AWT International (Thailand) Limited Financial Statements for the year ended 30 June 2010

Transcription

1 AWT International (Thailand) Limited Financial Statements for the year ended 30 June 2010 AWT International (Thailand) Limited - 30 June 2010 Page 1

2 Contents Statement of comprehensive income Page 3 Statement of financial position Page 4 Statement of changes in equity Page 5 Statement of cash flows Page 6 Notes to the financial statements: Page 7 Company information Page 7 1. Summary of significant accounting policies Page 7 2. Income and expenses Page Income tax expense Page Cash and cash equivalents Page Trade and other receivables Page Current tax liabilities Page Trade and other payables Page Dividend payable Page Share capital Page Reserves Page Retained earnings Page Total equity reconciliation Page Notes to the statement of cash flows Page Commitments Page Auditors remuneration Page Related party disclosures Page Financial risk management disclosures Page Contingencies Page 29 Directors Declaration Page 30 Independent Auditor s Report Page 31 AWT International (Thailand) Limited - 30 June 2010 Page 2

3 Start of audited financial statements AWT International (Thailand) Limited Statement of comprehensive income for the year ended 30 June 2010 Note $ $ Revenue 2(a) 179, ,031 Expenses 2(b) (21,255) (40,591) Profit before income tax 158, ,440 Income tax expense 3(a), (b) (38,644) (33,351) Profit for the period 119, ,089 Other comprehensive income Exchange differences on translation of foreign operation 10(b) 41, ,556 Other comprehensive income for the period net of income tax 41, ,556 Total comprehensive income for the period 161, ,645 This statement should be read in conjunction with the accompanying notes. AWT International (Thailand) Limited - 30 June 2010 Page 3

4 AWT International (Thailand) Limited Statement of financial position as at 30 June 2010 Note $ $ Current assets Cash and cash equivalents 4 324, ,941 Trade and other receivables 5 64, ,755 Total current assets 389, ,696 Total assets 389, ,696 Current liabilities Trade and other payables 7 4,983 8,065 Current tax payable 6 23,537 16,659 Dividend payable 8 7,247 6,850 Total current liabilities 35,767 31,574 Total liabilities 35,767 31,574 Net assets 353, ,122 Equity Share capital 9 40, ,656 Reserves 10 52,929 11,398 Retained earnings , ,068 Total equity , ,122 This statement should be read in conjunction with the accompanying notes. AWT International (Thailand) Limited - 30 June 2010 Page 4

5 AWT International (Thailand) Limited Statement of changes in equity for the year ended 30 June 2010 Ordinary Preferred Total share share share Translation Retained Total Note capital capital capital reserve earnings equity $ $ $ $ $ $ Balances as at 1 July ,960 88, ,656 11, , ,122 Comprehensive income for the period: Profit for the period , ,603 Other comprehensive income ,531-41,531 Total comprehensive income for the period , , ,134 Transactions with owners in their capacity as owners: Repayment of share capital (55,470) (66,522) (121,992) - - (121,992) Dividend recognised as a liability Total transactions with owners in their capacity as owners (55,470) (66,522) (121,992) - - (121,992) Balances as at 30 June ,490 22,174 40,664 52, , ,264 Balances as at 1 July ,960 88, ,656 (173,158) 602, ,029 Comprehensive income for the period: Profit for the period , ,089 Other comprehensive income , ,556 Total comprehensive income for the period , , ,645 Transactions with owners in their capacity as owners: Repayment of share capital Dividend recognised as a liability (572,552) (572,552) Total transactions with owners in their capacity as owners (572,552) (572,552) Balances as at 30 June ,960 88, ,656 11, , ,122 This statement should be read in conjunction with the accompanying notes. AWT International (Thailand) Limited - 30 June 2010 Page 5

6 AWT International (Thailand) Limited Statement of cash flows for the year ended 30 June 2010 Note $ $ Cash flows from operating activities Cash receipts in the course of operations 287, ,506 Cash payments in the course of operations (69,260) (72,624) Cash generated from operations 218, ,882 Income tax paid (33,098) (36,390) Withholding tax paid on dividend payment to Parent (7,533) (56,364) Net cash from operating activities ,381 22,128 Cash flows from financing activities Repayment of share capital to owners 9 (114,459) - Dividend paid to Parent 8 - (507,272) Net cash from financing activities (114,459) (507,272) Net increase (decrease) in cash and cash equivalents 62,922 (485,144) Cash and cash equivalents at beginning of period 220, ,357 Effect of exchange rate fluctuations on the balances of cash held in foreign currencies 40, ,728 Cash and cash equivalents at end of period 4 324, ,941 This statement should be read in conjunction with the accompanying notes. AWT International (Thailand) Limited - 30 June 2010 Page 6

