Ambertech Limited
Annual Report 2012

Plain-text annual report

Annual Report Annual Report for the year ended 30 June 2012 Ambertech Limited ACN 079 080 158 2 1 0 2 e n u J 0 3 d e d n e r a e y e h t r o f t r o p e R l a u n n A d e t i m i L h c e t r e b m A PO Box 955 Mona Vale NSW 1660 Australia Unit 1, 2 Daydream Street Warriewood NSW 2102 Email: info@ambertech.com.au Phone: 02 9998 7600 Fax: 02 9999 0770 www.ambertech.com.au Mission Statement Unit 1, 2 Daydream Street Warriewood NSW 2102 Tel: 02 9998 7600 Fax: 02 9999 0770 BDO East Coast Partnership 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 XXIV I Ambertech LimitedAnnual Report for the year ended 30 June 2012Chairman’s and Managing Director’s Review II Annual Report for the year ended 30 June 2012Ambertech 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 2012. Significant change and multiple challenges were the overriding themes of the 2011-12 financial year for Ambertech, and this is certainly reflected in the results being reported. The major factors that impacted the sales revenue for the year were: • • • The compounding impact of issues relating to supply, quality control and feature set of a major product line during the year, outside of our control. These issues contributed to market share loss and margin erosion for our lifestyle segment. These issues have now been addressed; Continued caution with discretionary spend of retail consumers; and Deferral in capital equipment spending at major Australian broadcasters during the year. The underlying results of the business included the following one off costs relating to the move of Ambertech’s head office; restructure costs, a significant bad debt, and the impairment of goodwill. Despite the difficult trading, Ambertech remained operating cash flow positive for the financial year. The 2012-13 financial year has begun with some pleasing results across our traditional market segments, including the announcement of a contract with the ABC for in excess of $4m in revenue. As a result, we are cautiously optimistic that we can deliver on our business strategies, which are focused on returning positive results for our investors in the short term. We expect to be able to update investors on revenue and profit forecasts at the time of holding the company’s AGM. The Board and management remain 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. 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 2012 Lifestyle Entertainment IV Annual Report for the year ended 30 June 2012Ambertech LimitedLifestyle Entertainment Update The 2011-12 financial year presented a continuation of tough economic conditions for our markets, and the compounding impact of issues relating to supply, quality control and feature set of a major product line. Despite this we were largely successful in maintaining or growing our market share with our major brands in their categories. This is as a result of a continued focus for the success of our brands in their respective markets, a defined strategy for growth and a continuation of the integrity in business which makes up our core values. During the year our core business had some significant events which will lay the foundation for future revenue growth, including: • Release to the market of the new range of Onkyo receivers which took the award winning, feature packed models and included network capability and introduced Spotify music streaming service to Australian Home Theatre Receivers. Onkyo also released an app based controller dedicated to providing more for the user. • On the immediate horizon is a new Onkyo wireless dock which will transform any legacy home theatre receiver into a wireless receiver. • • Sonance business continued to grow with the success of their traditional high quality architectural speaker products and the new outdoor Landscape Series. The introduction of the iPort range of products and an updated go to market strategy has seen Sonance flourish. NHT speakers came to Amber Technology to be the pioneer of our online only sales model. • • • • A welcome addition to our portfolio of world class brands to satisfy the high bright projector and commercial flat panel market is Panasonic. One For All continued the domination of the replacement Universal Remote Control market and this year introduced the first Full HD Indoor Antenna’s which have proven a success as the analogue switch off happens around the country. Another new addition to our portfolio is the fashionable headphone range from Zound Industries. Along the lines of fashion, we also introduced Pat Says Now cases and bags into the Australian market place Our efforts continue to be supporting our customers and working with them to help their business grow. 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 2012Broadcast and Professional VI Annual Report for the year ended 30 June 2012Ambertech LimitedBroadcast and Professional Update A number of factors affected performance during the year, which upon analysis led to some interesting observations and lessons to take forward into the new period. Key amongst these is: • Our resellers have not been immune to the impact of the strong Australian Dollar, with the attendant problems of grey importing and internet purchasing from overseas. We have adjusted ordering and shipping policies to better compete, and are working actively with our major resellers to address the changing marketplace in online presence and purchasing. Uncertainty in the resources sector has resulted in several key projects being put on hold, with a resultant reduction in growth in some of our new development areas such as communications systems for the mining sector. We lost a major agency, caused by their consolidation with another company in the UK which already had an office and staff in Australia. They chose to continue with their own existing operation rather than with Amber as a local representative. Growth in our services revenues. The pressure on many of our key customers to improve efficiency and cut costs has led to a significantly increased demand for turnkey installation offerings and services provision rather than capital expenditure. Amber’s Technical Services Group is well positioned to respond to these demands and showed a very satisfactory performance as a result. Our key product lines continue to show strength and stability, with good prospects for continued growth through diversification and expansion of their offerings. • • • • Overall it has been a year of consolidation and transformation. Looking ahead we expect to see further consolidation of brands and are positioning ourselves to capitalise on this. We also seek to address the ongoing need for greater services provision, and to maximise throughput of distributed products in the face of overseas internet channels. VII Ambertech LimitedAnnual Report for the year ended 30 June 2012New Zealand VIII Annual Report for the year ended 30 June 2012Ambertech LimitedNew Zealand Segment Amber NZ finished the 2011-12 financial year with a profitable result, which was pleasing given the tough conditions that still remain across all markets in New Zealand. Promising growth was seen in the AV/Custom Install market helped considerably by the Rugby World Cup (RWC) and the mini boom it created in Q2. Even so, sales were steady throughout the year with the North Island exceeding expectations. Several initiatives were implemented during the year with the most significant being the launch of Urbanears and Marshall Headphones from Zound Industries. Complementing the addition of Zound Industries to our portfolio we have also launched the TEXCUS range of batteries, torches and chargers from Wentronics. The TEXCUS products complement our current activities and even in these early stages we are seeing strong commitment from our growing customer base. Despite the stress of the grey market and parallel imported products the Pro Audio market was a steady performer. One project worthy of note was the purchase by “The Edge” (Home of The Aotea Centre, The