest) Disposal of property, plant, and equipment Changes in assets and liabilities (Increase)/decrease in trade and other debtors (Increase)/decrease in inventories (Increase)/decrease in prepayments (Increase)/decrease in deferred development costs (Increase)/decrease in intangible assets Increase/(decrease) in trade and other creditors Increase/(decrease) in allowance for doubtful debts Increase/(decrease) in provision for employee entitlements Increase/(decrease) in other provisions Increase/(decrease) in income tax payable Increase/(decrease) in deferred income tax liability Increase/(decrease) in revenue in advance Net cash ﬂ ow from operating activities (b) Reconciliation of cash Cash balance comprises: – cash at bank – cash on deposit 2013 $’000 10,066 593 7,537 196 1,112 - (430) 6 (199) (7,417) (373) (267) 15 250 - (224) 279 104 11,248 2012 $’000 8,461 570 5,996 52 - 2 (41) 48 1,535 (6,396) - (107) 74 72 - (662) 202 (67) 9,739 4,877 4,422 9,299 1,999 4,647 6,646 30 June 2013 Notes CONSOLIDATED 18. COMMITMENTS & CONTINGENCIES (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 – later than ﬁ ve years – aggregate operating lease expenditure contracted for at balance date Operating lease commitments are for offi ce accommodation both in Australia and abroad. (b) Performance Bank Guarantee 2013 $’000 2012 $’000 1,290 3,264 4,554 1,197 4,099 - 5,296 Infomedia Ltd has a performance bank guarantee to a maximum value of $508,000 (2012: $508,000) relating to the lease commitments of its corporate headquarters. SUPERSERVICE.COM 53. NOTES TO THE FINANCIAL STATEMENTS 19. SHARE BASED PAYMENT PLANS Employee Option Plan The Employee Option Plan entitles the Company to off er ‘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: Notes 2013 2012 Number of options Weighted average exercise price Number of options Weighted average exercise price Balance at beginning of year - granted - expired - exercised Balance at end of year 19(a) 19(b) 19(c) 19(d) 19(e) 5,670,000 600,000 (120,000) (300,000) 5,850,000 0.19 0.28 0.28 0.19 0.20 1,000,000 5,670,000 (1,000,000) - 5,670,000 0.30 0.19 0.30 - 0.19 (a) Options held at the beginning of the year: The following table summarises information about options held by employees at 1 July 2012 Number of options 2,250,000 3,420,000 Grant date 15/01/2012 30/05/2012 Earliest vesting date 15/01/2013 30/05/2013 Expiry date 14/03/2015 30/05/2015 Weighted average exercise price $0.19 $0.19 (b) Options granted during the year: The following table summarises information about options granted during the year. Number of options Grant date Earliest vesting date Expiry date Weighted average exercise price 600,000 12/03/2013 15/01/2014 01/02/2016 $0.28 (c) Options forfeited during the year: Number of options Grant date Earliest vesting date Expiry date Weighted average exercise price 120,000 12/03/2013 15/01/2014 01/02/2016 $0.28 (d) Options exercised during the year: Number of options Grant date Earliest vesting date Expiry date Weighted average exercise price 300,000 15/01/2012 15/01/2013 14/03/2015 $0.19 (e) Options held at the end of the year: Number of options 1,950,000 3,420,000 480,000 Grant date 15/01/2012 30/05/2012 12/03/2013 Earliest vesting date 15/01/2013 30/05/2013 15/01/2014 Expiry date 14/03/2015 30/05/2015 01/02/2016 Weighted average exercise price $0.19 $0.19 $0.28 54. INFOMEDIA.COM NOTES TO THE FINANCIAL STATEMENTS (f) Other details regarding options: The weighted average fair value of options granted during the year was $0.21 (2012: $0.04). The fair value of the equity-settled options granted under the option plan is estimated as at the grant date using a binomial model taking into account the term and conditions upon which the options were granted. The following table lists the inputs to the model used for the year: Granted 15/01/2012 Granted 30/05/2012 Granted 12/03/2013 Dividend yield (%) Expected volatility (%) Risk free rate (%) Option exercise price Weighted average share price at grant date 10.0% 41% 3.95% $0.19 $0.19 10.0% 39% 3.08% $0.19 $0.19 The expense recognised for employee services received during the year is shown in the table below: Expense arising from equity-settled share-based payment transactions 20. PENSIONS AND OTHER POST-EMPLOYMENT PLANS Superannuation Commitments CONSOLIDATED 2013 $’000 196 4.33% 42% 3.22% $0.28 $0.28 2012 $’000 52 Contributions are made by the Company in accordance with the relevant statutory requirements. Contributions by the Company for the year ended 30 June 2013 were 9% (2012: 9%) of employee’s wages and salaries which are legally enforceable in Australia. The superannuation plans provide accumulation beneﬁ ts. SUPERSERVICE.COM 55. NOTES TO THE FINANCIAL STATEMENTS 21. KEY MANAGEMENT PERSONNEL DISCLOSURES (a) Compensation of Key Management Personnel (i) Compensation by Category: Key Management Personnel Short-Term Post Employment Other Long-Term Share-based Payments CONSOLIDATED 2013 $ 1,676,189 107,657 14,887 50,305 1,849,038 2012 $ 1,602,877 108,507 14,497 38,130 1,764,011 (b) Option holdings of Key Management Personnel (Consolidated) 30 June 2013 Executives Karen Blunden Nick Georges Michael Roach Balance at beginning of period 1 July 2012 450,000 450,000 450,000 Andrew Pattinson 450,000 Jonathan Pollard 450,000 30 June 2012 2,250,000 Balance at beginning of period 1 July 2011 Granted as compensation Options exercised Expired Balance at end of period Vested at 30 June 2013 30 June 2013 Not exercisable Exercisable - - - - - - (150,000) (150,000) - - - (300,000) - - - - - - 300,000 300,000 450,000 450,000 450,000 300,000 300,000 300,000 300,000 300,000 - - 150,000 150,000 150,000 1,950,000 1,500,000 450,000 Granted as compensation Options exercised Expired Balance at end of period Vested at 30 June 2012 30 June 2012 Not exercisable Exercisable Executives Karen Blunden 250,000 