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2023 Reportwww.ambertech.com.auwww.amberonline.com.au s About Us Recognise entertainm throughou largest an technolog ed experts at r ment, commun ut Australasia nd most respec gy equipment reaching and s nications & te a, Ambertech i cted distributo solutions. supporting th echnology ma is one of Aust ors of high he arkets ralia's Ambertec innovative thirsty Au Our custo technolog Ambertec art manuf available. ch has been de e & smartest ustralian & Ne omers enthusi gy well in adva ch provides th facturers and c elivering some electronics to ew Zealand m astically embr ance of many o he bridge betw customers wh e of the world' o the technical markets since 1 race new other countrie ween state-of- ho demand the 's most lly 1987. es and -the- e best With offic cities, sup of authori provides a across a te tenth of th demandin offer and t reputation ces & represe pported by a c ised dealers & an efficient dis erritory larger he population ng audience ex the Ambertec n for deliverin l l major capital ntatives in all e national netw work omprehensive h ts, Ambertech & service agent tem d support syst stribution and ne A with just on r than the USA and y, intelligent a n. This wealthy as to st the world h xpects the bes served h team has bu uilt a well-des t. ng exactly that Vision From criti complete have seen an extraor technolog demonstr constantly diverse cu as they req ical profession home lifestyle audio & vide rdinary pace. T gical revolutio ated an ability y stay ahead o ustomer base w quire them. nal applicatio e environment eo technologie Throughout t n, Ambertech y to predict fu of the curve in with the tools o ns through to 6 years ts, the past 26 erge at es evolve & me this amazing h has constant uture trends a n providing ou s they need as tly nd ur soon The Ambe expect on constantly future ma them. Ou built on a innovative with unm ertech team is nly the very lat y scour the wo arket direction ur success over formula of off e technology t matched after-s s well aware th test and best f orld to stay ab ns and the tech r these past de fering only th to our clients sales support. s hat our client from us so we ible breast of possi tisfy hnology to sat en ecades has bee t e best & most it up and backing i www.ambertech.com.auwww.amberonline.com.au11 Con tents 3 Ch 10 Our Brands hairman’s Revi iew naging Direct tor’s Review iness Segment t Update 4 Man 15 Co 5 Busi 17 Fi orporate Gove rnance inancial Repo ort Statement 64 Shareholder I Information 66 C Corporate Dire ectory 222 Dear S Sharehold ders On behal pleased t most rece challenge managem lf of your Boar to present you ent results of es that have p ment of Amber rd and executi u with your 20 the company resented them rtech in recen ive manageme 013 Annual Re reflect the ma mselves to the nt times. ent I am eport. The any Board and The 2013 with an e consume discretio segment half of th results were economic land er confidence a nary spending felt the impac he financial yea impacted by s dscape domin and a reductio g. Our Lifesty ct of these fact ar. some significa ated by record on in househo yle Entertainm tors during th ant factors, d low old ment he second The Lifes continue implemen the group style group fin es to deal with ntation of stra p’s product po nds itself in a r h new staff str ategic plans, a ortfolio. rebuilding ph ructures, and the realign ase as it nment of Ambertech Head A Office, Warriew ood NSW. Together business financial implemen r with senior m in the Lifesty year will see t ntation of a nu management, yle Entertainm the implemen umber of strat your Board ha ment area, and ntation of furth tegic options as developed a enabling a ret her steps in th including: a strategy for b turn to more c he rebuilding building a mo consistent pro process. Thes ore robust stru ofit performan se steps includ ucture for futu ure 4 nce. The 2014 de the final ‐ ‐ ‐ Addition of a Introduction restoring mar Optimising th with a discret consumer ma number of ne and establish rgins; and he use of our n te product set arket via retail new direct sel t which minim lers. ew agencies to hment of new b o complement brands owned t and enhance d by Ambertec our existing b ch into multip brands; ple channels t o assist with ll website ww mizes the over ww.amberonlin rlap with, and ne.com.au to e d is complemen expand sales t ntary to curre to retail custo ent business in omers n the The Profe further w this part can carry essional and B work ongoing. of our busine y out plans to Broadcast area Much of the ess into what i do the same w a of our busine successes her it is today. Ou with other are ess has had sig re can be trace ur success in t eas of the busin gnificant proj ed back to pre transforming t ness. ect work in th evious strateg this business he last year, an gies which cha unit gives us c nd has visibili anged the shap confidence th ity of pe of hat we Strategic drive the c planning and e entire Amber d risk managem rtech team on ment remain k n achieving the key areas of fo e company’s g ocus for the Bo goals now and oard, and for t the manageme . d in the future. ent of Ambert tech to Peter Wa allace n Chairman 333 Dear S Sharehold ders Amidst t business Warriew facilitate one integ he disappoint as we look to wood late in th ed the implem grated location tment over the o the future. T he 2012 financi entation of str n allows. e results for th The relocation ial year has pr rategies for th he financial ye n of the Amber rovided the pl he future, whil ear there were rtech head off latform for fut lst taking adv e a number of fice to a new, c ture growth o vantage of the very positive custom built f f the business efficiencies th signs for our facility at s. The move h hat operating has out of We were projects d success o e particularly p during the yea of this group i pleased with ar, and you wi s in no small p the successes ill find details part due to th of our Profess s of these in th e strategic res sional Segmen he business seg shaping that w nt in winning gment update we undertook and deliverin e that follows. k in this area in major ng on several m g . The ongoing n 2011/12. Much of transform segment we canno continue plans to e positione confiden with our we have a the ground w mation of our has been com ot expect to co e to impact res ensure this se ed to take adv ce as they occ key suppliers a product offe work required Lifestyle Ente mpleted, or is w ontrol the eco sults in this ar gment of our vantage of imp cur. We conti s to increase m ering. for a similar ertainment bu well underway onomic factors rea, we have d business is w provements in inue to work c market share w usiness y. Whilst s which developed ell n consumer closely wherever Restructu ure Trans sformation Strategic Options Largely com mplete Progr ressing well Board approv ved Sections focused c recogniti installati awards a that follo of our Lifesty continue to pe ion we have re ion industry in are also contai ows yle business w erform well, an ecently receive n recent times ined in the bu which are comm nd we are pro ed in the cust s. Details of th siness segmen mercially oud of the om hese nt update Our New diversific establish Tasman, translate has begun progress sustainab w Zealand ope cation. Succes hment of some and we are no e into market s n with some p in implement bility and grow eration continu ss is being ach e key brands w ow beginning share gains. T pleasing resul ting the comp wth. ues to grow th hieved through with synergies to see opport he 2014 financ ts and with st any’s plans fo hrough h the s across the tunities cial year teady or future Relocation Head Offi n of ice Restructur Business U re of Units Establishm of OEM/OD team ment DM Strategic d agency and business s acquisitions Develop onlin channel ne Establish OEM/ODM M f portfolio of brands St treamline brand resentation repr Est of o and ablishment online sales d marketing D Develop EM/ODM OE brands mplementary com to o current offerings o Stra ategy Update ect to be able t year at the An gement and st to provide fur nnual General taff for their ti rther informat l Meeting on N ireless