AWT INTERNATIONAL (THAILAND) LIMITED

Transcription

1 AWT INTERNATIONAL (THAILAND) LIMITED Annual Financial Statements for the year ended 30 June 2008 AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 page 1

2 Contents Income statement page 3 Statement of recognised income and expense page 4 Balance sheet page 5 Cash flow statement page 6 Notes to and forming part of 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 Share capital page Reserves page Retained earnings page Total equity reconciliation page Notes to the cash flow statement page Commitments page Auditors remuneration page Related party disclosures page Financial risk management disclosures page Segment reporting page Contingencies page 27 Directors Declaration page 28 Independent Auditor s Report page 29 AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 page 2

3 Start of audited Financial Statements AWT INTERNATIONAL (THAILAND) LIMITED INCOME STATEMENT for the year ended 30 June 2008 Note $ $ Revenue 2(a) 183, ,128 Expenses 2(b) (21,447) (44,958) Profit before income tax 161, ,170 Income tax expense 3(a), (b) (34,768) (34,926) Profit for the period 127, ,244 AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 page 3

4 AWT INTERNATIONAL (THAILAND) LIMITED STATEMENT OF RECOGNISED INCOME AND EXPENSE for the year ended 30 June 2008 Note $ $ Foreign operations: Exchange differences on translation of foreign operations (186,057) 31,867 Net gain (loss) in translation reserve before and after tax 9(b) (186,057) 31,867 Net income (expense) recognised directly in equity (186,057) 31,867 Profit for the period 127, ,244 Total recognised income and expense for the period 11 (58,827) 139,111 AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 page 4

5 AWT INTERNATIONAL (THAILAND) LIMITED BALANCE SHEET as at 30 June 2008 Note $ $ CURRENT ASSETS Cash and cash equivalents 4 527, ,985 Trade and other receivables 5 88,311 63,895 TOTAL CURRENT ASSETS 615, ,880 TOTAL ASSETS 615, ,880 CURRENT LIABILITIES Trade and other payables 7 6,093 37,752 Current tax payable 6 17,546 20,272 TOTAL CURRENT LIABILITIES 23,639 58,024 TOTAL LIABILITIES 23,639 58,024 NET ASSETS 592, ,856 EQUITY Share capital 8 162, ,656 Reserves 9 (173,158) 12,899 Retained earnings , ,301 TOTAL EQUITY , ,856 AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 page 5

6 AWT INTERNATIONAL (THAILAND) LIMITED CASH FLOW STATEMENT for the year ended 30 June 2008 Note $ $ CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts in the course of operations 143, ,486 Cash payments in the course of operations (59,292) (29,519) Cash generated from operations 84, ,967 Income tax paid (31,948) (26,388) Net cash from operating activities 12 52, ,579 Net increase (decrease) in cash and cash equivalents 52, ,579 Cash and cash equivalents at beginning of period 644, ,033 Effect of exchange rate fluctuations on the balances of cash held in foreign currencies (170,231) 28,373 CASH AND CASH EQUIVALENTS AT END OF PERIOD 4 527, ,985 AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 page 6