Civic, Auckland Town Hall& Aotea Square) of DPA microphones and accessories. This sale will be a supreme testimonial for our future performing arts sales. During the year we also had our first major Prime Acoustics commercial installation take place with positive feedback from both installer and customer. Sales are growing steadily and we see a positive future for this agency. EVS was responsible for our largest broadcast project this year. With New Zealand hosting the RWC, OSB needed an upgrade of EVS Live Slow Motion (LSM) systems. TVNZ refreshed all their Avid edit clients and also asked Amber to supply all their preferred 3rd party plug-ins and utility software. After a long negotiation period Amber NZ is now the One For All (OFA) distributor for New Zealand and the Pacific Archipelago. This is a significant acquisition and gives the NZ operation a much stronger profile in the retail segment. IX Ambertech LimitedAnnual Report for the year ended 30 June 2012Our Business and Brands X Annual Report for the year ended 30 June 2012Ambertech LimitedXI Ambertech LimitedAnnual Report for the year ended 30 June 2012AMAZON CASES installation:innovation ® XII Annual Report for the year ended 30 June 2012Ambertech LimitedCorporate Governance Statement XIII Ambertech LimitedAnnual Report for the year ended 30 June 2012CORPORATE GOVERNANCE STATEMENT This disclosure is made with reference to the Corporate Governance Principles and Recommendations released by the ASX Corporate Governance Council in August 2007 as amended in 2010 (“the Principles”). Ambertech Limited has published on its website its Cor- porate Governance Summary and related Policies and Procedures, and in the explanations below references are made to those policies and procedures. The Board sets out below its “if not why not” report in relation to those matters or corporate governance where the Company’s practices depart from the Principles. Principle Current Practice 1.1 1.2 1.3 Formalise and disclose functions reserved to the Board and those delegated to management.  Outlined in the Ambertech Board Charter available from the investor section of the Ambertech website. Disclose the process for evaluating the performance of senior executives.  Outlined in the Corporate Governance Summary available from the investor section of the Ambertech website. Disclose whether performance evaluation of senior execu- tives has taken place in accordance with the disclosed process.  Performance evaluations for the 2011/12 year for the Managing Director and CFO were completed in Septem- ber 2012. 2.1 A majority of the Board should be independent directors.  The Board has taken a view that independence extends to non-executive directors with less than 10% of issued capital, resulting in 3 out of 5 directors being considered “independent”. 2.2 The chairperson should be an independent director.  Satisfied. 2.3 Roles of the chairperson and the managing director should not be exercised by the same person.  Satisfied. 2.4 The Board should establish a nomination committee.  A copy of the Remuneration and Nomination Commit- tee charter is available from the investor section of the Ambertech website. 2.5 Companies should disclose the process for evaluating the performance of the Board, its committees and individual directors.  Outlined in the Corporate Governance Summary available from the investor section of the Ambertech website. 2.6 Companies should provide the information about the board specified in the reporting guide to Principle 2.  Directors and Board committees have the right, in connec- tion with their duties and responsibilities, to seek inde- pendent professional advice at the Company’s expense, subject to approval of cost by the Chairman. Further infor- mation is contained in the Directors’ Report and outlined in the Corporate Governance Summary available from the investor section of the Ambertech website. 3.1 Establish a code of conduct and disclose the code.  A copy of the Code of Conduct is available from the inves- tor section of the Ambertech website. Establish a policy concerning diversity and disclose the code.  A copy of the Diversity Policy is available from the investor section of the Ambertech website. Disclose measureable objectives for achieving gender diversity and progress towards achieving them.  Given the small size of Ambertech, the only measurable objective at this point is to increase gender diversity within the company as a whole rather than focus on change within discrete functional areas. Disclose in the Annual Report the proportion of women employees in the whole organisation, in senior executive positions and on the Board.  21.4% of Ambertech’s employees are women. 12.5% of the senior executives are women. There are currently no women on the Board. 3.2 3.3 3.4 XIV Annual Report for the year ended 30 June 2012Ambertech LimitedThe Board should establish an audit committee.  Satisfied. 4.1 4.2 Structure the audit committee so that it consists of only non-executive directors, a majority of independent direc- tors, and the chairperson is independent and not the chair of the board and has at least three members.  The Audit and Risk Management Committee has only two members as it would be inefficient for the structure of the board to have three members. 4.3 The audit committee should have a formal charter  A copy of the Audit and Risk Management Committee 4.4 5.1 5.2 6.1 6.2 7.1 7.2 7.3 Report on the above including names of members and qualifications, numbers and meetings and attendees in the annual report Establish written policies and procedures designed to ensure compliance with ASX Listing rule disclosure require- ments and to ensure accountability at senior management level for that compliance. Charter is available from the investor section of the Am- bertech website.  Information contained in the Directors’ Report.  A copy of the Continuous Disclosure and Communications Policy is available from the investor section of the Am- bertech website. Post relevant disclosure policies on website and disclose any departures.  Satisfied. See the Ambertech website. Design and disclose a communications strategy to promote effective communication with shareholders and encourage effective participation at general meetings.  A copy of the Continuous Disclosure and Communications Policy is available from the investor section of the Am- bertech website. Use the company website to provide information, including webcasting, press releases and shareholder information by email.  Satisfied. See the Ambertech website. The Board or appropriate board committee should establish policies on risk oversight and management and disclose a summary of those policies.  A copy of the Risk Management Policy is available from the investor section of the Ambertech website. The Board should require management to design, imple- ment and report against a risk management and control system.  Satisfied. The Board should disclose whether it has received assur- ance from the Managing Director/CFO that the declara- tion under Sec 295A of the Corporations Act is founded on a sound system of risk management and an effective system of identifying financial reporting risks.  Satisfied. The Managing Director and CFO provide assur- ance to this effect to the Board. 7.4 Information specified in the guide on Principle 7 should be provided.  Satisfied. 8.1 The Board should establish a Remuneration Committee.  A copy of the Remuneration and Nomination Commit- tee charter is available from the investor section of the Ambertech website. 8.2 Clearly distinguish the structure of non-executive director remuneration from that of executive directors and senior management  Satisfied. 8.3 Information specified in the guide to Principle 8 should be provided.  Information contained in the Directors’ Report. XV Ambertech LimitedAnnual Report for the year ended 30 June 2012Financial Report XVI Annual Report for the year ended 30 June 2012Ambertech 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 2012 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 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. 