contrib tion on revenu November 26 butions to the ue and profit e . On behalf of e restructure a expectations f f the Board of and developme for the first ha Directors I w ent of the com alf of the 2014 would like to th mpany during hank the We expe financial all manag year. Peter Am Managin mos ng Director 4 Lifesty yle Entert tainment t Segment The 2013 year for o Nonethel new foun departur operation our valua financial year our Lifestyle E less, it was a y ndations for gr re of some bran n and make us able customer r was most ce Entertainment year in which rowth. A strat nds, allowing s more efficien rs. ertainly a chall t Segment. we were able tegic review le us to streaml nt and respon lenging e to lay ed to the ine our sive to This also brands an opportun o leaves us to f nd products w nity and fit ou focus on our c which add valu ur ever changin ore and syner ue to every ng environme nt. rgistic Onkyo TX-NR52 O 25 Network AV R Receiver During the fina D ighlights. On hi or lifestyle seg fo roducts. One pr ndoor Antenn In ew sales recor ne ancial year our nkyo remains a gment opening e For All’s Un a’s continue t rds for the com r core brands a very importa g up opportun niversal Remot o grow expon mpany. provided man ant and stable nities for many te Controls an nentially and b ny e brand y fringe nd broke In ntegra continu ustom installa cu ersion of the h ve onArray. The So qu uality audio in peakers. sp ued its succes ation market, w hugely popula brand also co n their entire i ss as an exclus whilst Sonan ar Landscape S ntinued to off in wall and in our sive brand to o nce released an n 8ohm e Series with th ge fer cutting edg n ceiling hi-fi One For All SV V9325 Full HD In ndoor Antenna Optoma technolog options, w audio ma range tak released t expectati world lea stayed at the gy with their whilst Nuvo e arket with the king on incum two new PTZ ions and seen ader and pione forefront of c new releases entered the w e release of a fa mbent market l Z cameras whi Amber Techn eer in its succ core projector D including LED e home) product ens eded our alia as a wireless (whol antastic new p leaders. Lum ich have excee nology Austra cess. Zound In Coloud, M grow, par UrbanEa ndustries fou Marshall Head rticularly with ars in major re ur headphone b dphones and h the successf etail stores. brands, Urban Molami conti ful retail place nEars, inue to ement of SonArr ray by Sonance - Eight satellites an nd Subwoofer 555 Pl lantronics ex he success of t th Gaming Heads G ba ack of revolut winning Drago w xceeded expec the new range ets. Audioqu tionary new pr on Fly DAC. ctations due in e of Bluetooth uest had a fant roduct lines in n no small par rt to d Headsets and the tastic year on award ncluding the a W We were also f w world class bra N Niveo, BeeWi we have high ex w fortunate enou ands during th and Energize xpectations. ugh to pick up he year, such a er charging pr p some emergi as Middle Atl roducts, for wh ing lantic, hich R Recently, the cu H Home Magazin Awards were v A esults represen re rands were w br So onance, Audio Atlantic and Pr A ustom install ne’s 2nd Annu voted on by th nt a fantastic idely recognis oquest, Cool C rimacoustic in industry vote ual “Most Popu he integrators result for our sed, with No.1 Components, n various categ ed in the Conn nected . ular” Awards. nd the themselves an mber’s company. Am by 1 spots taken b dle Integra, Midd gories. Optom ma HD83 Full HD D 3D Home Thea atre Projector UrbanEars – – Plattan, by Zoun nd Industries Amber T distribut premium Technology als tor, cementing m custom solut so took out th g our position tions distribu e award for N as Australia’s tor. No.1 s leading takes world c rs to make our ort and dedic king team at A class products r business wh ation of a fant Amber it wou e s and valuable ithout hat it is but wi tastic, loyal, uld struggle to o be Lastly, it customer the supp hardwork possible. 666 Profes ssional Se egment 2012-201 lines, wit and some us includ were suc EVS equi the comp 3 was a succe th success in w e significant o ded the ABC T ccessful in tend ipment set tog plete Systems ssful year for winning sever ongoing busine Tape Replacem dering to supp gether with su Integration p the Broadcast ral key tendere ess. Landmark ment project. H ply a very sub upporting pro ackage. t product ed projects k wins for Here we bstantial oducts and The proje Televisio with hard the ABC opposed and is du ongoing t ect was to rep on Recording S d-disk based s studio record to Tape Reco ue for complet throughout. place all of the Systems in Sy systems from dings will be li orders. The pro tion in Decemb e ABC’s tape-b ydney and Mel EVS. Hencefo ive to EVS sys oject started l ber 2013, with based lbourne orth all of stems as last year h revenue Avid M 7 Media Composer 7 The Nine Ne and support Promos depa largest AVID Australia, the challenges of overcome by the manufact twork selecte a significant n artment. Comb D Asset Manag e workflow an f this project w Amber’s tech turer. pply ed Amber Tech new AVID Sys bining video e gement system nalysis and im were significan hnical team wo hnology to su stem for their editing with th he m of its kind in n n mplementation ssfully nt, and succes y with orking closely Silvus Stre eamcaster 3800 M MIMO Radio Snell wer Kahuna V notable. T Australia Asia, and the wedg re also very ac Vision Mixer The first sale a, the Kahuna d we hope that ge with signifi ctive, with a la to Network T of its kind to Mixer is very t this sale repr icant ongoing andmark sale Ten being part a Broadcaster y popular in th resents the th potential. of a ticularly r in he rest of hin end of Further s of EVS sy and the fi Australia showing markets, steep lear significant pro ystems at Glob first sale of a n an Defence Fo much promis although as a rning curve to ojects include bal Television new line – Silv orce. Silvus is a se in Defence, a new technolo ogether with o d a wholesale n for Outside B vus Radios – t a line that is it Police and Br ogy we are tra our clients. e upgrade Broadcasts, o the tself oadcast aversing a Snell Kahuna a Production Swi itcher 777 Our professio due to a num the last 2-3 y segments hav live sound an principal sup relevant and onal products mber of strateg years. A numb ve experienced nd performanc ppliers have de leading the m s group produ gies that were ber of our mark d growth – pr ce sector. In a eveloped prod market in this a ced strong res put in place o ket vertical redominantly addition our ducts which a area. the are sults over We have also manufacturer revenue to ou added signifi o added to our rs that when ur result. Our icant growth. r product port successful wil r professional tfolio new ll add signific resellers have ant e also Vue Audiotechn nik Quad 18-inch isobaric subwoof fer In the mu our mark portfolio more sign we grow company usical instrum ket share and a . The increase nificant partn our business y they prefer to ment retail mar again added n e in business i ner for these re together beco o support. rket we have i new agencies t is leading us t esellers and in oming recogni increased to our to become a n doing so ised as a The year broadcas projects b replacem also saw sign st customers w being funded ment of equipm nificant capita which are the due to techno ment. l purchases fr result of long ology updates rom our term and Solid S State Logic C200 0 HD Digital Prod duction Console The coming f performance manufacturer realise their f financial year from our bran rs we have be full potential. promises soli nds and grow een promoting id and steady th from g over the last year to TC Electro onic Dreamscape Effects Pedal 888 New Z Zealand S Segment With the NZ portf commitm operation e addition of a folio at the beg ment to expan n was consum a range of cons ginning of the nsion and grow mmated. sumer produc e financial yea wth for the Ne ct to the ar our ew Zealand The trans complete introduct and charg include a Tradezon sition of the O ed during the tion of Tecxu gers continue a nationwide r ne stores and One For All ag first quarter, a s products the ed to show str rollout in 52 B all 15 Burnsco gency was suc and after last