More annual reports from Audio Pixels Holdings Limited:
2023 Reportwww.audiopixels.com.au
Audio Pixels Holdings Limited
ACN 094 384 273
2013
ANNUAL REPORT
CORPORATE DIRECTORY
Directors
Fred Bart (Chairman)
Ian Dennis
Cheryl Bart AO
Company Secretary
Ian Dennis
Registered Off ice
Israel Corporate Off ice
Level 12
75 Elizabeth Street
SYDNEY NSW 2000
Australia
3 Pekris Street
Rehovot
ISRAEL 76702
Telephone: +61 2 9233 3915
Facsimile: +61 2 9232 3411
Email:
iandennis@audiopixels.com.au
Telephone: + 972 73 232 4444
+ 972 73 232 4455
Facsimile:
danny@audiopixels.com
Email:
Bankers
St George Bank
Level 13
182 George Street
SYDNEY NSW 2000
Australia
Website
www.audiopixels.com.au
Auditor
Deloitte Touche Tohmatsu
Chartered Accountants
Eclipse Tower
Level 19
60 Station Street
Parramatta NSW 2150
Australia
Share Registry
Computershare Investor Services Pty Limited
Level 3
60 Carrington Street
Sydney NSW 2000
GPO Box 7045
Sydney NSW 1115
Australia
Telephone: 1300 855 080 or
Facsimile:
+61 3 9415 5000 outside Australia
1300 137 341
4658 Designed and Produced by RDA Creative www.rda.com.au
CONTENTS
Directors’ Report
Auditor’s Independence Declaration
Independent Audit Report
Directors’ Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes To and Forming Part of the Financial Statements
ASX Additional Information
Twenty Largest Ordinary Shareholders
Corporate Governance Statement
2
9
10
12
13
14
15
16
17
46
47
48
1
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 DIRECTORS’ REPORT
The Directors of Audio Pixels Holdings Limited submit herewith the financial report of the company for the financial
year ended 31 December 2013. In order to comply with the provisions of the Corporations Act 2001, the directors report
as follows:
The names and particulars of the directors of the company during or since the end of the financial year are:
Name
Fred Bart
Ian Dennis
Cheryl Bart AO
Particulars
Chairman and Chief Executive Officer. A director since 5 September 2000. He has been
Chairman and Managing Director of numerous private companies since 1980, specialising
in manufacturing, property and marketable securities. He is a member of the Australian Institute
of Company Directors.
Non executive director and Company Secretary. Ian is a chartered accountant with experience
as director and secretary in various public listed and unlisted technology companies. He has
been involved in the investment banking industry and stockbroking industry for the past twenty
five years. Prior to that, Ian was with KPMG, Chartered Accountants in Sydney. Appointed to the
Board on 5 September 2000. He is a member of the Australian Institute of Company Directors.
Non executive director. Appointed to the Board on 26 November 2001. Cheryl Bart is a lawyer and
company director. She is non‑executive director of ABC (Australian Broadcasting Corporation),
SA Power Networks (formerly ETSA Utilities), Spark Infrastructure Limited, SG Fleet Australia Limited,
Football Federation of Australia (FFA), Australian Himalayan Foundation, and the Local Organising
Committee of the 2015 Australian Asian Cup. She is immediate past Chairman of the
South Australian Film Corporation, FARE (Alcohol Education and Rehabilitation Foundation)
and ANZ Trustees Limited. She is a fellow of the Australian Institute of Company Directors and
Patron of SportsConnect.
Directorships of Other Listed Companies
Directorships of other listed companies held by directors in the 3 years immediately before the end of the financial year
are as follows:
Name
Fred Bart
Ian Dennis
Cheryl Bart
Company
Electro Optic Systems Holdings Limited
Electro Optic Systems Holdings Limited
Spark Infrastructure Group Limited
SG Fleet Australia Limited
Period of directorship
Since May 2000
Since May 2000
Since November 2005
Since February 2014
Principal Activities
The principal activity of the Company is an investment in Audio Pixels Limited of Israel. Audio Pixels Limited is engaged in
the development of digital speakers.
Results
The net loss for the financial year ended to 31 December 2013 was $2,147,576 (31 December 2012 ‑ $2,615,412).
2
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 DIRECTORS’ REPORT
Dividends
The directors recommend that no dividend be paid and
no amount has been paid or declared by way of dividend
since the end of the previous financial year and up to the
date of this report.
Review of Operations
In February 2013, 30,183 new ordinary shares were
issued at $1.59 raising $48,123. In March 2013 1,066,879
options were exercised at 38 cents each raising $405,414.
Following shareholder approval at the Annual General
Meeting held on 10 May 2013, interests associated
with Mr Fred Bart took up a further 200,000 shares at
$5.00 each raising an additional $1,000,000. The placement
terms were on the same basis as the institutional and
sophisticated investors took up shares in December 2012.
In total, 1,297,062 new ordinary shares were issued during
the year bringing the number of ordinary shares on issue
to 25,707,047 shares.
The Company continues to lease its commercial property
known as Lots 3, 4, 25 and 45 at 360 Pacific Highway,
Crows Nest to Sydneyside (Australia) Pty Limited with a
lease to 30 September 2016. The property has been put
up for sale in November 2013 as the property is surplus to
the requirements of the Group.
Digital Speakers
During the reporting period the Company continued
development of its digital speakers technologies and
its commercialisation into a high demand product;
including but not limited to activities under development
agreements with leading consumer, electronic,
and semiconductor manufacturers.
The primary achievements of the past year were technical
in nature; principally evolving prior development phases that
were focused on core technologies into a mass‑produced
commercially viable product. Management’s focus has
been on the implementation of Phase‑III of the previously
detailed four‑phase commercialisation plan. The significance
of this phase is in its application of the wealth and breadth
of knowledge and knowhow accumulated throughout
the company’s history, into the world’s first digital speaker
microchip that is capable of reproducing hi‑quality audio.
The chips resulting from this phase of development
fundamentally represent the company’s primary product,
and as such will also serve as early engineering samples for
select customers.
The technology developed, refined and optimised
over past years has enabled the company to enter into
this phase of development with the highest degree of
confidence possible to produce a working product of
mass‑market appeal. The marketplace continues to eagerly
anticipate achievement of this milestone, with countless
inquiries from industry leaders arriving daily.
Phase III involves the amalgamation of numerous critical
components, paramount among them is the flawless
fabrication of the micro electro mechanical structures
(the MEMS chips) in accordance with design criteria that
are compliant with specific commercial characteristics,
including (but not limited to):
Increased pixel count (and density) from 256 to
1024 elements per chip
Implementation of countermeasures intended to
mitigate fabrication risks
Implementation of design considerations for
integration of ASIC driver
Implementation of design considerations for
chip packaging
Implementation of design considerations to improve
yield of mass fabrication
Phase III also involved the evolution of the chips
drive electronics. The company applied the knowledge
obtained from previously designed and proven
electronic circuitry, into a highly sophisticated High
Voltage Driver ASIC (HVDA). The HVDA which will be
integrated into the final speaker chip, serves a multitude
of purposes principle among them is the utilisation of
existing device and system voltages for the precision
functionality of the MEMS component. Aided by one
of the world’s leading ASIC design houses, the ASIC
design is on schedule to be completed and fabricated
in accordance with the prescribed timelines.
The company’s collaboration with an industry leader
in advanced materials has also enabled the timely
completion of the chips initial package design.
This package design is intended to serve the chips
packaging needs through mass production, at which
point the current design will be transitioned from a
prefabricated package to the automated application
of the package during the chips assembly process.
3
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 DIRECTORS’ REPORT
Review of Operations (Cont.)
Changes in State of Affairs
Phase III also necessitated a complete overhaul of the
company’s test and measurement capabilities. The new
generation of the chip, in particular the increased pixel
count as well as the emphasis on the acoustic output of
the chip requires far more complex and sophisticated test
and measurement systems. Additionally, the exponential
increase in pixels, chips, numbers and variety of test
vectors necessitates extremely high speed of operation,
of course without compromise in precision.
As pioneers in the field of digital speakers certainly one
that utilises an array of micro electro mechanical structures,
this meant that the company itself needed to design
and build the test systems in‑house and from scratch.
This massive undertaking included design of highly
complex electronic drive and test circuitry, high precision
optical and mechanical systems, data and communications
systems as well as all the drive, test operational algorithms
and control software. The systems which perform a
multitude of electrical, mechanical, optical and acoustics
tests of each and every wafer, chip and pixel) is in the final
stages of fabrication, expected to be fully operational
well prior to the receipt of the first MEMS chips from the
silicon fabricators.
In parallel the company has also developed all the systems
needed to permit management the timely demonstration
of the chips capabilities to select audiences.
During this reporting period the company continues to
expand its formidable IP portfolio; now encompassing
52 patent applications with 32 Patents filed in
various jurisdictions.
Despite the broad expansion of activities the company
has been able to maintain its current staff levels without
any additional hiring’s.
Further information concerning the operations and
financial condition of the entity can be found in the
financial report and in releases made to the Australian
Stock Exchange (ASX) during the year.
There was no significant change in the state of affairs of
the company or the consolidated entity other than that
referred to in the financial statements or notes thereto.