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 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 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 2012AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT Edwin Francis Goodwin Non‐Executive Director 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 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 an independent telecommunications management and technology  consultant 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 101 full time employees as at 30 June 2012 (2011: 109 employees).  2 2 Annual Report for the year ended 30 June 2012Ambertech LimitedAMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT REVIEW AND RESULTS OF OPERATIONS The consolidated loss of the economic entity after providing for income tax for the financial year was ($4,693,000).   This was down from a profit after tax of $126,000 in the previous period.  Total revenues for the financial year  decreased by 22.9% to $51,407,000 (2010: $66,703,000).  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 operating 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  $760,000 for the year ended 30 June 2012 in difficult trading conditions.  Borrowings were increased by $400,000  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 $3,695,000 to  $12,843,000 as at 30 June 2012 (2011: $16,538,000).  The net assets of the economic entity have also decreased by  $4,677,000 to $15,305,000 as at 30 June 2012 (2011: $19,982,000).  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 On 25 September 2012, the economic entity announced that it had signed a significant contract in the order of  $4,000,000 to be completed during the 2012‐13 financial year.  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 financial years. FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES After a challenging 2011‐12 financial year, the Board and management remain focused on utilising 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. The 2012‐13 financial year has begun with some pleasing results across our traditional market segments. As a result,  we are cautiously optimistic that we can deliver on our business strategies, which are focused on returning positive  results to our investors in the short term. 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 2012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 2012Ambertech 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  Dividends paid (cents per share) Closing share price at 30 June ($) Share buy back ($'000) 2012 ‐ $0.24 ‐ Net (loss) / profit after tax ($'000) (4,693) Details of remuneration 2011 0.5 $0.31 8 126 2010 5.5 $0.38 ‐ 1,606 2009 3.5 $0.45 44 1,806 2008 7.0 $0.65 ‐ 3,179 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 Managing Director B Lee General Manager, Lifestyle Entertainment T Amos Non‐Executive Director R Caston General Manager, Broadcast & Professional E Goodwin Non‐Executive Director R McCleery Director, Amber New Zealand D Swift Non‐Executive Director P Simmons G Simeon Business Development Manager, Lifestyle  Entertainment (appointed on 1 July 2011) General Manager, Video & Audio Post Group  (resigned on 19 August 2011) 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 2012                                                                                                                                                                                            AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT REMUNERATION REPORT (continued) Elements of Remuneration 2012 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 P Simmons G Simeon * R McCleery 350,300 55,046 32,111 32,111 32,231 501,799 174,312 285,090 156,459 147,957 58,495 109,111 931,424 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 4,359 11,058 ‐ ‐ 15,417 29,700 3,683 4,954 2,890 2,890 2,770 ‐ ‐ ‐ ‐ 383,683 60,000 35,001 35,001 35,001 43,204 3,683 548,686 15,688 15,120 13,934 12,988 1,921 ‐ 59,651 36 36 36 ‐ ‐ 36 144 190,036 300,246 174,788 172,003 60,417 109,147 1,006,637 * Represents remuneration from 1 July 2011 to 19 August 2011 2011 Short‐term employment  benefits Post  employment  benefits Share based  payments 1.0% 0.0% 0.0% 0.0% 0.0% 0.7% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 2.5% 6.4% 0.0% 0.0% 1.5% %  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 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 ‐ ‐ ‐ ‐ 7,787 838 838 838 ‐ 838 387,791 60,000 35,001 35,001 35,001 552,794 190,844 183,958 194,783 177,883 108,172 757,487 33,786 61,015 3,352 855,640  6 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 11.3% 6.6% 0.0% 3.9% 2.0% 0.0% 0.0% 0.0% 0.0% 1.4% 0.4% 0.5% 0.4% 0.0% 0.8% 0.4% 6 Annual Report for the year ended 30 June 2012Ambertech 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 $380,000. 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 2012 Exercised $ Lapsed No $ No No Vested Vested Unvested Lapsed Overall ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 100,000 14,370 100,000 14,370 5,000 5,000 5,000 5,000 20,000 718 718 718 718 2,872 ‐ ‐ ‐ ‐ ‐ ‐ ‐ % % % 100 100 100 100 100 ‐ ‐ ‐ ‐ ‐ 75 100 100 100 100 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 2012                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          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 125,000 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: End of Remuneration Report Director P Wallace P Amos T Amos E Goodwin D Swift DIVIDENDS Ordinary Shares Options over  Ordinary Shares 236,528 4,313,843 5,484,625 2,883,556 2,995,826 ‐ 100,000 ‐ ‐ ‐ 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 2012: Nil 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 11 11 11 11 11 11 11 11 11 11 4  ‐  ‐ 4  ‐  8 Director P Wallace P Amos T Amos E Goodwin D Swift 8 Annual Report for the year ended 30 June 2012Ambertech Limited                                                                                                                                                                                         AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT NON‐AUDIT SERVICES It is the  economic entity's policy to employ BDO East Coast Partnership (BDO) (formerly PKF East Coast Practice  (PKF)) for assignments additional to their annual audit duties, when BDO'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 and Risk Management 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 is compatible with the  general standard of independence for auditors 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 2012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 27th day of September 2012. Sydney 10  10  10 Annual Report for the year ended 30 June 2012Ambertech 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 consolidated statement of financial position as at 30 June 2012, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company 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 gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, 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 company’s preparation of the financial report that gives a true and fair view 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 company’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. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Ambertech Limited, would be in the same terms if given to the directors as at the time of this auditor’s report. 11 11 Ambertech LimitedAnnual Report for the year ended 30 June 2012 Opinion In our opinion: (a) the financial report of Ambertech Limited is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the company’s financial position as at 30 June 2012 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1. 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 2012. 