Nick Georges - Michael Roach 250,000 Andrew Pattinson 250,000 Jonathan Pollard 250,000 450,000 450,000 450,000 450,000 450,000 1,000,000 2,250,000 - - - - - - (250,000) - (250,000) (250,000) (250,000) 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 (1,000,000) 2,250,000 2,250,000 - - - - - - 56. INFOMEDIA.COM NOTES TO THE FINANCIAL STATEMENTS 21. KEY MANAGEMENT PERSONNEL DISCLOSURES (CONTINUED) (c) Shareholdings of Key Management Personnel 30 June 2013 Number of shares held in Infomedia Ltd Balance 30 June 2012 Granted as compensation On exercise of options Net change other Balance 30 June 2013 Directors Richard Graham Myer Herszberg Geoff Henderson* Frances Hernon Executives Andrew Pattinson Nick Georges Michael Roach Jonathan Pollard Karen Blunden Total *resigned 3/01/13 30 June 2012 Number of shares held in Infomedia Ltd Directors Richard Graham Myer Herszberg Geoff Henderson* Frances Hernon Executives Andrew Pattinson Nick Georges Michael Roach Jonathan Pollard Karen Blunden Total *resigned 3/01/13 103,390,901 23,436,599 - 5,000 2,447,567 24,421 18,721 1,996 - 129,325,205 - - - - - - - - - - - - - - - - - - - - 150,000 (21,421) - - 150,000 300,000 - - - 103,390,901 23,436,599 - 5,000 2,447,567 153,000 18,721 1,996 150,000 (21,421) 129,603,784 Balance 1 July 2011 Granted as compensation On exercise of options Net change other Balance 30 June 2012 103,390,901 23,421,589 - 5,000 2,447,567 24,421 18,721 1,996 - 129,310,195 - - - - - - - - - - - - - - - - - - - - - 103,390,901 15,010 23,436,599 - - - - - - - - 5,000 2,447,567 24,421 18,721 1,996 - 15,010 129,325,205 All equity transactions with key management personnel other than those arising from the exercise of compensation options and compensation 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. (d) Loans to Key Management Personnel There were no loans at the beginning or the end of the reporting period to key management personnel. No loans were made available during the reporting period to key management personnel. SUPERSERVICE.COM 57. NOTES TO THE FINANCIAL STATEMENTS 22. AUDITORS’ REMUNERATION Amounts received or due and receivable by the auditors of Infomedia Ltd: BDO East Coast Partnership (formerly PKF East Coast Practice) – an audit or review of the ﬁ nancial report of the entity and any other entity in the consolidated entity – Non-audit services CONSOLIDATED 2013 $ 2012 $ 105,000 74,090 179,090 121,800 72,700 194,500 23. RELATED PARTY DISCLOSURES Ultimate Parent Infomedia Ltd is the ultimate Australian parent company Wholly-owned group transactions (a) An unsecured, trade receivable of $126,042 (2012: $483,736) remains owing to IFM Europe Ltd from Infomedia Ltd. (b) An unsecured, trade receivable of $1,090,359 (2012: $859,545) remains owing from IFM North America Inc. to Infomedia Ltd. (c) An unsecured, trade receivable of $Nil (2012: $18,919) remains owing to Diff erent Aspect Software Ltd. from Infomedia Ltd. (d) During the year Infomedia Ltd received $Nil (2012: $15,485,980) from IFM Europe Ltd for intra-group sales. (e) During the year Infomedia Ltd received $Nil (2012: $6,145,616) from IFM North America Inc. for intra-group sales. (f) During the year Infomedia Ltd paid $3,507,668 (2012: $Nil) to IFM Europe Ltd for intra-group distribution services. (g) During the year Infomedia Ltd paid $2,969,538 (2012: $Nil) to IFM North America Inc. for intra-group distribution services. (f) During the year IFM Europe paid $307,221 (2012: $466,317) to IFM Germany GmbH for intra-group distribution services. Entity with deemed signiﬁ cant inﬂ uence over the Company Wiser Equity Pty Limited, a company in which Richard Graham is a Director, owns 34.10% of the ordinary shares in Infomedia Ltd (2012: 34.10%). 58. INFOMEDIA.COM NOTES TO THE FINANCIAL STATEMENTS 24. SEGMENT INFORMATION 30 June 2013 Notes Asia Paciﬁ c Europe North America Latin & South America Corporate Total $’000 $’000 $’000 $’000 $’000 $’000 Business Segments REVENUE Sales revenue Consolidated revenue Segment result Finance revenue Finance cost 13,275 22,184 10,555 2,675 - 48,689 48,689 10,610 18,086 7,943 2,190 (26,855) 11,974 - - - - - - - - 76 - Consolidated proﬁ t before income tax 10,610 18,086 7,943 2,190 (26,779) Income tax expense 4 Consolidated proﬁ t after income tax Assets Segment assets Unallocated assets Total assets Liabilities Segment liabilities Unallocated liabilities Total liabilities Capital Expenditure Amortisation Depreciation - - - - - 7,927 359 625 505 22 359 36 16 - 73 - - - - - 76 - 12,050 (1,984) 10,066 8,286 43,329 51,615 1,130 12,317 13,447 - - 604 642 7,178 484 7,537 593 SUPERSERVICE.COM 59. NOTES TO THE FINANCIAL STATEMENTS 24. SEGMENT INFORMATION (CONTINUED) 30 June 2012 Notes Asia Paciﬁ c Europe North America Latin & South America Corporate Total $’000 $’000 $’000 $’000 $’000 $’000 Business Segments REVENUE Sales revenue Consolidated revenue Segment result Finance revenue Finance cost 12,349 21,129 9,665 2,534 - 45,677 45,677 9,809 17,358 7,159 2,028 (25,266) 11,088 - - - - - - - - 150 (50) Consolidated proﬁ t before income tax 9,809 17,358 7,159 2,028 (25,166) Income tax expense 4 Consolidated proﬁ t after income tax Assets Segment assets Unallocated assets Total assets Liabilities Segment liabilities Unallocated liabilities Total liabilities Capital Expenditure Amortisation Depreciation - - - - - 2,902 42 881 310 22 - 18 16 - 72 - - - - - 150 (50) 11,188 (2,727) 8,461 2,944 44,945 47,889 1,191 10,453 11,644 - - 498 536 5,996 480 5,996 570 Identiﬁ cation of reportable segments The group has identiﬁ ed its operating segments based on the internal reports that are reviewed and used by the Board of Directors (the chief operating decision makers) in assessing performance and in determining the allocation of resources. The operating segments are identiﬁ ed by management based on the region in which the product is sold. Discrete ﬁ nancial information about each of these operating businesses is reported to the Board of Directors regularly. The reportable segments are based on aggregated operating segments determined by the similarity of the products produced and sold as these are the sources of the Group’s major risks and have the most eff ect of the rates of return. Accounting policies and inter-segment transactions The accounting policies used by the Group in reporting segments internally are the same as those contained in note 2 to the accounts and in the prior period. The group accounting policies for segments are applied to the respective segments up to the segment result level. Major customers The Group has many customers to which it provides products. There is no signiﬁ cant reliance on any single customer. 