Significant Events After
Balance Date
There has not been any matter or circumstance that
has arisen since the end of the financial year which
is not otherwise dealt with in this report or in the
financial statements, that has significantly affected or may
significantly affect the operations of the company or the
consolidated entity, the results of those operations or the
state of affairs of the company or the consolidated entity
in subsequent financial years.
Future Developments
The consolidated entity will continue to focus on
the development of its digital speaker technology.
The consolidated entity expects to receive MEMS chips
from various suppliers in the current financial year
under Phase III of the previously detailed four‑phase
commercialisation plan. The chips resulting from this
phase of development fundamentally represent the
company’s primary product, and as such will also serve as
early engineering samples for select customers.
Environmental Regulations
In the opinion of the directors the company and the
consolidated entity is in compliance with all applicable
environmental legislation and regulations.
Indemnification of Officers
and Auditors
During or since the financial year, the company has not
indemnified or made a relevant agreement to indemnify
an officer or auditor of the company or of any related
body corporate against a liability incurred as such an
officer or auditor. In addition, the company has not paid,
or agreed to pay, a premium in respect of a contract
insuring against a liability incurred by an officer or auditor.
4
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 DIRECTORS’ REPORT
Directors’ Interests and Benefits
The relevant interest of each director in the share capital of the Company as notified by the directors to the Australian Stock
Exchange in accordance with Section 205G(1) of the Corporations Act as at the date of this report are:
Name
Fred Bart
Ian Dennis
Cheryl Bart
Ordinary Shares
5,441,250
570,050
500,000
Since the end of the previous financial year no director of the company has received or become entitled to receive
any benefit (other than a benefit included in the aggregate amount of remuneration received or due and receivable by
directors as shown in the financial statements) because of a contract made by the company or related corporation with
the director or with a firm of which the director is a member, or with a company in which the director has a substantial
financial interest. There are no employment contracts for any of the directors.
Remuneration Report (Audited)
This report outlines the remuneration arrangements in place for Directors and key management personnel of the Company.
The Directors are responsible for remuneration policies and packages applicable to the Board members of the Company.
The entire Board makes up the Nomination and Remuneration Committee. The broad remuneration policy is to ensure the
remuneration package properly reflects the person’s duties and responsibilities.
There are currently no performance based incentives to directors or executives based on the performance of the Company.
There are no employment contracts in place with any Director of the Company. There are standard employment contracts
for the three executives of Audio Pixels Limited in Israel including at will employment and a notice period of three months
for termination.
The key management personnel of Audio Pixels Holdings Limited during the year were:
Name
Fred Bart
Cheryl Bart
Ian Dennis
Danny Lewin
Yuval Cohen
Shay Kaplan
Position
Chairman and Chief Executive Officer
Non executive director
Non executive director and company secretary
CEO and director of Audio Pixels Limited
Chief Technical Officer of Audio Pixels Limited
Chief Scientist of Audio Pixels Limited
The Directors fees are not dependent on the earnings of the company and the consequences of the Company’s
performance on shareholder wealth. On 24 September 2010, the maximum total directors fees were increased to a
total of $250,000 per annum in line with the increased activities of the company. The actual directors fees paid were
within the approved limit of $250,000 per annum approved by shareholders at the Annual General Meeting held on
24 September 2010.
5
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 DIRECTORS’ REPORT
Remuneration Report (Cont.)
The table below sets out summary information about the company’s earnings and movements in shareholder wealth for
the last 5 financial years.
Year ended
31 December
2013
$
Year ended
31 December
2012
$
Year ended
31 December
2011
$
6 Months ended
31 December
2010
$
30 June 2010
$
30 June 2009
$
Revenue
304,536
161,986
269,534
143,207
563,842
438,819
Net profit/(loss)
before tax
Net profit/(loss)
after tax
Share price at start
of year/period
Share price at end
of year/period
Dividend Paid
(2,147,576)
(2,615,412)
(2,931,907)
(557,129)
237,211
(246,279)
(2,147,576)
(2,615,412)
(2,930,697)
(530,606)
197,489
(247,015)
5.60
3.80
0.00
6.00
5.60
0.00
4.60
6.00
0.00
0.26
4.60
0.00
0.16
0.26
0.00
0.21
0.16
0.00
The aggregate compensation of the key management personnel of the company is set out below:
Short‑term employee benefits
Post employment benefits
Share‑based payments
Termination benefits
31 December
2013
$
31 December
2012
$
618,715
125,668
‑
‑
553,453
108,821
‑
‑
744,383
662,274
6
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 DIRECTORS’ REPORT
Remuneration Report (Cont.)
Short Term
Post
Employment
Share Based
Payments
Total
Directors fees/
Salary
$
Non‑monetary
$
Superannuation
$
Options
$
61,000
37,500
67,500
122,076
133,788
116,724
538,588
61,000
37,500
67,500
107,019
107,019
102,312
482,350
‑
‑
‑
26,475
23,120
30,532
80,127
‑
‑
‑
23,223
20,578
27,302
71,103
5,566
3,422
3,422
36,931
40,626
35,701
125,668
5,490
3,375
3,375
32,202
33,006
31,373
108,821
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
December 2013
Fred Bart
Cheryl Bart
Ian Dennis
Danny Lewin
Yuval Cohen
Shay Kaplan
December 2012
Fred Bart
Cheryl Bart
Ian Dennis
Danny Lewin
Yuval Cohen
Shay Kaplan
$
66,566
40,922
70,922
185,482
197,534
182,957
744,383
66,490
40,875
70,875
162,444
160,603
160,987
662,274
Audit Committee
Due to the limitations imposed by size, the Company does not have a formally constituted audit committee.
Directors’ Meetings
During the year the company held two meetings of directors. The attendances of the directors at meetings of the Board were:
Attended
Maximum possible attended
Fred Bart
Ian Dennis
Cheryl Bart
2
2
2
2
2
2
No meetings of the Nomination and Remuneration Committee were held during the year. All current board members are
on the Nomination and Remuneration Committee.
7
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 DIRECTORS’ REPORT
Non‑audit Services
Details of amounts paid or payable to the auditor for non‑audit services provided during the year by the auditor are
outlined in Note 5 to the financial statements.
The directors are satisfied that the provision of non‑audit services, during the year, by the auditor (or by another person
or firm on the auditor’s behalf ) is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
The directors are of the opinion that the services disclosed in Note 5 to the financial statements do not compromise the
external auditors’ independence, based on a resolution of directors, for the following reasons:
All non‑audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor, and
None of the services undermine the general principles relating to auditor independence as set out in Code of Conduct
APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board,
including reviewing or auditing the auditor’s own work, acting in a management or decision‑making capacity for
the company, acting as advocate for the company or jointly sharing economic risks and rewards.
Auditor’s Independence Declaration
The auditor’s independence declaration is included on page 9.
Signed in accordance with a resolution of directors made pursuant to s.298(2) of the Corporations Act 2001.
On behalf of the Directors
I A Dennis
Director
Dated at Sydney this 27 day of February 2014.
8
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273
9
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 12 to 45.
10
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 5 to 7
11
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 DIRECTORS’ DECLARATION
The directors declare that:
(a)
in the directors’ opinion, there are reasonable grounds to believe the company will be able to pay its debts as
and when they become due and payable;
(b)
in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the
Corporations Act 2001, including compliance with accounting standards and give a true and fair view of the
financial position and performance of the company and the consolidated entity;
(c)
the directors have been given the declarations required by s.295A of the Corporations Act 2001; and
(d) the attached financial statements are in compliance with International Financial Reporting Standards, as stated
in Note 1 to the financial statements.
Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors
I A Dennis
Director
Dated at Sydney this 27 day of February 2014.
12
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2013
Revenue
Administrative expenses
Amortisation
Depreciation
Directors fees
Exchange gains/(losses)
Finance costs
Marketing
Property expenses
Reduction in fair value of investment property
Research and development expenses
(Loss) before income tax
Income tax benefit
(Loss) for the year
Consolidated
Year ended
31 December
2013
$
Consolidated
Year ended
31 December
2012
$
304,536
161,986
Note
2
(890,428)
(62,000)
(95,509)
(136,000)
1,045,468
‑
(47,375)
(37,043)
(100,000)
(2,129,225)
(924,543)
(62,000)
(104,845)
(136,000)
(77,560)
(1,776)
‑
(31,954)
(140,000)
(1,298,720)
2
3
(2,147,576)
(2,615,412)
‑
‑
(2,147,576)
(2,615,412)
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit and loss
Exchange differences arising on translation of foreign operations
17
(857,960)
76,128
Other comprehensive income/(loss) for the year, net of tax
(857,960)
76,128
Total comprehensive (loss) for the year
(3,005,536)
(2,538,824)
(Loss) attributable to:
Owners of the company
Total comprehensive (loss) attributable to:
Owners of the company
Earnings per share
(2,147,576)
(2,615,412)
(3,005,536)
(2,539,284)
Basic and diluted (cents per share)
21
(8.46)
(11.23)
Notes to the financial statements are included on pages 17 to 45.
