Ambertech Limited
Annual Report 2011

Plain-text annual report

Annual Report Annual Report for the year ended 30 June 2011 Ambertech Limited ACN 079 080 158 Mission Statement Contents Chairman’s and Managing Director’s Review Lifestyle Entertainment Update Broadcast and Professional Update New Zealand Segment Our Business and Brands Corporate Governance Statement Financial Report Shareholder Information Corporate Directory II IV VI VIII X XIII XVIII XIX XXIII I Ambertech LimitedAnnual Report for the year ended 30 June 2011Chairman’s and Managing Director’s Review II Annual Report for the year ended 30 June 2011Ambertech LimitedChairman’s and Managing Director’s Review On behalf of the Board and the executive management, we present to you the Annual Report of Ambertech Limited for 2011. Ambertech’s business segments represent a diverse portfolio of products sold through multiple channels to market. The results for the 2010/11 financial year reflect the difficult trading conditions experienced throughout the financial year. The major factors impacting the result for the year include: • Slowing in demand from the retail sector as a result of cautious consumer spending behavior, both in Australia and New Zealand; and • Continued depression of new home building market, restricting sales in our custom install markets. Despite the disappointing result, the business continued to be cash flow positive for the financial year, returning cash flows from operations of $2.1 million. Future trading conditions are forecast to remain difficult in a number of the markets in which Ambertech operates across Australia and New Zealand, particularly where these markets are impacted by discretionary household spending. We have implemented a number of cost reduction measures in order to reflect where we see the current demand for our products in order to improve our results. We are focused on utilizing the traditional strengths of the Ambertech business as a technical distributor to bring new products and brands to market and to redefine the methods and channels in which the business operates. These initiatives are underway and are the key drivers of future revenue and profit growth. In the 2011/12 financial year the business will be relocating its headquarters to a new facility which will allow Ambertech to consolidate multiple business units under one roof. This will assist in cross selling across Ambertech’s diverse brands, and to improve logistics management with modern building design. The Board of Directors would once again like to thank all management and staff for their contributions to the performance and development of the company during the year. P F Wallace Chairman P A Amos Managing Director III Ambertech LimitedAnnual Report for the year ended 30 June 2011 Lifestyle Entertainment IV Annual Report for the year ended 30 June 2011Ambertech LimitedLifestyle Entertainment Update Ambertech’s lifestyle entertainment business segment is a leader in the distribution of home theatre products, custom installation components for home theatre and commercial installations, projection and display products with business and domestic applications, and a large range of complementary video and audio accessories. The 2010/11 financial year presented our markets with tough economic conditions. Despite this, we were largely successful in maintaining our market share with our major brands and categories. The second half of the financial year is traditionally slower than the first, and this trend continued in 2010/11. During the year our core brands had some significant events which will lay the foundation for future revenue growth, including: • One For All released a new range of their world leading Universal Remote Control’s, in addition to some new categories which include Flat Screen Brackets, Care and Cleaning products and Universal Charging products. • • Plantronics released a new range of PC/ Multimedia and Bluetooth Headsets. Release to the market of the new range of Onkyo receivers which took the award winning, feature packed models and included support for iPods natively. • Onkyo release to the market of a low cost simplified surround sound package which was featured on Better Homes and Gardens. • • • Sonance have taken the “DNA” of their successful range of loudspeakers for the Custom Installation market and moved it outdoors with the launch of the new Landscape Series. Projection Design projectors were successful in winning a major tender for supply to the mining industry and used for simulators. Optoma announced a new range of 1080p 3D projectors, their first LED projector, and a range of ultra short throw projectors for the education market, one with interactive capability. These events, and others like them, combine to give a positive feel throughout our sales force. We also see some early signs that business and consumer confidence may be returning. We expect when this does happen, we will be in prime position to take full advantage of opportunities that may arise. V Ambertech LimitedAnnual Report for the year ended 30 June 2011Broadcast and Professional VI Annual Report for the year ended 30 June 2011Ambertech LimitedBroadcast and Professional Update In a year of uncertainty in the market, it was very heartening to see the core products in our Professional segment continue to hold up, and in some cases such as the emerging new MI section, blossom. However the Systems and Broadcast Products areas suffered from a distinct nervousness surrounding investment in these areas, which were not adequately offset by our efforts in Government and Defence. The Broadcast market was very uncertain, with major changes in all of the majors structures reflecting the rapid evolution occurring in this space. The lack of consumer spending also ripples through to the broadcast market directly, with an immediate impact on advertising spends. Our longer term areas of development outside the Broadcast market continue to hold great promise for the future, and we have seen some good developments here: • Standardisation on one of our core products as a communications platform for mining developments, with excellent prospects for continued high value sales. • Acquisition of a major product, Perceptive Pixel, a key high value display element in high-end Government, Resource and defence mapping and data management systems. • Continued expansion of protective case sales in all of these areas. Some key successes in our traditional sales areas were: • Acceptance by the ABC of a 3 year option for purchase of Music Production Consoles, with plans for further purchases. • Growth of 59% and 88% in turnover of TC Electronic Guitar and Vocal Products respectively. • A significant contribution to the relocation of GTV9 in Melbourne, with products from Avid Video and Audio, SSL, Vinten and EVS all playing a major part in the development • Connector and cable turnover returning to Pre GFC levels. • A very significant sale of EVS Technology to Premier Media Group (Fox Sports), representing the culmination of several years’ work. Overall it has been a hard year, but we stand ready to embrace the opportunities presented by the coming year with a strong and consolidated product range and some firm plans to embrace new markets. VII Ambertech LimitedAnnual Report for the year ended 30 June 2011New Zealand VIII Annual Report for the year ended 30 June 2011Ambertech LimitedNew Zealand Segment Our results for the year reflect, in particular, on disappointing sales in our broadcast area. As a result, further restructuring and some staff replacements have been undertaken as a measure to assist in offsetting the downturn in business. Our restructure process has been met with market acceptance and renewed customer confidence. The TVWorks project was brought to a successful completion in the 2010/11 financial year and since then we have added more storage to their system confirming our customer’s endorsement of this Enterprise investment. The financial year also saw the retirement of our Lifestyle Product Manager, Mr Tony van Dam. Tony had been with us for 15 years and we wish him and his family all the best in the future. Moving in to fill Tony’s seat is Mr Nigel Lee, and while Nigel is not from our industry he brings with him a fresh and creative approach that is showing very positive and measurable results. One of Nigel’s first achievements was the successful launch of the Trickelstar brand in New Zealand. An incentive program was created for which Genesis Energy clients would receive a discount via coupon when presented at their local Warehouse Stationary store. Our patience in this area is now paying off with re-orders by retailers happening regularly now. This partnership has been so successful that Genesis Energy has re-signed to continue this program for another term. The past year has been a very hard one yet again but, looking forward we feel confident that the future has a brighter outcome for us all. IX Ambertech LimitedAnnual Report for the year ended 30 June 2011Our Business and Brands X Annual Report for the year ended 30 June 2011Ambertech Limitedinstallation:innovation XI Ambertech LimitedAnnual Report for the year ended 30 June 2011AMAZON CASES ® XII Annual Report for the year ended 30 June 2011Ambertech LimitedCorporate Governance Statement XIII Ambertech LimitedAnnual Report for the year ended 30 June 2011CORPORATE GOVERNANCE STATEMENT Ambertech Limited (the Company) and the Board are committed to achieving and demonstrating high standards of corporate governance. The Board continues to review the framework and practices to ensure they meet the interests of all stakeholders. The Company recognises that on 30 June 2010 the ASX Corporate Governance Council released amendments to the second edition in relation to diversity, remuneration, trading policies and briefings, and these will apply to the Company for the 2012 financial year. A description of the Company’s main corporate governance practices is set out below. All these practices, unless otherwise stated, were in place for the entire year. Principle 1: Lay solid foundations for management and oversight The Board is responsible to the shareholders and is accountable to them for the performance of the Company in both the short and the longer term and seeks to balance sometimes competing objectives in the best interests of the company as a whole. Its focus is to enhance the interests of shareholders and other key stakeholders and to deliver value through the effective governance of the business. The responsibilities of the Board include:  Providing strategic guidance to the company, including contributing to the development of and approving the corporate strategy.  Reviewing, approving and monitoring systems of risk management and internal control, codes of conduct, legal compliance and accountability systems.  Monitoring financial performance, including approval of the annual and half-yearly financial reports.  Reviewing and approving annual budgets and financial plans, including major capital expenditure initiatives.  Overseeing and monitoring the progress of major capital expenditure, capital management and acquisitions and divestments.  Appointing and removing the Managing Director (MD).  Ratifying the appointment and removal of the Chief Financial Officer (CFO).  Monitoring the performance of the MD and CFO against annually set key performance indicators.  Ensuring appropriate resources are available to senior executives  Acting as an interface between the Company and shareholders. Day to day management of the company’s affairs and the implementation of the corporate strategy and policy initiatives are formally delegated by the Board to the MD, CFO and other senior executives. Performance assessments for senior executives, other than the CFO, are the responsibility of the MD. Assessment of the MD, CFO and other senior executives occur as part of an annual review process. Assessments consist of formal meetings to discuss performance against set KPIs which are based on company performance targets, and vary according to the roles and responsibilities of the executive. At the same time, these KPIs are aligned to reflect the common corporate goals such as growth in earnings and shareholders’ wealth, and achievement of working capital targets. The Board has adopted a formal charter and a copy is available on the company’s website. XIV Annual Report for the year ended 30 June 2011Ambertech LimitedPrinciple 2: Structure the board to add value Details of the members of the Board, their experience, expertise, qualifications and term of office are set out in the Directors’ Report under the heading “Information on directors”. At the date of signing the Directors’ Report, the Board comprises four non-executive directors, including the Chairman, and one executive director. As a team, the Board brings a range of qualifications, with experience in high technology equipment, finance, accounting, public company affairs and corporate governance. The Board believes that the first priority in the selection of directors is their ability to add value to the Board and enhance Ambertech’s performance. The Board’s view is that independence is extended to those non-executive directors whose interests are less than 10% of issued capital, where that director is not the major shareholder, and where no ongoing services are being provided to the Company by the director or related entities. At the date of signing the Directors’ report, the Board comprises three independent directors, (Mr Peter Wallace, Mr Edwin Goodwin, and Mr David Swift) and two non-independent directors (Mr Thomas Amos and Mr Peter Amos). The Chairman undertakes a regular performance evaluation for the board, its committees and directors. The Chairman meets privately with each director to discuss assessments. A performance evaluation has taken place during the reporting period in accordance with the process described above. The Board has established a Nomination and Remuneration committee as outlined under the heading Principle 8: Remunerate fairly and responsibly. Directors and Board committees have the right, in connection with their duties and responsibilities, to seek independent professional advice at the Company’s expense, subject to approval of cost by the Chairman. Principle 3: Promote ethical and responsible decision-making The company has developed a broad code of conduct for all staff which operates in conjunction with a strong network of company policies to ensure all personnel act with integrity, objectivity and in compliance with the letter and the spirit of the law and company policies. The code applies to all employees within the company from the Board, through management to all other staff. The code encourages all staff and other stakeholders to report any breaches of the code to the Chairman of the Board, who is required to investigate and report on all such matters. The Code of Conduct is supported by more detailed policies setting out the philosophy of the company in relation to its various stakeholders. A copy of the code is available on the company’s website. Securities Trading The Company’s Directors and Officers are prohibited from dealing in any of the Company’s shares, except while not in possession of unpublished price sensitive information. Directors and Officers are prohibited from