7 AWT International (Thailand) Limited Notes to the financial statements for the year ended 30 June 2010 Company information AWT International (Thailand) Limited was incorporated in Thailand on 10 May 2002 and will be referred to in these financial statements as the Company. The address of the Company s registered office in Thailand is 76/26 Soi Lang Suan, Ploenchit Road, Lumpini, Pratumwan, Bangkok. The Company is directly controlled by Australian Water Technologies Pty Ltd, a company incorporated in Australia that is a wholly-owned subsidiary of Sydney Water Corporation. Australian Water Technologies Pty Ltd will be referred to in these financial statements as the Parent. Sydney Water Corporation will be referred to in these financial statements as the ultimate Parent. The Company is not wholly-owned by the Parent as 51% of the issued share capital is owned by a Thailand shareholder. (Refer note 8). However, the Parent controls the financial and operating policy decisions affecting the Company. The Company s ultimate Parent, Sydney Water Corporation, is a statutory state owned corporation in NSW that is subject to the State Owned Corporations Act This Act effectively requires Sydney Water Corporation and each of its subsidiaries to be subject to the financial reporting requirements of Part 3 of the Public Finance and Audit Act 1983 and the associated requirements of the Public Finance and Audit Regulation Accordingly, these requirements apply to the Company for financial reporting purposes in the NSW public sector and are in addition to any necessary financial reporting requirements in Thailand in Baht currency. The principal activity of the Company is to market the ultimate Parent s expertise in water and water-related consulting services to customers in Thailand. In addition, the Company derives royalty revenue from a Know-how agreement with a Thailand water supply company. (Refer note 1(d)). The Company is a for-profit entity. The Company s financial statements for the year ended 30 June 2010 were authorised for issue in accordance with a resolution of directors on 3 September The significant accounting policies that have been adopted in the preparation of the financial statements are detailed below. 1. Summary of significant accounting policies (a) Basis of preparation The financial statements are general purpose financial statements, which have been prepared in accordance with applicable Australian Accounting Standards (including Australian Interpretations) adopted by the Australian Accounting Standards Board (AASB), mandates issued by NSW Treasury and other mandatory and statutory reporting requirements, including Part 3 of the Public Finance and Audit Act 1983 and the associated requirements of the Public Finance and Audit Regulation In preparing these financial statements, the accounting policies described below are based on the requirements applicable to for-profit entities in these mandatory and statutory requirements. The financial statements cover the financial performance and cash flows of the Company for the reporting period 1 July 2009 to 30 June 2010 and its financial position as at 30 June The financial statements have been prepared on the historical cost basis. The financial statements are presented in Australian dollars and all values are rounded to the nearest dollar ($). The accounting policies set out below have been consistently applied to all periods presented in the financial statements. Where relevant, comparative amounts have been restated to conform to the current reporting period s presentation, whether this is as a result of a change in accounting policy, the requirements of new or revised Australian Accounting Standards or Australian Interpretations, or a reclassification of items presented. (b) Statement of compliance The financial statements comply with all applicable Australian Accounting Standards, including Australian Interpretations. The financial statements also comply with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). AWT International (Thailand) Limited - 30 June 2010 Page 7

8 (c) Foreign currency Functional currency and presentation currency The functional currency of the Company is Thailand Baht, which is the currency used in Thailand. The presentation currency for preparing the financial statements of the Company for the purposes of financial reporting in the NSW public sector is Australian dollars. Transactions Transactions of the Company are undertaken in Thailand Baht currency. These are translated to Australian dollars for the purposes of these financial statements. Monetary assets and liabilities at the reporting date are translated to Australian dollars at the foreign exchange rate ruling on that date. Foreign exchange differences arising on translation are recognised in profit or loss. Net foreign exchange gains are classified as other income (refer note 1(e)) and net foreign exchange losses are classified as expenses. Translation of financial statements The assets and liabilities of the Company are translated into Australian dollars at the foreign exchange rate ruling at the reporting date. Equity items are translated at historical rates. Revenues and expenses are translated at a weighted average exchange rate for the reporting period, which is considered to approximate the foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences arising on retranslation are recognised in other comprehensive income and taken directly to a translation reserve, which is a separate component of equity. (d) Revenue Revenue is income that arises in the course of ordinary activities. Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. In respect of the significant categories of revenue earned, the following recognition criteria must also be met before revenue is recognised: Rendering of services The Company derives revenue for providing water-related consulting services to customers in Thailand. Revenue is recognised on an accrual basis when the services are provided and is measured by reference to the stage of completion, which is determined by reference to an assessment of costs incurred to date as a percentage of estimated total costs for each contract. Royalty revenue The Company derives royalty revenue from a Know-how agreement between the Company and a Thailand water supply company. Under this agreement, the Company has permitted its name and experience to be used by the particular Thailand water supply company in supplying water to a provincial water authority. The royalty revenue is based on 2.25% of the gross revenue arising from the sale of water by the Thailand water supply company to the provincial water authority. Royalty revenue is recognised on an accrual basis in line with the sale of water under the agreement. (e) Other income Other income comprises gains arising from either the disposal of recognised assets and liabilities or the remeasurement of some items to fair value at the reporting date that are required to be taken to profit or loss under the relevant applicable Australian Accounting Standards, such as foreign exchange gains on transactions (refer note 1(c)). (f) Expenses Expenses are recognised in profit or loss when incurred. Expenses include items that are incurred in the course of ordinary activities as well as various losses that arise from the remeasurement of some items at the reporting date that are required to be taken to profit or loss under the relevant applicable Australian Accounting Standards. Examples of losses are foreign exchange losses on transactions and asset impairment losses. Expenses are disclosed in these financial statements by nature. (Refer note 2(b)). AWT International (Thailand) Limited - 30 June 2010 Page 8

9 (g) Taxation The Company is subject to income tax in accordance with the tax jurisdiction that exists in Thailand. The Company applies the balance sheet method of tax-effect accounting to determine income tax expense and current and deferred tax assets and liabilities. Income tax expense on the operating result for the reporting period comprises both current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case the income tax itself is recognised directly in equity as part of other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income for the reporting period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable or receivable in respect of previous years. Deferred tax represents future assessable or deductible amounts that arise due to temporary differences existing at the reporting date between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes (their tax bases). Deferred tax balances are not recognised for temporary differences that arise from the initial recognition of assets or liabilities in a transaction that is not a business combination and that affect neither accounting profit or taxable profit. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Deferred tax assets and liabilities provided are based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities to which they relate. They are measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the tax laws enacted or substantively enacted at the reporting date. (h) Cash and cash equivalents Cash and cash equivalents in the statement of financial position comprise positive cash balances and any short-term investments with a maturity period of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purposes of the statement of cash flows, cash and cash equivalents consists of the above definition for the statement of financial position, net of any bank overdraft balance. Bank overdraft balances, if any, are shown as borrowings under current liabilities in the statement of financial position. (i) Trade and other receivables Trade and other receivables represent amounts that are receivable by the Company for providing services to customers prior to the end of the reporting period and that are yet to be collected. Trade and other receivables, which generally have settlement terms within 30 days, are recognised initially and subsequently carried at original invoice amount, which is their fair value, less any impairment losses recognised by way of an allowance for impairment that represents specific amounts considered to be either doubtful or uncollectible. Recognition at original invoice amount is adopted as this is not materially different to amortised cost, given the short-term nature of these receivables. The recoverability of trade receivables is regularly reviewed throughout the reporting period. The allowance for impairment is recognised when collection of the full amount invoiced is considered to be no longer probable after due consideration of factors such as the length of time in excess of the due date, financial difficulties of the debtor, past recoverability experience and prevailing economic conditions. All of these factors are considered to be objective evidence of impairment. Known bad debts are written off against the allowance as and when identified. (j) Impairment of assets At each reporting date, the carrying amounts of assets (other than any inventories and any deferred tax assets) are reviewed to determine whether there is an indication of impairment. If any such indication exists, a formal estimate of their recoverable amount is made. Where the carrying amount of an asset is greater than its recoverable amount, the asset is considered impaired. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised as an expense in profit or loss. Any reversals of impairment losses are also recognised in profit or loss. Impairment losses in respect of receivables are determined in accordance with the accounting policy in note 1(i). AWT International (Thailand) Limited - 30 June 2010 Page 9