13
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2013
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Assets held for sale
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
Goodwill
Intangible
Property, plant and equipment
Trade and other receivables
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Equity attributable to owners of the company
TOTAL EQUITY
Consolidated
December
2013
$
Consolidated
December
2012
$
Note
6
7
8
9
10
11
7
12
14
15
17
18
4,271,573
132,430
1,500,000
5,904,003
5,415,454
58,835
1,600,000
7,074,289
1,992,314
1,840,135
721,620
170,186
6,072
2,890,192
8,794,195
668,014
419,843
1,087,857
1,087,857
728,500
195,841
13,858
2,778,334
9,852,623
326,271
268,015
594,286
594,286
7,706,338
9,258,337
37,398,942
35,945,405
(21,792,649)
(20,934,689)
(7,899,955)
(5,752,379)
7,706,338
7,706,338
9,258,337
9,258,337
Notes to the financial statements are included on pages 17 to 45.
14
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2013
December 2013 ‑
Consolidated
Equity Settled
Option
Reserve
$
Issued
Capital
$
Exchange
Translation
Reserve
$
Minority
Acquisition
Reserve
$
Accumulated
Losses
$
Total
$
Balance at 1 January 2013
35,945,405
4,512,898
91,105
(25,538,692)
(5,752,379)
9,258,337
Issue of new shares at
$5.00 each
Issue of new shares at
$1.59 each
Exercise of options
Other comprehensive
income for the year
(Loss) for the year
Balance at
31 December 2013
1,000,000
48,123
405,414
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
(857,960)
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
1,000,000
48,123
405,414
(857,960)
(2,147,576)
(2,147,576)
37,398,942
4,512,898
(766,855)
(25,538,692)
(7,899,955)
7,706,338
December 2012 ‑
Consolidated
Equity Settled
Option
Reserve
$
Issued
Capital
$
Exchange
Translation
Reserve
$
Minority
Acquisition
Reserve
$
Accumulated
Losses
$
Total
$
Balance at 1 January 2012
30,360,295
4,512,898
14,977
(25,538,692)
(3,136,967)
6,212,511
Issue of new shares at
$5.00 each
Other comprehensive
income for the year
(Loss) for the year
Balance at
31 December 2012
5,585,110
‑
‑
‑
‑
‑
‑
76,128
‑
‑
‑
‑
‑
‑
5,585,110
76,128
(2,615,412)
(2,615,412)
35,945,405
4,512,898
91,105
(25,538,692)
(5,752,379)
9,258,337
Notes to the financial statements are included on pages 17 to 45.
15
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2013
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest and bill discounts received
Interest and other costs of finance paid
Consolidated
Year ended
31 December
2013
$
Consolidated
Year ended
31 December
2012
$
Notes
163,113
159,165
(2,987,225)
(2,388,557)
147,544
‑
24,334
(1,776)
Net cash (used by) operating activities
19
(2,676,568)
(2,206,834)
Cash flows from investing activities
Payment for property, plant and equipment
Net cash (outflows) from investing activities
Cash flows from financing activities
Placement of shares
Exercise of options
Proceeds of bank loan
Repayment of bank loan
Net cash provided by financing activities
Net increase/(decrease) in cash and cash equivalents held
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate fluctuations on the balances of cash
held in foreign currencies
Cash and cash equivalents at the end of the financial year
6
(44,824)
(44,824)
(44,934)
(44,934)
1,048,123
405,414
‑
‑
1,453,537
(1,267,855)
5,415,454
123,974
4,271,573
5,585,110
‑
200,000
(200,000)
5,585,110
3,333,342
2,113,321
(31,209)
5,415,454
Notes to the financial statements are included on pages 17 to 45.
16
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
1. Summary of Significant
Accounting Policies
Statement of Compliance
The financial report is a general purpose financial
report which has been prepared in accordance with
the Corporations Act 2001, Accounting Standards and
Interpretations, and complies with other requirements
of the law. Accounting Standards include Australian
equivalents to International Financial Reporting
Standards (“A‑IFRS”). Compliance with A‑IFRS ensures
that the financial statements and notes comply with
International Financial Reporting Standards (“IFRS”).
For the purposes of preparing the consolidated
financial statements, the Company is a for profit entity.
The financial statements were authorised for issue by
the Directors on 27 February 2014.
Provisions made in respect of short term employee
benefits are measured at their nominal values using
the remuneration rate expected to apply at the time
of settlement.
Provisions made in respect of long term employee
benefits are measured as the present value of the
estimated future cash outflows to be made by the
consolidated entity in respect of services provided
by employees up to the reporting date.
Defined contribution plans ‑ Contributions to defined
benefit contribution superannuation plans are expensed
when incurred.
(d) Financial assets
Financial assets are classified into loans and receivables.
The classification depends on the nature and purpose of
the financial assets and is determined at the time of the
initial recognition.
Basis of Preparation
Loans and receivables
The financial report has been prepared on the basis of historical
cost, except for the revaluation of investment property. Cost is
based on the fair values of the consideration given in exchange
for assets. All amounts are expressed in Australian dollars.
(a) Borrowings
Borrowings are recorded initially at fair value, net of
transaction costs. Subsequent to initial recognition,
borrowings are measured at amortised cost with any
difference between the initial recognised amount and the
redemption value being recognised in profit or loss over
the period of the borrowing using the effective interest
rate method.
(b) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand,
cash in banks and investments in money market
instruments maturing within less than 3 months at the
date of acquisition, net of outstanding bank overdrafts.
Bank overdrafts are shown within borrowings in current
liabilities in the Statement of Financial Position.
(c) Employee benefits
Provision is made for benefits accruing to employees
in respect of wages and salaries, annual leave, and long
service leave when it is probable that settlement will be
required and they are capable of being measured reliably.
Trade receivables, loans and other receivables are
recorded at amortised cost less impairment.
(e) Financial instruments issued by
the company
Debt and equity instruments
Debt and equity instruments are classified as either
liabilities or as equity in accordance with the substance
of the contractual arrangement.
Transaction costs on the issue of equity instruments
Transaction costs arising on the issue of equity
instruments are recognised directly in equity as a
reduction of the proceeds of the equity instruments to
which the costs relate. Transaction costs are the costs
that are incurred directly in connection with the issue of
those equity instruments and which would not have been
incurred had those instruments not been issued.
Interest
Interest is classified as an expense consistent with the
statement of financial position classification of the
related debt.
17
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
1. Summary of Significant
Accounting Policies (Cont.)
(f) Foreign currency
Foreign currency transactions
All foreign currency transactions during the financial
year are bought to account using the exchange rate in
effect at the date of the transaction. Foreign currency
monetary items at reporting date are translated at the
exchange rate existing at reporting date. Non‑monetary
assets and liabilities carried at fair value and historic cost
that are denominated in foreign currencies are translated
at the rates prevailing at the date when the fair value
was determined.
Exchange differences are recognised in profit and loss in
the period they arise.
Foreign operations
On consolidation, the assets and liabilities of the
consolidated entity’s overseas operations are translated
at exchange rates prevailing at the reporting date.
Income and expense items are translated at the average
exchange rates for the period unless exchange rates
fluctuate significantly. Exchange differences arising, if any,
are recognised in the foreign currency translation reserve,
and recognised in profit and loss on disposal of the
foreign operation.
(g) Goods and Services Tax
Revenues, expenses and assets are recognised net of the
amount of goods and services tax (GST), except:
i. where the amount of GST incurred is not recoverable
from the taxation authority, it is recognised as part of
the cost of acquisition of an asset or as part of an item
of expense; or
ii.
for receivables and payables which are recognised
inclusive of GST.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables.
Cash flows are included in the statement of cash flows
on a gross basis. The GST component of cash flows
arising from investing and financing activities which is
recoverable from, or payable to, the taxation authority is
classified as operating cash flows.
(h) Goodwill
Goodwill arising in a business combination is recognised
as an asset at the date that control is acquired
(the acquisition date). Goodwill is measured as the excess
of the sum of the consideration transferred, the amount
of any non‑controlling interests in the acquiree, and the
fair value of the acquirer’s previously held equity interest
in the acquiree (if any) over the net of the acquisition‑date
amounts of the identifiable assets acquired and the
liabilities assumed.
If, after reassessment, the Group’s interest in the fair
value of the acquiree’s identifiable net assets exceeds the
sum of the consideration transferred, the amount of any
non‑controlling interests in the acquiree and the fair value
of the acquirer’s previously held equity interest in the
acquiree (if any), the excess is recognised immediately in
profit or loss as a bargain purchase gain.
Goodwill is not amortised but is reviewed for
impairment at least annually. For the purpose of
impairment testing, goodwill is allocated to each of
the Group’s cash‑generating units expected to benefit
from the synergies of the combination. Cash‑generating
units to which goodwill has been allocated are tested
for impairment annually, or more frequently when there
is an indication that the unit may be impaired. If the
recoverable amount of the cash‑generating unit is less
than its carrying amount, the impairment loss is allocated
first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of
the unit pro‑rata on the basis of the carrying amount of
each asset in the unit. An impairment loss recognised for
goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of
goodwill is included in the determination of the profit or
loss on disposal.
(i) Impairment of assets
At each reporting date, the entity reviews the carrying
amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any).
Where the asset does not generate cash flows that are
independent from other assets, the entity estimates the
recoverable amount of the cash‑generating unit to which
the asset belongs.