dealing in the Company’s shares during specified periods prior to the release of the Company’s results, or before the AGM. Directors and Officers must notify either the Chair or the Company Secretary prior to dealing in the Company’s shares. The Board has established a securities trading policy and a copy is available on the company’s website. Diversity ASX Principles have been revised to require companies to establish diversity related measurable objectives, undertake an annual assessment against the objectives and make disclosures in the 2012 Annual Report. Ambertech is currently developing and formalizing targets for gender diversity in line with the requirements under the ASX Principles, which will be disclosed in the 2012 Annual Report. A Diversity Policy has been adopted by the Board and a copy is available on the company’s website. XV Ambertech LimitedAnnual Report for the year ended 30 June 2011Principle 4: Safeguard integrity in financial reporting Audit and Risk Management Committee The Board has established an Audit and Risk Management Committee responsible for ensuring that: • reporting on the financial and other performance indicators for the Company meets all applicable legislative and accounting standards; • the Company’s control and accountability systems are robust; • the Company identifies and monitors major risks as well as reviewing and ratifying systems of risk management, and internal compliance and control; and • governance policies of the Company comply with all relevant legislation. Members of the Committee are Ed Goodwin (Chairperson) and Peter Wallace, each of whom is a non-executive director with appropriate financial and business expertise to act effectively as a member of the Audit and Risk Management Committee. The committee contains only two members as it would be inefficient for the structure of the board to have three members. The Audit and Risk Management Committee meets at least three times a year and reports regularly to the Board. The Audit and Risk Management Committee has direct access to any employee, the auditors or any other independent experts and advisers, as it considers appropriate in order to ensure that its responsibilities can be carried out effectively. The Audit and Risk Management Committee has a formal charter. Details of the members of the committee, their experience, expertise, qualifications and attendance at meetings of the committee are set out in the Director’s Report. External Audit The Board has delegated to the Audit and Risk Management Committee responsibility for making recommendations on the appointment, evaluation and dismissal of external auditors, and ensuring that the auditors report to the Committee and the Board. It is policy for the external auditors to provide an annual declaration of independence to the Audit and Risk Management Committee. The external auditor will attend the Annual General Meeting and be available to shareholders for questions regarding the conduct of the audit and preparation of the content of the Audit Report. Principles 5 and 6: Make timely and balanced disclosures and Respect the rights of shareholders The Chairman and Company Secretary are responsible for communications with the ASX, and ensuring compliance with the continuous disclosure requirements in the ASX listing rules. Management are responsible for ensuring that all potential corporate information that could materially affect the price or value of the company’s shares is brought to the attention of the Chairman or Company Secretary immediately it becomes known. This information is then assessed in liaison with the Board and management in regards to ASX listing rule requirements of 3.1. The company has a shareholder communications policy which recognizes the value of providing current and relevant information to shareholders. All information disclosed to the ASX is posted on the company’s website as soon as it is disclosed to the ASX, and remains available to shareholders for at least two years. The current and historical share price details are also available on the website. All shareholders have the option to receive a hard copy of the Annual Report. The company does provide the opportunity for shareholders to receive the Annual Report through electronic means. A copy of the Annual Report is made available from the company’s website. The Board has adopted a continuous disclosure and communications policy and a copy is available on the Company’s website. XVI Annual Report for the year ended 30 June 2011Ambertech LimitedPrinciple 7: Recognise and manage risk The Board, through the Audit and Risk Management Committee, is responsible for ensuring there are adequate policies in relation to risk management, compliance and internal controls. The Board has required management to design and implement a risk management and internal control system to manage the Company’s material business risks and to report to it on whether those risks are being managed effectively. In summary, the Company policies are designed to ensure strategic, operational, legal, reputation and financial risks are identified, assessed, effectively and efficiently managed and monitored to enable achievement of business objectives. To realise its risk management objectives, the company: • Identifies and assesses risks to business and understands how such risks influence performance; • Ensures that an appropriate risk management framework is in place, that it is aligned to the company’s business strategy and that it evolves with the business; • Supports the framework and strategy with an appropriate organisational structure and ensures that associated responsibilities are clearly defined and communicated at all levels; • Ensures that risk management information is communicated through a clear and robust reporting structure; and • Integrates ongoing risk management activities within the business. The Managing Director is responsible for overall risk management leadership, policy and program implementation. The Chief Financial Officer (CFO) supports the Managing Director in discharging these responsibilities and is responsible for providing appropriate risk management resources to guide and support all personnel in maintaining the risk management framework, as well as coordinating regular reporting to the Audit and Compliance Committee. The CFO also ensures that his report to the Board notifies directors of any issues or concerns and reports as to the effectiveness of the Company’s management of its material business risks. Management has reported to the Board as to the effectiveness of the Company’s management of its material business risks. The Managing Director and Chief Financial Officer have also made the following certifications to the Board: • That the Company’s financial reports are complete and present a true and fair view, in all material respects, of the financial condition and operational results of the company and Group and are in accordance with relevant accounting standards. • That the above statements are founded on a sound system of risk management and internal compliance and control and which implements the policies adopted by the Board and that the company’s risk management and internal compliance and control is operating efficiently and effectively in all material aspects. Principle 8: Remunerate fairly and responsibly Nomination and Remuneration Committee The Board has established a Nomination and Remuneration Committee. The committee has a formal charter. The role of the Nomination and Remuneration Committee is to provide recommendations to the Board on various matters including: • appropriate remuneration policies and monitoring their implementation including with respect to executives, senior managers and non-executive directors; • incentive schemes designed to enhance corporate and individual performance; and • retention strategies for executives and senior management. Members of the Nomination and Remuneration Committee are Peter Wallace (chairperson), and David Swift, each of whom is a non executive director. Details of the members of the committee, their experience, expertise, qualifications and attendance at meetings of the committee are set out in the Director’s Report. The Nomination and Remuneration Committee meets at least once a year and at such other times as the chairman of that committee considers necessary. The Remuneration Report, within the Directors’ Report, sets out the Company’s policies for remunerating Directors, the Managing Director, the Chief Financial Officer and other senior executives. XVII Ambertech LimitedAnnual Report for the year ended 30 June 2011Financial Report XVIII Annual Report for the year ended 30 June 2011Ambertech LimitedAMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT The directors present their report together with the financial statements of the consolidated entity consisting of Ambertech  Limited and its controlled entites, ("company" or "economic entity") for the year ended 30 June 2011 and the auditor's report  thereon. DIRECTORS The qualifications, experience and special responsibilities of each person who has been a director of the Company at any time  during or since the end of the financial year are listed below, together with the details of the company secretary as at the end  of the financial year.  All directors were in office since the start of the year unless otherwise stated. Information on directors Peter Francis Wallace Chairman ‐ Non Executive Director Aged 51 Member of the Audit and Risk Management Committee and Chairman of the Remuneration and Nomination Committee. Peter Wallace is the founder and Managing Director of Endeavour Capital Pty Limited, an independent corporate advisory  firm.  Prior to establishing Endeavour Capital Pty Limited in 1998, he was an Investment Director with private equity  company Hambro‐Grantham. Mr Wallace has been a non‐executive director of over 20 groups of companies. He is currently  the non‐executive chairman of ASX listed, Ideas International Limited.  Mr Wallace has a Bachelor of Commerce degree from the University of New South Wales and a Master of Business  Administration degree from Macquarie University. He is a member of the Institute of Chartered Accountants, and a fellow of  the Australian Institute of Company Directors. Mr Wallace has been a director of Ambertech’s Group companies since February 2000 and Chairman of Ambertech Limited  since October 2002. Peter Andrew Amos Managing Director Aged 54 Peter Amos graduated from Sydney Technical College (now University of Technology, Sydney) with a Radio Trade Certificate  and from North Sydney Technical College with an Electronics Engineering Certificate. He joined Rank Electronics, the  Company from which Ambertech was formed via a management buyout, as a technician in the mid 1970s, rising from Senior  Technician to Service Manager. Upon the formation of Ambertech Limited, Mr Amos became Technical Director of the  Ambertech Group. He also served in a senior role as Marketing Director of Quantum Pacific Pty Ltd, another company owned  by the Ambertech Limited, until it was sold in the mid 1990s. Mr Amos has served as Managing Director of Ambertech Limited since 1995 and presided over the growth of the Company  since that date.  Mr Amos has been a director of Ambertech’s Group companies since 1987. Thomas Robert Amos Non‐Executive Director Aged 60 Tom Amos founded telecommunications consultancy Amos Aked Pty Limited in the early 1980s. His career in  telecommunications and media spans over 30 years, during which time he has been involved in all facets of the industry. An  engineer by profession, Mr Amos holds a B.E. (Electrical Engineering) degree from Sydney University.  Mr Amos has also been prominent in the telecommunication deregulation debate over a period of 15 years as a (former)  director and Vice Chairman of Australian Telecommunications Users Group Limited (“ATUG”) and as an industry  commentator. He is a director of Wave Link Systems Pty Limited and Amos Aked Swift (NZ) Limited. Mr Amos has been a director of Ambertech’s Group companies since June 1997.  1 1 Ambertech LimitedAnnual Report for the year ended 30 June 2011AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT Edwin Francis Goodwin Non‐Executive Director Aged 63 Chairman of the Audit and Risk Management Committee Ed Goodwin holds a BSc in economics from London University and an MBA from Sydney University.   In recent years he has  been working in new venture finance, following 25 years in senior finance and business development roles primarily in the  telecommunications industry. Mr Goodwin has been a director of Ambertech’s Group companies since June 1997. David Rostil Swift Non‐Executive Director Aged 64 Member of the Remuneration and Nomination Committee. David Swift, who holds a B.E. (Electrical Engineering) degree from the University of NSW, has extensive experience in both  the telecommunications and professional electronics industries.  Mr Swift, a co‐founder of Amos Aked Swift Pty Ltd and the  founder of AAS Consulting Pty Ltd, is currently the Business Development Director of Gibson Quai ‐ AAS Pty Ltd, an  independent telecommunications management and technology consulting practice operating in the Australasian Pacific  region. Mr Swift is also a Director and the Chairman of the Australian Telecommunications Users Group Limited (ATUG) and a  Director of Amos Aked Swift (NZ) Limited. In addition to his consulting experience he has had significant management  experience through senior positions with both Westpac Banking Corporation and Telecom Australia. Mr Swift has been a  director of Ambertech's Group companies since June 1997. Company Secretary The following person held the position of Company Secretary at the end of the financial year:  Robert John Glasson Robert Glasson joined Ambertech Limited in July 2002 and also holds the position of Chief Financial Officer.  He has a  Bachelor of Business degree from the University of Technology, Sydney, and is a member of the Institute of Chartered  Accountants in Australia.  He was appointed to the role of Company Secretary on 1 November 2004. CORPORATE INFORMATION Nature of operations and principal activities The principal activities of the economic entity during the financial year were the import and distribution of high technology  equipment to the professional broadcast, film, recording and sound reinforcement industries; the import and distribution of  home theatre products to dealers; distribution and supply of custom installation components for home theatre and  commercial installations to dealers and consumers, and the distribution of projection and display products with business  and domestic applications. There have been no significant changes in the nature of these activities since the end of the financial year. Employees The consolidated entity employed 109 full time employees as at 30 June 2011 (2010: 115 employees).  2 2 Annual Report for the year ended 30 June 2011Ambertech LimitedAMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT REVIEW AND RESULTS OF OPERATIONS The consolidated profit of the economic entity after providing for income tax for the financial year was down by 92.2%  to $126,000 (2010: $1,606,000).  Total revenues for the financial year increased by 0.8% to $66,703,000 (2010:  $66,204,000).  