ese batteries, ong growth. H BNT stores, 17 o Marine store cessfully year’s torches Highlights 7 of 33 es. Tecxus Al lkaline AA Batter ries Following on data for Zoun Headphones in Christchur brands. n from promis nd’s range of U have been pro rch have recen sing beginning Urbanears and omising. Bala ntly signed up gs in 2012, rec d Marshall antynes fashio p for the headp ent on store phone Marshall Major W M White Headphones s by Zound Indus stries Looking ahea along with or retailer who feature our U ad we have a r rders in hand is building a h Urbanears and roll out to the from our bigg headphone co d Marshall pro Smith City G gest AV specia ncept store th oducts. Group, alist hat will ntinue to show Home th projector from our to this ha catalogui heatre sales con rs and our Am Gefen range i as been Ideal E ing Amber NZ mbertec projec is also improv Electrical and Z’s lifestyle pr w growth for ction screens. ving. A key con d JA Russell re roducts. Optoma Turnover ntributor egularly In the pro year was commitm addition, System 6 System 6 ofessional aud The Rocksho ment to the TC , Park Road Po 6000 this year 6000. dio area, a maj op chain show C Electronic p ost invested in and Oceania A jor milestone f wing an increas product range. n yet another Audio upgrad for us this sed . In TC ding their Gefen TV D Digital Audio Dec oder Across the bo investment in us well as the oard we conti n resources in e New Zealan inue to see opp n the lifestyle a nd market con portunities. O area should po ntinues its reco Our osition overy. Our broadcas several capita approval and these become sional custom st and profess at now await f al projects tha d we are well p positioned to n. e more certain ers have sched funding or bo take advantag duled oard ge once TC Elect tronic Mastering 6000 MkII 999 101010 111111 1212 131313 141414 This disc ASX Cor published below ref closure is mad rporate Govern d on its websi ferences are m de with referen nance Counci ite its Corpor made to those nce to the Cor il in August 20 ate Governan policies and p rporate Gover 007 as amende nce Summary a procedures. rnance Princip ed in 2010 (“th and related Po ples and Recom he Principles” olicies and Pro mmendations ”). Ambertech ocedures, and s released by t h Limited has in the explan he nations The Boar Company rd sets out bel y’s practices d low its “if not depart from th why not” rep he Principles. ort in relation n to those mat tters or corpor rate governan nce where the Principle Current t Practice 1.1 1.2 1.3 2.1 2.2 2.3 2.4 2.5 2.6 3.2 3.3 Fo tho ormalise and dis ose delegated to sclose functions o management. s reserved to th he Board and Dis sen sclose the proc nior executives ess for evaluati . ng the perform mance of Dis ex pro sclose whether ecutives has tak ocess. r performance e ken place in acc valuation of sen cordance with t nior the disclosed A m majority of the Board should b be independent directors. Th he chairperson s should be an in dependent dire ector. Ro no oles of the chair ot be exercised b rperson and the by the same per e managing dire rson. ector should Th he Board should d establish a nom mination comm mittee. Outline from th websit ed in the Ambe he investor sect te. ertech Board Ch tion of the Amb harter available bertech Outline availab Amber ed in the Corpo ble from the inv rtech website. orate Governan estor section of nce Summary f the x Perform Manag Septem mance evaluatio ging Director an mber 2013. ons for the 2012 nd CFO were co e 2/13 year for the ompleted in The Bo extend 10% of directo oard has taken a ds to non-execu issued capital, ors being consid a view that inde utive directors w resulting in 3 o dered “independ ependence with less than out of 5 dent”. Satisfie ed. Satisfie ed. A copy Comm section y of the Remune ittee charter is n of the Ambert eration and Nom available from tech website. mination the investor Co per dir ompanies shoul rformance of th rectors. ld disclose the p he Board, its com process for eval mmittees and in luating the ndividual Outline availab Amber ed in the Corpo ble from the inv rtech website. orate Governan estor section of nce Summary f the Co spe ompanies shoul ecified in the re ld provide the in eporting guide t nformation abo to Principle 2. out the board Directo connec to seek Compa the Ch the Dir Corpor investo ors and Board c ction with their k independent p any’s expense, s hairman. Furthe rectors’ Report rate Governanc or section of the committees hav r duties and res professional adv subject to appro er information i and outlined in ce Summary ava e Ambertech w ve the right, in ponsibilities, vice at the oval of cost by is contained in n the e ailable from the ebsite. A copy investo y of the Code of or section of the f Conduct is ava e Ambertech w e ailable from the ebsite. A copy investo y of the Diversit or section of the ty Policy is avail e Ambertech w lable from the ebsite. 3.1 Es tablish a code o of conduct and disclose the cod de. Es cod tablish a policy de. y concerning div versity and disc close the Dis div sclose measure versity and prog able objectives gress towards a for achieving g gender achieving them . Given t measur gender rather t functio the small size o rable objective r diversity withi than focus on c onal areas. of Ambertech, th at this point is in the company change within d he only to increase y as a whole discrete 151515 3.4 4.1 4.2 4.3 4.4 5.1 5.2 6.1 6.2 7.1 7.2 7.3 7.4 8.1 8.2 8.3 sclose in the An Dis mployees in the em ositions and on t po nnual Report th whole organisa the Board. he proportion o ation, in senior of women executive Th he Board should d establish an au e. udit committee Str no dir ch ructure the aud on-executive dir rectors, and the air of the board dit committee so rectors, a major e chairperson is d and has at leas o that it consist rity of independ s independent a st three membe ts of only dent and not the ers. Th he audit commit ttee should hav ve a formal char rter x 20.9% women execut women (2012:21.4%) of n. 14.3% (2012: ives are women n on the Board. f Ambertech em 12.5%) of the se n. There are cur mployees are enior rrently no Satisfie ed. The Au only tw structu udit and Risk M wo members as ure of the board Management Co it would be ine d to have three m ommittee has efficient for the members. A copy Comm section y of the Audit an ittee Charter is n of the Ambert nd Risk Manag s available from tech website. gement m the investor Re qu an eport on the abo ualifications, nu nual report ove including n umbers and mee names of membe etings and atten ers and ndees in the Inform mation contained d in the Directo ors’ Report. Es en req ma tablish written sure complianc quirements and anagement leve n policies and pr ce with ASX Lis d to ensure acco el for that comp rocedures desig sting rule disclo ountability at se liance. gned to osure enior A copy Comm section y of the Continu unications Poli n of the Ambert uous Disclosure icy is available f tech website. e and from the invest tor Po dep ost relevant disc partures. closure policies on website and d disclose any Satisfie ed. See the Amb bertech websit te. De eff eff esign and disclo fective commun fective participa ose a communic nication with sh ation at general cations strategy hareholders and l meetings. y to promote d encourage A copy Comm section y of the Continu unications Poli n of the Ambert uous Disclosure icy is available f tech website. e and from the invest tor se the company Us we ebcasting, press mail. em y website to pro s releases and sh ovide informatio hareholder info on, including ormation by Satisfie ed. See the Amb bertech websit te. Th po sum he Board or app olicies on risk ov mmary of those ropriate board versight and ma e policies. committee sho anagement and ould establish d disclose a A copy from th y of the Risk Ma he investor sect anagement Poli tion of the Amb icy is available e. bertech website Th an he Board should d report agains d require manag st a risk manage gement to desig ement and cont gn, implement trol system. Satisfie ed. Th fro Sec sys ide he Board should om the Managin c 295A of the C stem of risk ma entifying financ d disclose wheth ng Director/CFO Corporations Ac anagement and cial reporting ri her it has receiv O that the decl ct is founded on an effective sys isks. ved assurance aration under n a sound stem of Satisfie assuran ed. The Manag nce to this effec ging Director an ct to the Board. e nd CFO provide Inf pro formation speci ovided. ified in the guid de on Principle 7 should be Th he Board should d establish a Re muneration Co ommittee. Cle rem ma early distinguis muneration from anagement sh the structure m that of execu e of non-execut utive directors a tive director and senior Inf pro formation speci ovided. ified in the guid de to Principle 8 8 should be Satisfie ed. A copy Comm section y of the Remune ittee charter is n of the Ambert eration and Nom available from tech website. mination the investor Satisfie ed. Inform mation contained d in the Directo ors’ Report. 