If the recoverable amount of an asset (or cash‑generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash‑generating unit) is reduced to its
recoverable amount. An impairment loss is recognised in profit
or loss immediately.
Where an impairment loss subsequently reverses,
the carrying amount of the asset (cash‑generating unit)
is increased to the revised estimate of its recoverable amount,
but only to the extent that the increased carrying amount
does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the
asset (cash‑generating unit) in prior years. A reversal of an
impairment loss is recognised in profit or loss immediately.
18
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
1. Summary of Significant
Accounting Policies (Cont.)
(j) Income Tax
Current tax
Current tax is calculated by reference to the amount of
income taxes payable or recoverable in respect of the
taxable profit or tax loss for the period. It is calculated
using tax rates and tax laws that have been enacted or
substantively enacted by reporting date. Current tax
for current and prior periods is recognised as a liability
(or asset) to the extent that it is unpaid (or refundable).
(k) Intangible assets
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination
are identified and recognised separately from goodwill
where they satisfy the definition of an intangible asset and
their fair value can be measured reliably. Subsequent to
initial recognition, intangible assets acquired in a business
combination are reported at cost less accumulated
amortisation and accumulated impairment losses,
on the same basis as intangible assets acquired separately.
The intangible assets are written off on a straight line basis
over 14 years. Expenditure on research activities is recognised
as an expense in the period in which it is incurred.
Deferred tax
(l) Investment property
Deferred tax is recognised on temporary differences
between the carrying amount of assets and liabilities in
the financial statements and the corresponding tax base
of those items.
In principle, deferred tax liabilities are recognised for
all taxable temporary differences. Deferred tax assets
are recognised to the extent that it is probable that
sufficient taxable amounts will be available against which
deductible temporary differences or unused tax losses
and tax offsets can be utilised. However, deferred tax
assets and liabilities are not recognised if the temporary
differences giving rise to them arise from the initial
recognition of assets and liabilities (other than as a result
of business combination) which affects neither taxable
income nor accounting profit.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the period(s) when
the assets and liability giving rise to them are realised
or settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted by reporting date.
The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the
manner in which the entity expects, at the reporting date,
to recover or settle the carrying amount of its assets
and liabilities.
Deferred tax assets and liabilities are offset when they
relate to income taxes levied by the same taxation
authority and the company intends to settles its
current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or
income in profit or loss, except when it relates to items
credited or debited directly to equity, in which case
the deferred tax is also recognised directly in equity,
or where it arises from the initial accounting for a
business combination, in which case it is taken into
account in the determination of goodwill or excess.
Investment property, which is property held to earn
rentals and/or for capital appreciation, is measured at its
fair value at the reporting date. Gains or losses arising from
changes in the fair value of the investment property are
included in profit or loss in the period in which they arise.
(m) Leasing
Leases are classified as finance leases whenever the terms
of the lease transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are classified as
operating leases.
The Group as lessor
Income from operating leases is recognised on a
straight‑line basis over the term of the relevant lease.
Initial direct costs incurred in negotiating and arranging
an operating lease are added to the carrying amount of
the leased asset and recognised on a straight‑line basis
over the lease term.
The Group as lessee
Operating lease payments are recognised as an expense
on a straight‑line basis over the lease term, except where
another systematic basis is more representative of the
time pattern in which economic benefits from the leased
asset are consumed. Contingent rentals arising under
operating leases are recognised as an expense in the
period in which they are incurred. In the event that lease
incentives are received to enter into operating leases,
such incentives are recognised as a liability. The aggregate
benefit of incentives is recognised as a reduction of
rental expense on a straight‑line basis, except where
another systematic basis is more representative of the
time pattern in which economic benefits from the leased
asset are consumed.
19
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
1. Summary of Significant
Accounting Policies (Cont.)
(n) Payables
(q) Property, plant and equipment
Fixtures and equipment are stated at cost less
accumulated depreciation and accumulated
impairment losses.
Trade payable and other accounts payable are recognised
when the entity becomes obliged to make future payments
resulting from the purchase of goods and services.
(o) Provisions
Provisions are recognised when the entity has a present
obligation as a result of a past event, the future sacrifice
of economic benefits is probable, and the amount of the
provision can be measured reliably.
When some or all of the economic benefits required to
settle a provision are expected to be recovered from a
third party, the receivable is recognised as an asset if it
is virtually certain that recovery will be received and the
amount of the receivable can be measured reliably.
The amount recognised as a provision is the best
estimate of the consideration required to settle the
present obligation, taking into account the risks and
uncertainties surrounding the obligation. Where a
provision is measured using the cash flows estimated to
settle the present obligation, its carrying amount is the
present value of those cash flows.
(p) Basis of consolidation
The consolidated financial statements incorporate
the financial statements of the Company and entities
controlled by the Company. Control is achieved when
the Company:
Has power over the investee;
Is exposed, or has rights, to variable returns from its
involvement with the investee; and
Has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an
investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control
listed above.
Consolidation of a subsidiary begins when the Company
obtains control over the subsidiary and ceases
when the Company loses control of the subsidiary.
Specifically, income and expenses of a subsidiary
acquired or disposed of during the year are included in
the consolidated statement of profit or loss and other
comprehensive income from the date the Company
gains control until the date when the Company ceases
to control the subsidiary.
Depreciation is recognised so as to write off the cost or
valuation of assets less their residual values over their
useful lives, using the straightline method. The estimated
useful lives, residual values and depreciation method are
reviewed at each year end, with the effect of any changes
in estimate accounted for on a prospective basis.
Assets and disposal groups are classified as held for sale
if their carrying amount will be recovered principally
through a sale transaction rather than through
continuing use. This condition is regarded as met only
when the sale is highly probable and the non‑current asset
(or disposal group) is available for immediate sales in the
present condition. Management must be committed
to the sale, which should be expected to qualify
as a completed sale within one year from the date
of classification. Non‑current assets (and disposal groups)
classified as held for sale are measured at the lower of their
previous carrying amount and fair value less costs to sell.
The following estimated useful lives are used in the
calculation of depreciation:
Computers and related equipment
5 to 15 years
Leasehold improvements
3 to 5 years
Office furniture and equipment
5 to 15 years
(r) Revenue Recognition
Rental revenue comprises revenue earned from the
rental of the premises at 360 Pacific Highway, Crows Nest,
New South Wales. Rental revenue is recognised on a
straight line basis over the term of the relevant lease
(See Note 1(m)).
Interest income and distributions received are recognised
as it accrues.
(s) Application of New and Revised
Accounting Standards
The Group has adopted all of the new and revised
Standards and Interpretations issued by the Australian
Accounting Standards Board (the AASB) that are relevant
to their operations and effective for the current year.
20
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
1. Summary of Significant
Accounting Policies (Cont.)
(s) Application of New and Revised
Accounting Standards (Cont.)
New and revised Standards and amendments thereof
and Interpretations effective for the current year that are
relevant to the Group include:
AASB 10 “Consolidated Financial Statements” and
AASB 2011‑7 “Amendments to Australian Accounting
Standards arising from the consolidation and Joint
Arrangements standards”
AASB 12 “Disclosure of Interests in Other Entities” and
AASB 2011‑7 “Amendments to Australian Accounting
Standards arising from the consolidation and Joint
Arrangements standards”
AASB 127 “Separate Financial Statements” (2011) and
AASB 2011‑7 “Amendments to Australian Accounting
Standards arising from the consolidation and Joint
Arrangements standards”
AASB 13 “Fair Value Measurement” and AASB 2011‑8
“Amendments to Australian Accounting Standards
arising from AASB 13”
AASB 119 “Employee Benefits” (2011) and
AASB 2011‑10 ‘Amendments to Australian Accounting
Standards arising from AASB 119 (2011)”
Impact of the application of AASB 10
AASB 10 replaces the parts of AASB127 “Consolidated and
Separate Financial Statements” that deal with consolidated
financial statements and Interpretation 112
“Consolidation ‑ Special Purpose Entities”. AASB 10 changes
the definition of control such that an investor controls
an investee when a) it has power over the investee,
b) it is exposed, or has rights, to variable returns from its
involvement with the investee, and c) has the ability to use
its power to affect its returns. All three of these criteria must
be met for an investor to have control over an investee.
Previously, control was defined as the power to govern the
financial and operating policies of an entity so as to obtain
benefits from its activities. Additional guidance has been
included in AASB 10 to explain when an investor has control
over an investee. Some guidance included in AASB 10 that
deals with whether or not an investor that owns less than
50% of the voting rights in an investee has control over the
investee is relevant to the Group.
The directors of the Company made an assessment
as at the date of the initial application of AASB 10
(i.e. 1 January 2013) as to whether or not the Group has
control over the entities listed in Note 27 in accordance
with the new definition of control and the related
guidance set out in AASB 10. The directors concluded
that the Company has control over the entities listed in
Note 27 on the basis of it’s 100% shareholding and its
ability to use its power to affect its variable returns.
The application of AASB 10 has not had any material
impact on the amounts recognised in the consolidated
financial statements.
Impact of the application of AASB 12
AASB 12 is a new disclosure standard and is applicable
to entities that have interests in subsidiaries,
joint arrangements, associates and/or unconsolidated
structured entities. In general, the application of AASB 12
has resulted in more extensive disclosures in the
consolidated financial statements. However this did not
result in any changes to the financial statements.