Further information on the operations is included in the Chairman's and Managing Director's Report  section of the Annual Report, and in the ASX Appendix 4E. FINANCIAL POSITION Despite a disappointing profit result the directors believe the economic entity is in a strong and stable financial  position to expand and grow its current operations.  The economic entity recorded positive operating cash flows of  $2,123,000 for the year ended 30 June 2011 in difficult trading conditions.  Borrowings were decreased by $1,700,000  during the financial year whilst maintaining a healthy working capital ratio. The economic entity's working capital, being current assets less current liabilities, has decreased by $197,000 to  $16,538,000 as at 30 June 2011 (2010: $16,735,000).  The net assets of the economic entity have also decreased by  $75,000 to $19,982,000 as at 30 June 2011 (2010: $20,057,000).  This change in net assets is largely due to the lower  earnings recorded during the financial year. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There were no significant changes in the state of affairs of the economic entity during the financial year. SIGNIFICANT EVENTS AFTER BALANCE DATE Apart from the above, there are no matters or circumstances that have arisen since the end of the financial year that  have significantly affected, or may significantly affect, the operations or the state of affairs of the economic entity in  future years. FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES The goal for the 2011/12 financial year is to return the business to positive earnings growth as a result of changes  made to the cost structure of the business during the 2010/11 financial year.  We believe that we have taken the  appropriate measures to ensure the business is well placed to meet this challenge in the coming financial year.   In the short term we expect that we will continue to see uncertainty in the economic outlook both for our markets and  globally.  We also anticipate that there is likely to be further consolidation or casualty of global suppliers of equipment,  and this continues to present both risks and opportunities for Ambertech. The Board of Ambertech is confident that further development of new and existing channels to market, along with  new product initiatives scheduled for early in the new financial year will assist with growth in coming financial years. ENVIRONMENTAL REGULATION The company is subject to regulation by the relevant Commonwealth and State legislation.  The nature of the  company's business does not give rise to any significant environmental issues.  3 3 Ambertech LimitedAnnual Report for the year ended 30 June 2011AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT REMUNERATION REPORT (AUDITED) The information provided below includes remuneration disclosures that are required under the Corporations Act 2001.  The  disclosures have been transferred from the financial report and have been audited. Non‐Executive Director Remuneration Remuneration of non‐executive directors is determined by the Remuneration and Nomination Committee.  In determining  payments to non‐executive directors, consideration is given to market rates for comparable companies for time,  commitment and responsibilities.  The Remuneration and Nomination Committee reviews the remuneration of non‐ executive directors annually, based on market practice, duties and accountability. Remuneration of non‐executive directors comprises fees determined having regard to industry practice and the need to  obtain appropriately qualified independent persons.  Fees do not contain any non‐monetary elements. Executive Remuneration Managing Director and Chief Financial Officer Remuneration of the Managing Director and the Chief Financial Officer (CFO) is determined by the Remuneration and  Nomination Committee.  In this respect, consideration is given to normal commercial rates of remuneration for similar levels  of responsibility.  Remuneration comprises salaries, bonuses, contributions to superannuation funds and options. The Managing Director and CFO receive an incentive element of their salary which is based on achievement of Key  Performance Indicators (KPIs) relevant to their responsibilities.  This includes a component that is based on the company's  profit targets.  The total incentive amounts payable are capped at a fixed rate rather than as a percentage of total  remuneration. KPIs are set annually by the Remuneration and Nomination Committee and based on company performance targets, and  vary according to the roles and responsibilities of the executive.  At the same time, these KPIs are aligned to reflect the  common corporate goals such as growth in earnings and shareholders' wealth, and achievement of working capital targets.   Performance against the KPIs is assessed annually by the Remuneration and Nomination Committee and recommendations  for payments determined following the end of the financial year. Other Executives Approximately 5% of the aggregate remuneration of the senior sales executives comprises an incentive element which is  related to the KPIs of those parts of the company's operations which are relevant to the executive's responsibilities.  The  senior sales executives may also receive a sales commission component, which will vary with the sales performance of those  parts of the sales business for which they are responsible. KPIs are set annually by the Remuneration and Nomination Committee, with a degree of consultation with executives to  ensure their committment.  The measures are tailored to the areas of each executive's involvement and over which they have  control.   They are based on company performance targets, and at the same time, these KPIs are aligned to reflect the  common corporate goals such as growth in earnings and shareholders' wealth, and achievement of working capital targets.   Performance against the KPIs is assessed annually by the Remuneration and Nomination Committee and recommendations  for payments determined following the end of the financial year.  4 4 Annual Report for the year ended 30 June 2011Ambertech LimitedAMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT REMUNERATION REPORT (continued) The table below sets out the economic entity's key shareholder indicators for the past 5 financial years: Dividends paid (cents per share) Closing share price at 30 June ($) Share buy back ($'000) Net profit after tax ($'000) Details of remuneration 2011 0.5 $0.31 8 126 2010 5.5 $0.38 ‐ 2009 3.5 $0.45 44 2008 7.0 $0.65 ‐ 2007 5.0 $0.69 75 1,606 1,806 3,179 2,575 Details of the remuneration of the directors and the key management personnel (as defined in AASB 124 Related Party  Disclosures) of the economic entity are set out in the following tables. The key management personnel of the economic entity includes the following: Name Position Name Position P Wallace Non‐Executive Chairman R Glasson CFO, Company Secretary P Amos T Amos Managing Director Non‐Executive Director B Lee R Caston General Manager, Lifestyle Entertainment General Manager, Broadcast & Professional E Goodwin Non‐Executive Director R McCleery Director, Amber New Zealand D Swift Non‐Executive Director G Simeon General Manager, Video & Audio Post Group Key management personnel are those directly accountable to the Managing Director and the Board and responsible for  the operational management and strategic direction of the Company. The nature and amount of each major element of the remuneration of each director of the economic entity and each of  the key management personnel of the parent and the economic entity for the financial year are set out in the following  tables.  5 5 Ambertech LimitedAnnual Report for the year ended 30 June 2011                                                                                                                                                    AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT REMUNERATION REPORT (continued) Elements of Remuneration 2011 Short‐term employment  benefits Post  employment  benefits Share based  payments Directors Cash salary Cash Bonus Superannuation Options Total Performance % Relating $ $ $ $ $ Related to Options %  P Amos P Wallace T Amos E Goodwin D Swift Executives R Glasson B Lee R Caston G Simeon R McCleery 2010 350,279 55,046 32,111 32,111 32,111 501,658 174,317 168,000 156,459 151,377 107,334 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 21,968 11,818 ‐ 29,725 4,954 2,890 2,890 2,890 43,349 15,689 15,120 15,518 14,688 ‐ 7,787 ‐ ‐ ‐ 387,791 60,000 35,001 35,001 35,001 7,787 552,794 838 838 838 ‐ 838 190,844 183,958 194,783 177,883 108,172 757,487 33,786 61,015 3,352 855,640 Short‐term employment  benefits Post  employment  benefits Share based  payments 2.0% 0.0% 0.0% 0.0% 0.0% 1.4% 0.4% 0.5% 0.4% 0.0% 0.8% 0.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 11.3% 6.6% 0.0% 3.9% %  Directors Cash salary Cash Bonus Superannuation Options Total Performance % Relating $ Related to Options $ $ $ 340,441 30,510 52,523 31,056 31,056 31,056 486,132 169,725 167,996 156,457 151,376 112,258 ‐ ‐ ‐ ‐ 30,510 8,541 37,770 30,607 9,147 ‐ $ 17,864 4,296 ‐ ‐ ‐ 22,160 2,758 2,758 2,758 ‐ 2,758 31,743 4,727 2,795 2,795 2,795 44,855 16,044 15,738 16,296 14,897 ‐ 420,558 61,546 33,851 33,851 33,851 583,657 197,068 224,262 206,118 175,420 115,016 757,812 86,065 62,975 11,032 917,884  6 7.3% 0.0% 0.0% 0.0% 0.0% 5.2% 4.3% 16.8% 14.8% 5.2% 0.0% 9.4% 4.2% 7.0% 0.0% 0.0% 0.0% 3.8% 1.4% 1.2% 1.3% 0.0% 2.4% 1.2% P Amos P Wallace T Amos E Goodwin D Swift Executives R Glasson B Lee R Caston G Simeon R McCleery 6 Annual Report for the year ended 30 June 2011Ambertech Limited                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT REMUNERATION REPORT (continued) Service agreements An executive agreement exists between Peter Amos, the Managing Director, and Amber Technology Limited.   This agreement  provides that Mr Amos, for a period of 12 months from the date of termination, will not engage in activities in competition with the  Amber Group.  There is a notice period by either party of 12 months. The agreement commenced on 31 May 1999 and continues indefinitely.  In the event that the company was to exercise its right to  terminate the contract, the current payout value would be $380,004. Share based compensation Ambertech has adopted an Employee Share Option Plan (ESOP). The Board of Directors may determine the executives and eligible  employees who are entitled to participate in the ESOP. The options issued under the ESOP will expire 5 years after the issue date, or earlier on any of the following events: a the eligible employee is dismissed with cause or has breached a restriction contained in his/her employment contract; b c d e the eligible employee dies while in the employ of the Company; the eligible employee is made redundant by the Company; the eligible employee’s employment with the Company is voluntarily terminated by the eligible employee; or the eligible employee’s employment terminates by reason of normal retirement. The total number of shares reserved for issuance under the ESOP, together with shares reserved for issuance under any other  Option Plan, shall not exceed 5% of the diluted ordinary share capital in the Company (comprising all Shares, all Options issued  under the ESOP and under any other Option Plan, and all other convertible issued securities). The ESOP provides the Board with the ability to determine the exercise price of the options, the periods within which the options  may be exercised, and the conditions to be satisfied before the option can be exercised. The ESOP provides for adjustments in accordance with ASX Listing Rules if there is a capital reconstruction, a rights issue or a bonus  issue.  The number of options on issue to directors and key executives at the date of this report is outlined in the following tables. There  were no options issued during or since the end of the financial year. Options Granted Grant Details Grant Date No Value $ Directors P Amos 7/12/2004 400,000 116,913 Executives R Glasson B Lee R Caston R McCleery 7/12/2004 7/12/2004 7/12/2004 7/12/2004 50,000 50,000 50,000 50,000 18,369 18,369 18,369 18,369 For the financial year ended 30 June 2011 Exercised $ Lapsed No $ No No Vested Vested Unvested Lapsed Overall ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 100,000 38,670 100,000 38,670 20,000 20,000 20,000 20,000 80,000 6,282 6,282 6,282 6,282 25,128 ‐ ‐ ‐ ‐ ‐ ‐ ‐ % % % 100 100 100 100 100 ‐ ‐ ‐ ‐ ‐ 50 90 90 90 90 When exercisable, each option is convertible into one ordinary share on a 1:1 basis.  7 7 Ambertech LimitedAnnual Report for the year ended 30 June 2011                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT REMUNERATION REPORT (continued) There have been no shares issued during or since the end of the financial year as a result of exercise of options.  During the  financial year 200,000 options lapsed. In relation to bonus issues, each outstanding option confers on the option holder the right to receive, on exercise of those  outstanding options, not only one share for each of the outstanding options exercised but also the additional shares the  option holder would have received had the option holder participated in that bonus issue as a holder of ordinary shares. The assessed fair value at offer date is determined using a Black‐Scholes option pricing model that takes into account the  exercise price, the term of the option,the impact of dilution, the share price at offer date and expected price volatility of the  underlying share, the expected dividend yield and the risk free interest rate for the term of the option. Interests of Directors At the date of this report the following interests were held by directors: Director P Wallace P Amos T Amos E Goodwin D Swift DIVIDENDS Ordinary Shares Options over  Ordinary Shares 171,897 4,313,843 5,484,625 2,883,556 2,995,826 ‐ 200,000 ‐ ‐ ‐ Dividends paid or declared by the Company to members since the end of the previous financial year were: Dividend Type Record Date Payment Date Cents per share Franking % Tax rate Declared and paid during the year ended 30 June 2011: Interim dividend 16/03/2011 31/03/2011 0.5 100% 30% DIRECTORS' MEETINGS The number of directors' meetings (including meetings of committees of directors) and the number of meetings attended by  each of the directors of the Company during the financial year are: Board Meetings Audit and Risk Management  Committee Meetings Nomination and Remuneration  Committee Attended Held Attended Held Attended Held 4  ‐  ‐ 4  ‐ 2  ‐  ‐  ‐ 2 2  ‐  ‐  ‐ 2 12 12 12 11 12 12 12 12 12 12 4  ‐  ‐ 4  ‐  8 Director P Wallace P Amos T Amos E Goodwin D Swift 8 Annual Report for the year ended 30 June 2011Ambertech Limited                                                                                                                                                                                      AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT NON‐AUDIT SERVICES It is the  economic entity's policy to employ PKF East Coast Practice (PKF) for assignments additional to their annual  audit duties, when PKF's expertise and experience with the economic entity are important. During the year these  assignments comprised primarily tax compliance assignments.  