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 2012 complies with section 300A of the Corporations Act 2001. BDO East Coast Partnership Arthur Milner Partner Sydney, 27 September 2012 12 12 Annual Report for the year ended 30 June 2012Ambertech Limited DECLARATION OF INDEPENDENCE BY ARTHUR MILNER TO THE DIRECTORS OF AMBERTECH LIMITED As lead auditor of Ambertech Limited for the year ended 30 June 2012, I declare that, to the best of my knowledge and belief, there have been no contraventions of: • • the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and any applicable code of professional conduct in relation to the audit. This declaration is in respect Ambertech Limited and the entities it controlled during the period. Arthur Milner Partner BDO Audit East Coast Partnership Sydney, 27 September 2012 13 13 Ambertech LimitedAnnual Report for the year ended 30 June 2012 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2012 Economic Entity Note 2012 $'000 2011 $'000 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 Restructure costs Impairment of goodwill Relocation expenses Other expenses p (Loss) / Profit before income tax expense Income tax benefit / (expense) (Loss) / Profit for the year Other comprehensive income Exchange differences on translation of foreign operations Total comprehensive income for the year 3 4 3 4 4 4 5 51,407  (36,196) 15,211  19 (9,363) (1,314) (1,704) (1,954) (245) (438) (552) (555) (2,970) (274) ) ( , (1,108) (5,247) 554  (4,693) 12  (4,681) Earnings per share Basic earnings per share (cents) Diluted earnings per share (cents) 25 25 (15.4) (15.4) The consolidated statement of comprehensive income is to be read in conjunction with the attached notes. 66,703  (47,541) 19,162  ‐ (11,206) (1,483) (1,551) (2,162) (272) (461) (648) ‐ ‐ ‐ ) ( , (1,221) 158 (32) 126  (52) 74  0.4 0.4  14  14 14 Annual Report for the year ended 30 June 2012Ambertech Limited                                                                                                                                                          AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2012 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 Other financial liabilities Deferred tax liabilities TOTAL NON‐CURRENT  LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Share capital Reserves Retained earnings TOTAL EQUITY Economic Entity Note 2012 $'000 2011 $'000 23 6 7 8 10 11 5 12 13 14 14 13 5 15 16 2,495 6,841 133 12,550 22,019 1,969 45 1,428 3,442 3,134 13,128 326 13,571 30,159 380 3,054 866 4,300 25,461 34,459 4,839 3,427 910 9,176 801 121 58 980 10,156 15,305 11,138 (118) 4,285 15,305 9,493 3,000 1,128 13,621 804 ‐ 52 856 14,477 19,982 11,138 (116) 8,960 19,982 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 2012                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2012 Share Capital $'000 Option  Reserve $'000 Foreign  Currency  Translation  Reserve $'000 Economic Entity Balance as at 30 June 2010 11,146  86  Total comprehensive income for the year Transactions with equity holders: Shares bought back during the year Costs of share based payments Dividends Total transactions with equity holders ‐ ‐ ‐ (8) (8) Balance as at 30 June 2011 11,138  Total comprehensive income for the year Transactions with equity holders: Shares bought back during the year Costs of share based payments Dividends Total transactions with equity holders ‐ ‐ ‐ ‐ Balance as at 30 June 2012 11,138  ‐ ‐ (58) ‐ (58) 28  ‐ ‐ (14) ‐ (14) 14  Retained  Earnings $'000 Total Equity $'000 8,917  20,057  126 ‐ 70 (153) (83) 74  (8) 12  (153) (149) (92) (52) ‐ ‐ ‐ ‐ (144) 8,960  19,982  12  (4,693) (4,681) ‐ ‐ ‐ ‐ ‐ ‐ 18  18  ‐ ‐ 4  4  (132) 4,285  15,305  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 2012Ambertech Limited                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2012 Economic Entity Note 2012 $'000 2011 $'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 Net cash provided by operating activities 23 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 provided by / (used in) financing activities Net (decrease) / 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 62,649  (58,236) 52  (438) (132) 325  (3,460) 760  (1,785) (13) (1,798) ‐ 400  ‐ ‐ 400  (638) 3,134  (1) 2,495  67,397  (59,834) 20  (461) (538) 361  (4,822) 2,123  (82) (125) (207) (153) ‐ (8) (1,700) (1,861) 55  3,090  (11) 3,134  The consolidated statement of cash flows is to be read in conjunction with the attached notes.  17 17 Ambertech LimitedAnnual Report for the year ended 30 June 2012                                                                            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 1, 2 Daydream Street, Warriewood NSW 2102. Authorisation of financial statements The financial statements were authorised for issue on 27 September 2012 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. The economic entity is a for profit entity. 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). Going Concern The economic entity's financing facility expires on 30 November 2012, and negotiations to renew the facility  cannot occur until results for the period to 30 September 2012 are known. In addition, the economic entity made a  loss after tax for the year ended 30 June 2012 of $4,693,000. Notwithstanding the loss, the economic entity had  positive operating cash flows for the year ended 30 June 2012 of $760,000. After taking into account all of the available information, including the following factors: ‐ ‐ ‐ Interim results for the period to 31 August 2012 has exceeded budget; Redundancy, restructure and relocation costs incurred during the financial year are not expected to reoccur; The economic entity's debts will be paid as and when they fall due based on the cashflow and profit forecasts  prepared by management; The Professional segment has secured a major contract in excess of $4,000,000 to be delivered in the 2012‐13  financial year; The Lifestyle Entertainment segment has been restructured to reduce fixed costs and overheads, providing  ongoing savings; and An indicative offer of funding on a debtor financing arrangement has been received, ‐ The directors have concluded that there are reasonable grounds to believe that the basis for the preparation of the  financial statements on a going concern basis is appropriate. ‐ ‐ 18  18 Annual Report for the year ended 30 June 2012Ambertech 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) 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) (ii) 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) 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) (iii) AASB 2010‐6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial  Assets [AASB 1 & AASB 7] (effective from 1 July 2011) (iv) 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) 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 2012, but have not been applied in preparing these financial statements. (i) AASB 9 Financial Instruments (effective from 1 January 2015) (ii) AASB 10 Consolidation (effective from 1 January 2013) (a) (b) (c) power over the investee;  exposure, or rights, to variable returns from its involvement with the investee; and the ability to use its power over the investee to affect the amount of the investor’s  (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.  19 19 Ambertech LimitedAnnual Report for the year ended 30 June 2012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) New Accounting Standards issued but not yet effective (continued) (iv) AASB 13 Fair Value Measurement (effective from 1 January 2013) AASB 13: (a) defines fair value; (b) (c)   sets out in a single IFRS a framework for measuring fair value; and requires disclosures about fair value measurements. (v) 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) (vi) AASB 2011‐4 Amendments to Australian Accounting Standards to Remove Individual Key Management  Personnel Disclosure Requirements [AASB 124] (effective from 1 July 2013) (vii) AASB 2012‐2 Amendments to Australian Accounting Standards ‐ Disclosures ‐ Offsetting Financial Assets and  Financial Liabilities [AASB 7 & AASB 132] (effective from 1 January 2013) (viii) AASB 2012‐3 Amendments to Australian Accounting Standards ‐ Offsetting Financial Assets and Financial  Liabilities [AASB 132] (effective from 1 January 2014) (ix) AASB 2012‐5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009‐2011  Cycle [AASB 1, AASB 101, AASB 116, AASB 132 & AASB 134 and Interpretation 2] (effective from 1 January  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 are discussed below. Provision for impairment of receivables The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of  provision is assessed by taking into account the ageing of receivables, historical collection rates, and specific  knowledge of the individual debtors' financial position. Estimated useful life of assets The economic entity determines the estimated useful life and related depreciation and amortisation charges for  plant and equipment and definite life of intangible assets. This is in accordance with the accounting policy stated in  note 2(h).   