Impact of the application of AASB 13
The Group has applied AASB 13 for the first time in the
current year. AASB 13 establishes a single source of
guidance for fair value measurements and disclosures
about fair value measurements. The scope of AASB 13
is broad; the fair value measurement requirements of
AASB 13 apply to both financial instrument items and
non‑financial instrument items for which other AASBs
require or permit fair value measurements and disclosures
about fair value measurements, except for share‑based
payment transactions that are within the scope of AASB 2
“Share‑based Payment”, leasing transactions that are
within the scope of AASB 17 “Leases”, and measurements
that have some similarities to fair value but are not
fair value (e.g. net realisable value for the purposes of
measuring inventories or value in use for impairment
assessment purposes).
AASB 13 defines fair value as the price that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction in the principal (or most advantageous)
market at the measurement date under current
market conditions. Fair value under AASB 13 is an exit
price regardless of whether the price is directly observable
or estimated using another valuation technique.
Also, AASB 13 includes extensive disclosure requirements.
AASB 13 requires prospective application from
1 January 2013. In addition, specific transitional provisions
were given to entities such that they need not apply
the disclosure requirements set out in the Standard in
comparative information provided for periods before the
initial application of the Standard. In accordance with
these transitional provisions, the Group has not made
any new disclosures required by AASB 13 for the 2012
comparative period, the application of AASB 13 has not
had material impact on the amounts recognised in the
consolidated financial statements.
21
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
1. Summary of Significant Accounting Policies (Cont.)
(s) Application of New and Revised Accounting Standards (Cont.)
Impact of the application of AASB 119
In the current year, the Group has applied AASB 119 (as revised in 2011) “Employee Benefits” and the related consequential
amendments for the first time.
The revised AASB 119 changes the definition of short‑term benefits. Only benefits that are expected to be settled wholly
within 12 months after the end of the end of the annual reporting period in which the employees render the service are
classified as short‑term employee benefits.
Specific transitional provisions are applicable to first‑time application of AASB 119 (as revised in 2011). The Group has
applied the relevant transitional provisions and restated the comparative amounts on a retrospective basis. The amount of
these restatements is not material.
Impact on total comprehensive income for the year of the
application of AASB 119 (as revised in 2011)
Impact on (loss) for the year
Increase in employee benefits expenses
Increase in (loss) for the year
31 December
2013
$
31 December
2012
$
10,654
10,654
6,687
6,687
Impact on assets, liabilities and equity as
at 1 January 2012 of the application of the
above new and revised Standards
Current employee benefits obligation
Total effect on net assets
Accumulated losses
Total effect on equity
As at 01/01/2012
as previously
reported
AASB 119
adjustments
As at 01/01/2012
as restated
169,747
6,247,538
(3,101,940)
6,247,538
35,027
(35,027)
(35,027)
(35,027)
204,774
6,212,511
(3,136,967)
6,212,511
22
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
1. Summary of Significant Accounting Policies (Cont.)
(s) Application of New and Revised Accounting Standards (Cont.)
As at 31/12/2012
as previously
reported
AASB 119
adjustments
As at 31/12/2012
as restated
Impact on assets, liabilities and equity as at
31 December 2012 of the application of the
above new and revised Standards
Current employee benefits obligation
Total effect on net assets
Reserves
Accumulated losses
Total effect on equity
240,281
9,286,071
(20,935,295)
(5,724,039)
9,286,071
27,734
(27,734)
606
(28,340)
(27,734)
Impact on assets, liabilities and equity as at 31 December 2013 of the
application of the amendments to AASB 119 (as revised in 2011)
Increase in current employee benefits obligation
268,015
9,258,337
(20,934,689)
(5,752,379)
9,258,337
AASB 119
adjustments
10,654
Standards and Interpretations in issue not yet adopted
At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not
yet effective.
Standard/Interpretation
AASB 9 Financial Instruments
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]
AASB 2011‑4 Amendments to Australian Accounting Standards to
Remove Individual Key Management Personnel Disclosure Requirements
[AASB 124]
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
1‑Jan‑17
31‑Dec‑17
1‑Jan‑17
31‑Dec‑17
1‑Jul‑13
31‑Dec‑14
The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material
financial impact on the financial statements of the company or the consolidated entity but may change disclosures made.
23
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
1. Summary of Significant
Accounting Policies (Cont.)
(t) Share based payments
Equity‑settled share‑based payments are measured at
fair value at the date of the grant. Fair value is measured
by use of a Black‑Scholes Option Pricing model.
The expected life used in the model has been adjusted,
based on management best estimates, for the
effects of non‑transferability, exercise restrictions and
behavioural considerations. The fair value determined
at the grant date of the equity‑settled share based
payments is expensed on a straight‑line basis over
the vesting period, based on the consolidated entity’s
estimate of shares that will eventually vest.
(u) Critical accounting judgements
In the application of the consolidated entity’s
accounting policies, management is required to
make judgements, estimates and assumptions about
carrying values of assets and liabilities that are not
readily apparent from other sources. The estimates
and associated assumptions are based on historical
experience and various other factors that are believed
to be reasonable under the circumstance, the results
of which form the basis of making these judgements.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is
revised if the revision affects only that period, or in the
period of the revision and future periods if the revision
affects both current and future periods.
Key sources of estimation uncertainty
The following are the key assumptions concerning
the future, and other key sources of estimation uncertainty
at the balance sheet date, that have a significant risk of
causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year:
Asset held for sale
The directors made a critical judgement in relation to the
value of the property included in Note 8 as an asset held
for resale.
Intangible asset/Goodwill
The directors made a critical judgement in relation to the
value of the intangible asset included in Note 10 and the
impairment model used in accessing the carrying amount
of the goodwill (see Note 9).
24
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
2. (Loss) from Operations
(a) Revenue
Interest received ‑ other entities
Management fees ‑ related parties
Rental income
Total revenue
(b) Expenses
Reduction of fair value of investment property
Amortisation
Depreciation
Employee benefits expense:
Other employee benefits
Superannuation
Finance costs ‑ interest paid ‑ other entities
3. Income Taxes
(a) Income tax recognised in profit or loss
Tax expense comprises:
Tax expense/(income) ‑ prior year
Deferred tax expense/(income)
Total tax expense/(income)
Consolidated
Year ended
31 December
2013
$
Consolidated
Year ended
31 December
2012
$
142,652
14,366
147,518
304,536
100,000
62,000
95,509
1,370,483
12,410
1,382,893
‑
‑
‑
‑
29,226
‑
132,760
161,986
140,000
62,000
104,845
1,131,289
12,240
1,143,529
1,776
‑
‑
‑
The prima facie income tax expense on pre‑tax accounting profit reconciles to the income tax expense in the financial
statements as follows:
(Loss) from operations
Amortisation
Impairment of property
(2,147,576)
(2,615,412)
62,000
100,000
62,000
140,000
(1,985,576)
(2,413,412)
25
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
3. Income Taxes (Cont.)
Income tax expense calculated at 30%
Effect of different tax rates of subsidiaries operating in other jurisdictions
Deferred tax benefit not brought to account
31 December
2013
$
31 December
2012
$
(595,673)
143,931
451,742
‑
(724,024)
155,957
568,067
‑
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on
taxable profits under Australian tax law and 25% under Israeli law. There has been no change in the corporate tax rate
when compared with the previous reporting period.
(b) Unrecognised deferred tax balances
The following deferred tax assets have not been bought to account as assets:
Tax losses ‑ revenue
Temporary differences
(c) Franking account balance
Adjusted franking account balance
(d) Israeli Tax Ruling
1,793,129
(104,961)
1,688,168
1,341,387
(52,578)
1,288,809
86,721
86,721
On July 16th 2012 a Tax Ruling was issued by the Israeli Tax Authorities (ITA) under which the ITA confirmed that the Merger
carried out between Audio Pixels Ltd, a private Israeli company (P.C 513853606) and Audio Pixels Holdings Limited, a public
Australian company, complies with the conditions stipulated in Section 103T of the Israeli Ordinance. Consequently, the transfer
of the rights by the transferring rights holders in exchange for the issuance of shares in the Australian company is not taxable at
the date of the Merger pursuant to the provisions of Section 103T of the Israeli Ordinance.
4. Key Management Personnel Remuneration
The aggregate compensation of the key management personnel of the group is set out below:
Short‑term employee benefits
Post employment benefits
Share‑based payments
Termination benefits
618,715
125,668
‑
‑
553,453
108,821
‑
‑
744,383
662,274
The remuneration above relates to directors fees and superannuation paid to entities associated with Fred Bart, Cheryl Bart
and Ian Dennis and the remuneration of the three senior executives of Audio Pixels Limited in Israel.
26
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
5. Remuneration of Auditors
(i) Auditor of the parent entity
Audit or review of the financial statements
Taxation service
(ii) Network firm of the parent entity auditor
Audit or review of the financial statements
Taxation service
The auditor of Audio Pixels Holdings Limited is Deloitte Touche Tohmatsu.