The Board of Directors is satisfied that the auditors'  independence is not compromised as a result of providing these services because:  ‐  ‐ All non‐audit services have been reviewed by the audit committee to ensure they do not impact the impartiality  and objectivity of the auditor, and None of the services undermines the general principles relating to the auditor independence as set out in APES 110  Code of Ethics for Professional Accountants, including reviewing or auditing the auditors' own work, acting in a  management or decision making capacity for the company, acting as an advocate for the company or jointly  sharing economic risks and rewards. During the year fees that were paid or payable for services provided by the auditor of the parent entity  and its related practices as disclosed at note 27. The Directors are satisfied that the provision of non‐audit services during the year by the auditor's is compatible with  the general standard of independence for auditor's imposed by the Corporations Act 2001. PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on  behalf of the company, or to intervene in any proceedings to which the company is a party, for the purpose of taking  responsibility on behalf of the company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the company with leave of the Court under section 237  of the Corporations Act 2001. AUDITORS' INDEPENDENCE DECLARATION A copy of the auditors' independence declaration as required under section 307C of the Corporations Act 2001 is set out  on page 11.  9 9 Ambertech LimitedAnnual Report for the year ended 30 June 2011AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT INDEMNIFICATION OF OFFICERS The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a  director or executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the company paid a premium in respect of a contract to insure the directors and executives  of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance  prohibits disclosure of the nature of liability and the amount of the premium. ROUNDING The company is an entity to which Class Order 98/100 applies and, in accordance with this class order, amounts in this report and the financial statements have been rounded off to the nearest thousand dollars unless otherwise indicated. Signed in accordance with a resolution of directors. Director: P F Wallace P A Amos Dated this 26th day of August 2011. Sydney 10  10  10 Annual Report for the year ended 30 June 2011Ambertech LimitedIndependent Auditor’s Report To the members of Ambertech Limited Report on the Financial Report We have audited the accompanying financial report of Ambertech Limited, which comprises the statements of financial position as at 30 June 2011, the statements of comprehensive income, the statements of changes in equity and the statements of cash flows for the year then ended, notes comprising a summary of significant accounting policies, other explanatory information, and the directors’ declaration of Ambertech Limited (the consolidated entity). The consolidated entity comprises Ambertech Limited and the entities it controlled at the year’s end or from time to time during the financial year. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 2(a), the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au PKF | ABN 83 236 985 726 Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia DX 10173 | Sydney Stock Exchange | New South Wales The PKF East Coast Practice is a member of the PKF International Limited network of legally independent member firms. The PKF East Coast Practice is also a member of the PKF Australia Limited national network of legally independent firms each trading as PKF. PKF East Coast Practice has offices in NSW, Victoria and Brisbane. PKF East Coast Practice does not accept responsibility or liability for the actions or inactions on the part of any other individual member firm or firms. Liability limited by a scheme approved under Professional Standards Legislation. 11 11 Ambertech LimitedAnnual Report for the year ended 30 June 2011 Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Opinion In our opinion: (a) the financial report of Ambertech Limited is in accordance with the Corporations Act 2001, including: (i) (ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of their performance for the year ended on that date; and complying with Australian Accounting Standards and the Corporations Regulations 2001; and (b) the consolidated parent financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 2(a). Report on the Remuneration Report We have audited the Remuneration Report included in pages 4 to 8 of the directors’ report for the year ended 30 June 2011. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Opinion In our opinion, the Remuneration Report of Ambertech Limited for the year ended 30 June 2011, complies with section 300A of the Corporations Act 2001. PKF Arthur Milner Partner Sydney 26 August 2011 12 12 Annual Report for the year ended 30 June 2011Ambertech LimitedLead auditor’s independence declaration under Section 307C of the Corporations Act 2001 To the Directors of Ambertech Limited and the entities it controlled during the year. I declare to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2011 there have been: no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit, and no contraventions of any applicable code of professional conduct in relation to the audit. • • PKF Arthur Milner Partner Sydney 26 August 2011 Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au PKF | ABN 83 236 985 726 Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia The PKF East Coast Practice is a member of the PKF International Limited network of legally independent member firms. The PKF East Coast Practice is also a member of the PKF Australia Limited national network of legally independent firms each trading as PKF. PKF East Coast Practice has offices in NSW, Victoria and Brisbane. PKF East Coast Practice does not accept responsibility or liability for the actions or inactions on the part of any other individual member firm or firms. Liability limited by a scheme approved under Professional Standards Legislation. 13 13 Ambertech LimitedAnnual Report for the year ended 30 June 2011AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2011 Revenue Cost of sales Gross profit Other income Employee benefits expense Distribution costs Marketing costs Premises costs Depreciation and amortisation expenses Finance costs Travel costs Other expenses Profit before income tax expense Income tax benefit / (expense) Profit for the year Other comprehensive income Exchange differences on translation of foreign operations Total comprehensive income for the year Earnings per share Basic earnings per share Diluted earnings per share Economic Entity Note 2011 $'000 2010 $'000 3 4 3 4 4 4 5 25 25 66,703  (47,541) 19,162  ‐ 66,204  (45,024) 21,180  803 (11,206) (11,438) (1,483) (1,551) (2,162) (272) (461) (648) (1,221) 158 (32) 126  (52) 74  0.4 0.4 (1,656) (2,139) (1,868) (279) (390) (678) (1,252) 2,283 (677) 1,606  7 1,613  5.2 5.2 The consolidated statement of comprehensive income is to be read in conjunction with the attached notes. 14  14 Annual Report for the year ended 30 June 2011Ambertech Limited                                                                                                             AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011 ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Current tax assets Inventories TOTAL CURRENT ASSETS NON‐CURRENT ASSETS Plant and equipment Intangible assets Deferred tax assets TOTAL NON‐CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT  LIABILITIES Trade and other payables Other financial liabilities Provisions TOTAL CURRENT  LIABILITIES NON‐CURRENT  LIABILITIES Provisions Deferred tax liabilities TOTAL NON‐CURRENT  LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Share capital Reserves Retained earnings TOTAL EQUITY Economic Entity Note 2011 $'000 2010 $'000 23 6 7 8 10 11 5 12 13 14 14 5 15 16 3,134 13,128 326 13,571 30,159 380 3,054 866 4,300 34,459 9,493 3,000 1,128 13,621 804 52 856 14,477 19,982 3,090 8,149 366 16,089 27,694 531 2,970 778 4,279 31,973 5,292 4,700 967 10,959 811 146 957 11,916 20,057 11,138 (116) 8,960 19,982 11,146 (6) 8,917 20,057 The consolidated statement of financial position is to be read in conjuntion with the attached notes.  15 15 Ambertech LimitedAnnual Report for the year ended 30 June 2011                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2011 Share Capital $'000 Option  Reserve $'000 Foreign  Currency  Translation  Reserve $'000 Economic Entity Balance as at 30 June 2009 11,146  Total comprehensive income for the year Transactions with equity holders: Costs of share based payments Dividends ‐ ‐ ‐ ‐ Balance as at 30 June 2010 11,146  Total comprehensive income for the year Transactions with equity holders: Shares bought back during the year Costs of share based payments Dividends ‐ ‐ ‐ (8) (8) Balance as at 30 June 2011 11,138  271  ‐ (185) ‐ (185) 86  ‐ (58) ‐ (58) 28  Retained  Earnings $'000 Total Equity $'000 8,994  20,312  1,606 1,613  ‐ (1,683) (1,683) 8,917  126  ‐ 70  (153) (83) (185) (1,683) (1,868) 20,057  74  (8) 12  (153) (149) (99) 7 ‐ ‐ ‐ (92) (52) ‐ ‐ ‐ ‐ (144) 8,960  19,982  The consolidated statement of changes in equity is to be read in conjunction with the attached notes. 16  16 Annual Report for the year ended 30 June 2011Ambertech Limited                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2011 Economic Entity Note 2011 $'000 2010 $'000 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Interest and other costs of finance paid Income taxes paid Income taxes refunded Goods and services tax remitted 67,397  (59,834) 20  (461) (538) 361  (4,822) Net cash provided by operating activities 23 2,123  CASH FLOWS FROM INVESTING ACTIVITIES Payments for plant and equipment Payments for intangible assets ‐ website Net cash (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid to shareholders Proceeds from borrowings Payments for shares bought back Repayment of borrowings Net cash (used in) financing activities Net increase in cash and cash equivalents held Cash and cash equivalents at beginning of year Effect of exchange rate changes on the balance of cash and cash equivalents held in foreign currencies at the beginning of the financial year Cash and cash equivalents at end of year 23 The consolidated statement of cash flows is to be read in conjunction with the attached notes. (82) (125) (207) (153) ‐ (8) (1,700) (1,861) 55  3,090  (11) 3,134  75,089  (67,530) 16  (390) (1,236) 257  (4,496) 1,710  (230) ‐ (230) (1,683) 500  ‐ ‐ (1,183) 297  2,793  ‐ 3,090   17 17 Ambertech LimitedAnnual Report for the year ended 30 June 2011                                                                                               AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: INTRODUCTION The financial statements cover the consolidated entity consisting of Ambertech Limited and its controlled entities.  Ambertech Limited is a company limited by shares, incorporated and domiciled in Australia. Operations and principal activities Ambertech is a distributor of high technology equipment to the professional broadcast, film, recording and sound  reinforcement industries and of consumer audio and video products in Australia and New Zealand. Currency The financial statements are presented in Australian dollars and rounded to the nearest one thousand dollars. Registered office Unit B, 5 Skyline Place, Frenchs Forest NSW 2086. Authorisation of financial statements The financial statements were authorised for issue on 26 August 2011 by the Directors.  The company has the  power to amend the financial statements. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Overall Policy The principal accounting policies adopted in the preparation of these consolidated financial statements are  stated in order to assist in a general understanding of the financial statements.  The financial statement is a  general purpose financial statement prepared in accordance with Australian Accounting Standards and the  Corporations Act 2001. Statement of Compliance The financial statements comply with Australian Accounting Standards which include Australian equivalents to  International Financial Reporting Standards (AIFRS).  Compliance with AIFRS ensures that the financial  statements and notes of the economic entity comply with International Financial Reporting Standards (IFRS). Accounting Standards not Previously Applied The economic entity has adopted the following new and revised Australian Accounting Standards issued by the  AASB which are mandatory to apply to the current period. Disclosures required by these Standards that are  deemed material have been included in these financial statements on the basis that they represent a  significant change in information from that previously made available. (i) AASB 2009‐8 Amendments to Australian Accounting Standards ‐ Group Cash‐settled Share‐based  Payment Transactions [AASB 2] (effective from 1 January 2010) The amendments clarified the scope of AASB 2 by requiring an entity that receives goods or services in a  share‐based payment arrangement to account for those goods or services no matter which entity in the  group settles the transaction, and no matter whether the transaction is settled in shares or cash. (ii) AASB 2009‐10 Amendments to Australian Accounting Standards ‐ Classification of Rights Issues [AASB  132] (effective from 1 February 2010) The amendments clarified that rights, options or warrants to acquire a fixed number of an entity's own  equity instruments for a fixed amount in any currency are equity instruments if the entity offers the rights,  options or warrants pro rata to all existing owners of the same class of its own non‐derivative equity  instruments. (iii) AASB2009‐20 Amendments to Australian Accounting Standards arising from Interpretation 19:  Extinguishing Financial Liabilities with Equity Instruments [AASB 1] (effective from 1 July 2010) The amendments require the extinguishment of a financial liability by the issue of equity instruments to be  measured at fair value (preferably using the fair value of the equity instrument issued) with the difference  between fair value of the instrument and the carrying value of the liability extinguished being recognised  in profit or loss. The Interpretation does not apply where the conversion terms were included in the  original contract (such as in the case of a convertible debt) or to common control transactions.  