20 20 Annual Report for the year ended 30 June 2012Ambertech LimitedAMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (b) Significant Judgements and Key Assumptions (continued) Impairment of goodwill The economic entity tests annually whether goodwill has suffered any impairment and is in accordance with  accounting policy stated in note 2(j). These calculations require the use of assumptions, and are described further  in note 11. Long service leave provision The liability for long service leave is recognised and measured at the present value of the estimated future cash  flows to be made in respect of all employees at the reporting date. In determining the present value of the liability,  estimates of attrition rates and pay increases through promotion and inflation have been taken into account. Warranty provision In determining the level of provision required for warranties, the economic entity has made judgements in respect  of the expected performance of the product, expected customer claims and costs of fulfilling the conditions of  warranty.  (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.  21 21 Ambertech LimitedAnnual Report for the year ended 30 June 2012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) Trade and other 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) Inventories Inventories include finished goods and stock in transit and 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.  22 22 Annual Report for the year ended 30 June 2012Ambertech LimitedAMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (i) 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(j)).   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. (j) 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. (k) 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.  23 23 Ambertech LimitedAnnual Report for the year ended 30 June 2012AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (l) 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.  (m) Service Warranties Provision is made for the estimated liability on all products still under warranty at balance date. (n) 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. (ii) Finance leases Lease payments, where substantially all the risks and benefits incidental to the ownership of the leased asset  transfer from the lessor to the lessee, are allocated between the principal component of the lease liability and the  finance costs. Leased assets acquired under a finance lease are depreciated over the term of the lease. (o) 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. (p) 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.  24 24 Annual Report for the year ended 30 June 2012Ambertech LimitedAMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (q) 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.  25 25 Ambertech LimitedAnnual Report for the year ended 30 June 2012AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (r) 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. (s) 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. (t) 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. (u) 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. (v) 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. (w) 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. (x) Derivative financial instruments Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently  re‐measured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends  on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.  Derivatives are classified as current according to expected period of realisation.  26 26 Annual Report for the year ended 30 June 2012Ambertech Limited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: EXPENSES 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 Leased plant and equipment Amortisation Website costs Bad and doubtful debts Rental expense on operating leases: Minimum lease payments Net foreign exchange losses Net loss on disposal of plant and equipment Net fair value (loss) / gain on derivative financial instruments ‐  forward exchange contracts  27 Economic Entity 2012 2011 $'000 $'000 51,355 66,683 52 51,407 20 66,703 19 19 ‐ ‐ 36,196 191 47,541 18 8,907 456 9,363 10,704 502 11,206 123 29 34 7 193 52 16  139 26 66 ‐ 231 41 163  1,193 1,315 ‐ 3 (18) 57 1 45 27 Ambertech LimitedAnnual Report for the year ended 30 June 2012                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      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 (benefit) / expense Reconciliation between income tax expense and prima facie tax on accounting  (loss) / profit (Loss) / Profit before income tax expense Tax at 30% (2011:30%) Tax effect of non deductible expenses  ‐ Entertainment  ‐ Impairment charge  ‐ Other items Under provision for income tax in prior years Income tax (benefit) / 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 Unrealised foreign currency loss Tax losses Other Analysis of deferred tax liabilities Leases Other Economic Entity 2012 2011 $'000 $'000 ‐ 2  (556) (554) (5,247) (1,575) 9 735  275  2  (554) 438 29 11 32 55 129 22 15 675 22  1,428 57 1 58 213  1  (182) 32 158  47  13 ‐ (29) 1  32 443 148 5 119 7 73 14 ‐ ‐ 57  866 50 2 52 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 2012. 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.  28 28 Annual Report for the year ended 30 June 2012Ambertech Limited                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       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 2012 2011 $'000 $'000 6,825 (186) 6,639 56 ‐ 146 6,841 12,704 (26) 12,678 228 45 177 13,128 26 176 (16) 186 121 68 (163) 26 (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 $133,000 (2011: $326,000) 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.  29 29 Ambertech LimitedAnnual Report for the year ended 30 June 2012                                                                                                                                                                                                                       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 2012 2011 $'000 $'000 12,255  12,952  728  12,983  (433) 12,550 861  13,813  (242) 13,571 Country of Percentage Owned Incorporation 2012 2011 Australia Australia 100% 100% Australia New Zealand 100% 100% 100% 100%  30 30 Annual Report for the year ended 30 June 2012Ambertech Limited               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 Accumulated depreciation Net carrying amount 2012 $'000 2011 $'000 2012 $'000 2011 $'000 2012 $'000 2011 $'000 Economic Entity Plant and equipment Furniture and fittings Leasehold improvements Leased plant and equipment Total plant and equipment 1,258 482 1,345 169 3,254 1,743 392 768 10 (1,004) (232) (33) (16) (1,451) (320) (752) (10) 2,913 (1,285) (2,533) 254 250 1,312 153 1,969 292 72 16 ‐ 380 Reconciliation of carrying amounts: 2012 Economic Entity Balance at the beginning of the year Additions Disposals Depreciation and amortisation expense Carrying amount at the end of the year 2011 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  improvements $'000 292  85  ‐ (123) 254  72  210  (3) (29) 250  