10 (k) Trade and other payables Trade and other payables represent liabilities for goods and services provided to the Company prior to the end of the reporting period and that are unpaid. Trade and other payables are recognised in the statement of financial position at cost, which is considered to approximate amortised cost due to their short-term nature. They are not discounted, as the effect of discounting would not be material for these liabilities. Recognition of trade and other payables occurs when goods or services purchased by the Company have been received and an obligation to make future payments arises. (Refer note 7). (l) Dividend payable A liability for dividend payable is recognised in the reporting period in which the dividend is declared. This is considered to be the period in which the dividend has been proposed and agreed with the Company s shareholders. (m) Accounting standards and interpretations issued but not yet operative At the reporting date, a number of Australian Accounting Standards and Australian Interpretations adopted by the Australian Accounting Standards Board (AASB) had been issued but are not yet operative and have not been early adopted by the Company. The following is a list of these standards and interpretations and a description of their possible impact on the financial statements in the period of their initial application: AASB Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 5, AASB 8, AASB 101, AASB 107, AASB 117, AASB 118, AASB 136 & AASB 139 (issued May 2009) This standard makes amendments to AASB 5 Non-current Assets Held for Sale and Discontinued Operations, AASB 8 Operating Segments, AASB 101 Presentation of Financial Statements, AASB 107 Statement of Cash Flows, AASB 117 Leases, AASB 118 Revenue, AASB 136 Impairment of Assets, and AASB 139 Financial Instruments: Recognition and Measurement. The amendments are as a result of the Annual Improvements Project undertaken by the IASB, and implemented in Australian Accounting Standards by the AASB. The initial application of this standard will have no impact on the financial results of the Company. This standard is applicable to annual reporting periods beginning on or after 1 January 2010 (ie ). AASB Amendments to Australian Accounting Standards Group Cash-settled Share-based Payment Transactions [AASB 2] (issued July 2009) This standard clarifies and amends the scope of AASB 2 Share-based Payment by requiring an entity that receives goods or services in a share-based payment arrangement to account for those goods or services no matter which entity in a group settles the transaction, and no matter whether the transaction is settled in shares or cash. The standard supersedes the requirements previously included in AASB Interpretation 8 Scope of AASB 2 and AASB Interpretation 11 AASB 2 Group and Treasury Share Transactions. The initial application of this standard will have no impact on the financial results of the Company. This standard is applicable to annual reporting periods beginning on or after 1 January 2010 (ie ). AASB Amendments to Australian Accounting Standards Additional Exemptions for First-time Adopters [AASB 1] (issued September 2009) This standard makes amendments to AASB 1 First-time Adoption of Australian Accounting Standards. The amendments address the retrospective application of Australian Accounting Standards to ensure that entities applying them for the first time will not face undue cost or effort in the transition process in particular situations. The amendments specify requirements for entities using the full cost method in place of retrospective application of Australian Accounting Standards for oil and gas assets, and they exempt entities with existing leasing contracts from reassessing the classification of those contracts in accordance with Australian Interpretation 4 Determining whether an Arrangement contains a Lease when the application of their previous accounting policies would have given the same outcome. The initial application of this standard will have no impact on the financial results of the Company. This standard is applicable to annual reporting periods beginning on or after 1 January 2010 (ie ). AASB Amendments to Australian Accounting Standards Classification of Rights Issue [AASB 132] (issued October 2009) This standard makes amendments to AASB 132 Financial Instruments: Presentation. The amendments clarify that rights, options or warrants to acquire a fixed number of an entity s own equity instruments for a fixed amount in any currency are equity instruments if the entity offers the rights, options or warrants pro rata to all existing owners of the same class of its own nonderivative equity instruments. The initial application of this standard will have no impact on the financial results of the Company. This standard is applicable to annual reporting periods beginning on or after 1 February 2010 (ie ). AWT International (Thailand) Limited - 30 June 2010 Page 10