18 18 Annual Report for the year ended 30 June 2011Ambertech LimitedAMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (a) Overall Policy (continued) (iv) AASB 2010‐3 Amendments to Australian Accounting Standards arising from the Annual Improvements Project  [AASB 3, AASB 7, AASB 121, AASB 128, AASB 201, AASB 202 & AASB 209] (effective from 1 July 2010) The subjects of the principal amendments to the Standards are set out below: AASB 3 Business Combinations ‐ ‐ ‐ Measurement of non‐controlling interests; Unreplaced and voluntarily replaced share‐based payment awards; Transition requirements for contingent consideration from a business combination that occurred before  the effective date of the revised AASB 3 (2008). (v) AASB 2009‐12 Amendments to Australian Accounting Standards [AASBs 5, 8, 108, 110, 112, 119, 133, 137, 1023  & 1031 and Interpretations 2, 4, 16, 1039 & 1052] (effective from 1 January 2011) The amendment to AASB 8 requires an entity to exercise judgement in assessing whether a government and  entities known to be under the control of that government are considered a single customer for the purposes of  certain operating segment disclosures. This Standard also makes numerous editorial amendments to a range of Australian Accounting Standards and  Interpretations, including amendments to reflect changes made to the text of IFRSs by the IASB. (vi) AASB 124 Related Party Disclosure (effective from 1 January 2011) Simplifies the definition of a related party, clarifying its intended meaning & eliminating inconsistencies from  the definition of a related party. New Accounting Standards issued but not yet effective The following standards, amendments to standards and interpretations have been identified as those which may  impact the economic entity in the period of initial application.  They are available for early adoption at 30 June 2011,  but have not been applied in preparing these financial statements. (i) AASB 9 Financial Instruments (effective from 1 January 2013) (ii) AASB 10 Consolidation (effective from 1 January 2013) (a) power over the investee;  (b) exposure, or rights, to variable returns from its involvement with the investee; and (c) the ability to use its power over the investee to affect the amount of the investor’s returns. (iii) AASB 12 Disclosure of Interestes in Other Entities (effective from 1 January 2013) AASB 12 provides the disclosure requirements for entities that have an interest in a subsidiary, a joint  arrangement, an associate or an unconsolidated structured entity.  As such, it pulls together and replaces  disclosure requirements from many existing standards. (iv) AASB 13 Fair Value Measurement (effective from 1 January 2013) AASB 13: (a) defines fair value; (b) sets out in a single IFRS a framework for measuring fair value; and (c)   requires disclosures about fair value measurements. (v) AASB 2010‐4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements  Project [AASB 1, AASB 7, AASB 101 & AASB 134 and Interpretation 13] (effective from 1 January 2011)  19 19 Ambertech LimitedAnnual Report for the year ended 30 June 2011AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (a) Overall Policy (continued) (vi) AASB 2010‐5 Amendments to Australian Accounting Standards [AASB 1, 3, 4, 5, 101, 107, 112, 118, 119, 121,  132, 133, 134, 137, 139, 140, 1023 & 1038 and Interpretations 112, 115, 127, 132 & 1042] (effective from 1 January  2011) (vii) AASB 2010‐6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets  [AASB 1 & AASB 7] (effective from 1 July 2011) (viii) AASB 2010‐7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1,  3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5,  10, 12, 19 & 127] (effective from 1 January 2013) (ix) (x) (xi) AASB 2011‐1 Amendments to Australian Accounting Standards arising from the Trans‐Tasman Convergence  Project [AASB 1, AASB 5, AASB 101, AASB 107, AASB 108, AASB 121, AASB 128, AASB 132 & AASB 134 and  Interpretations 2, 112 & 113] (effective from 1 July 2011) AASB 2011‐2 Amendments to Australian Accounting Standards arising from the Trans‐Tasman Convergence  Project – Reduced Disclosure Requirements [AASB 101 & AASB 1054] (effective from 1 July 2013) AASB 2011‐4 Amendments to Australian Accounting Standards to Remove Individual Key Management  Personnel Disclosure Requirements [AASB 124] (effective from 1 July 2013) (b) Significant Judgements and Key Assumptions Judgements made in applying accounting policies that have the most significant effect on the amounts recognised in  the financial statements concern impairment of goodwill.  The economic entity tests annually whether goodwill has  suffered any impairment, in accordance with the accounting policy stated in note 2(k).  These calculations require the  use of assumptions, and these are described further in note 11. (c) Consolidation Policy A controlled entity is any entity controlled by Ambertech Limited.  Control exists where Ambertech Limited has the  capacity to dominate the decision‐making in relation to the financial and operating policies of another entity so that  the other entity operates with Ambertech Limited to achieve the objectives of Ambertech Limited.  Details of the  controlled entities are contained at note 9. All inter‐company balances and transactions between entities in the economic entity, including any unrealised profits  or losses, have been eliminated on consolidation.  (d)  Revenue Recognition Sales revenue comprises revenue earned (net of returns, discounts and allowances) from the provision of goods and  services to entities outside the economic entity. Sale of goods Revenue from the sale of goods is recognised when all significant risks and rewards of ownership have been  transferred to the buyer.  In most cases this coincides with the transfer of legal title, or the passing of possession to  the buyer. Rendering of services Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. Interest revenue Interest revenue is recognised as it accrues using the effective interest method. Dividend revenue Dividends are recognised as income as they are received, net of any franking credits.  20 20 Annual Report for the year ended 30 June 2011Ambertech LimitedAMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (e) Cash and Cash Equivalents For the purposes of the statement of cash flows, cash and cash equivalents includes cash on hand, deposits at call  with banks or financial institutions, investments in money market instruments maturing within less than three  months, and bank overdrafts. (f) Receivables Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using  the effective interest method, less provision for impairment. Trade receivables are generally due for settlement  between 30 and 60 days. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are  written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when  there is objective evidence that the economic entity will not be able to collect all amounts due according to the  original terms of the receivables. (g) Inventory Inventories are measured at the lower of weighted average cost and net realisable value.  Costs are assigned on a  first‐in first‐out basis and include direct materials, direct labour and an appropriate proportion of variable and fixed  overhead expenses. (h) Plant and Equipment Plant and equipment is stated at historical cost less depreciation and impairment.  Historical cost includes  expenditure that is directly attributable to the acquisition of the items. Plant and equipment is depreciated over estimated useful life taking into account estimated residual values.  The  straight line method is used. Plant and equipment is depreciated from the date of acquisition or, in respect of leasehold improvements, from the  time the asset is completed and ready for use.  The depreciation rates used for each class of plant and equipment  remain unchanged from the previous year and are as follows: Class of Asset Plant and equipment Furniture and fittings Leasehold improvements Leased plant and equipment Useful life 3‐8 years 3‐8 years Term of the lease Term of the lease The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances  indicate the carrying value may not be recoverable.  If any such indication exists and where the carrying values  exceed the estimated recoverable amount, the plant and equipment or cash generating units to which the plant and  equipment belong  are written down to their recoverable amount.  21 21 Ambertech LimitedAnnual Report for the year ended 30 June 2011AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (i) Investments in Subsidiaries In the separate financial statements of the parent, investments in subsidiaries that are not classified as held for sale  or included in a disposal group classified as held for sale, are accounted for at cost. (j) Intangible Assets Goodwill All business combinations are accounted for by applying the purchase method.  Goodwill represents the difference  between the cost of the acquisition and the fair value of the net identifiable assets acquired. Goodwill is stated at cost less any accumulated impairment.  Goodwill is allocated to cash generating units and is  not subject to amortisation, but tested annually for impairment (refer to note 2(k)).   Where the recoverable amount of the cash generating unit is less than the carrying amount, an impairment loss is  recognised. Website Costs Significant costs associated with website costs are deferred and amortised on a straight‐line basis over the period  of their expected benefit, being a finite life of 3 years. (k) Impairment of Assets Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested  annually for impairment, or more frequently if events or changes in circumstances indicate that they might be  impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the  carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s  carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less  costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for  which there are separately identifiable cash inflows which are largely independent of the cash inflows from other  assets or groups of assets (cash‐generating units).  If there is evidence of impairment for any of the company’s financial assets carried at amortised cost, the loss is  measured as the difference between the asset’s carrying amount and the present value of estimated future cash  flows, excluding future credit losses that have not been incurred. The cash flows are discounted at the economic  entity's weighted average cost of capital. The loss is recognised in the statement of comprehensive income. (l) Trade and Other Payables These amounts represent liabilities for goods and services provided to the economic entity prior to the end of  financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.  22 22 Annual Report for the year ended 30 June 2011Ambertech LimitedAMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (m) Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently  measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption  amount is recognised in the statement of comprehensive income over the period of the borrowings using the  effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of  the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is  deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the  facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the  period of the facility to which it relates.  (n) Service Warranties Provision is made for the estimated liability on all products still under warranty at balance date. (o) Leases (i) Operating leases Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are  charged as expenses in the periods in which they are incurred.  Lease incentives under operating leases are  recognised as a liability and amortised on a straight –line basis over the life of the lease term. (p) Share Based Payments Options issued over ordinary shares are valued using a pricing model which takes into account the option exercise  price, the current level and volatility of the underlying share price, the risk free interest rate, the expected  dividends on the underlying share, the current market price of the underlying share and the expected life of the  option. Information relating to these schemes is set out in note 21. The value of the options is recognised in an option reserve until the options are exercised, forfeited or expire. (q) Employee Benefits Short term employee benefits are employee benefits (other than termination benefits and equity compensation  benefits) which fall due wholly within 12 months after the end of the period in which employee services are  rendered.  They comprise wages, salaries, commissions, social security obligations, short‐term compensation  absences and bonuses payable within 12 months and non‐mandatory benefits such as car allowances. The undiscounted amount of short‐term employee benefits expected to be paid is recognised as an expense. Other long‐term employee benefits include long‐service leave payable 12 months or more after the end of the  financial year.  23 23 Ambertech LimitedAnnual Report for the year ended 30 June 2011AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (r) Income Tax The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based  on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities  attributable to temporary differences and to unused tax losses. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax  bases of assets and liabilities and their carrying amounts. However, the deferred income tax is not accounted for if  it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the  time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined  using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected  to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable  that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and  tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of  the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and  liabilities and when the deferred tax balances relate to the same taxation authority.  Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends  either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly  in equity. Tax consolidation legislation  Ambertech Limited and its Australian wholly owned controlled entities have implemented the tax consolidation  legislation. The head entity, Ambertech Limited, and the controlled entities in the tax consolidated group continue to account  for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax  consolidated group continues to be a ‘stand‐alone taxpayer’ in its own right. Current tax liabilities (assets) and deferred tax assets arising from unused tax losses and tax credits are  immediately transferred to the head entity. The tax consolidated group has entered a tax sharing agreement  whereby each company in the group contributes to the income tax payable by the group in proportion to their  contribution to the group’s taxable income. Differences between the amounts of net tax assets and liabilities  derecognised and the net amounts recognised pursuant to the funding arrangement will be recognised as either a  contribution by, or distribution to the head entity. 24  24 Annual Report for the year ended 30 June 2011Ambertech LimitedAMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (s) Foreign Currency Translation The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on  consolidation, are translated to Australian dollars at exchange rates ruling at the balance sheet date.  