60. INFOMEDIA.COM NOTES TO THE FINANCIAL STATEMENTS 25. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Company’s principal ﬁ nancial instruments, other than derivatives, comprise cash and short-term deposits. The Company has various other ﬁ nancial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. The Company also enters into derivative transactions through forward currency and range forward contracts. The purpose is to manage the currency risks arising from the Company’s operations. It is, and has been throughout the period under review, the Company’s policy that no trading in ﬁ nancial instruments shall be undertaken. The main risks arising from the Company’s ﬁ nancial instruments are cash ﬂ ow interest rate risk, liquidity risk, foreign currency risk and credit risk. Details of the signiﬁ cant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of ﬁ nancial asset, ﬁ nancial liability and equity instrument are disclosed in Note 2 to the ﬁ nancial statements. (a) Interest rate risk The Company’s exposure to the risk of changes in market interest rates relates solely to the Company’s cash holding of $9,299,000 (2012: $6,646,000) with a ﬂ oating interest rate. The Company’s policy is to accept the ﬂ oating interest rate risk with both its cash holdings and bank loans. Cash is held primarily with leading Australian banks for periods not exceeding 30 days, as such any reasonably expected change in interest rates (+/- 1%) would not have a signiﬁ cant impact on post tax proﬁ t or other comprehensive income. (b) Foreign currency risk The Company has transactional currency exposures. These exposures mainly arise from the transactional sale of products and to a lesser extent the associated cost of sales component relating to these products. As the Company’s product off erings are typically made on a recurring monthly subscription basis, there is a relatively high degree of reliability in estimating a proportion of future cashﬂ ow exposures. Approximately 40% of the Company’s sales are denominated in United States Dollars and 40% are denominated in Euros (measured using the spot foreign exchange rates in existence in the current ﬁ nancial year). The Company seeks to mitigate exposure to movements in these currencies by entering into forward exchange derivative contracts under an approved hedging policy. As a result of the Company’s investment in both its European and United States subsidiaries, the Company’s statement of ﬁ nancial position can be aff ected by movements in both the Euro and United States dollar against the Australian dollar. At 30 June, the Group had the following exposure to US$ foreign currency that is not designated in cash ﬂ ow hedges: Financial Assets Cash and cash equivalents CONSOLIDATED 2013 $’000 1,242 1,242 2012 $’000 15 15 SUPERSERVICE.COM 61. NOTES TO THE FINANCIAL STATEMENTS 25. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) At 30 June, the Group had the following exposure to EUR foreign currency that is not designated in cash ﬂ ow hedges: Financial Assets Cash and cash equivalents CONSOLIDATED 2013 $’000 1,833 1,833 2012 $’000 374 374 The following sensitivity is based on the foreign currency risk exposures in existence at the balance date: At 30 June, had the Australian Dollar moved, as illustrated in the table below, with all other variables held constant, post tax proﬁ t and total equity would have been aff ected as follows: Judgments of reasonably possible movements: Consolidated AUD/USD +10% AUD/USD – 15% AUD/EUR +10% AUD/EUR – 15% Post tax proﬁ t Higher/(Lower) Total equity Higher/(Lower) 2013 $’000 2012 $’000 2013 $’000 2012 $’000 (79) 153 (117) 226 (1) 2 (32) 63 (79) 153 (117) 226 (1) 2 (32) 63 Management believe the balance date risk exposures are representative of the risk exposure inherent in the ﬁ nancial instruments. (c) Credit risk The Company’s credit risk with regard to accounts receivables is spread broadly across three automotive groups – manufacturers, distributors and dealerships. Receivable balances are monitored on an ongoing basis with the result that the Company’s exposure to bad debts is not signiﬁ cant. As the products typically have a monthly life cycle and are priced on a relatively low subscription price, the concentration of credit risk is typically low with automotive manufacturers being the exception. With respect to credit risk arising from the other ﬁ nancial assets of the Company, which comprise cash and cash equivalents, and certain derivative instruments, the Company’s exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Since the Company trades only with recognised third parties, collateral is not requested nor is it the Group’s policy to securitise its trade and other receivables. (d) Price risk There are no items on the statement of ﬁ nancial position as at 30 June 2013 that are subject price risk. 62. INFOMEDIA.COM NOTES TO THE FINANCIAL STATEMENTS 25. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) (e) Liquidity risk The Company’s exposure to liquidity risk is minimal given the relative strength of the statement of ﬁ nancial position and cash ﬂ ows from operations. Given the nature of the Company’s operations and no borrowings, the Company does not have ﬁ xed or contracted payments at balance date other than with respect of its cash ﬂ ow hedges which are disclosed below. Consequently the remaining contractual maturity of the group entity’s ﬁ nancial liabilities is as stated in the statement of ﬁ nancial position and is less than 60 days. Deferred revenue requires no cash outﬂ ow. Liquidity and Interest rate risk The following table sets out the carrying amount, by maturity, of the ﬁ nancial instruments exposed to interest rate or liquidity risk: CONSOLIDATED YEAR ENDED 30 JUNE 2013 Less than one year $’000 Two to ﬁ ve years $’000 Greater than ﬁ ve years $’000 Weighted average eff ective interest rate % Floating rate Cash and cash equivalents Trade and other receivables Trade and other payables 9,299 5,304 (2,634) - - - - - - 1.5 - - CONSOLIDATED YEAR ENDED 30 JUNE 2012 Less than one year $’000 Two to ﬁ ve years $’000 Greater than ﬁ ve years $’000 Weighted average eff ective interest rate % Floating rate Cash and cash equivalents Trade and other receivables Trade and other payables 6,646 4,033 (2,901) - - - - - - 3.0 - - Interest on cash and cash equivalents classiﬁ ed as ﬂ oating rate is repriced at intervals of less than one year. Interest on ﬁ nancial instruments classiﬁ ed as ﬁ xed rate is ﬁ xed until maturity of the instrument. The other ﬁ nancial instruments of the Group that are not included in the above tables are non-interest bearing and are therefore not subject to interest rate risk. SUPERSERVICE.COM 63. NOTES TO THE FINANCIAL STATEMENTS 25. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) (f) Fair value Derivative instruments use valuation techniques other than quoted prices in active markets with only observable market inputs for the asset or liability , either directly (as prices) or indirectly (derived from prices) to determine the fair value of foreign exchange contracts Derivative contracts The following table summarises the forward exchange contracts on hand at 30 June 2013. CONSOLIDATED Company buys Company sells Exchange rate Maturity – Forward exchange contracts Less than one year Greater than one year and not greater than two years Maturity – Forward exchange contracts Less than one year Greater than one year and not greater than two years $A’000 3,713 4,759 $A’000 3,681 4,420 USD’000 3,500 4,400 EUR’000 2,760 3,000 0.943 0.924 0.750 0.679 The mark to market valuation of these contracts at 30 June 2013 was ($688,000) which is booked directly in equity. The following table summarises the range forward contracts on hand at 30 June 2013. Maturity – Vanilla Collars Less than one year Less than one year Less than one year Maturity – Enhanced Collars Less than one year Less than one year CONSOLIDATED Company sells Floor rate Ceiling rate Strike rate USD’000 3,000 1,800 1,500 EUR’000 5,520 5,040 0.987 0.969 0.951 0.689 0.699 1.060 1.019 0.978 0.790 0.790 n/a n/a n/a 0.765 0.776 The mark to market valuation of these range forwards at 30 June 2013 was ($1,504,000). The intrinsic value of ($392,000) is booked directly in equity. The time value of ($1,112,000) is included in the statement of proﬁ t & loss and other comprehensive income as other expenses. Derivative contracts The following table summarises the forward exchange contracts on hand at 30 June 2012. Maturity Company sells United States Dollars (USD) Less than one year Company sells Euros (E) Less than one year CONSOLIDATED Company buys Company sells Exchange rate $A’000 7,738 $A’000 7,130 USD’000 7,600 E’000 5,240 0.982 0.735 The mark to market valuation of these contracts at 30 June 2012 was $699,000 which is booked directly in equity. Maturity Less than one year Less than one year CONSOLIDATED Company sells Floor rate Ceiling rate USD’000 3,975 700 0.8825 0.8800 1.100 0.9900 The mark to market valuation of these range forwards at 30 June 2012 was a loss of $6,000 which is booked directly in equity. 64. INFOMEDIA.COM NOTES TO THE FINANCIAL STATEMENTS 26. FINANCIAL INSTRUMENTS Fair values Set out below is a comparison by category of carrying amounts and fair values of all of the Company’s ﬁ nancial instruments recognised in the ﬁ nancial statements. The fair values of derivatives have been calculated by discounting the expected future cash ﬂ ows at prevailing interest rates. CONSOLIDATED Financial assets Cash and cash equivalents Trade and other debtors Derivatives Financial liabilities Trade and other creditors Derivatives 27. ACQUISITION OF SUBSIDIARY Carrying Amount Fair Value 2013 $’000 9,299 5,304 - 2,634 2,193 2012 $’000 6,646 4,033 693 2,901 - 2013 $’000 9,299 5,304 - 2,634 2,193 2012 $’000 6,646 4,033 693 2,901 - On 2 September 2011, Infomedia Ltd acquired 100% of the share capital of Diff erent Aspect Software Ltd for $4,719,000 in cash. Diff erent Aspect Software Ltd is a UK based software developer specialising in the provision of IT application solutions to the automotive industry. As a result of the acquisition, the group is expected to further improve its off erings of software products in the automotive space. Goodwill of $3,182,000 arising from the acquisition is attributable to the assembled workforce and potential for cost saving synergies and cross selling opportunities. None of the goodwill recognised is expected to be deductible for income tax purposes. The following table summarises the consideration paid for Diff erent Aspect Software Ltd, the fair value of assets acquired and liabilities assumed at the acquisition date. Consideration at 2 September 2011 Cash Total consideration transferred $’000 4,719 4,719 Recognised amounts of identiﬁ able assets acquired and liabilities assumed Cash and cash equivalents