7 AWT INTERNATIONAL (THAILAND) LIMITED NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 COMPANY INFORMATION AWT International (Thailand) Limited ( the Company ) was incorporated in Thailand on 10 May 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. ( the Parent ), a company incorporated in Australia. The Company is not wholly owned by the Parent as 51 per cent 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 ultimate Parent is Sydney Water Corporation, 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 report for the year ended 30 June 2008 was authorised for issue in accordance with a resolution of Directors on 5 September The significant accounting policies that have been adopted in the preparation of the financial report are detailed below. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) BASIS OF PREPARATION The financial report is a general purpose financial report, which has 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 this financial report, the accounting policies described below are based on the requirements applicable to for-profit entities in these mandatory and statutory requirements. The financial report covers the financial performance of the Company for the reporting period 1 July 2007 to 30 June 2008 and its financial position as at 30 June The financial report has been prepared on the historical cost basis. The financial report is 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 report. Where relevant, comparative amounts have been restated to conform with the current reporting period s presentation. (b) STATEMENT OF COMPLIANCE The financial report complies with all applicable Australian Accounting Standards, including those Standards that are Australian equivalents to International Financial Reporting Standards ( AEIFRS ). Compliance with AEIFRS also ensures that the financial report complies with International Financial Reporting Standards ( IFRS ) issued by the International Accounting Standards Board ( IASB ). AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 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 report 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 this financial report. 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 the Income Statement. 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 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 per cent 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 the Income Statement under the relevant applicable Australian Accounting Standards, such as foreign exchange gains on transactions (refer Note 1(c)). (f) EXPENSES Expenses are recognised in the Income Statement 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 the Income Statement under the relevant applicable Australian Accounting Standards. Examples of losses are foreign exchange losses on transactions and asset impairment losses. Expenses are disclosed in this financial report by nature. (Refer Note 2(b)). AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 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 the Income Statement 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. 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 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, using tax rates (and tax laws) enacted or substantively enacted at the reporting date. (h) CASH AND CASH EQUIVALENTS Cash and cash equivalents in the Balance Sheet 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 Cash Flow Statement, cash and cash equivalents consists of the above Balance Sheet definition, net of any bank overdraft balance. Bank overdraft balances, if any, are shown as borrowings under Current Liabilities in the Balance Sheet. (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 doubtful debts 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 doubtful debts 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 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 the Income Statement. Any reversals of impairment losses are also recognised in the Income Statement. Impairment losses in respect of receivables are determined in accordance with the accounting policy in Note 1(i). (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 Balance Sheet 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. AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 page 9

10 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 Interpretations adopted by the 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 report in the period of their initial application: AASB 1049 Financial Reporting of General Government Sectors by Governments (issued September 2006) This Standard specifies requirements for financial reports of the General Government Sector of each government, which is not applicable to the Company. The initial application of this Standard will not impact on the financial results of the Company. The Standard is operative for annual reporting periods beginning on or after 1 July 2008 (ie. 2008/09). However, it is unlikely that it will ever individually come into operation (unless it is early adopted by a government in 2007/08) as it is being replaced by AASB 1049 Whole of Government and General Government Sector Reporting (issued October 2007), which has the same operative date. (See below). AASB 8 Operating Segments (issued February 2007) This Standard replaces the presentation requirements of segment reporting in AASB 114 Segment Reporting, which is currently not relevant to the Company. The initial application of this Standard will have no impact on the financial results of the Company and is only concerned with disclosures for entities where segment reporting is relevant. The Standard is operative for annual reporting periods ending on or after 1 January 2009 (ie. 2009/10). AASB Amendments to Australian Accounting Standards arising from AASB 8 (issued February 2007) This Standard makes changes to AASB 5 Non-current Assets Held for Sale and Discontinued Operations, AASB 6 Exploration for and Evaluation of Mineral Resources, AASB 102 Inventories, AASB 107 Cash Flow Statements, AASB 119 Employee Benefits, AASB 127 Consolidated and Separate Financial Statements, AASB 134 Interim Financial Reporting, AASB 136 Impairment of Assets, AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts. These changes are consequential changes due to the issuance of AASB 8 Operating Segments and include changes to references and to language compatible with AASB 8. The initial application of this Standard will have no impact on the financial results of the Company. The Standard is operative for annual reporting periods beginning on or after 1 January 2009 (ie. 2009/10). AASB Interpretation 12 Service Concession Arrangements (issued February 2007) This Interpretation addresses the accounting for service concession operators, but not grantors, for public-to-private service concession arrangements. It states that for arrangements falling within its scope, the infrastructure assets within the arrangements are not recognised as property, plant and equipment of the operator and that instead, the operator will recognise either a financial asset, an intangible asset or a combination of the two depending on the terms of the arrangement. The initial application of this Interpretation will not impact on the financial results of the Company. The Interpretation is operative for annual reporting periods beginning on or after 1 January 2008 (ie. 2008/09). AASB Amendments to Australian Accounting Standards arising from AASB Interpretation 12 (issued February 2007) This Standard makes amendments to AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards to allow a first-time adopter an optional exemption from full retrospective application of Interpretation 12 and allows recognition from the start of the earliest period presented in the financial report if retrospective application is impracticable. Application of this requirement must be made at the same time as Interpretation 12 Service Concession Arrangements. The initial application of this Standard will have no impact on the financial results of the Company. This part of the Standard is operative for annual reporting periods beginning on or after 1 January 2008 (ie. 2008/09). AASB Interpretation 4 Determining whether an Arrangement contains a Lease (issued February 2007) This Interpretation specifies criteria for determining whether an arrangement is, or contains, a lease. The determination is based on an assessment of whether fulfilment of the arrangement is dependent on the use of a specific asset and whether the arrangement conveys a right to use the asset. This Interpretation replaces the existing Interpretation 4 (issued in June 2005) to specifically exclude from its scope public-to-private service concession arrangements within the scope of Interpretation 12 AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 page 10