The revenues  and expenses of foreign operations are translated to Australian dollars at rates approximating to the exchange rates  ruling at the dates of the transactions. Foreign exchange differences arising on retranslation are recognised directly in a separate component of equity. (t) Earnings Per Share (i) Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company,  excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary  shares outstanding during the year, adjusted for bonus elements in ordinary shares issued during the year. (ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into  account the after income tax effect of interest and other financing costs associated with dilutive potential  ordinary shares and the weighted average number of shares assumed to have been issued for no consideration  in relation to dilutive potential ordinary shares. (u) Share Capital Ordinary shares are classified 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. (v) Dividends Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the  discretion of the entity, on or before the end of the year but not distributed at balance date. (w) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a  substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such  time as the assets are substantially ready for their intended use or sale. Other borrowing costs are expensed. (x) Goods and Services Tax Revenues, expenses and assets are recognised net of the amount of GST, unless the GST incurred is not recoverable  from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the  expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount  of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the  statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing  activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.  25 25 Ambertech LimitedAnnual Report for the year ended 30 June 2011AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 3: REVENUE Revenue  ‐ Sale of goods and services  ‐ Interest received Other income  ‐ Net foreign exchange gains NOTE 4: ITEMS INCLUDED IN PROFIT Additional information on the nature of expenses Inventories Cost of sales Movement in provision for inventory obsolescence Employee benefits expense Salaries and wages Employee termination expense Depreciation Plant and equipment Furniture and fittings Leasehold improvements Amortisation Website costs Bad and doubtful debts Economic Entity 2011 $'000 2010 $'000 66,683 20 66,703 ‐ ‐ 47,541 18 10,704 502 11,206 139 26 66 231 41 163  66,188 16 66,204 803 803 45,024 147  11,235 203 11,438 141 29 109 279 ‐ 25  Rental expense on operating leases: Minimum lease payments Net foreign exchange losses Net loss on disposal of plant and equipment Net fair value gain on derivative financial instruments ‐ forward  exchange contracts 1,315 1,166 57 1 45 ‐ 3 334  26 26 Annual Report for the year ended 30 June 2011Ambertech Limited                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 5: INCOME TAX Major components of income tax expense Current income tax Under provision in prior years Deferred tax Income tax expense Reconciliation between income tax expense and prima facie tax on accounting  profit Profit before income tax expense Tax at 30% (2010:30%) Tax effect of non deductible expenses  ‐ Entertainment  ‐ Other items Under provision for income tax in prior years Income tax expense Applicable tax rate The applicable tax rate is the national tax rate in Australia. Analysis of deferred tax assets Employee benefits Plant and equipment Intangible assets Accrued expenses Allowance for doubtful accounts Provision for obsolesence Inventory Other Analysis of deferred tax liabilities Unrealised foreign currency exchange gain Other Economic Entity 2011 $'000 2010 $'000 213  1  (182) 32  158  47  13 (29) 1  32  443 148 5 119 7 73 14 57  866 50 2 52 611  10  56  677 2,283  685  17 (35) 10  677 446 155 ‐ 55 36 68 18 ‐ 778 144 2 146 Tax consolidated group Ambertech Limited is head entity in a tax consolidated group.  The tax consolidated legislation has been applied in respect  of the year ended 30 June 2011. Ambertech Limited has entered into a tax sharing agreement with Amber Technology Limited and Alphan Pty Limited.  The  tax sharing agreement allows for an allocation of income tax expense to members of the group on the basis of taxable  income.  27 27 Ambertech LimitedAnnual Report for the year ended 30 June 2011                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 6: TRADE AND OTHER RECEIVABLES Current Trade accounts receivable (a) Provision for impairment of receivables (b) Other receivables (a) Derivative financial instruments ‐ forward exchange contracts Prepayments (a) Current trade and other receivables are non‐interest bearing loans,  generally between 30 and 60 day terms.  A provision for impairment is  recognised when there is objective evidence that a trade or other  receivable is impaired.  These amounts have been included in the other  expenses item. (b) Movement in the provision for impairment of receivables is as follows: Current trade receivables Opening balance Charge for the year Amounts written off Closing balance Economic Entity 2011 $'000 2010 $'000 12,704 (26) 12,678 228 45 177 13,128 7,498 (121) 7,377 200 334 238 8,149 121 68 (163) 26 86 60 (25) 121 (c) The economic entity's exposure to credit risk and impairment losses  related to trade and other receivables is disclosed at note 24. NOTE 7: CURRENT TAX ASSETS The current tax asset in the economic entity of $326,000 (2010: $366,000) represents the amount of income tax  recoverable in respect of current and prior years that arise from the payment of tax in excess of amounts due to the  relevant tax authority.  28 28 Annual Report for the year ended 30 June 2011Ambertech Limited                                                                                                                                                                                                                                                                                                                                                                        AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 8: INVENTORIES Current Finished goods Stock in transit Provision for obsolescence NOTE 9: CONTROLLED ENTITIES Entity Parent Entity  ‐ Ambertech Limited Subsidiaries of Ambertech Limited  ‐ Amber Technology Limited Subsidiaries of Amber Technology Limited  ‐ Alphan Pty Limited  ‐ Amber Technology (NZ) Limited Economic Entity 2011 $'000 2010 $'000 12,952  861  13,813  (242) 13,571 15,284  1,030  16,314  (225) 16,089 Country of Incorporation Percentage Owned 2011 2010 Australia Australia 100% 100% Australia New Zealand 100% 100% 100% 100%  29 29 Ambertech LimitedAnnual Report for the year ended 30 June 2011              AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 10: PLANT AND EQUIPMENT Non‐Current Gross Carrying Amount 2011 $'000 2010 $'000 Accumulated  depreciation 2011 $'000 2010 $'000 Net carrying amount 2011 2010 $'000 $'000 Economic Entity Plant and equipment Furniture and fittings Leasehold improvements Leased plant and equipment 1,743 1,760 (1,451) (1,392) 392 768 10 387 756 10 (320) (752) (10) (294) (686) (10) Total plant and equipment 2,913 2,913 (2,533) (2,382) 292 72 16 ‐ 380 Reconciliation of carrying amounts: 2011 Economic Entity Balance at the beginning of the year Additions Disposals Depreciation and amortisation expense Carrying amount at the end of the year 2010 Economic Entity Balance at the beginning of the year Additions Disposals Depreciation and amortisation expense Carrying amount at the end of the year Plant and  equipment $'000 Furniture  and fittings $'000 Leasehold  improveme nts $'000 Leased  plant and  equipment $'000 368  65  (2) (139) 292  93  5  ‐ (26) 72  70  12  ‐ (66) 16  ‐ ‐ ‐ ‐ ‐ Plant and  equipment $'000 Furniture  and fittings $'000 Leasehold  improveme nts $'000 Leased  plant and  equipment $'000 306  205  (2) (141) 368  109  13  ‐ (29) 93  168  12  (1) (109) 70  ‐ ‐ ‐ ‐ ‐ 368 93 70 ‐ 531 Total $'000 531  82  (2) (231) 380  Total $'000 583  230  (3) (279) 531   30 30 Annual Report for the year ended 30 June 2011Ambertech Limited                                                                                                                                                                                                                                                                                                                                                                                                                                            AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 11: INTANGIBLE ASSETS Non‐Current Goodwill at cost Website  (a) Goodwill (i) Impairment tests for goodwill Economic Entity 2011 2010 $'000 $'000 2,970 84 3,054 2,970 ‐ 2,970 Goodwill is allocated to the economic entity's Cash Generating Units (CGUs) defined according to  business segment and country of operation. A segment level summary of the goodwill allocation is presented below: 2011 Lifestyle Entertainment Professional New Zealand 2010 Lifestyle Entertainment Professional New Zealand Australia New Zealand $'000 $'000 Total $'000 1,963 963 ‐ 2,926 1,963 963 ‐ 2,926 ‐ ‐ ‐ ‐ 44 44 44 44 1,963 963 44 2,970 1,963 963 44 2,970 (ii) Key assumptions for value in use calculations The recoverable amount of each CGU is determined based on value in use calculations.  Value in use is  calculated based on the present value of cash flow projections over a 5 year period plus a terminal value based  on a detailed financial budget approved by management and the board of directors. The cash flows are  discounted using the post tax weighted average cost of capital at the beginning of the budget period. The following assumptions were used in the value in use calculations: CGU Sales Growth Rate 2011 2010 Average Growth Rate 2011 2010 Discount Rate 2011 2010 Lifestyle Entertainment Professional New Zealand 3.00% 3.00% 3.00% 7.40% 1.00% 3.90% 16.00% 3.90% ‐0.50% 4.60% 1.00% 11.00% 11.30% 11.30% 11.30% 12.10% 12.10% 12.10% The average growth rates applied in the cash flow projections represent management's best estimate of likely  economic conditions for the forecast period. Impact of possible changes in key assumptions (iii) In determining the value in use of a CGU, management applied sensitivity analysis to the discount rate to  ensure that the recoverable amount of the CGU's exceeds its carrying amount.  Discount rates between 10.46%  and 12.10% (2010: 11.12% and 12.99%) were used for this purpose. Management does not consider a change in any of the key assumptions, that would cause a CGUs carrying  amount to exceed the recoverable amount, to be reasonably likely.  31 31 Ambertech LimitedAnnual Report for the year ended 30 June 2011                                                                                                                                                                                                                                                                                                                                                     AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 11: INTANGIBLE ASSETS (continued) Non‐Current (b) Website ‐ at cost Less accumulated amortisation Reconciliation of written down values: Opening balance at 1 July 2010 Additions Amortisation expense Closing balance at 30 June 2011 NOTE 12: TRADE AND OTHER PAYABLES Current Trade accounts payable Other accounts payable Amounts payable in foreign currencies: Website $'000 ‐ 125 (41) 84 Trade accounts payable:  ‐ US Dollars  ‐  ‐  ‐  ‐ New Zealand Dollars  ‐ British Pound Euro Swiss Francs Japanese Yen NOTE 13: OTHER FINANCIAL LIABILITIES Current Bills payable (a) Economic Entity 2011 $'000 2010 $'000 125 (41) 84 ‐ ‐ ‐ 7,320 2,173 9,493 1,398 375 79 185 140 56 2,233 3,000 3,000 3,035 2,257 5,292 1,427 391 38 142 342 ‐ 2,340 4,700 4,700 Details of the economic entity's exposure to interest rate changes on other financial liabilities are outlined in note 24. The fair value of the financial liabilities approximates their carrying value. (a) Bills payable Bills payable are a part of a multi‐option borrowing facility that includes flexible overdraft and commercial bill  components.  The economic entity breached its covenants in relation to the facility during the year, and as a result  the facility was subject to review by the lenders when it expired on 15 July 2011.  A new facility has been  successfully negotiated and a letter of offer dated 12 August 2011 signed on behalf of the Board.  The new facility  has an expiry date of 31 July 2012. The facility is secured by a charge over the assets of Amber Technology Limited.  Guarantees are in place to a limit  of $6,500,000 (2010:$6,500,000).  The value of assets at balance date is $32,952,000 (2010: $29,780,000). 32  32 Annual Report for the year ended 30 June 2011Ambertech Limited                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 14: PROVISIONS Current Service warranty Make good provision Employee benefits Non Current Make good provision Employee benefits Economic Entity 2011 $'000 2010 $'000 244 210 674 1,128 ‐ 804 804 228 ‐ 739 967 60 751 811 (a) Service warranty Provision is made for the estimated warranty claims in respect of products sold which are still under warranty at  balance date. These claims are expected to be settled in the next financial year. Management estimates the provision  based on historical warranty claim information and any recent trends that may suggest future claims could differ from  historical amounts. (b) Make good provision The company is required to restore the leased premises at Frenchs Forest to their original condition at the time of  leaving the premises. A provision has been recognised for the present value of the estimated expenditure required to  remove any leasehold improvements. (c) Movements in provisions Movements in provisions, other than employee benefits are set out below: Opening balance at 1 July 2010 Additional provision recognised Reductions resulting from payments Closing balance at 30 June 2011 NOTE 15: SHARE CAPITAL  Service  warranty  $'000  Make good  provision  $'000 Total $'000 228 264 (248) 244 60 150 ‐ 210 288 414 (248) 454 Economic Entity Economic Entity 2011 Shares 2010 Shares 2011 $'000 2010 $'000 Ordinary Shares fully paid (no par value) 30,573,181 30,598,181 11,138 11,146 Details  No of shares  Issued price $'000 Balance 30 June 2010 Shares bought back 18 March 2011 Balance 30 June 2011 30,598,181 (25,000) 30,573,181 $0.335 11,146 (8) 11,138 Share Buy Back On 2 September 2005, the company announced an on‐market buy back of up to 1,543,150 ordinary shares on issue.   The buy back is a part of the company's capital management and is designed to improve shareholder returns.  During  the year ended 30 June 2011 the company bought back 25,000 (2010: Nil) shares.  33 33 Ambertech LimitedAnnual Report for the year ended 30 June 2011                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 16: RESERVES Foreign currency translation reserve (a) Share based payments reserve (b) Economic Entity 2011 $'000 2010 $'000 (144) 28 (116) (92) 86 (6) For an explanation of movements in reserve accounts refer to Statement of Changes in Equity. Nature and purpose of reserves (a) Foreign currency translation reserve  Exchange differences arising on translation of the foreign controlled entity are taken to the foreign currency  translation reserve as described in note 2(s).  The reserve is recognised in profit and loss when the net investment is  disposed of.  (b) Share based payments reserve The share based payments reserve is used to recognise the fair value of options issued but not exercised. NOTE 17: CAPITAL & LEASING COMMITMENTS (a) Operating lease commitments Payable: Not later than 1 year Later than 1 year but not later than 5 years Minimum lease payments Economic Entity 2011 $'000 2010 $'000 986 342 1,328 1,407 1,274 2,681 The Frenchs Forest property lease is a non‐cancellable lease ending on 31 March 2012, with rent payable monthly in  advance.   