161616 For the y ACN 079 year ended 30 J 9 080 158 June 2013 18 Directors’ R Report 28 Auditor’s Rep port & Independenc e Declaration 32 Statement o of Financial 33 Statement of f Changes in Position Equity 35 Notes to the e Financial Statements 63 Directors’ De eclaration 31 S Statement of P Profit or Loss and Other Compre O ehensive Incom me 34 Statement of Cash Flows 171717 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 2013 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 during the whole of the financial year and up to the date of this report 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. 181818 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 90 full time employees as at 30 June 2013 (2012: 101 employees). 191919 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 $2,212,000. This was improved from a loss after tax of $4,693,000 in the previous period. Total revenues for the financial year increased by 9.9% to $54,451,000 (2012: $49,568,000). 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 reasonably strong and stable financial position to expand and grow its current operations. The economic entity recorded positive operating cash flows of $118,000 for the year ended 30 June 2013 in difficult trading conditions. Borrowings were increased by $413,000 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 $3,501,000 to $9,342,000 as at 30 June 2013 (2012: $12,843,000). The net assets of the economic entity have also decreased by $2,148,000 to $13,157,000 as at 30 June 2013 (2012: $15,305,000). 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 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 2012‐13 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 2013‐14 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. 202020 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. In recent years the remuneration policy of Ambertech has had to take into account competing interests. On one hand, shareholder returns are inadequate, while Directors, faced with their responsibilities to the Company, need to retain an experienced, expert Board and executive management team. Directors are aware that these staff may have opportunities to pursue their careers in less challenging environments with prospects of greater remuneration. At the 2012 AGM, the non‐binding resolution to adopt the Remuneration Report was not approved. The Board believes that the predominant sentiment against the resolution was general criticism of the Company and other issues not related to executive remuneration. Whilst the Board understands the concerns expressed by shareholders, it maintains the view that it is in the shareholders' interests that the existing executive management team is retained, believing that they are best placed to lead the Company through its current challenges. Consistent with this view, there have been no significant changes to the remuneration strategy employed by the Board for the 2013 financial year. There has been no change in the remuneration of non‐executive directors since 1 January 2010. Remuneration Strategy 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. In response to the financial performance of the company the remuneration of non‐executive directors has remained unchanged since 1 January 2010. 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. As a result of the financial performance of the company, the Managing Director and CFO have foregone the entirety of their short term incentive and KPI salary components for each of the 2011, 2012 and 2013 financial years. 212121 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT REMUNERATION REPORT (continued) Other Executives Remuneration of other key executives is set by the Managing Director and Chief Financial Officer, with reference to guidelines set 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. 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 commitment. 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. The table below sets out the economic entity's key shareholder indicators for the past 5 financial years: Dividends paid (cents per share) Closing share price at 30 June ($) Share buy back ($'000) 2013 ‐ $0.23 ‐ 2012 ‐ $0.24 ‐ Net (loss) / profit after tax ($'000) (2,212) (4,693) Details of Remuneration 2011 0.5 $0.31 8 126 2010 5.5 $0.38 ‐ 2009 3.5 $0.45 44 1,606 1,806 Details of the remuneration of the directors and the key management personnel (as defined in AASB 124 Related Party Disclosures) of the economic entity are set out in the following tables. The key management personnel of the economic entity includes the following: Name Position Name Position P Wallace Non‐Executive Chairman R Glasson CFO, Company Secretary P Amos T Amos Managing Director P Simmons General Manager, Lifestyle Entertainment 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 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. 222222 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT REMUNERATION REPORT (continued) Elements of Remuneration 2013 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 R Caston P Simmons R McCleery 357,799 55,046 32,111 32,111 11,735 488,802 192,661 178,991 167,591 112,027 651,270 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 5,000 ‐ ‐ 5,000 32,202 4,954 2,890 2,890 23,265 66,201 17,340 19,541 21,277 ‐ 58,158 756 ‐ ‐ ‐ ‐ 756 ‐ ‐ ‐ ‐ ‐ 390,757 60,000 35,001 35,001 35,000 555,759 210,001 203,532 188,868 112,027 714,428 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 2.5% 0.0% 0.0% 0.7% 0.2% 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 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 4,954 2,890 2,890 2,770 43,204 15,688 15,120 13,934 12,988 1,921 ‐ 59,651 3,683 ‐ ‐ ‐ ‐ 3,683 36 36 36 ‐ ‐ 36 144 383,683 60,000 35,001 35,001 35,001 548,686 190,036 300,246 174,788 172,003 60,417 109,147 1,006,637 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% 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% 232323 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 (2012: $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 Overall Grant Date No. Value $ Exercise Period Start Finish Exercise Price Lapsed Vested Vested Unvested Lapsed No. $ No. % % % Directors P Amos 07/12/04 400,000 116,913 30/09/07 30/09/12 $ 1.35 100,000 14,850 100,000 14,850 100 ‐ 100 ‐ ‐ When exercisable, each option is convertible into one ordinary share on a 1:1 basis. 242424 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 100,000 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 236,528 4,313,843 5,484,625 2,883,556 2,995,826 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 2013: 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: Director P Wallace P Amos T Amos E Goodwin D Swift Board Meetings Attended 12 12 12 10 12 Held 12 12 12 12 12 Audit and Risk Management Committee Meetings Held 4 ‐ ‐ 4 ‐ Attended 4 ‐ ‐ 4 ‐ Nomination and Remuneration Committee Attended 2 ‐ ‐ ‐ 2 Held 2 ‐ ‐ ‐ 2 252525 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 following this report. 