11 Service Concession Arrangements. The initial application of this Interpretation will have no impact on the financial results of the Company. The Interpretation is operative for annual reporting periods beginning on or after 1 January 2008 (ie. 2008/09). AASB Interpretation 129 Service Concession Arrangements: Disclosures (issued February 2007) This Interpretation requires specific disclosures about service concession arrangements entered into by an entity, whether as a grantor or as an operator. The required disclosures include significant terms of each individual arrangement that may affect the amount, timing and certainty of future cash flows. This Interpretation replaces Interpretation 129 Disclosure Service Concession Arrangements issued in July 2004 but must only be applied at the same time as Interpretation 12 Service Concession Arrangements. The initial application of this Interpretation will not impact on the financial results of the Company. The Interpretation is operative for annual reporting periods beginning on or after 1 January 2008 (ie. 2008/09). AASB 123 Borrowing Costs (issued June 2007) This Standard makes amendments to AASB 123 Borrowing Costs issued in July 2004 to require the capitalisation of all borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset, which is an asset that necessarily takes a substantial period of time to get ready for its intended use. In the July 2004 version of AASB 123, entities had a choice to either expense or capitalise such costs. This choice is no longer available under the revised AASB 123 and only capitalisation of such costs is permitted. All other borrowing costs, however, are to continue to be expensed. The initial application of this Standard will have no impact on the financial results of the Company. The Standard is operative for annual reporting periods beginning on or after 1 July 2009 (ie. 2009/10). AASB Amendments to Australian Accounting Standards arising from AASB 123 [AASB 1, AASB 101, AASB 107, AASB 111, AASB 116 & AASB 138 and Interpretations 1 & 12] (issued June 2007) This Standard makes consequential amendments to AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards, AASB 101 Presentation of Financial Statements, AASB 107 Cash Flow Statements, AASB 111 Construction Contracts, AASB 116 Property, Plant and Equipment, AASB 138 Intangible Assets, Interpretation 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities and Interpretation 12 Service Concession Arrangements as a result of the issue of the revised AASB 123 Borrowing Costs in June 2007 (see above). The amendments principally remove references to expensing borrowing costs on qualifying assets, as AASB 123 was revised to require such borrowing costs to be capitalised The initial application of this Standard will have no impact on the financial results of the Company. The Standard is operative for annual reporting periods beginning on or after 1 January 2009 (ie. 2009/10). AASB Interpretation 13 Customer Loyalty Programmes (issued August 2007) This Interpretation addresses accounting for customer loyalty programmes under which customers are granted loyalty award credits as part of a sales transaction and those credits can be redeemed by them in the future for discounted goods and services. The initial application of this Interpretation will not impact on the financial results of the Company. The Interpretation is operative for annual reporting periods beginning on or after 1 July 2008 (ie. 2008/09). AASB Interpretation 14 AASB 119 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (issued August 2007) Under Australian Accounting Standard AASB 119 Employee Benefits, the measurement of a defined benefit superannuation scheme recognised asset arising from a surplus in that scheme is limited to the present value of economic benefits available in the form of refunds from the scheme or reductions in future contributions to the scheme plus any unrecognised gains and losses. This Interpretation provides general guidance on when refunds or reductions in future contributions should be regarded as available by an employer sponsor in assessing that limit, particularly when a minimum funding requirement exists for the particular scheme. The initial application of this Interpretation will not impact on the financial results of the Company. The Interpretation is operative for annual reporting periods beginning on or after 1 January 2008 (ie. 2008/09). AASB 101 Presentation of Financial Statements (issued September 2007) This Standard will replace the existing AASB 101 (issued October 2006) and will make changes to the names and content of the Financial Statements of an entity. When operative, the Balance Sheet will be referred to as a Statement of Financial Position and the Cash Flow Statement will be referred to as a Statement of Cash Flows. Items of income and expense will be permitted to be displayed either in one single Statement of Comprehensive Income (combining the current Income Statement and Statement of Recognised Income and Expense) or two separate Statements - an Income Statement for items comprising profit or loss and a Statement of Comprehensive Income for non-owner changes in Equity such as movements in Reserves. Additionally, a new Statement of Changes in Equity will be required to display changes in Equity arising from transactions with owners in their capacity as owners. Whenever an entity applies an accounting policy retrospectively, the Standard also requires an entity to display an additional comparative column as at the beginning of the previous reporting period in its Statement of Financial Position. The Standard also requires disclosure of any reclassification adjustments from other comprehensive income to profit or loss. The initial application of this Standard will not impact on the financial results of the Company, as it is only concerned with presentation of the Financial Statements and their form and content. The Standard is operative for annual reporting periods beginning on or after 1 January 2009 (ie. 2009/10). AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 page 11