16  1,330  ‐ (34) 1,312  Plant and  equipment $'000 Furniture and  fittings $'000 Leasehold  improvements $'000 Leased  plant and  equipment $'000 ‐ 160 ‐ (7) 153 Leased  plant and  equipment $'000 368  65  (2) (139) 292  93  5  ‐ (26) 72  70  12  ‐ (66) 16  ‐ ‐ ‐ ‐ ‐ Total $'000 380  1,785  (3) (193) 1,969  Total $'000 531  82  (2) (231) 380   31 31 Ambertech LimitedAnnual Report for the year ended 30 June 2012                                                                                                                                                                                                                                                                                                                                                                                                                                                              AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 11: INTANGIBLE ASSETS Non‐Current Goodwill at cost (a) Less impairment Website at cost (b) Less accumulated amortisation (a) Goodwill (i) Impairment tests for goodwill Economic Entity 2012 2011 $'000 $'000 2,970 (2,970) ‐ 138 (93) 45  45 2,970 ‐ 2,970  125 (41) 84  3,054 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: 2012 Lifestyle Entertainment Professional New Zealand 2011 Lifestyle Entertainment Professional New Zealand Australia New Zealand $'000 $'000 Total $'000 ‐ ‐ ‐ ‐ 1,963 963 ‐ 2,926 ‐ ‐ ‐ ‐ ‐ ‐ 44 44 ‐ ‐ ‐ ‐ 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 Growth Rate 2012 2011 Discount Rate 2012 2011 Lifestyle Entertainment Professional New Zealand 4.1% 3.8% 3.0% 3.0% 3.0% 3.0% 12.2% 12.2% 12.2% 11.3% 11.3% 11.3% The growth rates applied in the cash flow projections represent management's best estimate of likely  economic conditions for the forecast periods beyond the current Board approved budget.  32 32 Annual Report for the year ended 30 June 2012Ambertech Limited                                                                                                                                                                                                                                                                                                                                                                                  AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 11: INTANGIBLE ASSETS (continued) Non‐Current (iii) Impact of possible changes in key assumptions 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 11.32%  and 13.05% (2011: 10.46% and 12.10%) were used for this purpose. Accordingly, goodwill of $2,970,000 has been impaired and is reflected in the Statement of Comprehensive  Income. Reconciliation of written down values: Opening balance at 1 July 2011 Additions Impairment Amortisation expense Closing balance at 30 June 2012 Goodwill $'000 Website $'000 Total $'000 2,970 ‐ (2,970) ‐ ‐ 84 13 ‐ (52) 45 3,054 13 (2,970) (52) 45 NOTE 12: TRADE AND OTHER PAYABLES Current Trade accounts payable Other accounts payable Derivative financial instruments ‐ forward exchange contracts Amounts payable in foreign currencies: Trade accounts payable:  ‐ US Dollars  ‐ British Pounds  ‐ Euro  ‐ Swiss Francs  ‐ New Zealand Dollars  ‐ Japanese Yen Economic Entity 2012 2011 $'000 $'000 2,990 1,831 18 4,839 1,201 84 667 205 155 10 2,322 7,320 2,173 ‐ 9,493 1,398 375 79 185 140 56 2,233  33 33 Ambertech LimitedAnnual Report for the year ended 30 June 2012                                                                                                                                                                                                                                                                                                                                                                                                                       AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 13: OTHER FINANCIAL LIABILITIES Current Bills payable (a) Lease Liability (b) Non Current Lease Liability (b) Economic Entity 2012 $'000 2011 $'000 3,400 27 3,427 3,000 ‐ 3,000 121 ‐ 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 part of a multi‐option borrowing facility that includes flexible overdraft and commercial bill  components. The economic entity breached covenants in relation to the facility during the year and as such is  subject to monthly reporting to its lenders. Subsequent to year end, the facility was renewed with amended  covenants in place. The facility has an expiry date 30 November 2012. The facility is secured by a charge over the assets of Amber Technology Limited.  Guarantees are in place to a limit  of $4,800,000 (2011:$6,500,000).  The value of assets at balance date is $26,462,000 (2011: $32,952,000). (b) Lease liability The lease liabilities are effectively secured as the rights to the leased assets, recognised in the statement of financial  position, revert to the lessor in the event of default. NOTE 14: PROVISIONS Current Service warranty Lease make good Employee benefits Non Current Employee benefits 244 ‐ 666 910 801 801 244 210 674 1,128 804 804 (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) Movements in provisions Movements in provisions, other than employee benefits are set out below: Opening balance at 1 July 2011 Additional provision recognised Reductions resulting from payments Closing balance at 30 June 2012 34  34  Service  warranty  $'000  Lease  make good  $'000 Total $'000 244 237 (237) 244 210 ‐ (210) ‐ 454 237 (447) 244 Annual Report for the year ended 30 June 2012Ambertech Limited                                                                                                                                                                                                                                                                                                                                                                                                                                                     AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 15: SHARE CAPITAL Economic Entity 2012 Shares 2011 Shares Economic Entity 2012 2011 $'000 $'000 Ordinary Shares fully paid (no par value) 30,573,181 30,573,181 11,138 11,138 Details Balance 30 June 2011 Shares bought back Balance 30 June 2012 No of shares 30,573,181 ‐ 30,573,181 $'000 11,138 ‐ 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 2012 the company bought back nil shares  (2011: 25,000) shares. NOTE 16: RESERVES Foreign currency translation reserve (a) Share based payments reserve (b) Economic Entity 2012 2011 $'000 $'000 (132) 14 (118) (144) 28 (116) 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 Later than 5 years Minimum lease payments 867 5,011 8,124 14,002 986 342 ‐ 1,328 The Warriewood property lease is a non‐cancellable lease ending on 13 January 2023, 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 at 3.75% per annum.  35 35 Ambertech LimitedAnnual Report for the year ended 30 June 2012                                                                                                                                                                                                        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 2012 $'000 2011 $'000 685 685 540 540 No material losses are anticipated in respect of any of the above contingent liabilities. NOTE 19: EVENTS SUBSEQUENT TO REPORTING DATE On 25 September 2012, the economic entity announced that it had signed a significant contract in the order of  $4,000,000 to be completed during the 2012‐13 financial year. Apart from the above, there are no matters that have arisen since the end of financial year that have significantly  affected, or may significantly affect, the 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 Transactions with related parties The following transactions occurred with related parties: ‐ Payment for services from associate ‐ Payment for on‐line marketing consulting services (director‐related entity of  Thomas Amos and Edwin Goodwin) Trade payables for on‐line marketing consulting services (director‐related entity of  Thomas Amos and Edwin Goodwin) ‐ Economic Entity 2012 $ 2011 $ 1,448,640 1,292,931 102,855 104,364 3,827  1,555,323 11,139  1,408,434 50,540 60,000 42,000 6,000 98,540 ‐ ‐ 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.  