262626 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT INDEMNIFICATION OF OFFICERS The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of liability and the amount of the premium. ROUNDING The company is an entity to which Class Order 98/100 applies and, in accordance with this class order, amounts in this report and the financial statements have been rounded off to the nearest thousand dollars unless otherwise indicated. Signed in accordance with a resolution of directors. Director: P F Wallace P A Amos Dated this 26th day of September 2013. Sydney 272727 Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret St Sydney NSW 2000 Australia 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 2013, the consolidated statement of profit or loss and other 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 2(a), the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the 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. BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania. 282828 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 consolidated entity’s financial position as at 30 June 2013 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 2(a). Emphasis of Matter Without modifying our opinion, we draw attention to Note 2(a) in the financial report, which indicates that the consolidated entity incurred a net loss of $2,212,000 during the year ended 30 June 2013. In addition, the consolidated entity’s financing facility expires on 30 November 2013 and, at present, the result of negotiations to renew this facility is unknown. These conditions, along with other matters as set forth in Note 2(a), indicate the existence of a material uncertainty that may cast significant doubt about the consolidated entity’s ability to continue as a going concern and therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business. 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 2013. 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 2013 complies with section 300A of the Corporations Act 2001. BDO East Coast Partnership Arthur Milner Partner Sydney, 26 September 2013 292929 Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret St Sydney NSW 2000 Australia DECLARATION OF INDEPENDENCE BY ARTHUR MILNER TO THE DIRECTORS OF AMBERTECH LIMITED As lead auditor of Ambertech Limited for the year ended 30 June 2013, 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 of Ambertech Limited and the entities it controlled during the period. Arthur Milner Partner BDO East Coast Partnership Sydney, 26 September 2013 BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania. 303030 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2013 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 (Loss) before income tax expense Income tax benefit (Loss) for the year Other comprehensive income Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign operations Other comprehensive income for the year, net of tax Total comprehensive income for the year Economic Entity Note 2013 $'000 2012 $'000 3 4 3 4 4 4 5 54,451 (41,828) 12,623 12 (9,060) (1,328) (1,348) (1,926) (350) (424) (555) ‐ ‐ ‐ (849) (3,205) 993 (2,212) 49,568 (34,357) 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) 63 63 12 12 (2,149) (4,681) Earnings per share Basic earnings per share (cents) Diluted earnings per share (cents) 25 25 (7.2) (7.2) (15.4) (15.4) The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the attached notes. 313131 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2013 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 2013 $'000 2012 $'000 23 6 7 8 10 11 5 12 13 14 14 13 5 15 16 2,843 8,935 10 12,835 24,623 1,794 40 2,421 4,255 2,495 6,841 133 12,550 22,019 1,969 45 1,428 3,442 28,878 25,461 9,983 3,844 1,454 15,281 299 91 50 440 15,721 13,157 11,138 (69) 2,088 13,157 4,839 3,427 910 9,176 801 121 58 980 10,156 15,305 11,138 (118) 4,285 15,305 The consolidated statement of financial position is to be read in conjuntion with the attached notes. 323232 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2013 Share Capital $'000 Option Reserve $'000 Foreign Currency Translation Reserve $'000 Retained Earnings $'000 Total Equity $'000 Economic Entity Balance as at 30 June 2011 Loss for the year Other comprehensive income for the year Total comprehensive income for the year Transactions with equity holders: Costs of share based payments Total transactions with equity holders 11,138 ‐ ‐ ‐ ‐ ‐ Balance as at 30 June 2012 11,138 Loss for the year Other comprehensive income for the year Total comprehensive income for the year Transactions with equity holders: Costs of share based payments Total transactions with equity holders ‐ ‐ ‐ ‐ ‐ Balance as at 30 June 2013 11,138 28 ‐ ‐ ‐ (14) (14) 14 ‐ ‐ ‐ (14) (14) ‐ (144) ‐ 12 12 ‐ ‐ 8,960 (4,693) ‐ 19,982 (4,693) 12 (4,693) (4,681) 18 18 4 4 (132) 4,285 15,305 63 63 ‐ ‐ ‐ (2,212) ‐ (2,212) 15 15 (2,212) 63 (2,149) 1 1 (69) 2,088 13,157 The consolidated statement of changes in equity is to be read in conjunction with the attached notes. 333333 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2013 Economic Entity Note 2013 $'000 2012 $'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 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 Proceeds from borrowings Net cash provided by financing activities 23 Net increase/ (decrease) in cash and cash equivalents held Cash and cash equivalents at beginning of year Effect of exchange rate changes on the balance of cash and cash equivalents held in foreign currencies at the beginning of the financial year Cash and cash equivalents at end of year 23 The consolidated statement of cash flows is to be read in conjunction with the attached notes. 57,766 (53,251) 34 (424) ‐ 124 (4,131) 118 (137) (35) (172) 404 404 350 2,495 (2) 2,843 62,649 (58,236) 52 (438) (132) 325 (3,460) 760 (1,785) (13) (1,798) 400 400 (638) 3,134 (1) 2,495 343434 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 24 September 2013 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. These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001, as appropriate for profit oriented entities. The financial statements have been prepared under the historic cost convention. 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 During the year the economic entity breached its loan covenants in relation to its financing facilities. These facilities expire on 30 November 2013, and negotiations to renew the facility cannot occur until results for the period to 30 September 2013 are known. In addition, whilst the economic entity had positive operating cash flows for the year of $118,000, it made a loss after tax for the year ended 30 June 2013 of $2,212,000. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the economic entity's ability to continue as a going concern and therefore, the economic entity may be unable to realise its assets and discharge its liabilities in the normal course of business. After taking into account all of the available information, including the following factors: ‐ ‐ ‐ Interim results for the period to 31 August 2013 have exceeded budget; Significant write down of inventory is 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; and The Lifestyle Entertainment segment has been restructured to reduce fixed costs and overheads, providing ongoing savings, ‐ 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. Should the economic entity be unable to continue as a going concern it may be required to realise its assets and discharge its liabilities other than in the normal course of business and at amounts different to those stated in the financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount of liabilities that might result should the company be unable to continue as a going concern and meet its debts as and when they fall due. 353535 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) Reclassification of Rebates The economic entity has amended the classification of rebates provided to customers for the 2013 financial year. The comparative numbers for revenue, sale of goods and services, and cost of sales have been amended by $1,821,000 to relect this change in classification. The change in classification does not impact the net loss of the economic entity in either year. Accounting Standards not Previously Applied The economic entity has adopted the following new and revised Australian Accounting Standards issued by the AASB which are mandatory to apply to the current period. Disclosures required by these Standards that are deemed material have been included in these financial statements on the basis that they represent a significant change in information from that previously made available. (i) AASB 2011‐9 Amendments to Australian Accounting Standards ‐ Presentation of Items of Other Comprehensive Income The consolidated entity has applied AASB 2011‐9 amendments from 1 July 2012. The amendments require grouping together of items within other comprehensive income on the basis of whether they will eventually be "recycled" to the profit or loss (reclassification adjustments). The change provides clarity about the nature of items presented as other comprehensive income and the related tax presentation. The amendments also introduced the term 'Statement of profit or loss and other comprehensive income' clarifying that there are two discrete sections, the profit or loss section (or separate statement of profit or loss) and the other comprehensive income section. 