12 AASB Amendments to Australian Accounting Standards arising from AASB 101 (issued September 2007) This Standard makes editorial and terminology amendments to Australian Accounting Standards (including Interpretations) as a consequence of the issuance of revised AASB 101 Presentation of Financial Statements in September 2007 (see above). The changes are largely to better align Australian Accounting Standards (and Interpretations) with IFRS terminology, such as changing the term financial report to financial statements. The initial application of this Standard will have no impact on the financial results of the Company. The Standard is operative when the revised AASB 101 above is operative, being annual reporting periods beginning on or after 1 January 2009 (ie. 2009/10). AASB 1049 Whole of Government and General Government Sector Financial Reporting (issued October 2007) This Standard specifies requirements for whole of government financial reports and General Government Sector financial reports of each government, and as such is not applicable to the Company. When operative, the Standard will replace AASB 1049 Financial Reporting of General Government Sectors by Governments issued in September 2006 (see earlier) and AAS 31 Financial Reporting by Governments issued in November 1996 (as amended). The initial application of this Standard will not impact on the financial results of the Company. The Standard is operative for annual reporting periods beginning on or after 1 July 2008 (ie. 2008/09). AASB 1004 Contributions (issued December 2007) This Standard specifies requirements for financial reporting of contributions received by not-for-profit entities, local governments, government departments that are reporting entities, General Government Sectors and whole of governments. Accordingly, it is not applicable to the Company and will have no impact on its financial results upon initial application. When operative, this Standard together with AASB 1049 Whole of Government and General Government Sector Financial Reporting (see above), AASB 1050 Administered Items, AASB 1051 Land Under Roads, AASB 1052 Disaggregated Disclosures, AASB Amendments to Australian Accounting Standards arising from the Review of AAS 27, AAS 29 and AAS 31 and AASB Interpretation 1038 Contributions by Owners to Wholly-Owned Public Sector Entities (all issued in December see below) will supersede AASB 1004 Contributions issued in July 2004, AAS 27 Financial Reporting by Local Governments issued in June 1996 (as amended), AAS 29 Financial Reporting by Government Departments issued in June 1998 (as amended) and AAS 31 Financial Reporting by Governments issued in June 1998 (as amended). The Standard is operative for annual reporting periods beginning on or after 1 July 2008 (ie. 2008/09). AASB 1050 Administered Items (issued December 2007) This Standard specifies requirements for government departments relating to disclosure of administered items in their Financial Statements. It applies to government departments only. Accordingly, it is not applicable to the Company and will have no impact on its financial results upon initial application. When operative, this Standard together with AASB 1049 Whole of Government and General Government Sector Financial Reporting, AASB 1004 Contributions (see above), AASB 1051 Land Under Roads, AASB 1052 Disaggregated Disclosures, AASB Amendments to Australian Accounting Standards arising from the Review of AAS 27, AAS 29 and AAS 31 and AASB Interpretation 1038 Contributions by Owners to Wholly-Owned Public Sector Entities (see below) will supersede AAS 29 Financial Reporting by Government Departments issued in June 1998 (as amended). The Standard is operative for annual reporting periods beginning on or after 1 July 2008 (ie. 2008/09). AASB 1051 Land Under Roads (issued December 2007) This Standard specifies requirements for financial reporting of land under roads by local governments, government departments, General Government Sectors and whole of governments. Accordingly, it is not applicable to the Company and will have no impact on its financial results upon initial application. When operative, this Standard together with AASB 1049 Whole of Government and General Government Sector Financial Reporting, AASB 1004 Contributions, AASB 1050 Administered Items (see above), AASB 1052 Disaggregated Disclosures, AASB Amendments to Australian Accounting Standards arising from the Review of AAS 27, AAS 29 and AAS 31 and AASB Interpretation 1038 Contributions by Owners to Wholly- Owned Public Sector Entities (see below) will supersede AAS 27 Financial Reporting by Local Governments issued in June 1996 (as amended), AAS 29 Financial Reporting by Government Departments issued in June 1998 (as amended) and AAS 31 Financial Reporting by Governments issued in June 1998 (as amended). The Standard is operative for annual reporting periods beginning on or after 1 July 2008 (ie. 2008/09). AASB 1052 Disaggregated Disclosures (issued December 2007) This Standard specifies principles for reporting financial information by function or activity by local governments, and financial information about service costs and achievements by government departments. Accordingly, it is not applicable to the Company and will have no impact on its financial results upon initial application. When operative, this Standard together with AASB 1049 Whole of Government and General Government Sector Financial Reporting, AASB 1004 Contributions, AASB 1050 Administered Items, AASB 1051 Land Under Roads (see above), AASB Amendments to Australian Accounting Standards arising from the Review of AAS 27, AAS 29 and AAS 31 and AASB Interpretation 1038 Contributions by Owners to Wholly-Owned Public Sector Entities (see below) will supersede AAS 27 Financial Reporting by Local Governments issued in June 1996 (as amended) and AAS 29 Financial Reporting by Government Departments issued in June 1998 (as amended). The Standard is operative for annual reporting periods beginning on or after 1 July 2008 (ie. 2008/09). AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 page 12