Property, plant and equipment Inventories Trade and other receivables Intellectual property Other intangibles Trade and other payables Deferred revenue Deferred tax liability Provision for tax Total identiﬁ able net assets Goodwill Total 103 19 5 246 578 1,071 (339) (275) 100 29 1,537 3,182 4,719 Acquisition-related costs of $158,000 are included in Other expenses in the consolidated income statement for the year ended 30 June 2012. The revenue included in the consolidated statement of comprehensive income since 2 September 2011 contributed by Diff erent Aspect Software Ltd was $1.2m. Diff erent Aspect Software Ltd contributed proﬁ t $214,000 over the same period. Had the acquisition of Diff erent Aspect Software Ltd been eff ected at 1 July 2011, management estimates revenue of the group for the 12 months ended 30 June 2012 would have been $1.45m and the proﬁ t would have been $250,000. SUPERSERVICE.COM 65. NOTES TO THE FINANCIAL STATEMENTS 28. SUBSEQUENT EVENTS There has been no matter or circumstance that has arisen since the end of the ﬁ nancial year that has signiﬁ cantly aff ected the operations of the Company, the results of those operations, or the state of aff airs of the Company. 29. PARENT ENTITY INFORMATION Current assets Total assets Current liabilities Total liabilities Contributed equity Retained earnings Employee equity beneﬁ t reserve Cashﬂ ow hedge reserve Total shareholders’ equity Proﬁ t or loss of the parent entity Total comprehensive income of the parent entity 30. INTERESTS IN CONTROLLED ENTITIES Parent Entity 2013 $’000 11,596 48,332 7,075 12,317 10,856 25,663 252 (756) 36,015 10,054 8,812 2012 $’000 9,601 45,411 4,873 10,453 10,798 23,619 56 485 34,958 7,273 6,295 Name Country of incorporation Percentage of equity interest held by the Company (directly or indirectly) Parent entity IFM Europe Ltd - ordinary shares United Kingdom Diff erent Aspect Software Ltd** - ordinary shares IFM North America Inc - ordinary shares IFM Germany GmbH* United Kingdom United States of America 2013 % 100 100 100 2012 % 100 100 100 - ordinary shares Germany 100 100 * Investment is held by IFM Europe Ltd. ** Entity was purchased on 2 September 2011 2013 2012 $ 247 $ 247 4,719 4,719 1 - 1 - 4,967 4,967 66. INFOMEDIA.COM Directors’ Declaration In accordance with a resolution of the directors of Infomedia Limited, I state that: In the opinion of the directors: (a) the ﬁ nancial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the consolidated entity’s ﬁ nancial position as at 30 June 2013 and of their performance for the year ended on that date; and (ii) complying with Accounting Standards and the Corporations Regulations 2001; and (b) the ﬁ nancial statements and notes also comply with International Financial Reporting Standards as disclosed in note 2b (c) there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they become due and payable. (d) 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 year ending 30 June 2013. 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CORPORATE GOVERNANCE INFOMEDIA LTD CORPORATE GOVERNANCE STATEMENT FY2013 OVERVIEW Infomedia’s adoption of ‘best practice’ Corporate Governance Principles Infomedia strives to ensure an acceptable level of compliance with the voluntary governance principles set out in the ‘Corporate Governance Principles and Recommendations 2nd Edition with 2010 Amendments‘ published by the Australian Stock Exchange’s (ASX) Corporate Governance Committee (CGC) (the ASX Principles). Infomedia endeavours to meet the ASX Principles in a manner consistent with the resources, size and operational scope of the Company. Where Infomedia is non-compliant with particular elements of the voluntary framework, the Company embraces the “If not, why not?” principle, and provides explanatory materials relating to those compliance discrepancies. ASX – Corporate Governance Principles PRINCIPLE 1 Lay solid foundations for management and oversight PRINCIPLE 2 Structure the Board to add value PRINCIPLE 8 Remunerate fairly and responsibly PRINCIPLE 7 Recognise and manage risk ASX CORPORATE GOVERNANCE PRINCIPLES PRINCIPLE 3 Promote ethical and responsible decision making PRINCIPLE 6 Respect the rights of shareholders PRINCIPLE 4 Safeguard integrity in ﬁnancial reporting PRINCIPLE 5 Make timely and balanced disclosures The ASX Principles provide a standard platform from which Infomedia implements and maintains a range of charters, policies and procedures applicable to the Company (the Policies). Infomedia’s Policies seek to instil and entrench the values, standards and behaviours required to ensure transparency, effi cient resource allocation and protection of stakeholder interests. Further information about the Policies is available at http://www.infomedia.com.au/?Page=CorporateGovernance CORPORATE GOVERNANCE STATEMENT 1. PARTIAL NON-COMPLIANCE WITH THE ASX PRINCIPLES –“IF NOT, WHY NOT?” As a voluntary set of guidelines, compliance with the ASX Principles is not mandatory. In order to encourage participation, and in recognition of the fact that the resources and operating environments vary between participants, the ASX Principles provide organisations with the ﬂ exibility to comply in full or in part. This ﬂ exibility is tempered by the adoption of the “If not, why not?” principle, encouraging the Company to provide reasons for non- compliance with particular parts of the ASX Principles. Whilst Infomedia strives to meet the ASX Principles, it does so in a manner consistent with the resources available to it, and within the context of its operating environment. During FY2013, Infomedia was non-compliant with several of the ASX Principles. The following sections contain commentary on the areas of both compliance and non-compliance, and provide relevant commentary in accordance with the “If not, why not?” framework. 