6. Cash and Cash Equivalents
Cash on hand and at bank
Weighted average interest rate received on cash
7. Trade and Other Receivables
Current
GST receivable
Interest receivable
Prepayments
Trade debtors
Other debtors
Current debtors are receivable within 30 days
Non Current
Other debtors
Other debtors comprise security deposits with government bodies.
31 December
2013
$
31 December
2012
$
27,050
4,500
31,550
15,586
‑
15,586
23,100
15,000
38,100
14,599
10,044
24,643
4,271,573
1.98%
5,415,454
2.90%
69
‑
118,838
13,523
‑
132,430
2,831
4,892
33,838
‑
17,274
58,835
6,072
13,858
27
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
8. Asset held for sale
Strata title commercial property
31 December
2013
$
31 December
2012
$
1,500,000
1,600,000
In 2013 the fair value of the Strata Title commercial property was determined in accordance with a valuation carried out on
14 February 2014 by Landmark White (Sydney) Pty Limited, independent valuers not related to the company. The valuation
which conforms to Australian Valuation Standards was arrived at by reference to market evidence of transaction prices for
similar properties and capitalisation of the net rental income at a rate of 7.25%.
The directors have determined the fair value of the property at 31 December 2013 of $1,500,000 based on the
14 February 2014 valuation.
9. Goodwill
Being goodwill acquired on the acquisition of Audio Pixels Limited. The goodwill
is allocated to the cash generating unit of digital speakers by Audio Pixels Limited
of Israel.
Balance at 1 January
Net foreign currency exchange
Balance at 31 December
1,992,314
1,840,135
1,840,135
152,179
1,992,314
1,840,135
‑
1,840,135
The recoverable amount of this cash generating unit is determined based on a value in use calculation which uses
cash flow projections based on financial budgets approved by the directors covering a 11 year period, with a growth
rate reflecting the expected future growth in the product market, and a discount rate of 24% per annum. The cash flow
projections used in the impairment model extend beyond 5 years as the intangible assets generating the cash flows within
have a remaining life of 11 years and the product is new technology and hence related cash flows have a longer operating
cycle and time to market. Cash flow projections during the budget period are based on the same expected gross margins
and raw materials price inflation during the budget period and factor in a probability of the viability of the product.
The directors believe that any reasonable possible change in the key assumptions on which recoverable amount is based
would not cause the aggregate carrying value to exceed the aggregate recoverable amount of the cash generating unit.
Movements in the value of the goodwill are a result of the retranslation of the goodwill from the functional currency of the
cash generating unit to which it is attributed.
10. Intangible Asset
Being the independent valuation of In Process Research and Development
determined at the acquisition date of 24 September 2010 by Ernst & Young,
Israel in their report dated 17 August 2011.
Exchange differences on translation
Less accumulated amortisation
868,000
55,120
(201,500)
721,620
868,000
‑
(139,500)
728,500
28
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
11. Property, Plant and Equipment
Computers and related equipment ‑ at cost
Less accumulated depreciation
Leasehold improvements ‑ at cost
Less accumulated depreciation
Office furniture and equipment ‑ at cost
Less accumulated depreciation
31 December
2013
$
31 December
2012
$
255,609
(237,415)
18,194
183,065
(182,604)
461
742,611
(591,080)
151,531
211,659
(180,508)
31,151
156,595
(156,129)
466
603,883
(439,659)
164,224
Total net book value of Property, Plant and Equipment
170,186
195,841
Cost
Computers and related equipment
Balance at 1 January
Additions
Net foreign currency exchange differences
Balance as at 31 December
Leasehold improvements
Balance at 1 January
Net foreign currency exchange differences
Balance as at 31 December
211,659
8,172
35,778
255,609
156,595
26,470
183,065
199,003
16,455
(3,799)
211,659
159,642
(3,047)
156,595
29
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
11. Property, Plant and Equipment (Cont.)
Office furniture and equipment
Balance at 1 January
Additions
Net foreign currency exchange differences
Balance as at 31 December
Accumulated depreciation
Computers and related equipment ‑ at cost
Balance as at 1 January
Net foreign currency exchange differences
Depreciation expense
Balance at 31 December
Leasehold improvements
Balance as at 1 January
Net foreign currency exchange differences
Depreciation expense
Balance at 31 December
Office furniture and equipment
Balance as at 1 January
Net foreign currency exchange differences
Depreciation expense
Balance at 31 December
12. Trade and Other Payables
Current
Trade payables and accruals
Other creditors ‑ related parties
The payables are non interest bearing and have an average credit period of 30 days.
31 December
2013
$
31 December
2012
$
603,883
36,652
102,076
742,611
(180,508)
(32,569)
(24,338)
(237,415)
(156,129)
(26,398)
(77)
580,697
28,479
(5,293)
603,883
(159,243)
3,275
(24,540)
(180,508)
(159,095)
3,038
(72)
(182,604)
(156,129)
(439,659)
(80,327)
(71,094)
(591,080)
(367,200)
7,774
(80,233)
(439,659)
668,014
‑
668,014
303,115
23,156
326,271
30
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
13. Current Borrowings
At amortised cost
Commercial bill ‑ secured
Financing arrangements
Total facilities available
Facilities utilised at balance date
Facilities not used at balance date
31 December
2013
$
31 December
2012
$
‑
‑
‑
‑
‑
920,000
‑
920,000
The commercial bills were denominated in Australian dollars. The commercial bill facility of $900,000 was a committed
facility secured by a registered first mortgage against the Strata Title property. The $900,000 commercial bill expired on
28 February 2013. The average weighted interest rate on the interest bearing liabilities was Nil (2012 ‑ 5.85%). The unused
facility of $20,000 relates to a credit card facility. The carrying amount is equal to the fair value.
14. Provisions
Employee benefits
15. Issued Capital
Issued and paid up capital
Fully paid Ordinary Shares
Balance at the beginning of the financial year
Issue of shares at $5.00 each for cash
Issue of shares at $1.59 each for cash
Issue of shares on exercise of options
Balance at the end of the financial year
Fully paid Ordinary Shares
Balance at the beginning of the financial year
Issue of shares at $5.00 each for cash
Issue of shares $1.59 each for cash
Issue of shares on exercise of options
Balance at the end of the financial year
419,843
268,015
35,945,405
1,000,000
48,123
405,414
30,360,295
5,585,110
‑
‑
37,398,942
35,945,405
Number
24,409,985
200,000
30,183
1,066,879
Number
23,292,963
1,117,022
‑
‑
25,707,047
24,409,985
Fully paid ordinary shares carry one vote per share and carry the rights to dividends.
Changes in the Corporations Law abolished the authorised capital and par value concept in relation to share capital from
1 July 1998. Therefor the company does not have a limited amount of authorised capital and issued shares do not have
a par value.
31
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
16. Options Issued to Founders and Staff
On 13 January 2011, shareholders approved the issue of 1,066,879 unlisted options at an exercise price of 38 cents to the
founders and staff of Audio Pixels Limited of Israel. These 1,066,879 unlisted options were issued on 11 February 2011.
All the 1,066,879 options were exercised during the year raising $405,414. There are no options outstanding at balance date
or the date of this report.
Each share option converted to one ordinary share in Audio Pixels Holdings Limited. The options carry neither rights to
dividends nor voting rights.
The allocation of the options between the founders and staff is as follows:
Founders
Staff
Number
919,879
147,000
1,066,879
Value
3,891,088
621,810
4,512,898
The value of the options issued to the three founders was allocated to the minority acquisition reserve and the value of the
options issued to staff was treated as share based payments in the 31 December 2011 profit and loss account.
2013
2012
Weighted
Average
Exercise price
$
0.38
0.38
‑
‑
Number
1,066,879
(1,066,879)
‑
‑
Weighted
Average
Exercise price
$
0.38
‑
0.38
0.38
Number
1,066,879
‑
1,066,879
‑
Balance at the beginning of the financial year
Exercised during the year
Balance at the end of the financial year
Exercisable at end of year
These 1,066,879 options were subject to a voluntary escrow which expired on 11 February 2013.
32
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
17. Reserves
Foreign currency translation
Balance at the beginning of the financial year
Translation of foreign operations
Balance at end of financial year
31 December
2013
$
31 December
2012
$
91,105
(857,960)
(766,855)
14,977
76,128
91,105
Exchange differences relating to the translation of the results and net assets of the Group’s foreign operations from their
functional currencies to the Group’s presentation currency (i.e. Australian dollars) are recognised directly in other comprehensive
income and accumulated in the foreign currency translation reserve. Exchange differences previously accumulated in the
foreign currency translation reserve are reclassified to profit and loss on the disposal of the foreign operation.
Equity settled option reserve
Balance at the beginning of the financial year
Balance at end of financial year
4,512,898
4,512,898
4,512,898
4,512,898
The above equity‑settled option reserve relates to share options granted
by the Company.
Minority acquisition reserve
Balance at the beginning of the financial year
Balance at end of financial year
(25,538,692)
(25,538,692)
(25,538,692)
(25,538,692)
The minority interest reserve comprises amounts related to the acquisition of a
minority interest shareholding in a subsidiary company in a prior period.