13 AASB Amendments to Australian Accounting Standards arising from the Review of AAS 27, AAS 29 and AAS 31 (issued December 2007) This Standard makes amendments to AASB 3 Business Combinations, AASB 5 Non-current Assets Held for Sale and Discontinued Operations, AASB 8 Operating Segments, AASB 101 Presentation of Financial Statements, AASB 114 Segment Reporting, AASB 116 Property, Plant and Equipment, AASB 127 Consolidated and Separate Financial Statements and AASB 137 Provisions, Contingent Liabilities and Contingent Assets as a consequence of the AASB s short term review of the requirements in AAS 27 Financial Reporting by Local Governments, AAS 29 Financial Reporting by Government Departments and AAS 31 Financial Reporting by Governments. The initial application of this Standard will have no impact on the financial results of the Company. When operative, this Standard will apply at the same time as AASB 1049 Whole of Government and General Government Sector Financial Reporting, AASB 1004 Contributions, AASB 1050 Administered Items, AASB 1051 Land Under Roads, AASB 1052 Disaggregated Disclosures (see above) and AASB Interpretation 1038 Contributions by Owners to Wholly-Owned Public Sector Entities (see below), being annual reporting periods beginning on or after 1 July 2008 (ie. 2008/09). AASB Interpretation 1038 Contributions by Owners Made to Wholly-Owned Public Sector Entities (issued December 2007) This Interpretation is a result of changes made to the September 2004 version of UIG Interpretation 1038 with the same title arising from the December 2007 version of AASB 1004 Contributions (see above), dealing with accounting for restructures of administrative government arrangements. The Interpretation establishes criteria for determining whether a transfer of assets (or of assets and liabilities) to wholly-owned public sector entities from other entities in the same group of entities satisfies the definition of contributions by owners in AASB 1004 Contributions, based on the rights held directly or indirectly by the controlling government. The initial application of this Standard will have no impact on the financial results of the Company. When operative, the Interpretation will supersede UIG Interpretation 1038 Contributions by Owners Made to Wholly-Owned Public Sector Entities (issued September 2004) and will apply at the same time as AASB 1004 Contributions, AASB 1050 Administered Items, AASB 1051 Land Under Roads, AASB 1052 Disaggregated Disclosures and AASB Amendments to Australian Accounting Standards arising from the Review of AAS 27, AAS 29 and AAS 31 (all issued in December see above), being annual reporting periods beginning on or after 1 July 2008 (ie. 2008/09). AASB Amendments to Australian Accounting Standard Share-based Payments: Vesting Conditions and Cancellations [AASB 2] (issued February 2008) This Standard makes amendments to AASB 2 Share-based Payment as a result of the issuance in January 2008 of amendments to IFRS 2 Share-based Payment by the IASB regarding vesting conditions and cancellations in relation to sharebased payments. The amendments clarify that vesting conditions comprise service conditions and performance conditions only and that other features of a share-based payment transaction are not vesting conditions. They also specify that all cancellations, whether by the entity or by other parties, should receive the same accounting treatment. The initial application of this Standard will have no impact on the financial results of the Company. The Standard is operative for annual reporting periods beginning on or after 1 January 2009 (ie. 2009/10). AASB Amendments to Australian Accounting Standards Puttable Financial Instruments and Obligations arising on Liquidation [AASB 7, AASB 101, AASB 132 & AASB 139 and Interpretation 2] (issued March 2008) This Standard makes amendments to AASB 132 Financial Instruments: Presentation as a result of the issuance in February 2008 of amendments to IAS 32 Financial Instruments: Presentation by the IASB regarding puttable financial instruments and obligations arising on liquidation. These amendments result in consequential amendments to AASB 7 Financial Instruments: Disclosures, AASB 101 Presentation of Financial Statements, AASB 139 Financial Instruments: Recognition and Measurement and AASB Interpretation 2 Members Shares in Co-operative Entities and Similar Instruments. The Standard introduces an exception to the definition of financial liability to classify as equity instruments certain puttable financial instruments and certain instruments that impose on an entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation of the entity. The initial application of this Standard will have no impact on the financial results of the Company. The Standard is operative for annual reporting periods beginning on or after 1 January 2009 (ie. 2009/10). AASB 3 Business Combinations (issued March 2008) This Standard will replace the existing AASB 3 (issued in July 2004 and amended to December 2007) and establishes principles and requirements on how an acquirer applies the acquisition method of accounting in a business combination. It covers how the acquirer recognises and measures in its Financial Statements the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree, how the acquirer recognises and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and how the acquirer determines information to disclose on the nature and financial effects of the business combination. When operative, the Standard will replace AASB Interpretation 1001 Consolidated Financial Reports in relation to Pre-Date-of-Transition Dual Listed Company Stapling Arrangements issued in December 2005, AASB Interpretation 1002 Post-date-of-Transition Stapling Arrangements issued in December 2005 and AASB Interpretation 1013 Consolidated Financial Reports in relation to Pre-Date-of-Transition Stapling Arrangements issued in April The initial application of the Standard will have no impact on the financial results of the Company. The Standard applies prospectively to business combinations for which the acquisition date is on after the beginning of the first annual reporting period beginning on or after 1 July 2009 (ie. 2009/10). AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 page 13