70. INFOMEDIA.COM CORPORATE GOVERNANCE 2. THE BOARD, SUB-COMMITTEES AND SENIOR MANAGEMENT 2.1 Composition and structure of the Board The composition and size of Board has been primarily shaped by Infomedia’s Constitution. Relevantly, the Constitution provides that: (a) the Company must maintain a minimum of three and a maximum of seven directors; (b) 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, retiring directors may off er themselves for re-election. Careful consideration is given to the contribution each director is able to make both individually and collectively. There is strong emphasis on promoting, among other attributes, an appropriate mix of complementary skills, independence, expertise, business knowledge and executive and non-executive participation. As noted in the Directors’ Report, Mr Geoff rey Henderson resigned from the position of Non-Executive Director eff ective on 3 January 2013. Following Mr Henderson’s resignation, the Infomedia Board is comprised of three Directors. The details of each Director’s name, terms of offi ce, meeting attendance records, skills experience and expertise, appear in the Directors’ Report. 2.2 Independence of the Chair Following the resignation of the Chief Executive Offi cer on 31 August 2010, Mr Richard Graham, after a six-year absence from the Company’s executive, resumed the duties of the Chief Executive Offi cer in his role as Executive Chairman. Mr Graham assumed this duty in addition to his continuing role as Chairman of the Board. Mr Graham also remained the Company’s largest shareholder until 28 August 2013 when he announced to the market his intention to retire in his executive capacity within the next 12 months. Mr Graham has expressed an intention to remain on the Board subject to shareholder approval. For the reasons outlined above, the Company did not comply with the following principles during FY 2013: (a) ASX Principle 2.2 - The chair should be an independent Director; and (b) ASX Principle 2.3 - The roles of the chair and the chief executive offi cer should not be exercised by the same individual. Notwithstanding Mr Graham’s prior shareholding in the Company, the Board believes that its independence has remained uncompromised. Additionally, the Board derives comfort from: (a) the Board Charter permitting Board members to elect a non-executive Director to chair informal meetings of non- executive Directors; and (b) the ability of the Directors to seek independent professional advice, made available at the expense of the Company. The sale of Mr Graham’s shares, coupled with his pending retirement from an executive role will serve to increase the Company’s compliance with the ASX Principles in FY 2014. 2.3 Independence of the Board ASX Principle 2.1 calls for the majority of the Board to be independent, non-executive Directors. For the ﬁ rst half of FY 2013, the Board was comprised of three non-executive Directors in the form of Ms Frances Hernon, Mr Geoff rey Henderson and Mr Myer Herszberg. Whilst Ms Hernon and Mr Henderson meet the criteria for independence, Mr Herszberg’s independence was technically compromised by his standing as a substantial shareholder of the Company for the relevant period. Accordingly, the Company only partially complied with ASX Principle 2.1 and, since the resignation of Mr Henderson, no longer complies with ASX Principle 2. The independence of the Board is subject to continual evaluation. Ultimately, however, the Board accepts that its members remain in offi ce upon the vote of the Company’s shareholders and that they may elect members to the Board regardless of their standing, independent or otherwise. 2.4 Establishment of nomination and remuneration committees The ASX Principles recommend that the Board should establish: (a) a nominations committee for the examination of selection, recruitment and succession practices of the Company (ASX Principle 2.4); and (b) a remuneration committee to focus on remuneration policies (ASX Principle 8.1). SUPERSERVICE.COM 71. CORPORATE GOVERNANCE The Board has assumed responsibility for remuneration and nomination since July 2007. Given the relative size and resources available to the Company, the Board is of the view that neither a nominations nor a remuneration committee would add any signiﬁ cant corporate governance value for the following reasons: (a) given the size and structure of the Board, there is little effi ciency to be derived from sub-committees other than the Audit, Risk & Governance Committee (Audit Committee); (b) ultimate responsibility for nominations and remuneration rests with the Board whether or not a nomination or remuneration sub-committee is established; (c) the Board has processes in place to raise issues relating to nomination and remuneration in the form of regular reporting by senior management (including detailed reports from the Human Resources Manager) on such matters; and (d) the Company maintains a formal policy for the nomination and induction of Directors (Director Nomination and Induction Policy), a summary of which is available on Infomedia’s website. 2.5 Board charter and responsibilities A formal charter documenting the appropriate division between the responsibilities of the Board and management has been in place since July 2004. The Charter mandates the Board’s focus on the following key matters: (a) developing the Company’s overall objectives; (b) developing and mandating strategies to achieve Company objectives; (c) setting overall policy framework within which the business of the Company is conducted; and (d) ensuring that the Company operates with integrity and in accordance with good management and governance practices. A summary of the Charter of the Board is available on the Company’s website. 2.6 Audit, Risk & Governance Committee Please refer to section 4.1 below for a report on the activities of the Audit Committee. 