Total Reserves
(21,792,649)
(20,934,689)
18. Accumulated Losses
Balance at the beginning of the financial year
(Loss) for the year attributable to owners of the company
Balance at the end of the financial year
(5,752,379)
(2,147,576)
(7,899,955)
(3,136,967)
(2,615,412)
(5,752,379)
33
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
31 December
2013
$
31 December
2012
$
19. Notes to the Statement of Cash Flows
(a) Reconciliation of cash and cash equivalents
For the purposes of the statement of cash flows, cash includes cash on hand and at call deposits with banks or financial institutions,
investments in money market instruments maturing within less than 3 months at the date of acquisition. Cash and cash equivalents
at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of
financial position as follows:
Cash and cash equivalents
(b) Restricted cash
4,271,573
5,415,454
Cash held as security for future lease payments
30,667
23,251
(c) Reconciliation of (loss) for the period to net cash flows from operating activities
(Loss) after related income tax
Prior period adjustment
Reduction in fair value of investment property
Amortisation
Depreciation
Foreign exchange
Changes in assets and liabilities
(Increase)/decrease in assets
Current trade and other receivables
Non‑current trade and other receivables
Increase/(decrease) in liabilities
Provisions
Current trade payables
(2,147,576)
(2,615,412)
‑
100,000
62,000
95,509
(1,214,263)
(73,595)
7,786
151,828
341,743
(6,687)
140,000
62,000
104,845
104,783
(13,608)
445
70,534
(53,734)
Net cash used in operating activities
(2,676,568)
(2,206,834)
34
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
20. Related Party Transactions
(a) Directors
The Directors of Audio Pixels Holdings Limited in office during the year were Fred Bart, Ian Dennis and Cheryl Bart.
(b) Directors’ Shareholdings
Fred Bart
Ian Dennis
Cheryl Bart
2013
Number
2012
Number
5,441,250
5,291,250
570,050
500,000
520,050
500,000
Mr Fred Bart purchased 200,000 ordinary shares during the year ended 31 December 2013 via a placement approved
by shareholders in general meeting. On 4 September 2013, Ian Dennis purchased 50,000 ordinary shares from Fred Bart
at $2.00 each.
(c) Transactions with Related Entities
The company has paid Nil (year ended 31 December 2012: $35,464) in respect of rental of the Sydney offices premises
to 4F Investments Pty Limited, a company associated with Fred Bart. These rentals were based on a share of actual costs
incurred and did not include a profit mark up.
The company received $14,366 (year ended 31 December 2012: Nil) in respect of management fees from 4F Investments
Pty Limited, a company associated with Fred Bart. These management fees are based on a share of actual costs incurred
and do not include a profit mark up.
During the year ended 31 December 2013, the Company paid a total of $107,488 (year ended 31 December 2012 ‑ $107,365)
to 4F Investments Pty Limited, a company associated with Mr Fred Bart in respect of directors fees and superannuation for
Mr Fred Bart and Mrs Cheryl Bart.
During the year ended 31 December 2013, the Company paid a total of $40,922 (year ended 31 December 2012 ‑ $40,875)
to Dennis Corporate Services Pty Limited, a company associated with Mr Ian Dennis in respect of directors fees
and superannuation.
During the year, the Company paid $30,000 (31 December 2012 ‑ $30,000) to Dennis Corporate Services Pty Limited,
a company associated with Mr Ian Dennis in respect of consulting fees for company secretarial and accounting services.
On 29 October 2012, the company entered into a sublease in respect of office premises at Level 12, 75 Elizabeth Street
Sydney for a period of seventeen months to 30 March 2014. The company recharges 20% of the rent to Electro Optic
Systems Holdings Limited, a company of which Fred Bart and Ian Dennis are directors, 20% to 4F Investments Pty Limited,
a company controlled by Fred Bart and 40% to another tenant who is a shareholder in the company. The related parties
have advanced Nil (2012: $23,156) to the company as advance rent which is included in other creditors in Note 12.
35
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
21. Earnings per Share
Basic (loss) per share
Diluted (loss) per share
(Loss) (a)
31 December
2013
$
31 December
2012
$
(8.46 cents)
(11.23 cents)
(8.46 cents)
(11.23 cents)
(2,147,576)
(2,615,412)
Weighted average number of Ordinary Shares
25,395,498
23,292,963
(a) (Loss) used in the calculation of basic earnings per share are the same as the net (loss) in the Statement of profit or loss and other comprehensive income.
Diluted (loss) per share
There were 1,066,879 unlisted options exercisable at 38 cents which expire on 31 March 2013 which were potential ordinary
shares which were considered to be antidilutive as they would result in a reduction in the loss per share if exercised.
Accordingly as per AASB 133 the basic earnings per share is the same as diluted earnings per share as no adjustment has
been made for the antidilutive potential ordinary shares.
22. Segment Information
Since 24 September 2010, the company acquired an equity interest in Audio Pixels Limited of Israel which is involved in
the development of digital speakers.
Segment Revenues
Property investment
Digital speakers
Total of all segments
Unallocated
Total
Segment Results
Property investment
Digital speakers
Total of all segments
Unallocated
(Loss) before income tax
Income tax gain/(expense)
(Loss) for the period
147,518
‑
147,518
157,018
304,536
132,760
‑
132,760
29,226
161,986
10,475
(2,315,069)
(2,304,594)
157,018
100,806
(2,745,444)
(2,644,638)
29,226
(2,147,576)
(2,615,412)
‑
‑
(2,147,576)
(2,615,412)
The consolidated entity had one customer who provided 100% of the rental income for the year ended 31 December 2013
and 100% for the year ended 31 December 2012.
36
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
22. Segment Information (Cont.)
Segment Assets and Liabilities
Assets
Liabilities
31 December
2013
$
31 December
2012
$
31 December
2013
$
31 December
2012
$
1,513,523
1,600,000
‑
3,009,030
4,522,553
4,271,642
8,794,195
‑
2,834,338
4,434,338
5,418,285
9,852,623
‑
‑
1,087,857
1,087,857
‑
1,087,587
‑
‑
594,286
594,286
‑
594,286
Property investment
Other investments
Digital speakers
Total all segments
Unallocated
Consolidated
Assets used jointly by reportable segments are allocated on the basis of the revenue earned by the individual
reportable segments.
Other Segment Information
Depreciation and
amortisation of segment assets
Acquisition of segment assets
31 December
2013
$
31 December
2012
$
31 December
2013
$
31 December
2012
$
‑
‑
157,509
157,509
‑
157,509
‑
‑
166,845
166,845
‑
166,845
‑
‑
44,824
44,824
‑
44,824
‑
‑
44,934
44,934
‑
44,934
Property investment
Other investments
Digital speakers
Total all segments
Unallocated
Consolidated
37
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
22. Segment Information (Cont.)
Information on Geographical Segments
Geographical Segments
31 December 2013
Australia
Israel
Total
31 December 2012
Australia
Israel
Total
Revenue
from External
Customers
$
Segment Assets
$
Acquisition of
Segment Assets
$
304,536
‑
304,536
161,952
34
161,986
5,674,251
3,119,944
8,794,195
6,885,407
2,967,216
9,852,623
‑
44,824
44,824
‑
44,934
44,934
38
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
23. Financial Risk Management Objectives and Policies
The consolidated entity’s principal financial instruments comprise receivables, payables, cash and short term deposits.
Due to the small size of the group significant risk management decisions are taken by the board of directors. These risks
include market risk (including fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and
liquidity risk. The Directors do not plan to eliminate risk altogether, rather they plan to identify and respond to risks in a
way that creates value for the company and its shareholders. Directors and shareholders appreciate that in order for the
consolidated entity to compete and grow, a long term strategy needs to involve risk taking for reward.
The consolidated entity does not use derivative financial instruments to hedge these risk exposures.
Risk Exposures and Responses
(a) Interest Rate Risk
The Group’s exposure to market interest rates relates primarily to the consolidated entity’s cash holdings and short term deposits.
At balance date, the consolidated entity had the following mix of financial assets exposed to Australian interest rate risk that
are not designated in cash flow hedges:
Financial assets
Cash and cash equivalents
31 December
2013
$
31 December
2012
$
4,271,573
5,415,454
The Group constantly analyses its interest rate exposure. Within this analysis consideration is given to potential renewals of
existing positions, alternative financing and the mix of fixed and variable interest rates.
At 31 December 2013, if interest rates had moved, as illustrated in the table below, with all other variables held constant,
post tax (loss) and equity would have been affected as follows:
Judgements of reasonably
possible movements
Post Tax Profit
Higher/(Lower)
Equity
Higher/(Lower)
31 December
2013
$
31 December
2012
$
31 December
2013
$
31 December
2012
$
Consolidated entity
+1% (100 basis points)
‑.5% (50 basis points)
21,273
(21,443)
54,244
(26,987)
21,273
(21,443)
54,244
(26,987)
The movements in profits are due to higher/lower interest rates on cash and cash equivalents balances. The cash and cash
equivalents balances were lower in December 2013 than in December 2012 and accordingly the sensitivity is lower.
39
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
23. Financial Risk Management Objectives and Policies (Cont.)
(b) Foreign Currency Risk
The consolidated entity has a foreign currency risk since the acquisition of Audio Pixels Limited. Audio Pixels Limited
operates in Israel and all transfer of funds to Audio Pixels Limited are denominated in US dollars. The consolidated entity
does not hedge its US dollar exposure.