36 36 Annual Report for the year ended 30 June 2012Ambertech Limited                                                                                                                                                                                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, 125,000 options lapsed (2011: 200,000) and no options were forfeited (2011: 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 2012 2011        225,000            425,000  100,000 100,000 225,000 225,000 Date Granted Exercise Period Start Finish Exercise Price 2012 7/12/2004 7/12/2004 30/09/2006 30/09/2007 30/09/2011 30/09/2012 $1.35 $1.35 Weighted average 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 $1.20 $1.20 $1.20 $1.20 $1.35 $1.35 Weighted average exercise price Balance at  start of year Lapsed/  Forfeited  during year Balance at  end of year Exercisable  at end of year 125,000 100,000 225,000 $1.35 125,000 25,000 25,000 25,000 125,000 100,000 425,000 $1.28 (125,000) ‐ (125,000) $1.35 (125,000) (25,000) (25,000) (25,000) ‐ ‐ (200,000) $1.20 ‐ 100,000 100,000 $1.35 ‐ ‐ ‐ ‐ 125,000 100,000 225,000 $1.35 ‐ 100,000 100,000 $1.35 ‐ ‐ ‐ ‐ 125,000 100,000 225,000 $1.35 The weighted average remaining contractual life of share options outstanding at the end of the period was 0.25 years  (2011: 0.70 years).  37 37 Ambertech LimitedAnnual Report for the year ended 30 June 2012                                                                                                                                                                                                                                                                                                                                                                                                                                       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 19,516 210 19,726 57  (963) (906) 29,342 ‐ 29,342 (1,068) (1,963) (3,031) 2,497 ‐ 2,497 87  (44) 43  6,407 13,835 1,295 2,234 2,399 378 ‐ (210) (210) ‐ ‐ ‐ ‐ ‐ ‐ ‐ 51,355 ‐ 51,355 (924) (2,970) (3,894) (967) (4,861) (386) (5,247) 554  (4,693) 21,537 3,924 25,461 5,011 5,145 10,156 1,798 1,798 245 245 Acquisition of non current segment assets 717 1,075 Depreciation and amortisation of segment  assets 140 93  38  38 6 12  ‐  ‐ 38 Professional Lifestyle Entertainment New Zealand (b)  Segment information 2012 Revenue  ‐ Total segment revenue Inter‐segment revenue  ‐  Revenue from external customers Result Result  ‐  Underlying EBIT Impairment charge  ‐   ‐  Segment EBIT  ‐  Unallocated / corporate result  ‐  EBIT  ‐  Net interest and finance costs  ‐  Loss before income tax Income tax benefit  ‐   ‐  Loss for the year Assets  ‐  Segment Assets  ‐  Unallocated/corporate assets  ‐  Total assets Liabilities  ‐ Segment Liabilities  ‐ Unallocated/corporate liabilities  ‐ Total liabilities Other Annual Report for the year ended 30 June 2012Ambertech Limited                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 22: SEGMENT REPORTING (continued) 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 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 ‐ 66,683 846 306 (164) 12,099 16,644 1,271 6,653 2,879 278  ‐ Acquisition of non current segment assets 81 122  ‐ Depreciation and amortisation of segment  assets 105 158 4 9  39 ‐ ‐ ‐ ‐ ‐ 988 (389) 599 (441) 158 (32) 126 30,014 4,445 34,459 9,810 4,667 14,477 207 207 272 272 39 Ambertech LimitedAnnual Report for the year ended 30 June 2012                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 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 2012 $'000 2011 $'000 Carrying Amount of  Segment Assets 2012 $'000 2011 $'000 Acquisition of Non‐  Current Assets 2012 $'000 2011 $'000 Geographical Location  ‐ Australia  ‐ New Zealand (d) Other segment information (i) Accounting Policies 48,858 2,497 51,355 64,623 2,060 66,683 20,242 1,295 21,537 28,743 1,271 30,014 1,792 6 1,798 204 3 207 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 and goodwill.  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.  40 40 Annual Report for the year ended 30 June 2012Ambertech Limited                                                                                                                                                                                                                                           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 (Loss) / Profit for the year Depreciation and amortisation Impairment of goodwill Net loss on disposal of plant and equipment Foreign exchange (gains) / losses Non‐cash share based payments Changes in operating assets and liabilities Decrease/(Increase) in trade and other receivables Decrease in inventories Decrease in tax receivable (Decrease)/Increase in payables Increase in lease liabilities (Decrease)/Increase in provisions (Increase) 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 2012 2011 $'000 $'000 3 2,492 2,495 (4,693) 245  2,970  3  (19) 4  6,291  1,032  311  (4,756) 149  (221) (556) 760  3 3,131 3,134 126  272  ‐ 1  57  12  (5,344) 2,480  368  4,173  ‐ 160  (182) 2,123   41 41 Ambertech LimitedAnnual Report for the year ended 30 June 2012                          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.  42 42 Annual Report for the year ended 30 June 2012Ambertech Limited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 2012 2011 $'000 $'000 3,156  2,347  331  805  6,639  186  6,825  8,530  3,571  442  135  12,678  26  12,704  The economic entity does not have  other receivables which are past due (2011: 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 2012 Trade and other payables Commercial Bills Lease Liability Economic Entity 2011 Trade and other payables Commercial Bills Lease Liability Contractural Cash Flows Less than  3 months $'000 3 to 6  months $'000 6 to 12  months $'000 More than  12 months $'000 4,839  3,400  6  8,245  9,493  3,000  ‐ 12,493  7  7  ‐ ‐ ‐ ‐ ‐ ‐ 14 14  ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 121 121  ‐ ‐ ‐ ‐ Total $'000 4,839  3,400  148  8,387  9,493  3,000  ‐ 12,493  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.  43 43 Ambertech LimitedAnnual Report for the year ended 30 June 2012                                                                                                                                                                                                                                                                                                                     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 4 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 Sell Australian dollars Average exchange rates 2012 $'000 2011 $'000 2012 2011 2,359 515 1,903 ‐ 0.9737 0.9719 1.0509 ‐ 259 ‐ 0.7727 ‐ 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% 2012 2011 $'000 $'000 Strengthening of 10% 2012 $'000 2011 $'000 183  183  48  48  (120) (120) (9) (9) 44  44 Annual Report for the year ended 30 June 2012Ambertech Limited                                                                                                                       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: Note Weighted average  interest rate 2012 % 2011 % Balance 2012 $'000 2011 $'000 Commercial Bills 13 6.54% 6.19% 3,400 3,000 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 2012, with all other variables remaining constant: Increase of 1% of average  interest rate Decrease of 1% of average  interest rate 2012 $'000 2011 $'000 2012 $'000 2011 $'000 (33) (33) (44) (44) 33  33  44  44  Impact on profit Impact on equity Net Fair Values The net fair values of assets and liabilities approximates their carrying values.  