11 AASB 9 Financial Instruments (issued December 2009) This standard includes new requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the IASB s project to replace IAS 39 Financial Instruments: Recognition and Measurement (and consequently AASB 139 Financial Instruments: Recognition and Measurement ). These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of the existing AASB 139. The main changes from AASB 139 are as follows: (a) (b) (c) (d) (e) Financial assets are classified on the basis of both the objective of an entity s business model for managing its financial assets, and the characteristics of the contractual cash flows. This reduces the numerous categories of financial assets in AASB 139, each of which had its own classification criteria. The standard requires a financial asset to be measured at amortised cost if the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows, and if the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Otherwise, financial assets are to be measured at fair value. The standard allows an irrevocable option on initial recognition to present gains or losses on investments in equity instruments that are not held for trading in other comprehensive income. There is no subsequent recycling on disposal of the instrument through profit or loss. Investments in unquoted equity instruments must be measured at fair value. Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces an accounting mismatch from measuring assets or liabilities, or recognising the gains or losses on them, on different bases. Financial assets may be reclassified when there is a relevant change in the entity s business model. While these are significant changes to the classification and measurement requirements for financial assets for many entities, these amendments and the initial application of this standard will have no impact on the financial results of the Company. This standard is applicable to annual reporting periods beginning on or after 1 January 2013 (ie ). AASB Amendments to Australian Accounting Standards arising from AASB 9 [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 121, 127, 128, 131, 132, 136, 139, 1023 & 1038 and Interpretations 10 & 12] (issued December 2009) This standard makes consequential amendments to various standards and interpretations as a result of the issuance of AASB 9 Financial Instruments (see above). AASB 9 sets out new requirements for the classification and measurement of financial assets. The initial application of this standard will have no impact on the financial results of the Company. This standard is applicable to annual reporting periods beginning on or after 1 January 2013 when AASB 9 is applied (ie ). AASB 124 Related Party Disclosures (issued December 2009) This standard simplifies and clarifies the intended meaning of a related party and eliminates inconsistencies from the definition. The definition now identifies a subsidiary and an associate with the same investor as related parties of each other. Entities significantly influenced by one person and entities significantly influenced by a close family member of the family of that person are no longer related parties of each other. Also, the definition now identifies that whenever a person or entity has both joint control over a second entity and joint control or significant influence over a third party, the second and third entities are related parties of each other. Finally, a partial exemption is provided from the full disclosure requirements for government-related entities where they are controlled by the same government. The initial application of this standard will have no impact on the financial results of the Company. This standard is applicable to annual reporting periods beginning on or after 1 January 2011 when AASB 9 is applied (ie ). AASB Amendments to Australian Accounting Standards [AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031 and Interpretations 2, 4, 16, 1039 & 1052] (issued December 2009) This standard makes amendments to a number of Australian Accounting Standards and Interpretations. The main amendment is in relation to AASB 8 Operating Segments as a result of the issuance of revised AASB 124 Related Party Disclosures in December AASB 8 is not applicable to the Company. All the other amendments principally arise from editorial corrections made by the IASB to its Standards and Interpretations (IFRSs) and by the AASB to its pronouncements. These amendments are considered to be minor and will have no impact on the financial results of the Company. This standard is applicable to annual reporting periods beginning on or after 1 January 2011 (ie ). AASB Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments (Issued December 2009) This Interpretation addresses the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the financial liability. Such transactions are sometimes referred to as debt for equity swaps. The initial application of this interpretation will have no impact on the financial results of the Company. This interpretation is applicable to annual reporting periods beginning on or after 1 July 2010 (ie ). AWT International (Thailand) Limited - 30 June 2010 Page 11

12 AASB Amendments to Australian Accounting Standards arising from Interpretation 19 [AASB 1] (issued December 2009) This standard makes amendments to AASB 1 First-time Adoption of Australian Accounting Standards. The amendments arise from the issuance of IFRIC Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments by the IASB in November 2009 and the corresponding Australian Interpretation 19 (see above). They permit a first-time adopter of Australian Accounting Standards to apply the transitional provisions in Interpretation 19. The initial application of this standard will have no impact on the financial results of the Company. This standard is applicable to annual reporting periods beginning on or after 1 July 2010 (ie ). AASB Amendments to Australian Interpretation Prepayments of a Minimum Funding Requirement [AASB Interpretation 14] (issued December 2009) This standard makes amendments to AASB Interpretation 14 AASB 119 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. These amendments arise from the issuance of Prepayments of a Minimum Funding Requirement (Amendment to IFRIC 14) by the IASB in November The amendments relate to grammatical changes to remove an unintended consequence arising from the treatment of prepayments of future contributions to defined benefit plans in some circumstances where there is a minimum funding requirement. The initial application of this standard will have no impact on the financial results of the Company. This standard is applicable to annual reporting periods beginning on or after 1 January 2011 (ie ). AASB Amendments to Australian Accounting Standards Limited Exemption from Comparative AASB 7 Disclosures for First-time Adopters [AASB 1 & AASB 7] (issued February 2010) This standard makes amendments to AASB 1 First-time Adoption of Australian Accounting Standards and AASB 7 Financial Instruments: Disclosures. These amendments principally give effect to extending the transition provisions of AASB Amendments to Australian Accounting Standards Improving Disclosures about Financial Instruments to first-time adopters of Australian Accounting Standards. They permit first-time adopters to use the same transition arrangements in AASB as those applicable to existing preparers of financial statements prepared in accordance with Australian Accounting Standards. The initial application of this standard will have no impact on the financial results of the Company. This standard is applicable to annual reporting periods beginning on or after 1 July 2010 (ie ). AASB 1053 Application of Tiers of Australian Accounting Standards (issued June 2010) This standard establishes a differential financial reporting framework consisting of two Tiers of reporting requirements for preparing general purpose financial statements: (a) (b) Tier 1 Australian Accounting Standards; and Tier 2 Australian Accounting Standards Reduced Disclosure Requirements Tier 2 comprises the recognition, measurement and presentation requirements of Tier 1, and substantially reduced disclosures corresponding to those requirements. Tier 1 requirements must be complied with by for-profit entities in the private sector that have public accountability (as defined in the standard), and Australian, State, Territory and Local Governments. Tier 2 requirements can apply as an optional choice to for-profit private sector entities that do not have public accountability, all notfor-profit private sector entities and public sector entities other than Australian, State, Territory and Local Governments. Whether this becomes an optional choice for the Company in the future to present reduced disclosure requirements under the standard will depend on NSW public sector-wide policy decisions of the NSW Treasury. The initial application of this standard will have no impact on the financial results of the Company as it is concerned with disclosure only. This standard is applicable to annual reporting periods beginning on or after 1 July 2013 (ie ). AASB Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements (issued June 2010) This standard makes amendments to many Australian Accounting Standards and Interpretations, to introduce reduced disclosure requirements to these pronouncements for entities that prepare general purpose financial statements under the differential reporting framework and the two Tiers of financial reporting requirements established by Australian Accounting Standard AASB 1053 Application of Tiers of Australian Accounting Standards (see above). The initial application of this standard will have no impact on the financial results of the Company as it is concerned with disclosure only, and its applicability on the Company is dependent on NSW public sector-wide policy decisions of the NSW Treasury in the future. This standard is applicable to annual reporting periods beginning on or after 1 July 2013 (ie ). AASB Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 3, AASB 7, AASB 121, AASB 128, AASB 131, AASB 132 & AASB 139] (issued June 2010) This standard makes amendments to various Australian Accounting Standards as a consequence of the IASB s annual improvements project that provides a vehicle for non-urgent but necessary amendments being made to standards. The amendments mainly cover transitional arrangements in relation to business combinations, various requirements regarding share-based payment awards and measurement of non-controlling interests at the acquisition date of a business combination. The initial application of this standard will have no impact on the financial results of the Company. This standard is applicable to annual reporting periods beginning on or after 1 July 2010 (ie ). AWT International (Thailand) Limited - 30 June 2010 Page 12