The carrying amounts of the Group’s foreign currency (US$) denominated monetary assets and monetary liabilities at the
end of the reporting period are as follows:
Liabilities
Assets
31 December
2013
$
31 December
2012
$
31 December
2013
$
31 December
2012
$
Cash and cash equivalents
Trade and other receivables
Trade and other payables
‑
‑
‑
‑
392,479
275,267
1,024,765
116,349
‑
941,813
25,157
‑
All US$ denominated financial instruments were translated to A$ at 31 December 2013 at the exchange rate of 0.8874
(2012: 1.0374).
At 31 December 2013 and 31 December 2012, had the Australian Dollar moved, as illustrated in the table below, with all
other variables held constant, post tax loss and equity would have been affected as follows:
Judgements of reasonably
possible movements
Post Tax Profit
Higher/(Lower)
Equity
Higher/(Lower)
2013
$
2012
$
2013
$
2012
$
Consolidated
AUD/USD +10%
AUD/USD ‑5%
261,693
(151,506)
173,386
(100,381)
261,693
(151,506)
173,386
(100,381)
Management believes the balance date risk exposures are representative of risk exposure inherent in financial instruments.
(c) Credit Risk Management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to
the Group. The consolidated entity has adopted a policy of only dealing with creditworthy counterparties which are
continuously monitored. Rental revenue is due in advance.
The credit risk on liquid funds is limited because the counterparties are major banks with high credit‑ratings assigned by
international credit agencies.
40
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
23. Financial Risk Management Objectives and Policies (Cont.)
(d) Liquidity Risk Management
The consolidated entity’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due. The consolidated entity’s investments in money market instruments all have a
maturity of less than 3 months.
Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate risk
management framework for the management of the consolidated entity’s short, medium and long term funding and
liquidity requirements. The consolidated entity manages liquidity by maintaining adequate cash reserves by continuously
monitoring forecast and actual cash flows and managing maturity profiles of financial assets.
Prior to being repaid, the consolidated entity’s commercial bill borrowings of $900,000 were rolled over on a monthly basis
at prevailing commercial interest rates. The commercial bill facility expired on 28 February 2013.
The following tables detail the consolidated entity’s remaining contractual maturity for its non‑derivative financial assets.
The tables have been drawn up based on the undiscounted contractual maturities of the financial assets including interest
that will be earned on these assets except where the consolidated entity anticipates that the cash flow will occur in a
different period.
Weighted
average
effective
interest rate
%
Less than
1 month
$
1‑3 months
$
3 months
to 1 year
$
1‑5 years
$
0.00
1.98
0.00
2.90
962,021
3,316,608
864,181
4,532,514
‑
14,110
‑
26,160
‑
63,497
‑
31,839
‑
‑
‑
‑
31 December 2013
Non interest bearing
Fixed rate instruments
31 December 2012
Non interest bearing
Fixed rate instruments
(e) Commodity Price Risk
The consolidated entity has no exposure to commodity price risk.
(f) Other Price Risks
The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the
financial statements approximate their fair values.
41
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
24. Financial Instruments
Fair value of financial instruments
This note provides information about how the Group determines fair values of various financial assets and financial liabilities.
The Strata Title property held for resale is the only asset in the Group measured at fair value. The fair value determined at
31 December 2013 was $1,500,000 (2012: $1,600,000).
The fair value hierarchy was Level 3.
Movement schedule
Opening balance
Total gains/(losses) in profit/(loss)
Closing balance
Sensitivity schedule
1,600,000
(100,000)
1,500,000
Movements in the valuation of the property have sensitivity to the capitalisation rate. Increases in the capitalisation rate
would result in a lower property valuation and vice versa.
25. Subsequent Events
The Directors are not aware of any significant events since the end of the financial year and up to the date of this report.
42
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
26. Parent Entity Disclosures
Financial position
Assets
Current assets
Non‑current assets
Total assets
Liabilities
Current liabilities
Non‑current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
(Accumulated losses)/Retained earnings
Total equity
Financial performance
Profit/(Loss) for the period
Other comprehensive income
31 December
2013
$
31 December
2012
$
12,215,449
4,028,209
10,003,453
4,028,209
16,243,658
14,031,662
16,415
‑
51,002
‑
16,415
51,002
16,227,243
13,980,660
37,398,942
35,945,405
(21,025,794)
(21,025,794)
(145,905)
(938,951)
16,227,243
13,980,660
793,046
(652,851)
‑
‑
793,046
(652,851)
43
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
27. Controlled Entity
Name of Entity
Parent Entity
Country of
Incorporation
31 December
2013
%
31 December
2012
%
Audio Pixels Holdings Limited
Australia
Controlled Entity
Audio Pixels Limited
28. Leases
Israel
100.00
100.00
Operating leases ‑ leasing arrangements (the Company as Lessor)
Operating leases relate to the strata title property owned by the consolidated entity with a remaining lease term of thirty
three months to 30 September 2016, with an option for a further term of three years. The operating leases contain rental
review clauses. The lessee does not have an option to buy the property at the expiry of the lease period.
Non‑cancellable operating lease receivables
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
31 December
2013
$
31 December
2012
$
147,518
358,153
‑
110,639
‑
‑
405,671
110,639
Operating leases ‑ leasing arrangements (the Company as lessee)
The parent company entered into a sublease arrangement in respect of its head office premises at Level 12,
75 Elizabeth Street, Sydney NSW commencing on 29 October 2012 for a period of 17 months to 30 March 2014.
Non‑cancellable operating lease payables
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
31 December
2013
$
31 December
2012
$
1,412
‑
‑
1,412
65,599
30,000
‑
95,599
At the date of this report, the Company is negotiating a new four year lease on the current premises from 31 March 2014.
The Company recovers 80% of the lease payments from director related entities who sublease space from the company on
a month to month arrangement.
44
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
29. Contingent Liability
The parent company has been advised of a potential derivative action in Israel by an individual shareholder of BE4 Limited,
an Israeli company in bankruptcy proceedings. At the date of this report the parent company has not been formally served.
The Directors do not believe the Company has a case to answer, and is prepared to vigorously defend any action if commenced.
30. Additional Company Information
Audio Pixels Holdings Limited is a listed public company, incorporated and operating in Australia.
Registered Office and Principal Place of Business
Level 12
75 Elizabeth Street
Sydney NSW 2000
Australia
Tel: (02) 9233 3915
Fax: (02) 9232 3411
www.audiopixels.com.au
The Company has 11 (2012: 11) employees in Israel.
45
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2013 ASX ADDITIONAL INFORMATION
Additional information required by the Australian Stock Exchange Listing Rules and not disclosed elsewhere in this report.
Home Exchange
The Company’s ordinary shares are quoted on the Australian Stock Exchange Limited under the trading symbol “AKP”.
The Home Exchange is Sydney. The Company also has a Level 1 American Depositary Receipts (ADR) program and
quotation on the OTCQX market in the United State of America under the code “ADPXY”.
Substantial Shareholders
At 14 February 2014 the following substantial shareholders were registered:
Fred Bart Group
Ordinary Shares
Percentage
of total
Ordinary Shares
5,441,250
21.17%
Voting Rights
At 14 February 2014 there were 893 holders of fully paid ordinary shares.
Rule 74 of the Company’s Constitution stipulates the voting rights of members as follows:
“Subject to any rights or restrictions for the time being attached to any class or classes of shares and to this Constitution:
(a) on a show of hands every person present in the capacity of a Member or a proxy, attorney or representative (or in more
than one of these capacities) has one vote; and
(b) On a poll every person present who is a Member or proxy, attorney or representative has member present has:
(i) For each fully paid share that the person holds or represents ‑ one vote; and
(ii) For each share other than a fully paid share that the person holds or represents ‑ that proportion of one vote
that the amount paid (not credited) on the shares bears to the total amount paid and payable on the share
(excluding amounts credited).”
Other Information
In accordance with Listing Rule 4.10.19, the Company has used the cash and assets in a form readily convertible to cash that
it had at the time of admission in a way consistent with its business objectives.
Distribution of Shareholdings
At 14 February 2014 the distribution of ordinary shareholdings were:
Range
1‑1,000
1,001 ‑ 5,000
5,001 ‑ 10,000
10,001 ‑ 100,000
100,001 and over
There were 88 ordinary shareholders with less than a marketable parcel.
There is no current on‑market buy‑back.
46
Ordinary
Shareholders
Number of
Shares
272
261
196
126
38
893
118,475
787,642
1,752,064
4,066,445
18,982,421
25,797,047
Annual Report 2013Audio Pixels Holdings Limited ACN 094 384 273 TWENTY LARGEST ORDINARY SHAREHOLDERS
At 14 February 2014 the 20 largest ordinary shareholders held 63.40% of the total issued fully paid quoted ordinary shares
of 25,707,047.
Shareholder
1. Meitav Dash Trusts Limited
2. Landed Investments (NZ) Limited
3. Fred Bart
4. Link Traders (Aust) Pty Limited
5. Kam Superannuation Fund Pty Limited
6. Bart Superannuation Pty Limited
7. Lee K Lau
8. Ian Dennis and Caroline Dennis
9. Cheryl Bart
10. Meitav Dash Trusts Limited
Continue reading text version or see original annual report in PDF format above