3. ETHICAL BUSINESS CONDUCT 3.1 Infomedia’s Code of Conduct Since its inception, Infomedia has placed emphasis on personal integrity, mutual respect and ethical business practices as core values (Core Values). The Company’s dedication to these Core Values was formalised by the introduction of a formal Code of Conduct in 2004. The Code was further reﬁ ned under the guidance of the Corporate Governance Committee during FY2006 to: (a) strengthen formal resolution strategies for intra-organisational disputes; and (b) provide clearer reporting guidelines with regard to compliance mechanisms. The Infomedia Code of Conduct strengthens the Company’s commitment to the Core Values by articulating and formally entrenching positive cultural values within the Company, and by providing guidance on dealings with various stakeholders. A summary of the Code of Conduct is available on the Company’s website. 3.2 Workplace Diversity The Company has historically dedicated itself to principles of equality and diversity within the workplace, and remains committed to that goal. The Company has consistently achieved annual accreditation from the Department of Equal Opportunity for Women in the Workplace (EOWA) for over a decade. Given the relative size and resourcing of the Company, it did not maintain formal measurable objectives or policies relating to diversity during the reporting period, therefore placing it outside of technical compliance with ASX Principles 3.2 and 3.3. In accordance with ASX Principle 3.4, the following proportional split of employees was recorded as at 31 May 2013: Category Females Males Total Directors Key Management Personnel Employees 1 (33%) 1 (20%) 2 (66%) 4 (80%) 34 (17.8%) 157 (82.2%) 3 5 191 72. INFOMEDIA.COM CORPORATE GOVERNANCE 4. FINANCIAL REPORTING, AUDIT, GOVERNANCE AND RISK MANAGEMENT 4.1 The Audit, Risk & Governance Committee Infomedia has maintained an Audit Committee in various forms since the year 2000. The last Audit Committee continued to meet throughout the ﬁ rst half of FY 2013, however, its functions were temporarily incorporated by the full Board upon the resignation of Mr Geoff rey Henderson, the then Chairperson of the Committee, on 3 January 2013. It is noted that the Company was not included in the S&P / ASX 300 Index at the beginning of its ﬁ nancial year and is therefore not required to follow Listing Rule 12.7. Nevertheless, the Board is committed to re-establishing the previous Audit Committee upon the appointment of a suitably qualiﬁ ed independent non-executive director. The composition of the previous Audit Committee met all of the requirements contained in ASX Principle 4.2 on the basis that it: (a) consists only of non-executive directors; (b) consists of a majority of independent directors; (c) is chaired by an independent chair, who is not the chair of the board; and (d) has at least three members. The objectives of the Committee are clearly deﬁ ned within the Company’s temporarily suspended Audit Committee Charter. A summary of the Audit Committee Charter is available via the Company’s website. 4.2 Independent auditors The Board acknowledges the importance of external auditor independence and the rotation of not only responsible audit partners but also audit ﬁ rms. The appointment of BDO as auditors during FY 2012, after many years of commendable service from the Company’s previous auditors, Ernst & Young, represents a commitment towards this objective. Additionally, the Committee has formalised procedures for the rotation of responsible audit partners from BDO on a regular basis. 4.3 Financial reporting obligations The Company’s ﬁ nancial reporting obligations for FY 2013 were fulﬁ lled in accordance with applicable legal and accounting requirements. For further information, please refer to the ﬁ nancial statements and notes contained in the Directors’ Report and the Independent Audit Report. Having acted in accordance with the Risk Management Policy and Risk Management Plan, the Executive Chairman and the Chief Financial Offi cer have provided the Board with the necessary certiﬁ cations required pursuant to the Corporations Act 2001 (Cth) and the ASX Principles. 4.4 Risk Management Upon the recommendation of the Audit Committee, the Board adopted the Risk Management Policy (Risk Policy) in July 2004. Following a review by the Audit and Risk Committee during FY 2006, a recommendation was made to the Board to adopt a revised Risk Management Policy and a Risk Management Plan. The revised plans promoted the establishment and implementation of a more eff ective and appropriate risk management framework for the Company. The revised Risk Management Policy allocates oversight responsibility to the Board and the Audit Committee, 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. During the reporting period, both the Audit Committee and the Board received periodic presentations from management regarding strategies and procedures implemented by the Company to mitigate against signiﬁ cant risks to the business. In particular, the Audit Committee and the Board supervised the development of a formal Disaster Recovery Plan during FY2013 to ensure timely and accurate recovery of data and operations following an unexpected, sudden interruption to the normal operating environment. A summary of the Company’s Risk Management Policy is available on the Company’s website; however, given the commercially sensitive nature of its content, details of the Company’s Risk Management Plan have not been made public. 