13 AASB Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1, AASB 7, AASB 101 & AASB 134 and Interpretation 13] (issued June 2010) This standard makes further amendments to various Australian Accounting Standards and Interpretations as a consequence of the IASB s annual improvements project. The amendments clarify existing requirements in the standards and cover transitional arrangements for first-time adopters of Australian Accounting Standards, disclosures related to the statement of changes in equity and financial instruments, significant event disclosures for interim financial reporting and the fair value of award credits in customer loyalty programs. The initial application of this standard will have no impact on the financial results of the Company. This standard is applicable to annual reporting periods beginning on or after 1 January 2011 (ie ). AWT International (Thailand) Limited - 30 June 2010 Page 13

14 Note $ $ 2. Income and expenses Profit before income tax expense has been arrived at after including the following income and expense items: (a) Revenue Revenue from rendering services - Royalty revenue 179, ,031 Total revenue recognised in profit or loss 179, ,031 (b) Expenses Contractor service expenses 11,284 16,273 Transport expenses 46 4,292 Consultancy expenses ,123 Legal expenses - 1,340 Administration expenses 9,525 6,563 Total expenses recognised in profit or loss 21,255 40,591 AWT International (Thailand) Limited - 30 June 2010 Page 14

15 Note $ $ 3. Income tax expense Major components of income tax expense for the reporting period are as follows: (a) Recognised in profit or loss Current tax expense Current year 38,644 33,351 Total income tax expense in profit or loss 38,644 33,351 (b) Reconciliation between income tax expense and profit before income tax Profit before income tax 158, ,440 Income tax expense calculated using the domestic company tax rate of 30% (2009: 30%) 47,474 43,032 Decrease in tax expense due to: Amount not recognised for tax purposes (8,830) (9,681) Income tax expense 38,644 33, Cash and cash equivalents Current Cash 324, ,941 Cash and cash equivalents in statement of financial position and statement of cash flows 324, ,941 Significant terms and conditions Cash book balance During the reporting period, the cash book balance can fluctuate from a positive balance to a negative (overdraft) balance. When the cash book balance is negative at the reporting date, it is shown as a bank overdraft under borrowings in the statement of financial position. At the reporting date, the cash book showed a positive cash on hand balance of $324,325 (2009: $220,941 on hand) for the Company, which equated to the actual bank balance at the reporting date. Cash balances are non interest-bearing. AWT International (Thailand) Limited - 30 June 2010 Page 15

16 Note $ $ 5. Trade and other receivables Current Trade receivables Trade debtors billed: Other parties - 44,444 Other receivables - 44,444 Other debtors and accrued income: Other parties 64,706 80,311 64,706 80,311 Total trade and other receivables 64, ,755 There was no allowance for impairment for trade receivables at the current or previous reporting dates. Significant terms and conditions Trade debtors are required to be settled within 30 days. All other receivables are expected to be realised within 12 months of the reporting date. Refer also note 17(c) for a maturity analysis of all financial assets and financial liabilities. Ageing analysis of trade receivables billed to customers At the reporting date, the ageing analysis of outstanding trade receivables billed to customers is as follows: Trade debtors billed Gross amounts Not past due - 44,444 Trade debtors billed - 44,444 All other balances within trade and other receivables are not past due and are expected to be realised at the amounts carried in the statement of financial position when due. Allowance for impairment There was no allowance for impairment at the beginning or end of the reporting period and there was no movement during the reporting period. AWT International (Thailand) Limited - 30 June 2010 Page 16

17 Note $ $ 6. Current tax liabilities The current tax liability of $23,537 (2009: $16,659) represents the remaining balance of income taxes payable at the reporting date in respect of current and prior periods. 7. Trade and other payables Current Other payables Non-trade payables and accrued expenses: Other parties 4,983 8,065 4,983 8,065 Total trade and other payables 4,983 8,065 Significant terms and conditions Trade accounts payable and accrued expenses are normally settled within 30 days. Other non-trade payables are payable at various times throughout the reporting period. Trade and other payables are not secured against the assets of the Company. Refer also note 17(c) for a maturity analysis of all financial assets and financial liabilities. 8. Dividend payable Current Dividend outstanding on preferred shares * 7,247 6,850 Under the NTER, the Company is not required to maintain a dividend franking account. 7,247 6,850 * During the previous reporting period, the Company recognised a dividend of $563,636 attributable to the Parent who holds ordinary shares. This represents $28.76 per ordinary share. Of this amount, $507,272 was paid to the Parent after withholding tax of $56,364 was deducted and remitted to the taxation authorities in Thailand. Additionally, the Company recognised a liability for the dividend attributable to the shareholder that holds preferred shares. This dividend originally amounted to $8,916, and represents $0.44 per preferred share. After translation of this amount at the foreign exchange spot rate at the previous reporting date, the amount outstanding amounted to $6,850 at that date. This dividend payable was still outstanding at the current reporting date, and the only movement was due to changes in foreign exchange rates from the previous reporting date to the current reporting date. AWT International (Thailand) Limited - 30 June 2010 Page 17