14 AASB 127 Consolidated and Separate Financial Statements (issued March 2008) This Standard will replace the existing AASB 127 (issued in July 2004 and amended to December 2007) and incorporates amendments made as a result of the issuance of revised AASB 3 Business Combinations in March 2008 (see above). In general terms, the Standard specifies the circumstances in which an entity must consolidate the Financial Statements of another entity (being a subsidiary), the accounting for changes in the level of ownership interest in a subsidiary, the accounting for the loss of control of a subsidiary and disclosures in relation to the nature of the relationship between the entity and its subsidiaries. The initial application of the Standard will have no impact on the financial results of the Company. The amendments to the Standard arising from the revised AASB 3 can only be applied at the same time as the revised AASB 3 and are operative for annual reporting periods beginning on or after 1 July 2009 (ie. 2009/10). AASB Amendments to Australian Accounting Standards arising from AASB 3 and AASB 127 [AASBs 1, 2, 4, 5, 7, 101, 107, 112, 114, 116, 121, 128, 131, 132, 133, 134, 136, 137, 138 & 139 and Interpretations 9 & 107] (issued March 2008) This Standard makes consequential amendments to various existing Accounting Standards and Interpretations as a result of the issuance in March 2008 of revised AASB 3 Business Combinations and amended AASB 127 Consolidated and Separate Financial Statements (see above). The amendments include, inter alia, various editorial changes such as amending the term minority interests to non-controlling interests, as well as inserting references to the revised AASB 3 issued in March 2008 within the other Standards and Interpretations where necessary. The initial application of this Standard will have no impact on the financial results of the Company. The Standard can only be applied at the same time as revised AASB 3 and amended AASB 127 and is operative for annual reporting periods beginning on or after 1 July 2009 (ie. 2009/10). AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 page 14