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 2013, but have not been applied in preparing these financial statements. (i) (ii) AASB 9 Financial Instruments (effective from 1 January 2015) 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 returns. (iii) AASB 12 Disclosure of Interestes in Other Entities (effective from 1 January 2013) AASB 12 provides the disclosure requirements for entities that have an interest in a subsidiary, a joint arrangement, an associate or an unconsolidated structured entity. As such, it pulls together and replaces disclosure requirements from many existing standards. (iv) AASB 13 Fair Value Measurement (effective from 1 January 2013) AASB 13: (a) (b) (c) defines fair value; sets out in a single IFRS a framework for measuring fair value; and requires disclosures about fair value measurements. (v) AASB 119 Employee Benefits (effective from 1 Janaury 2013) and AASB 2011‐10 Amendments to Australian Accounting Standards arising from AASB 119 (effective from 1 January 2013). The amendments changed the definition of short‐term employee benefits, from "due to" to "expected to" be settled within 12 months. This will require annual leave that is not expected to be wholly settled within 12 months to be discounted allowing for expected salary levels in the future period when the leave is expected to be taken. The adoption of the revised standard from 1 July 2013 is expected to reduce the reported annual leave liability and increase disclosures of the economic entity. 363636 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (a) Overall Policy (continued) (vi) AASB 2010‐7 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) (vii) AASB 2011‐4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements [AASB 124] (effective from 1 July 2013) (viii) 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 debtor's 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). Provision for impairment of inventories The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that affect inventory obsolescence. 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). 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. The provision is based on estimates made from historical warranty costs associated with similar products. 373737 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (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. (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 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. 383838 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (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. (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 profit or loss and other comprehensive income. 393939 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (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. Due to their short term nature, they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. (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 profit or loss and other 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 the Black‐Scholes 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. 404040 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 benefit 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. 414141 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 prevailing at the balance sheet date. The revenues and expenses of foreign operations are translated to Australian dollars at rates approximating to the exchange rates prevailing 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. 424242 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 loss on disposal of plant and equipment Economic Entity 2013 2012 $'000 $'000 54,417 34 54,451 49,516 52 49,568 12 12 19 19 41,828 2,177 34,357 18 8,727 333 9,060 8,907 456 9,363 107 43 144 16 310 40 166 833 1 123 29 34 7 193 52 16 1,315 1 Net fair value gain/(loss) on derivative financial instruments ‐ forward exchange contracts 49 (18) 434343 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 Reconciliation between income tax expense and prima facie tax on accounting (loss) (Loss) before income tax expense Tax at 30% (2012:30%) 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 2013 2012 $'000 $'000 ‐ 8 (1,001) (993) ‐ 2 (556) (554) (3,205) (5,247) (962) (1,575) 7 ‐ (46) 8 (993) 449 76 12 225 24 781 23 32 766 33 2,421 48 2 50 9 735 275 2 (554) 438 29 11 32 55 129 22 15 675 22 1,428 57 1 58 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 2013. 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. Tax Losses The Directors are satisfied that forecast results provide sufficient evidence that the economic entity will be able to utilise tax losses against future taxable profits of the economic entity. 444444 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 (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 $10,000 (2011: $133,000) 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. 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 2013 2012 $'000 $'000 8,322 (81) 8,241 490 49 155 8,935 6,825 (186) 6,639 56 ‐ 146 6,841 186 61 (166) 81 26 176 (16) 186 13,410 2,035 15,445 (2,610) 12,835 12,255 728 12,983 (433) 12,550 Country of Incorporation Percentage Owned 2013 2012 Australia Australia 100% 100% Australia New Zealand 100% 100% 100% 100% 454545 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 2013 $'000 2012 $'000 2013 $'000 2012 $'000 2013 $'000 2012 $'000 Economic Entity Plant and equipment Furniture and fittings Leasehold improvements Leased plant and equipment Total plant and equipment 1,297 482 1,412 170 3,361 1,258 482 1,345 170 3,255 (1,085) (272) (177) (33) (1,567) (1,004) (232) (33) (17) (1,286) 212 210 1,235 137 1,794 254 250 1,312 153 1,969 Reconciliation of carrying amounts: 2013 Economic Entity Balance at the beginning of the year Additions Disposals Depreciation and amortisation expense Carrying amount at the end of the year 2012 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 $'000 254 66 (1) (107) 212 250 4 (1) (43) 210 1,312 67 ‐ (144) 1,235 Plant and equipment Furniture and fittings Leasehold improvements $'000 $'000 $'000 292 85 ‐ (123) 254 72 210 (3) (29) 250 16 1,330 ‐ (34) 1,312 Leased plant and equipment $'000 Total $'000 153 1,969 ‐ ‐ (16) 137 Leased plant and equipment $'000 ‐ 160 ‐ (7) 153 137 (2) (310) 1,794 Total $'000 380 1,785 (3) (193) 1,969 464646 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 Reconciliation of written down values: Opening balance at 1 July 2012 Additions Impairment Amortisation expense Closing balance at 30 June 2013 Goodwill Website $'000 ‐ $'000 45 ‐ ‐ ‐ ‐ 35 ‐ (40) 40 Total $'000 45 35 ‐ (40) 40 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 NOTE 13: OTHER FINANCIAL LIABILITIES Current Bills payable (a) Lease Liability (b) Non Current Lease Liability (b) Economic Entity 2013 2012 $'000 $'000 2,970 (2,970) ‐ 173 (133) 40 40 2,970 (2,970) ‐ 138 (93) 45 45 7,684 2,299 ‐ 9,983 1,855 53 2,700 195 600 ‐ 5,403 3,814 30 3,844 2,990 1,831 18 4,839 1,201 84 667 205 155 10 2,322 3,400 27 3,427 91 121 474747 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Economic Entity 2013 $'000 2012 $'000 NOTE 13: OTHER FINANCIAL LIABILITIES continued Details of the economic