18 Note $ $ 9. Share capital Issued and fully paid up share capital Balances at beginning of period: 19,600 ordinary shares (2009: 19,600 ordinary shares) of 100 Baht each fully paid and translated at $3.77 (2009: $3.77) per share in Australian Dollars 73,960 73,960 20,400 preferred shares (2009: 20,400 preferred shares) of 100 Baht each fully paid and translated at $4.35 (2009: $4.35) per share in Australian Dollars 88,696 88,696 Movements during the reporting period: Repayment of share capital: 162, ,656 14,700 ordinary shares (2009: Nil ordinary shares) of 100 Baht each fully paid and translated at $3.77 (2009: $Nil) per share in Australian Dollars (55,470) - 15,300 preferred shares (2009: Nil preferred shares) of 100 Baht each fully paid and translated at $4.35 (2009: $Nil) per share in Australian Dollars (66,522) - Balances at end of period: (121,992) - 4,900 ordinary shares (2009: 19,600 ordinary shares) of 100 Baht each fully paid and translated at $3.77 (2009: $3.77) per share in Australian Dollars 18,490 73,960 5,100 preferred shares (2009: 20,400 preferred shares) of 100 Baht each fully paid and translated at $4.35 (2009: $4.35) per share in Australian Dollars 22,174 88,696 40, ,656 Significant terms and conditions The preferred shares are held by a Thailand shareholder. The Parent is entitled to one vote per share at shareholders meetings. The holder of the preferred shares is entitled to one vote for every twenty preferred shares at any meeting of the shareholders. When a dividend is declared, dividends from the profits of the Company are allocated to the preferred shareholder at the rate of 10% of paid up capital prior to the holder of the ordinary shares. After the allocation of dividends on preferred shares, the remaining dividend would be distributed to the Parent. In the event of winding up the Company, the holder of the preferred shares is entitled to the return of its paid up capital prior to the distribution of the net assets to the Parent. AWT International (Thailand) Limited - 30 June 2010 Page 18

19 Note $ $ 10. Reserves (a) Carrying amount Translation reserve 52,929 11,398 (b) Movements during the reporting period Balance at beginning of period 11,398 (173,158) Translation adjustment on financial statements 41, ,556 Balance at end of period 52,929 11,398 The translation reserve records the foreign currency differences arising from the translation of the Company s financial statements from the functional currency of Thailand Baht to the presentation currency of Australian Dollars. (Refer note 1(c)). 11. Retained earnings Balance at beginning of period 140, ,531 Profit for the period 119, ,089 Dividend recognised as a liability 8 - (572,552) Balance at end of period 259, , Total equity reconciliation Balance at beginning of period 314, ,029 Total comprehensive income for the period 161, ,645 Repayment of share capital 9 (121,992) 294,645 Dividend recognised as a liability 8 - (572,552) Balance at end of period 353, ,122 AWT International (Thailand) Limited - 30 June 2010 Page 19

20 Note $ $ 13. Notes to the statement of cash flows Reconciliation of profit to net cash from operating activities Profit for the period 119, ,089 Adjustments for: Net movement in statement of financial position items applicable to operating activities: Trade and other receivables 63,093 (8,362) Trade and other payables (10,861) (76,560) Income tax assets and liabilities 5,546 (3,039) Net cash from operating activities 177,381 22,128 The Company had no standby credit arrangements as at the end of the current or previous reporting period. 14. Commitments The Company had no commitments as at the end of the current or previous reporting period. 15. Auditors remuneration Audit services Remuneration for audit or review of the financial statements of the Company: Auditors of the Company: - domestic auditors * 3,100 3,100 - overseas auditors 3,665 4,093 * This audit fee is paid or payable by the Parent. 6,765 7,193 AWT International (Thailand) Limited - 30 June 2010 Page 20

21 Note $ $ 16. Related party disclosures The Company has related party relationships with key management personnel (refer (a) below), their related entities (refer (b) below), the Parent (refer (c) below) and other related parties (refer (d) below). (a) Key management personnel compensation Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. This comprises all directors, whether executive or non-executive, and senior executives of the ultimate Parent who manage the business operations of the Company. Key management personnel compensation paid by the Company is as follows: Short-term employee benefits 2,287 2,554 2,287 2,554 The above comprises compensation relating to a non-executive Thailand director only. All other key management personnel received no compensation from the Company, nor did they receive compensation on behalf of the Company for services rendered to the Company from any other related entity. (b) Other transactions with key management personnel and related entities Any transactions undertaken with entities related to key management personnel are conducted on an arm's length basis in the normal course of business and on commercial terms and conditions. During the current or previous reporting periods, there were no transactions with such entities. (c) Transactions with the Parent Repayment of share capital to the Parent during the period 9 47,937 - The Company repaid share capital of $121,992 to its owners during the current reporting period. Of this amount, $55,470 related to the Parent s ordinary share capital. (Refer also note 9). However, after deducting withholding tax of $7,533 that was paid to the taxation authorities in Thailand, the repayment by the Company amounted to $47,937. Upon receipt by the Parent, this was further reduced by foreign exchange losses of $5,248, resulting in the Parent ultimately receiving $42,689 for the Company s share capital repayment. Dividend paid to the Parent during the period 8-507,272 The Company paid a total dividend of $563,636 during the previous reporting period, comprising $507,272 that was paid to the Parent and $56,364 that was paid to the taxation authorities in Thailand for withholding tax. (Refer also note 8). Apart from the above transactions, the Company did not transact with the Parent during the current or previous reporting periods. (d) Transactions with other related parties There were no transactions with other related parties in either the current or previous reporting period. AWT International (Thailand) Limited - 30 June 2010 Page 21