No financial assets or liabilities are  readily traded on organised markets. Capital Management The Board's aim is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to  sustain future development of the business.  The Board seeks to maintain a balance between the higher returns that  might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital  position. Total capital is defined as shareholders' equity.  The Board monitors the return on capital, which is defined as net  operating income divided by total shareholders' equity.  The Board also establishes a dividend payout policy which is  targeted as being greater than 50% of earnings, subject to a number of factors, including the capital expenditure  requirements and the company's financial and taxation position. Dividend payout for the year ended 30 June 2012 is nil  (2011: 242.8%). There were no changes to the economic entity's approach to capital management during the financial year.  45 45 Ambertech LimitedAnnual Report for the year ended 30 June 2012                        AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 25:  EARNINGS PER SHARE Basic earnings per share (cents) Weighted average number of ordinary shares (number) Earnings used to calculate basic earnings per share ($) Diluted earnings per share (cents) Weighted average number of ordinary shares (number) Earnings used to calculate diluted earnings per share ($) Economic Entity 2012 2011 (15.4) 0.4 30,573,181 30,590,832 (4,693,000) 126,000 (15.4) 0.4 30,573,181 30,590,832 (4,693,000) 126,000 (a) The effect of the Executive Share Option Plan options on issue is not considered dilutionary because based on  conditions at the date of this report, it is considered unlikely that these options would be converted into ordinary  shares. NOTE 26: DIVIDEND FRANKING CREDITS In respect of dividends first recognised as a liability during the period or paid in the period without  previously being recognised as a liability Dividends that have been fully franked: Amount in aggregate ($'000) Cents per share Tax rate Amount of franking credits available for subsequent reporting periods ($'000) ‐ ‐ 30% 6,146 153 0.5 30% 6,139  46 46 Annual Report for the year ended 30 June 2012Ambertech Limited                                                                                                                                             AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Economic Entity 2012 2011 $ $ 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 BDO East Coast Partnership (formerly PKF) Audit and review of financial reports, and other work under the Corporations Act  2001. 114,560 124,560 Other practices ‐ PKF NZ Audit or review of financial reports of subsidiary Total remuneration for audit services Non‐audit services BDO East Coast Partnership (formerly PKF) 10,000 10,000 124,560 134,560 Tax compliance services, including review of company income tax returns Total remuneration for non‐audit services 19,830 19,830 18,035 18,035 It is the economic entity's policy to employ BDO on assignments additional to their statutory audit duties where  BDO's expertise and experience with the economic entity are important.  These assignments are principally tax  advice or where BDO is awarded assignments on a competitive basis.  47 47 Ambertech LimitedAnnual Report for the year ended 30 June 2012                                                           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 Profit / (Loss) of the parent entity Total comprehensive income of the parent entity Parent Entity 2012 $'000 2011 $'000 11,027 15,584 1,462 1,462 11,009 15,567 1,462 1,462 11,138 11,138 14 2,970 13  13  28 2,939 (2) (2)  48 48 Annual Report for the year ended 30 June 2012Ambertech Limited                                                                                                                                AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' DECLARATION The directors of the company declare that: 1. The financial statements, comprising of the statement of comprehensive income, statement of financial  position, statement of cash flows, statement of changes in equity and accompanying notes, are in  accordance with the Corporations Act 2001  and: (a) comply with Accounting Standards and the Corporations Regulations  2001 ; and (b) give a true and fair view of the consolidated entity's financial position as at 30 June 2012 and of its  performance for the year ended on that date. The company has included in the notes to the financial statements an explicit and unreserved statement of  compliance with International Financial Reporting Standards. In the directors' opinion, there are reasonable grounds to believe that the company will be able to pay its  debts as and when they become due and payable. The directors have been given the declarations by the chief executive officer and chief financial officer  required by Section 295A. 2. 3. 4. This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf  of the directors by: P F Wallace ll  Director  P A Amos  Director  Dated this 27th day of September 2012. Sydney  49  49 49 Ambertech LimitedAnnual Report for the year ended 30 June 201250 Annual Report for the year ended 30 June 2012Ambertech LimitedShareholder Information XIX Ambertech LimitedAnnual Report for the year ended 30 June 2012Shareholder Information a. Distribution of equity security by size of holding: 1 1,001 5,001 10,001 100,001 Total - - - - 1,000 5,000 10,000 100,000 and over Number of shareholders Number of Ordinary Shares % of total capital 78 92 50 73 23 70,400 329,399 432,699 2,398,282 27,342,401 0.23 1.08 1.42 7.84 89.43 316 30,573,181 100.00 The number of security investors holding less than a marketable parcel of 2,273 securities is 98 and they hold 105,448 securities. b. Equity Security Holders: The twenty largest shareholders as at 10 October 2012 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 Talon A Pty Limited (A K Fund 1) Crowton Pty Ltd (Amos Super Fund) Howbay Pty Ltd Wavelink Systems Pty Ltd Wavelink Systems Pty Ltd (Employee Superannuation Fund) Nanyang Australia Limited Appwam Pty Limited Wygrin Pty Ltd 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 Mr David Le Cornu & Mrs Betty Le Cornu Mr Stephen Rodney Hariono Realcal Pty Ltd Wallace Capital Pty Ltd Velkov Funds Management Limited Mr Edward Dally & Mrs Selina Dally Source: Link Market Services XX Number of shares 4,245,667 3,231,681 2,883,556 2,784,625 2,650,000 2,000,464 1,950,025 1,507,556 1,488,270 1,082,162 993,250 413,045 357,599 333,261 220,000 219,270 200,000 152,600 150,000 145,000 % of total capital 13.89 10.57 9.43 9.11 8.67 6.54 6.38 4.93 4.87 3.54 3.25 1.35 1.17 1.09 0.72 0.72 0.65 0.50 0.49 0.47 27,008,031 88.34 Annual Report for the year ended 30 June 2012Ambertech Limited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 Accretion Investment Management Wavelink Systems Pty Ltd Crowton Pty Limited Wygrin Pty Ltd Howbay Pty Ltd Appwam Pty Limited d. On-Market Buy Back: Number of shares 6,246,131 5,484,625 4,313,843 2,995,826 2,883,556 1,950,025 % of total capital 20.43 17.94 14.11 9.80 9.43 6.38 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 10 October 2012. 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 2012 no 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 2012Ambertech LimitedNotes XXII Annual Report for the year ended 30 June 2012Ambertech LimitedNotes XXIII Ambertech LimitedAnnual Report for the year ended 30 June 2012Corporate Directory XXIV Ambertech LimitedAnnual Report for the year ended 30 June 2012Mission Statement Unit 1, 2 Daydream Street Warriewood NSW 2102 Tel: 02 9998 7600 Fax: 02 9999 0770 BDO East Coast Partnership Annual Report Annual Report for the year ended 30 June 2012 Ambertech Limited ACN 079 080 158 2 1 0 2 e n u J 0 3 d e d n e r a e y e h t r o f t r o p e R l a u n n A d e t i m i L h c e t r e b m A PO Box 955 Mona Vale NSW 1660 Australia Unit 1, 2 Daydream Street Warriewood NSW 2102 Email: info@ambertech.com.au Phone: 02 9998 7600 Fax: 02 9999 0770 www.ambertech.com.au 

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