entity's exposure to interest rate changes on other financial liabilities is 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, amended covenants were put in place for the remaining term of the facility. The facility has an expiry date 30 November 2013. The facility is secured by a charge over the assets of Amber Technology Limited. Guarantees are in place to a limit of $4,175,000 (2012:$4,800,000). The value of assets at balance date is $29,350,000 (2012: $26,462,000). (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 Employee benefits Non Current Employee benefits 254 1,200 1,454 299 299 244 666 910 801 801 (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 2012 Additional provision recognised Reductions resulting from payments Closing balance at 30 June 2013 Service warranty $'000 244 264 (255) 253 (c) Amounts not expected to be settled within the next twelve months: The current provision for long service leave includes all unconditional entitlements where employees have completed the required period of service. The entire amount is presented as current, since the economic entity does not have an unconditional right to defer settlement. However, based on past experience, the consolidated entity does not expect all employees to take the full amount of accrued long service leave or require payment within the next twelve months. The following amounts reflect leave that is not expected to be taken within the next twelve months: Long service leave obligation expected to be settled after 12 months 379 429 484848 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 15: SHARE CAPITAL Ordinary Shares fully paid (no par value) 30,573,181 30,573,181 11,138 11,138 Economic Entity 2013 Shares 2012 Shares Economic Entity 2013 2012 $'000 $'000 Details Balance 30 June 2012 Shares bought back Balance 30 June 2013 Share Buy Back No of shares 30,573,181 ‐ 30,573,181 $'000 11,138 ‐ 11,138 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 2013 the company bought back nil shares (2012: nil) shares. 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. NOTE 16: RESERVES Foreign currency translation reserve (a) Share based payments reserve (b) 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(r). 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 (a) 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. (b) The economic entity had no commitments for capital expenditure as at 30 June 2013 (2012: Nil) (69) ‐ (69) (132) 14 (118) 1,316 5,411 6,777 13,504 867 5,011 8,124 14,002 494949 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 2013 $'000 2012 $'000 685 685 685 685 No material losses are anticipated in respect of any of the above contingent liabilities. NOTE 19: EVENTS SUBSEQUENT TO REPORTING DATE 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 2013 $ 2012 $ 1,145,072 124,359 756 1,270,187 1,448,640 102,855 3,827 1,555,323 63,007 50,540 79,200 42,000 6,000 148,207 6,000 98,540 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. 505050 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 100,000 options lapsed (2012: 125,000) and no options were forfeited (2012: 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 beginning 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 2013 2012 100,000 225,000 ‐ ‐ 100,000 100,000 Date Granted Exercise Period Start Finish Exercise Price 2013 07/12/04 30/09/07 30/09/12 $1.35 Weighted average exercise price 2012 07/12/04 07/12/04 30/09/06 30/09/07 30/09/11 30/09/12 $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 100,000 100,000 $1.35 (100,000) (100,000) $1.35 ‐ ‐ ‐ ‐ ‐ ‐ 125,000 100,000 225,000 $1.35 (125,000) ‐ (125,000) $1.35 ‐ 100,000 100,000 $1.35 ‐ 100,000 100,000 $1.35 The weighted average remaining contractual life of share options outstanding at the end of the period was nil years (2012: 0.25 years). 515151 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 28,247 53 28,300 1,410 (1,212) 198 23,278 37 23,315 (1,226) (1,106) (2,332) 2,892 75 2,967 (129) ‐ (129) 11,604 11,727 1,857 6,479 2,245 1,005 ‐ (165) (165) ‐ ‐ ‐ ‐ ‐ ‐ ‐ 54,417 ‐ 54,417 55 (2,318) (2,263) (553) (2,816) (389) (3,205) 993 (2,212) 25,188 3,619 28,807 9,729 5,871 15,600 172 172 350 350 Other ‐ Acquisition of non current segment assets ‐ Depreciation and amortisation of segment assets 68 136 101 203 3 11 Professional Lifestyle Entertainment New Zealand (b) Segment information 2013 Revenue ‐ ‐ Revenue from external customers Total segment revenue Inter‐segment revenue Result ‐ Underlying EBIT ‐ Abnormal Inventory Obsolescence ‐ 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 525252 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 22: SEGMENT REPORTING (continued) 2012 Revenue ‐ Total segment revenue ‐ Inter‐segment revenue Revenue from external customers EBIT Result ‐ Segment EBIT ‐ Unallocated / corporate result ‐ ‐ 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 Professional Lifestyle Entertainment New Zealand Eliminations $'000 $'000 $'000 $'000 Economic Entity $'000 19,495 210 19,705 27,542 ‐ 27,542 2,479 ‐ 2,479 ‐ (210) (210) (906) (3,031) 43 6,407 13,835 1,295 2,234 2,399 378 49,516 ‐ 49,516 (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 ‐ ‐ ‐ ‐ ‐ Other ‐ Acquisition of non current segment assets 717 1,075 ‐ Depreciation and amortisation of segment assets 93 140 6 12 535353 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 2013 $'000 2012 $'000 Carrying Amount of Segment Assets 2013 $'000 2012 $'000 Acquisition of Non‐ Current Assets 2013 $'000 2012 $'000 Geographical Location ‐ Australia ‐ New Zealand (d) Other segment information 51,525 2,892 54,417 47,037 2,479 49,516 23,331 1,857 25,188 20,242 1,295 21,537 169 3 172 1,792 6 1,798 (i) Accounting Policies 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. 545454 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 the following amounts: Cash on hand At call deposits with financial institutions (ii) Reconciliation of net cash provided by operating activities to loss after income tax (Loss) for the year Depreciation and amortisation Impairment of goodwill Net loss on disposal of plant and equipment Foreign exchange gains Non‐cash share based payments Changes in operating assets and liabilities (Increase)/Decrease in trade and other receivables (Increase)/Decrease in inventories Decrease in tax receivable Increase/(Decrease) in payables (Decrease)/Increase in lease liabilities Increase/(Decrease) 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 2013 2012 $'000 $'000 3 2,840 2,843 3 2,492 2,495 (2,212) (4,693) 350 ‐ 1 (12) 1 (2,013) (200) 124 5,066 (28) 34 (993) 118 245 2,970 3 (19) 4 6,291 1,032 311 (4,756) 149 (221) (556) 760 555555 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. 565656 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 2013 2012 $'000 $'000 4,977 2,280 603 381 8,241 81 8,322 3,156 2,347 331 805 6,639 186 6,825 The economic entity does not have other receivables which are past due (2012: 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 2013 Trade and other payables Commercial Bills Lease Liability Economic Entity 2012 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 9,983 3,814 5 13,802 4,839 3,400 6 8,245 10 10 ‐ ‐ ‐ ‐ 15 15 ‐ ‐ ‐ ‐ 7 7 14 14 ‐ ‐ 91 91 ‐ ‐ 121 121 Total $'000 9,983 3,814 121 13,918 4,839 3,400 148 8,387 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. 