22 17. Financial risk management disclosures Financial instruments and financial risk factors The Company undertakes transactions in a range of financial instruments including: cash (refer note 4) receivables (refer note 5) payables (refer note 7) These financial instruments expose the Company to a range of financial risks in the normal course of its business operations. These risks include market risk (which comprises foreign currency risk and interest rate risk), credit risk and liquidity risk. Financial risk management policies, objectives and reporting The risks outlined above are managed by both the Thailand director and staff within the ultimate Parent, Sydney Water Corporation, who are responsible for managing the operations of the Company as part of the Sydney Water Group as a whole. The ultimate Parent has in place treasury management policies approved by its Board that the Company utilises as required to manage its risks. These policies provide a framework of strict controls so as to manage the impact of these exposures on the financial results of the Company within the context of the Sydney Water Group. The policies have also been set to operate in a manner that sits within the overall framework of the Public Authorities (Financial Arrangements) Act 1987 in NSW. The policies cover a number of aspects such as: approved delegation levels and segregation of duties for dealing, authorising and settling treasury management transactions approved credit limits for dealing with counterparties the types of treasury transactions, including derivatives, that the ultimate Parent can enter into on behalf of the Company approved limits for hedging foreign exchange exposures the structure of any debt and investment portfolios approved benchmarks for managing performance. Reporting of treasury and financial risk management performance occurs monthly within the ultimate Parent, and is done in conjunction with the Thailand director. Where appropriate, additional reporting is also provided to the ultimate Parent s Board on a quarterly basis, with specific treasury management matters being reviewed by the Finance Committee, a sub committee of the ultimate Parent s Board, also on a regular basis. Treasury management strategies and performance are also reported on and reviewed on a monthly basis by a Treasury Committee of senior finance managers within the Finance and Regulatory Division of the ultimate Parent. In addition, the NSW Treasury conducts regular reviews of the Sydney Water Group s treasury management activities as to their compliance with the Public Authorities (Financial Arrangements) Act Use of derivative financial instruments and hedge accounting The Company does not enter into any derivative financial instruments in its own right. Any such instruments would be entered into by the ultimate Parent on the Company s behalf only if there is a material exposure that needs to be hedged under the ultimate Parent s treasury management policies. The derivative financial instruments that the ultimate Parent would use to manage exposure to foreign currency risk are forward foreign exchange contracts. The ultimate Parent uses derivative financial instruments for hedging purposes only and does not enter into or trade them for speculative purposes. Strict internal guidelines and treasury management policies approved by the ultimate Parent s Board exist to control the use of derivative financial instruments. There were no derivative financial instruments in place at the reporting date for the Company and hedge accounting was not undertaken, as exposures were not considered material. Financial risk exposures (a) Market risk Market risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk normally comprises foreign currency risk and interest rate risk. However, only foreign currency risk applies to the Company, as it did not have any interest-bearing financial instruments as at the end of the current or previous reporting period. Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The objective in managing foreign currency risk is to minimise the impact that changes in foreign exchange rates will have on the Company s financial outcomes. Exposure to foreign currency risk for the Company arises from the purchase or supply of goods and services where payment is either required to be made in foreign currency or is pegged to foreign currency rates. In addition, it arises for the Company as a result of translation differences between its functional currency and its presentation currency for financial reporting purposes in the NSW public sector. In this regard, the exposure is not considered to be material and is therefore not hedged. AWT International (Thailand) Limited - 30 June 2010 Page 22

23 The policies used by the Company for management of foreign currency risks arising from contractual arrangements for the purchase or supply of goods and services are contained in the ultimate Parent s Treasury Management Policy manual. These policies include hedging of all foreign currency exposures in excess of Australian Dollars (AUD) 1,000,000 and foreign currency exposures above AUD 500,000 that exceed 90 days. The ultimate Parent manages foreign exchange exposures on behalf of the Company, where necessary, by entering into forward foreign exchange contracts to hedge the relevant purchase and sale commitments. It is the ultimate Parent s policy not to enter forward foreign exchange contracts until a firm commitment is in place and to negotiate the terms of these cash flow hedging derivatives to match the terms of the hedged item in order to maximise hedge effectiveness. There was no change in the level of foreign exchange risk exposure for the Company during the current reporting period. Sensitivity analysis The following table shows the effect on profit and equity after tax at the reporting date of a 10% adverse and favourable movement in exchange rates at that date, with all other variables being held constant and taking into account all underlying exposures and related hedges, if any. An adverse movement in exchange rates implies an increase in the AUD against the foreign currency. A favourable movement represents a fall in the AUD against the foreign currency. A sensitivity of 10% has been selected for use at the reporting date as this is considered reasonable based on the current AUD level and the historical volatility of the AUD against other currencies, particularly over the past five years. Based on the value of the AUD at the reporting date as compared with the currencies below, adverse or favourable movements in the foreign exchange rates would result in an increase or decrease in the AUD respectively. The currencies are abbreviated as follows: AUD Australian Dollars BHT Thailand Baht Post tax profit Equity Higher (lower) Higher (lower) Judgement of reasonably possible events $ $ $ $ Translation of the Company s financial statements: AUD/BHT + 10% 13,289 12,232 39,252 34,902 AUD/BHT - 10% (10,873) (10,008) (32,115) (28,557) (b) Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. In this context, it refers to the risk that indebted counterparties will default on their contractual obligations, resulting in financial loss to the Company. Exposures to credit risk for the Company exist in respect of all financial assets recognised in the statement of financial position, such as trade and other receivables, cash and cash equivalents. In respect of trade and other receivables, the Company monitors balances outstanding on an ongoing basis and uses the ultimate Parent s policies for the recovery or write-off of amounts outstanding. In respect of cash and cash equivalents, the Company only deals with creditworthy counterparties and recognised financial intermediaries as a means of mitigating against the risk of financial losses from defaults. The Company uses the ultimate Parent s policies to monitor the credit ratings of counterparties and to limit the amount of funds placed with those counterparties, depending on their credit rating. There was no change in the level of credit risk exposure for the Company during the current reporting period. At the reporting date, the only significant concentration of credit risk in which the Company is exposed relates to amounts receivable within trade and other receivables in note 5 arising from royalty revenue receivable under the Know-how agreement with a particular water supply company in Thailand. This represents a proportion of 99.8% (2009: 84.3%) of the total trade and other receivables at the reporting date. There were no other significant concentrations of credit risk in which the Company is exposed to any single counterparty or group of counterparties having similar characteristics. The Company is not materially directly exposed to overseas countries. At the reporting date, the maximum exposure to credit risk for the Company is represented by the carrying amount of each financial asset in the statement of financial position. (Refer notes 4 and 5). AWT International (Thailand) Limited - 30 June 2010 Page 23