5. MARKET DISCLOSURE & SHAREHOLDER RIGHTS 5.1 Market disclosure During FY 2004, the Board adopted a Market Disclosure Policy, developed in accordance with the ASX Principles. Internal reviews of the Market Disclosure Policy indicate that both the continuous and periodic reporting obligations imposed under the ASX Listing Rules, and the Company’s internal procedures, are well understood by senior management. Infomedia remains committed to providing relevant, timely and accurate information to the market regarding ﬁ nancial information, performance, ownership and governance. A summary of the Market Disclosure Policy can be found on the Company’s website. SUPERSERVICE.COM 73. CORPORATE GOVERNANCE 5.2 Communicating with shareholders Through a series of initiatives, Infomedia continues to demonstrate its commitment to promoting eff ective communication with all shareholders. The Company continues to embrace and develop its online content delivery for shareholders via the Company website where the following documents are located: • • • • this Corporate Governance Statement; summaries of the various corporate governance charters, policies and guidelines; annual, and half yearly reports; a synopsis of the Infomedia business model; • media releases, achievements, share price information; • • relevant notices relating to members’ meetings; and the Company’s July 2000 Prospectus. Infomedia has considered and adopted, as appropriate to its circumstances, the various methods of electronic communications contemplated by the ASX Principles. 5.3 Shareholder participation Shareholder participation at general meetings is always encouraged. As usual, Infomedia’s independent auditor, BDO, will be present during the FY 2013 Annual General Meeting, and will be available to answer shareholder questions at that time. 6. EXECUTIVE & NON-EXECUTIVE REMUNERATION 6.1 Infomedia’s remuneration and performance review policies Upon recommendation of the then Remuneration and Nomination Committee, the Board adopted a Remuneration and Performance Evaluation Policy (Remuneration Policy) for Directors and senior executives in July 2004. The Remuneration Policy 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. Further, it aims to provide a framework for structuring total remuneration that: (a) facilitates both the short and long term growth and success of the Company; (b) implements a mixture of ﬁ xed, performance and equity based incentives; (c) is competitive with the market place; and (d) which is demonstrably linked to the Company’s overall performance. The Company also has two equity based incentive plans: (a) an Employee Option Plan, applicable to certain eligible employees, including senior executives and executive Directors; and (b) 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 June 2005, the Board resolved to suspend the Employee Share Plan indeﬁ nitely. Further details of senior executive remuneration under the Employee Option Plan is included in the Remuneration Report. 6.2 Remuneration dichotomy – Executive versus Non-Executive The Remuneration Policy (refer paragraph 6.1 above) was formulated with regard to the best practice measures contained in the commentary to Principle 8 of the ASX Principles. The range of remuneration incentives available* to Executive and Non-Executive Directors and staff is summarised in the table below: Components of Executive Director Remuneration* Components of Non-Executive Director Remuneration* Components of Senior Executive and Staff Remuneration* • Directors’ fees • Directors’ fees • Salary • Statutory Superannuation contributions • Statutory Superannuation contributions • Statutory Superannuation contributions • Incentive payments • Share options • Retirement beneﬁ ts • Bonuses • Share options • Commissions * Note – the listed incentives for each category is optional and at the discretion of the Board. Diff ering combinations of remuneration and incentives are off ered on a case by case basis. 74. INFOMEDIA.COM ADDITIONAL INFORMATION Holder Name Balance at 19-09-2013 Top 20 Holdings as at 19-09-2013 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED CITICORP NOMINEES PTY LIMITED NATIONAL NOMINEES LIMITED RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED J P MORGAN NOMINEES AUSTRALIA LIMITED BNP PARIBAS NOMS PTY LTD BNP PARIBAS NOMINEES PTY LTD ACF PENGANA UBS NOMINEES PTY LTD JP MORGAN NOMINEES AUSTRALIA LIMITED CITICORP NOMINEES PTY LIMITED AMP LIFE LIMITED EQUITY TRUSTEES LIMITED MR ANDREW PATTINSON MR RICHARD GRAHAM EQUITAS NOMINEES PTY LIMITED <2874398 A/C> SPANDOU INVESTMENTS PTY LTD RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD OPITO INVESTMENTS PTY LIMITED MR PETER ALEXANDER BROWN Total IC 39,157,242 28,651,289 22,270,321 18,922,025 12,414,285 9,352,482 7,957,219 7,638,176 6,507,064 6,259,951 6,155,000 4,130,189 2,670,000 2,447,567 2,376,559 2,088,599 1,850,000 1,724,362 1,525,000 1,350,000 185,447,330 304,833,155 % 12.845 9.399 7.306 6.207 4.072 3.068 2.610 2.506 2.135 2.054 2.019 1.355 0.876 0.803 0.780 0.685 0.607 0.566 0.500 0.443 60.836 Analysis of Holdings as at 19-09-2013 Security Classes Fully Paid Ordinary Shares Holdings Ranges Holders 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 100,001-9,999,999,999 Totals 423 1,764 1,145 2,041 199 5,572 Total Units 326,670 5,572,562 9,633,631 64,433,237 224,867,055 304,833,155 % 0.107 1.828 3.160 21.137 73.767 100.000 SUPERSERVICE.COM 75. CORPORATE DIRECTORY CORPORATE DIRECTORY Infomedia Ltd Telephone: Facsimile: Internet: Directors Company Secretary Chief Financial Offi cer Registered Offi ce Auditor Share Registry Lawyers 357 Warringah Road Frenchs Forest NSW 2086 ABN 63 003 326 243 +61 (02) 9454 1500 +61 (02) 9454 1844 infomedia.com.au Richard Graham Frances Hernon Myer Herszberg Nick Georges Jonathan Pollard 357 Warringah Road Frenchs Forest NSW 2086 BDO Australia Level 10, 1 Margaret Street Sydney NSW 2000 Boardroom Pty Ltd Level 7, 207 Kent Street Sydney NSW 2000 Thomsons Lawyers Level 25 Australia Square Tower 264 George Street Sydney NSW 2000 76. INFOMEDIA.COM NOTES SUPERSERVICE.COM

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