Contingent rental provisions within the lease agreement require that the minimum lease payments shall be  increased at review dates by 3.5%, 5% and 5% per annum. On 7 June 2010, the Board announced that it had signed a deed of agreement for a 10 year lease of new premises at the  completion of the lease at Frenchs Forest.  Amounts relating to this lease have not been included in the operating lease  commitments above because at the date of signing the financial report, the development schedule does not allow the  Board to accurately determine the commencement date for this lease. Economic Entity 2011 $'000 2010 $'000 ‐ 25 (b) Capital expenditure commitments Capital expenditure commitments contracted for: Website developments Payable: Not later than 1 year  34 34 Annual Report for the year ended 30 June 2011Ambertech Limited                                                                                                                                                                                 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 18: CONTINGENT LIABILITIES Estimates of the maximum amounts of contingent liabilities  that may become payable:  ‐ Bank guarantees by Amber Technology Limited in  respect of various property leases Economic Entity 2011 $'000 2010 $'000 540 540 336 336 No material losses are anticipated in respect of any of the above contingent liabilities. NOTE 19: EVENTS SUBSEQUENT TO REPORTING DATE Since the end of the financial year, no matters have arisen which significantly affected or may significantly affect  the operations of the economic entity, the results of those operations or the state of affairs of the economic entity  in future financial years. NOTE 20: RELATED PARTY TRANSACTIONS Key management personnel compensation Key management personnel comprises directors and other persons having authority and responsibility for  planning, directing and controlling the activities of the economic entity. Summary  ‐ Short term employee benefits  ‐ Post employment benefits  ‐ Share based payments Economic Entity 2011 $ 2010 $ 1,292,931 1,360,519 104,364 11,139  107,830 33,192  1,408,434 1,501,541 Transactions with related parties The following transactions occurred with related parties: ‐ Payment for services from associate 60,000 60,000 The company has taken advantage of the relief provided by Corporations Regulation 2M.6.04 and information  required to be disclosed by AASB 124 paragraphs Aus25.4 to Aus 25.7.2 in respect of the remuneration of key  management personnel is presented in the Directors' Report.  35 35 Ambertech LimitedAnnual Report for the year ended 30 June 2011                                                                                                                                               AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 21:  SHARE BASED PAYMENT ARRANGEMENTS The Board may determine the executives and eligible employees who are entitled to participate.  The options expire 5  years after vesting or earlier in the event of dismissal, death, termination, redundancy or retirement of the employee. During the financial year, 200,000 options lapsed (2010: 325,000) and no options were forfeited (2010: Nil). There were no  options exercised during the financial year. The fair value of the options as at the date issued was determined with reference to the market price. In relation to bonus issues, each outstanding option confers on the option holder the right to receive, on exercise of those  outstanding options, not only one share for each of the outstanding options exercised but also the additional shares the   option holder would have received had the option holder participated in the bonus issue as a holder of ordinary shares. Employee Share Option Plan Held by employees at the beginnining of the year Held by employees at the end of the year Exercisable at the end of the year Set out below are summaries of options granted under the plan: Number of Options over Ordinary Shares 2011 2010         425,000             750,000  225,000 225,000 425,000 425,000 Date Granted Exercise Period Start Finish Exercise Price 2011 7/12/2004 7/12/2004 7/12/2004 7/12/2004 7/12/2004 7/12/2004 30/09/2005 31/12/2005 31/03/2006 30/06/2006 30/09/2006 30/09/2007 30/09/2010 31/12/2010 31/03/2011 30/06/2011 30/09/2011 30/09/2012 Weighted average exercise price 2010 7/12/2004 7/12/2004 7/12/2004 7/12/2004 7/12/2004 7/12/2004 7/12/2004 7/12/2004 7/12/2004 7/12/2004 7/12/2004 31/12/2004 31/03/2005 30/06/2005 30/09/2005 31/12/2005 31/03/2006 30/06/2006 30/09/2006 30/09/2007 7/12/2009 31/12/2009 31/03/2010 30/06/2010 30/09/2010 31/12/2010 31/03/2011 30/06/2011 30/09/2011 30/09/2012 $1.20 $1.20 $1.20 $1.20 $1.35 $1.35 $1.20 $1.20 $1.20 $1.20 $1.20 $1.20 $1.20 $1.20 $1.35 $1.35 Balance at  start of year Lapsed/  Forfeited  during year Balance at  end of year Exercisable  at end of year 125,000 25,000 25,000 25,000 125,000 100,000 425,000 $1.28 250,000 25,000 25,000 25,000 125,000 25,000 25,000 25,000 125,000 100,000 750,000 (125,000) (25,000) (25,000) (25,000) ‐ ‐ (200,000) $1.20 (250,000) (25,000) (25,000) (25,000) ‐ ‐ ‐ ‐ ‐ ‐ (325,000) ‐ ‐ ‐ ‐ 125,000 100,000 225,000 $1.35 ‐ ‐ ‐ ‐ 125,000 25,000 25,000 25,000 125,000 100,000 425,000 ‐ ‐ ‐ ‐ 125,000 100,000 225,000 $1.35 ‐ ‐ ‐ ‐ 125,000 25,000 25,000 25,000 125,000 100,000 425,000 Weighted average exercise price $1.25 $1.20 $1.28 $1.28 The weighted average remaining contractual life of share options outstanding at the end of the period was 0.70 years  (2010: 1.11 years).  36 36 Annual Report for the year ended 30 June 2011Ambertech Limited                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 22: SEGMENT REPORTING (a)  Description of segments Management has determined the operating segments based on the internal reports that are reviewed and used by the Board of  Directors in assessing performance and determining the allocation of resources. The economic entity comprises the following operating segments: Distribution of high technology equipment to professional broadcast, film, recording and  sound reinforcement industries. Distribution of home theatre products to dealers, distribution and supply of custom  installation components for home theatre and commercial installations to dealers and  consumers, and the distribution of projection and display products with business and  domestic applications. Distribution of a wide range of quality products for both professional and consumer markets  in New Zealand. Professional Lifestyle  Entertainment New Zealand Eliminations $'000 $'000 $'000 $'000 Economic  Entity $'000 26,238 251 26,489 38,385 ‐ 38,385 2,060 ‐ 2,060 ‐ (251) (251) 66,683 ‐ 66,683 Professional Lifestyle Entertainment New Zealand (b)  Segment information 2011 Revenue  ‐  ‐  Total segment revenue Inter‐segment revenue Revenue from external customers Result  ‐  Segment EBIT  ‐  Unallocated/corporate result  ‐  EBIT  ‐  Net interest and finance costs  ‐  Profit before income tax Income tax expense  ‐   ‐  Profit for the year Assets  ‐  Segment Assets  ‐  Unallocated/corporate assets  ‐  Total assets Liabilities  ‐ Segment Liabilities  ‐ Unallocated/corporate liabilities  ‐ Total liabilities Other  ‐  ‐ Acquisition of non current segment assets Depreciation and amortisation of segment assets 846 306 (164) 12,099 16,644 1,271 6,653 2,879 278 122 158 4 9 81 105  37 ‐ ‐ ‐ ‐ ‐ 988 (389) 599 (441) 158 (32) 126 30,014 4,445 34,459 9,810 4,667 14,477 207 207 272 272 37 Ambertech LimitedAnnual Report for the year ended 30 June 2011                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 22: SEGMENT REPORTING (continued) 2010 Revenue  ‐ Total segment revenue  ‐  Inter‐segment revenue Revenue from external customers Result  ‐  Segment EBIT  ‐   ‐  Unallocated/corporate result EBIT  ‐  Net interest and finance costs  ‐  Profit before income tax  ‐  Income tax expense  ‐  Profit for the year Assets  ‐  Segment Assets  ‐  Unallocated/corporate assets  ‐  Total assets Liabilities  ‐ Segment Liabilities  ‐ Unallocated/corporate liabilities  ‐ Total liabilities Other Professional Lifestyle  Entertainment New Zealand Eliminations $'000 $'000 $'000 $'000 Economic  Entity $'000 21,446 164 21,610 40,871 ‐ 40,871 3,871 ‐ 3,871 ‐ (164) (164) 66,188 ‐ 66,188 302 1,523 155 7,087 18,748 1,700 2,099 2,835 583 ‐ ‐ ‐ ‐ ‐ 1,980 677  2,657 (374) 2,283 (677) 1,606 27,535 4,438 31,973 5,517 6,399 11,916 230 230 279 279  ‐ Acquisition of non current segment assets  ‐ Depreciation and amortisation of segment assets 84 107 125 161 21 11  38 38 Annual Report for the year ended 30 June 2011Ambertech Limited                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 22: SEGMENT REPORTING (continued) (c) Segment information on geographical region Segment Revenues from  Sales to External  Customers 2011 $'000 2010 $'000 Carrying Amount of  Segment Assets 2011 $'000 2010 $'000 Acquisition of Non‐  Current Assets 2011 $'000 2010 $'000 Geographical Location  ‐ Australia  ‐ New Zealand (d) Other segment information (i) Accounting Policies 64,623 2,060 66,683 62,317 3,871 66,188 28,743 1,271 30,014 25,835 1,700 27,535 204 3 207 209 21 230 Segment revenues and expenses are those directly attributable to the segments and include any joint revenues and  expenses where a reasonable basis of allocation exists. Segment assets include all assets used by a segment and  consist principally of cash, receivables, inventories and property, plant and equipment.  All remaining assets of the  economic entity are considered to be unallocated assets. Segment liabilities consist principally of accounts payable,  employee entitlements, accrued expenses, provisions and borrowings. Segment assets and liabilities do not include income taxes. (ii) Intersegment Transfers Segment revenues, expenses and result include transfers between segments. The prices charged on intersegment  transactions are the same as those charged for similar goods to parties outside of the economic entity. These transfers  are eliminated on consolidation.  39 39 Ambertech LimitedAnnual Report for the year ended 30 June 2011                                                                                                                                                                                                                                                   AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 23: CASH FLOW INFORMATION (i) Cash and cash equivalents Cash and cash equivalents included in the statement of cash flows  comprise of the following amounts: Cash on hand At call deposits with financial institutions (ii) Reconciliation of net cash provided by / (used in) operating activities  to profit or loss after income tax Profit for the year Depreciation and amortisation Net loss on disposal of plant and equipment Foreign exchange losses/(gains) Non‐cash share based payments Changes in operating assets and liabilities (Increase)/Decrease in trade and other receivables Decrease/(Increase) in inventories Decrease in tax receivable Increase/(Decrease) in payables Increase in provisions (Increase)/Decrease in deferred taxes Net cash provided by operating activities (iii) Non Cash Financing and Investing Activities There were no non‐cash financing or investing activities during the financial year. Economic Entity 2011 $'000 2010 $'000 3 3,131 3,134 126  272  1  57  12  (5,344) 2,480  368  4,173  160  (182) 2,123  3 3,087 3,090 1,606  279  3  (803) (185) 3,197  (1,806) 249  (1,044) 158  56  1,710   40 40 Annual Report for the year ended 30 June 2011Ambertech LimitedAMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 24: FINANCIAL RISK MANAGEMENT The economic entity's financial risk management policies are established to identify and analyse the risks faced by the  business, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.  Risk management  policies and systems are reviewed regularly to reflect changes in market conditions and the economic entity's  activities. The economic entity's activities expose it to a wide variety of financial risks, including the following: credit risk liquidity risk  ‐  ‐  ‐ market risk (including foreign currency risk and interest rate risk) This note presents information about the economic entity's exposure to each of the above risks, the objectives,  policies and processes for measuring and managing risk and how the economic entity manages capital. Liquidity and market risk management is carried out by a central treasury department (Group Treasury) in accordance  with risk management policies. The Board has overall responsibility for the establishment and oversight of the risk  management framework.  The Board, through the Audit and Risk Management Committee, oversees how  management monitors compliance with the risk management policies and procedures and reviews the adequacy of  the risk management framework in relation to risks. The economic entity uses derivative financial instruments such as foreign exchange contracts to hedge certain risk  exposures.  Derivatives are used exclusively for hedging purposes.  The economic entity does not enter into or trade  financial instruments, including derivative financial instruments, for speculative purposes. Credit Risk Credit risk is the risk of financial loss to the economic entity if a customer or the counterparty to a financial instrument  fails to meet its contractual obligations, and arises principally from the economic entity's receivables from customers.  The maximum exposure to credit risk is the carrying amount of the financial assets. Trade and other receivables Exposure to credit risk is influenced mainly by the individual characteristics of each customer.  The customer base  consists of a wide variety of  customer profiles.  New customers are analysed individually for creditworthiness, taking  into account credit ratings where available, financial position, past experience and other factors.  This includes major  contracts and tenders approved by executive management.  Customers that do not meet the credit policy guidelines  may only purchase using cash or recognised credit cards. The general terms of trade for the economic entity are  between 30 and 60 days. In monitoring credit risk, customers are grouped by their debtor ageing profile.  Monitoring of receivable balances on  an ongoing basis minimises the exposure to bad debts. Impairment allowance The impairment allowance relates to specific customers, identified as being in trading difficulties, or where specific  debts are in dispute.  The impairment allowance does not include debts past due relating to customers with a good  credit history, or where payments of amounts due under a contract for such customers are delayed due to works in  dispute and previous experience indicates that the amount will be paid in due course.  