24 (c) Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The objective of managing liquidity risk is to maintain a balance of funding and flexibility in ensuring sufficient cash is available each day to meet the Company s financial obligations and avoid going into overdraft. Liquidity risk is managed by the Company through the maintenance of cash flow forecasting models and by monitoring the daily bank balance to ensure sufficient funds are available at all times. It is also monitored by the ultimate Parent as part of its cash management activities for the Sydney Water Group as a whole. There was no change in liquidity risk exposure for the Company during the current reporting period. AWT International (Thailand) Limited - 30 June 2010 Page 24

25 Maturity analysis of financial assets and financial liabilities recognised in the statement of financial position The following tables reflect the maturity bands for the settlement of the carrying amounts of financial assets and financial liabilities recognised in the statement of financial position of the Company at the reporting date. Repricing or maturing in: 2010 Less than 1 to 2 2 to 3 3 to 4 4 to 5 More than Total Note 1 year years years years years 5 years $ $ $ $ $ $ $ Financial assets At amortised cost: Cash 4 324, ,325 Trade and other receivables 5 64, , , ,031 Financial liabilities At amortised cost: Trade and other payables 7 4, ,983 4, ,983 AWT International (Thailand) Limited - 30 June 2010 Page 25

26 Repricing or maturing in: 2009 Less than 1 to 2 2 to 3 3 to 4 4 to 5 More than Total Note 1 year years years years years 5 years $ $ $ $ $ $ $ Financial assets At amortised cost: Cash 4 220, ,941 Trade and other receivables 5 124, , , ,696 Financial liabilities At amortised cost: Trade and other payables 7 8, ,065 8, ,065 AWT International (Thailand) Limited - 30 June 2010 Page 26

27 Contractual maturities of all cash flows from financial liabilities The following table reflects the maturity bands for all contractual payments for settlement resulting from recognised financial liabilities as at the reporting date for the Company. For these obligations, the respective undiscounted cash flows for the maturity bands shown are presented. Repricing or maturing in: Less than 1 to 2 2 to 3 3 to 4 4 to 5 More than Total Note 1 year years years years years 5 years $ $ $ $ $ $ $ 2010 Trade and other payables 7 4, , Trade and other payables 7 8, ,065 AWT International (Thailand) Limited - 30 June 2010 Page 27

28 Fair values of financial assets and financial liabilities Fair values of financial assets and financial liabilities are determined on the following bases: Cash The carrying amount is considered to be a reasonable approximation of the fair value. Cash equivalents If any, fair values are determined on the basis of discounted cash flows using valuation rates supplied by independent market sources. Trade and other receivables The carrying amount is considered to be a reasonable approximation of the fair value. Trade and other payables The carrying amount is considered to be a reasonable approximation of the fair value. The following table details the carrying amounts and fair values at the reporting date for all financial instruments: Carrying amount Fair value Note $ $ $ $ Financial assets At amortised cost: Cash 4 324, , , ,941 Trade and other receivables 5 64, ,755 64, , , , , ,696 Financial liabilities At amortised cost: Trade and other payables 7 4,983 8,065 4,983 8,065 4,983 8,065 4,983 8,065 Fair value hierarchy There were no financial instruments at either the current or previous reporting dates that were carried in the statement of financial position at fair value determined by any of the three valuation methods defined below: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie, as prices) or indirectly (ie, derived from prices) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). AWT International (Thailand) Limited - 30 June 2010 Page 28

29 Management of capital The Company s objective when managing capital is to safeguard the Company s ability to continue as a going concern, so that it can continue to provide appropriate returns for its shareholders when required. This is achieved by maintaining an optimal capital structure that is reflective of the Company s size, current operations and level of activity. The Company s capital structure is monitored throughout each reporting period to ensure it does not diminish below the level of the previous reporting period and continues to increase over time to add value to both the Parent s group and the Sydney Water Group as a whole. The table below shows the level of capital employed at the reporting date for the Company. Note $ $ Interest-bearing debt - - Other interest-bearing liabilities - - Total interest-bearing liabilities - - Total equity , ,122 Total capital employed 353, ,122 There are no interest-bearing liabilities, and hence the level of capital employed for the Company is made up entirely of total equity as reported in the statement of financial position. Accordingly, debt to equity and gearing ratios for the Company, which are measures used by the ultimate Parent to manage its capital and the capital for the Sydney Water Group as a whole in accordance with the NSW Treasury s Commercial Policy Framework, are nil at the end of both the current and previous reporting periods. 18. Contingencies To the best of their knowledge and belief, the directors are not aware of any contingent liabilities or contingent assets existing at the end of the current or previous reporting periods that may result in a material cost, loss or economic benefit to the Company. End of audited financial statements AWT International (Thailand) Limited - 30 June 2010 Page 29

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