575757 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. These 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 2013 $'000 2012 $'000 2013 2012 2,037 ‐ 2,359 515 0.9576 0 0.9737 0.9719 138 259 0.7225 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% 2013 2012 $'000 $'000 Strengthening of 10% 2013 $'000 2012 $'000 (168) (168) 183 183 200 200 (120) (120) 585858 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 2013 % 2012 % Balance 2013 $'000 2012 $'000 Commercial Bills 13 6.12% 6.54% 3,814 3,400 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 2013, with all other variables remaining constant: Impact on profit Impact on equity Increase of 1% of average interest rate 2013 $'000 2012 $'000 Decrease of 1% of average interest rate 2013 2012 $'000 $'000 (38) (38) (33) (33) 38 38 33 33 Net Fair Values The net fair values of assets and liabilities approximate their carrying values. No financial assets or liabilities are readily traded on organised markets. Capital Management The Board's aim is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. Total capital is defined as shareholders' equity. The Board monitors the return on capital, which is defined as net operating income divided by total shareholders' equity. The Board also establishes a dividend payout policy which is targeted as being greater than 50% of earnings, subject to a number of factors, including the capital expenditure requirements and the company's financial and taxation position. Dividend payout for the year ended 30 June 2013 is nil (2012: nil). There were no changes to the economic entity's approach to capital management during the financial year. 595959 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 25: EARNINGS PER SHARE Basic earnings per share (cents) Weighted average number of ordinary shares (number) Earnings used to calculate basic earnings per share ($) Diluted earnings per share (cents) Weighted average number of ordinary shares (number) Earnings used to calculate diluted earnings per share ($) Economic Entity 2013 2012 (7.2) 30,573,181 (2,212,000) (15.4) 30,573,181 (4,693,000) (7.2) 30,573,181 (2,212,000) (15.4) 30,573,181 (4,693,000) (a) The effect of the Executive Share Option Plan options on issue is not considered dilutive because based on conditions at the date of this report, it is considered unlikely that these options would be converted into ordinary shares. NOTE 26: DIVIDEND FRANKING CREDITS In respect of dividends first recognised as a liability during the period or paid in the period without previously being recognised as a liability Dividends that have been fully franked: Amount in aggregate ($'000) Cents per share Tax rate Amount of franking credits available for subsequent reporting periods ($'000) ‐ ‐ 30% 6,146 ‐ ‐ 30% 6,146 606060 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Economic Entity 2013 2012 $ $ 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. 114,463 114,560 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) 8,978 10,000 123,441 124,560 Tax compliance services, including review of company income tax returns 18,460 19,830 Other practices ‐ PKF NZ Tax compliance services, including review of company income tax returns Total remuneration for non‐audit services 2,504 20,964 19,830 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. 616161 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 of the parent entity Total comprehensive income of the parent entity Guarantees entered into by the parent entity in relation to the debts of its subsidiaries The parent entity and some of its subsidiaries are party to a deed of cross guarantee under which the parent guarantees the debts of the others. Contingent Liabilites The parent entity had no contingent liabilities as at 30 June 2013 (2012: Nil). Capital Commitments The parent entity had no capital commitments for property, plant and equipment as at 30 June 2013 (2012: Nil) Parent Entity 2013 $'000 2012 $'000 11,046 15,604 1,462 1,462 11,027 15,584 1,462 1,462 11,138 11,138 ‐ 3,004 19 19 14 2,970 13 13 626262 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' DECLARATION The directors of the company declare that: 1. The financial statements, comprising the statement of profit or loss and other 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) (b) comply with Accounting Standards and the Corporations Regulations 2001 ; and give a true and fair view of the consolidated entity's financial position as at 30 June 2013 and of its performance for the year ended on that date. 2. 3. 4. 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. 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 Director P A Amos Director Dated this 26th day of September 2013. Sydney 636363 The follo owing informa ation is require ed by the Aus stralian Securi ities Exchange e Limited. Distrib bution of eq quity securi ity by size o : of holding: - - - - and 1,000 5,000 10,000 100,000 1 over 1 1 1 1,001 5,001 1 10,001 1 1 100,001 l Total of Number o shareholders s 78 8 2 92 50 0 73 3 3 23 Ordin Number of nary Shares 70,400 329,399 432,699 2,398,282 27,342,401 2 % of total capital 0.23 1.08 1.42 7.84 89.43 6 316 30,573,181 100.00 mber of securit y investors ho olding less tha an a marketab ble parcel of 2, 778 securities s is 103 and the ey hold 121,74 48 The num s. securities Equity Security H Holders The twe nty largest sh hareholders a as at 16 Octob e: ber 2013 were Rank T Twenty largest ho olders (Employee Sup perannuation n Fund) amily Super Fu und A/C) und 1) per Fund) mited (A K Fu Ltd (Amos Sup td tems Pty Ltd tems Pty Ltd ( ralia Limited Limited d d (Wygrin Pe Limited Australia Pty L ech Talon A Pty Lim 1 T Crowton Pty L 2 C Howbay Pty Lt 3 H Wavelink Syst 4 W Wavelink Syst 5 W Nanyang Austr 6 N Appwam Pty L 7 A Wygrin Pty Lt 8 W Wygrin Pty Lt 9 W Crowton Pty L 10 C JH H Nominees A 11 Mr Joseph Gre 12 M Milton Yannis 13 M Cleery Mr Ralph McC 14 M ul Grech & Ms s Deborah Lee Mr Joseph Pau 15 M o odney Hariono Mr Stephen Ro 16 M Betty Le Corn Cornu & Mrs B Mr David Le C 17 M d Realcal Pty Ltd 18 R al Pty Ltd Wallace Capit 19 W Management Velkov Funds M 20 V Ltd (Harry Fa ension Fund) Limited e Grech nu Source: Link Market Services f Number of shares % of tota capita al al 4,245,667 3,231,681 2,883,556 2,784,625 2,650,000 2,000,464 1,958,325 1,507,556 1,488,270 1,082,162 993,250 413,045 404,348 357,599 333,261 225,070 220,000 200,000 152,600 150,000 13.89 9 7 10.57 9.43 3 9.11 1 7 8.67 4 6.54 6.41 1 4.93 3 7 4.87 3.54 4 3.25 5 1.35 5 2 1.32 1.17 7 1.09 9 0.74 4 2 0.72 0.65 5 0.50 0 9 0.49 27,281,479 3 89.23 646464 Substan ntial Share holders Substant the comp tial shareholde pany under th ers with a rele e Corporation evant interest ns Act 2001 in of 5% or mor nclude: Shareholde er Management y Ltd n Investment k Systems Pty n Pty Limited Pty Ltd Pty Ltd Accretion Wavelink Crowton Wygrin P Howbay Appwam m Pty Limited e of total issue ed shares, bas sed on notifica ations provide ed to Num mber of shares % of total capital 6,246 5,484 4,313 2,995 2,883 1,950 6,131 4,625 3,843 5,826 3,556 0,025 20.43 17.94 14.11 9.80 9.43 6.38 On-Ma arket Buy B Back On 2 Sep ordinary unlimited ptember 2005, shares on issu d. The compa , the company ue. On 28 Sep any has not lod y lodged an Ap ptember 2006 dged an Appe ppendix 3C an the company endix 3F to fin nnouncing an lodged an Ap nalise the buy on-market bu ppendix 3D am back as at 16 uy-back of up mending the b October 2013 to 1,543,150 buy-back dura . ation to The buy b year ende back is a part ed 30 June 201 of the compa 13 no shares w any's capital m were bought b management an back by the com nd is designed mpany. d to improve s shareholder re eturns. Durin ng the Voting rights On a show sharehold w of hands, on der. ne vote for eve ery registered d shareholder, and for a poll l, one vote for every share he eld by a regist tered 656565 Register red Office Banke ers Sydn ney Head Of ffice Unit 1, 2 Warriew T: +61 2 2 Daydream S wood NSW 2 9998 7600 Street 2102 Comm Level 1 North monwealth Ba 19, 111 Pacific Sydney NSW ank of Austr c Highway W 2060 alia Unit War T: +6 am Street 1, 2 Daydrea riewood NSW W 2102 00 61 2 9998 760 Directo rs Audito ors Melb bourne hairman naging Direct tor Peter F W Peter A A Tom R A Edwin F David R Wallace - Ch Amos - Man Amos F Goodwin R Swift BDO E Level 1 Sydney T: + 61 artnership East Coast Pa 11, 1 Margare t Street 0 y NSW 2000 2 9251 4100 igh Street Suite Kew T: +6 e 12, 79-83 Hi VIC 3101 61 3 9853 040 01 Compan y ny Secretary ASX L Listing Brisb bane Robert J J Glasson AMO Share R Registry Unit Unde T: +6 an Rd 8, 2994 Log erwood QLD D 4119 7 61 7 3341 6487 Auck kland www. www. ambertech.c amberonline com.au e.com.au Link Ma Locked B South Sy arket Service Bag A14 ydney NSW es 1235 Or e Street Level 12 Sydney N T: +61 2 T: 1300 5 , 680 George NSW 2000 8280 7111 or 554 474 a Road and 0672 3, 77 Porana nfield, Auckla w Zealand Unit Glen New T: + 6 64 9 443 075 53 666666
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