41 41 Ambertech LimitedAnnual Report for the year ended 30 June 2011AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 24: FINANCIAL RISK MANAGEMENT (continued) The ageing of trade receivables at the reporting date was: Not past due Past due up to 30 days Past due 31‐60 days Past due 61 days and over Total trade receivables not impaired Trade receivables impaired Total trade receivables Economic Entity 2011 $'000 2010 $'000 8,530  3,571  442  135  12,678  26  12,704  3,187  3,179  408  603  7,377  121  7,498  The economic entity does not have  other receivables which are past due (2010: Nil). Liquidity Risk Liquidity risk is the risk that the economic entity will not be able to meet its financial obligations as they fall due.  The  economic entity's policy for managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity (cash  reserves and banking facilities) to meet its liabilities when due, under both normal and stressed conditions.  The objective of  the policy is to maintain a balance between continuity of funding and flexibility through the use of bank facilities. The economic entity monitors liquidity risk by maintaining adequate cash reserves and banking facilities and by continuously  monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.  The table  below summarises the maturity profile of the economic entity's financial liabilities based on contractual undiscounted  payments: Economic Entity 2011 Trade and other payables Commercial Bills Economic Entity 2010 Trade and other payables Commercial Bills Contractural Cash Flows Less than  3 months $'000 3 to 6  months $'000 6 to 12  months $'000 More than  12 months $'000 9,493  3,000  12,493  5,292  4,700  9,992  ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Total $'000 9,493  3,000  12,493  5,292  4,700  9,992  The economic entity also has a number of premises under operating lease commitments.  The future contracted  commitment at year end is disclosed at note 17.  42 42 Annual Report for the year ended 30 June 2011Ambertech Limited                                                                                                                                                                                                                                                                                                                  AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 24: FINANCIAL RISK MANAGEMENT (continued) Market Risk Market risk is the risk that changes in market prices will affect the economic entity's income or the value of its holdings  of financial instruments.  The activities of the ecomonic entity expose it primarily to the financial risks of changes in  foreign currency rates and interest rates.  The objective of market risk management is to manage and control market  risk exposures within acceptable parameters, whilst optimising the returns. Foreign Currency Risk The economic entity operates internationally and is primarily exposed to currency risk on inventory purchases  denominated in a currency other than the functional currency of the economic entity.  Where appropriate, the  economic entity uses forward exchange contracts to manage its foreign currency exposures. The board has adopted a policy requiring management of the foreign exchange risk against the functional currency.   The economic entity is required to hedge  the exposure arising from future commercial transactions and recognised  assets and liabilities using forward contracts.  The amount of foreign currency denominated payables outstanding at  balance date is disclosed at note 12. In order to protect against exchange rate movements, the economic entity has entered into forward foreign exchange  contracts. There contracts are hedging highly probably forecasted cash flows for the ensuing financial year.  Management has a risk management policy to hedge between 50% and 80% of anticipated foreign currency  transactions for the subsequent 3 months.  The maturity, settlement amounts and the average contractual exchange rates of the economic entity's outstanding  forward foreign exchange contracts at the reporting date was as follows: Buy US dollars Maturity: 0‐3 months 3‐6 months Buy EUR dollars Maturity: 0‐3 months Buy JPY dollars Maturity: 0‐3 months Buy CHF dollars Maturity: 0‐3 months Sell Australian dollars 2011 2010 $'000 $'000 Average exchange rates 2011 2010 1,903 ‐ 3,045 623 1.0509 ‐ 0.8868 0.8023 ‐ ‐ ‐ 579 728 51 ‐ ‐ ‐ 0.6912 82.5750 0.9771 The following table demonstrates the impact on the profit and equity of the economic entity, if the Australian Dollar  weakened/strengthened by 10%, which management consider to be reasonably possible at balance date against the  respective foreign currencies, with all other variables remaining constant: Impact on profit Impact on equity Weakening of 10% 2011 $'000 2010 $'000 Strengthening of 10% 2011 2010 $'000 $'000 456  456  (9) (9) (348) (348) 48  48   43 43 Ambertech LimitedAnnual Report for the year ended 30 June 2011                                                                                                                                                                                                                                                                                                                             AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 24: FINANCIAL RISK MANAGEMENT (continued) Interest Rate Risk The economic entity has a borrowing facility which allows the group to utilise a combination of commercial bills and  overdraft facilities to minimise its interest costs whilst maintaining the flexibility to accomodate short term working  capital requirements that may vary from time to time.  By converting overdraft to commercial bill debt, interest rates are  effectively converted from variable to fixed rates for the term of the bill.   The use of the facility exposes the economic  entity to cash flow interest rate risk. As at the reporting date, the economic entity had the following fixed and variable rate borrowings: Weighted average interest  rate Note Balance 2011 % 2010 % 2011 $'000 2010 $'000 Commercial Bills 13 4.91% 5.10% 3,000 4,700 The following table demonstrates the impact on the profit and equity of the economic entity if the average interest rate  on the multi option borrowing facility had either increased or decreased by 1%, which management consider to be  reasonably possible over the whole year ending 30 June 2011, with all other variables remaining constant: Increase of 1% of average  interest rate Decrease of 1% of average  interest rate 2011 $'000 2010 $'000 2011 $'000 2010 $'000 (44) (44) (43) (43) 44  44  43  43  Impact on profit Impact on equity Net Fair Values The net fair values of assets and liabilities approximates their carrying values.  No financial assets or liabilities are readily  traded on organised markets. Capital Management The Board's aim is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to  sustain future development of the business.  The Board seeks to maintain a balance between the higher returns that  might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. Total capital is defined as shareholders' equity.  The Board monitors the return on capital, which is defined as net  operating income divided by total shareholders' equity.  The Board also establishes a dividend payout policy which is  targeted as being greater than 50% of earnings, subject to a number of factors, including the capital expenditure  requirements and the company's financial and taxation position. Dividend payout for the year ended 30 June 2011 is  242.8% (2010: 66.7%). There were no changes to the economic entity's approach to capital management during the financial year.  44 44 Annual Report for the year ended 30 June 2011Ambertech Limited                            AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 25:  EARNINGS PER SHARE Basic earnings per share (cents) Weighted average number of ordinary shares (number) Earnings used to calculate basic earnings per share ($) Diluted earnings per share (cents) Weighted average number of ordinary shares (number) Earnings used to calculate diluted earnings per share ($) Economic Entity 2011 2010 0.4 5.2 30,590,832 30,598,181 126,000 1,606,000 0.4 5.2 30,590,832 30,598,181 126,000 1,606,000 (a) The effect of the Executive Share Option Plan options on issue is not considered dilutionary because  based on conditions at the date of this report, it is considered unlikely that these options would be  converted into ordinary shares. NOTE 26: DIVIDEND FRANKING CREDITS In respect of dividends first recognised as a liability during the period or paid in the period  without previously being recognised as a liability Dividends that have been fully franked: Amount in aggregate ($'000) Cents per share Tax rate Amount of franking credits available for subsequent  reporting periods ($'000) 153 0.05 30% 1,683 5.5 30% 6,139 6,001  45 45 Ambertech LimitedAnnual Report for the year ended 30 June 2011                                                                                                                                                  AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Economic Entity 2011 $ 2010 $ NOTE 27: AUDITORS' REMUNERATION During the year the following fees were paid or payable for services provided by the  auditor of the parent and its related practices: Audit services PKF Audit and review of financial reports, and other work under the Corporations Act  2001. 124,560 130,290 Related practices of PKF Audit or review of financial reports of subsidiary Total remuneration for audit services Non‐audit services PKF 10,000 134,560 10,000 140,290 Tax compliance services, including review of company income tax returns Total remuneration for non‐audit services 18,035 18,035 27,870 27,870 It is the economic entity's policy to employ PKF on assignments additional to their  statutory audit duties where PKF's expertise and experience with the economic entity  are important.  These assignments are principally tax advice or where PKF is awarded  assignments on a competitive basis.  46 46 Annual Report for the year ended 30 June 2011Ambertech Limited                                                          AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 28: PARENT ENTITY INFORMATION Information relating to Ambertech Limited (parent entity):  ‐ Current Assets  ‐ Total Assets  ‐ Current Liabilities  ‐ Total Liabilities  ‐ Share capital  ‐ Share based payments reserve  ‐ Retained earnings (Loss) / Profit of the parent entity Total comprehensive income of the parent entity Parent Entity 2011 $'000 2010 $'000 11,009 15,567 1,462 1,462 11,161 15,718 1,462 1,462 11,138 11,146 28 2,939 (2) (2) 86 3,024 173 173  47 47 Ambertech LimitedAnnual Report for the year ended 30 June 2011                                                                                                                                                             AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' DECLARATION In the directors' opinion: a. the financial statements and notes are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory  professional reporting requirements; and (ii) giving a true and fair view of the economic entity's and parent entity's financial position as at 30 June  2011 and of their performance for the financial year ended on that date; and there are reasonable grounds to believe that the company will be able to pay its debts as and when they  become due and payable; and the remuneration disclosures set out in the Directors' Report comply with Accounting Standard AASB 124  Related Party Disclosures and the Corporations Regulations 2001 for the financial year ended 30 June 2011. b. c. The directors have been given the declarations by the chief executive officer and chief financial officer required  by Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2011. The financial statements also comply with International Financial Reporting Standards as disclosed in note 2(a). This declaration is made in accordance with a resolution of the directors. Director: Director: P F Wallace P A Amos Dated this 26th day of August 2011. Sydney  48  48 48 Annual Report for the year ended 30 June 2011Ambertech Limited49 Ambertech LimitedAnnual Report for the year ended 30 June 2011Shareholder Information XIX Annual Report for the year ended 30 June 2011Ambertech LimitedShareholder Information a. Distribution of equity security by size of holding: 1 1,001 5,001 10,001 100,001 - - - - and 1,000 5,000 10,000 100,000 over Number of shareholders Number of Ordinary Shares % of total capital 79 102 59 92 24 72,687 359,521 518,829 2,955,095 26,667,049 0.24 1.18 1.70 9.67 87.22 100.00 The number of security investors holding less than a marketable parcel of 2,222 securities is 104 and they hold 116,107 securities. 30,573,181 Total 356 b. Equity Security Holders: The twenty largest shareholders as at 29 September 2011 were: Rank Twenty largest holders 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Crowton Pty Ltd (Amos Super Fund) Howbay Pty Ltd Wavelink Systems Pty Ltd Wavelink Systems Pty Ltd (Employee Super Fund) Kestrel Capital Pty Limited (Kestrel Secondaries Fund 1) Nanyang Australia Limited Wygrin Pty Ltd Appwam Pty Limited Kestrel Capital Pty Ltd (ATF Kestrel Sec Fund 1) Wygrin Pty Ltd (Wygrin Pension Fund) Crowton Pty Limited JH Nominees Australia Pty Ltd (Harry Family Super Fund A/C) Mr Joseph Grech Mr Ralph McCleery Mr Joseph Paul Grech & Ms Deborah Lee Grech Dorran Pty Ltd Realcal Pty Ltd Mr Stephen Rodney Hariono Wallace Capital Pty Ltd Velkov Funds Management Limited Source: Link Market Services Number of shares % of total capital 3,231,681 2,883,556 2,784,625 2,650,000 2,644,802 2,000,464 1,699,556 1,500,000 1,475,865 1,296,270 1,082,162 940,758 413,045 357,599 333,261 220,000 200,000 166,835 152,600 150,000 10.57 9.43 9.11 8.67 8.65 6.54 5.56 4.91 4.83 4.24 3.54 3.08 1.35 1.17 1.09 0.72 0.65 0.55 0.50 0.49 26,183,079 85.64 XX Ambertech LimitedAnnual Report for the year ended 30 June 2011c. Substantial Shareholders: Substantial shareholders with a relevant interest of 5% or more of total issued shares, based on notifications provided to the company under the Corporations Act 2001 include: Shareholder Kestrel Capital Pty Limited Wavelink Systems Pty Ltd Crowton Pty Limited Wygrin Pty Ltd Howbay Pty Ltd d. On-Market Buy Back: Number of shares % of total capital 6,268,868 5,484,625 4,313,843 2,995,826 2,883,556 20.50 17.94 14.11 9.80 9.43 On 2 September 2005, the company lodged an Appendix 3C announcing an on-market buy-back of up to 1,543,150 ordinary shares on issue. On 28 September 2006 the company lodged an Appendix 3D amending the buy-back duration to unlimited. The company has not lodged an Appendix 3F to finalise the buy back as at 30 September 2011. The buy back is a part of the company’s capital management and is designed to improve shareholder returns. During the year ended 30 June 2011, 25,000 shares were bought back by the company. e. Voting rights: On a show of hands, one vote for every registered shareholder, and for a poll, one vote for every share held by a registered shareholder. XXI Annual Report for the year ended 30 June 2011Ambertech LimitedNotes XXII Ambertech LimitedAnnual Report for the year ended 30 June 2011Corporate Directory XXIII Annual Report for the year ended 30 June 2011Ambertech LimitedPO Box 942 Brookvale NSW 2100 Australia Unit B 5 Skyline Place Frenchs Forest NSW 2086 Email: info@ambertech.com.au Phone: 02 9452 8600 Fax: 02 9975 1368 www.ambertech.com.au 

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