15 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 15,667 20,071 Royalty revenue 167, ,057 Total revenue 183, ,128 (b) EXPENSES Contractor service expenses 12,264 31,217 Transport expenses 1,686 3,810 Consultancy expenses 2,628 - Legal expenses Administration expenses 4,621 9,557 Total expenses in the course of ordinary activities 21,199 44,958 Foreign exchange loss Total expenses 21,447 44,958 AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 page 15

16 Note $ $ 3. INCOME TAX EXPENSE Major components of income tax expense for the reporting period are as follows: (a) RECOGNISED IN THE INCOME STATEMENT Current tax expense Current year 34,768 34,926 (b) RECONCILIATION BETWEEN INCOME TAX EXPENSE AND PRE-TAX NET PROFIT Profit before income tax 161, ,170 Income tax expense calculated using the domestic company tax rate of 30% (2007: 30%) 48,599 42,651 Decrease in tax expense due to: Amount not recognised for tax purposes (13,831) (7,725) Income tax expense on pre-tax net profit 34,768 34, CASH AND CASH EQUIVALENTS CURRENT Cash 527, ,985 Cash and cash equivalents in the Balance Sheet and Cash Flow Statement 527, ,985 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 Balance Sheet. At the reporting date, the cash book showed a positive cash on hand balance of $527,357 (2007: $644,985 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 2008 page 16

17 Note $ $ 5. TRADE AND OTHER RECEIVABLES CURRENT Trade receivables: Trade debtors billed: Other parties 36, ,743 Allowance for doubtful debts 36, ,743 - (265,743) 36,950 - Other receivables: Other debtors and accrued income: Other parties 51,361 63,895 51,361 63,895 Total trade and other receivables 88,311 63,895 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 16(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 36,950 - Past due days - - Past due days - - Past due > 90 days - 265,743 Trade debtors billed 36, ,743 Allowance for doubtful debts Past due > 90 days - (265,743) Allowance for doubtful debts - (265,743) All other balances within Trade and other receivables are not past due and are expected to be realised at the amounts carried in the Balance Sheet when due. AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 page 17

18 Note $ $ MOVEMENT IN ALLOWANCE FOR DOUBTFUL DEBTS The movement during the reporting period for the Allowance for doubtful debts is as follows: Carrying amount at beginning of period (265,743) (252,548) Charge for impairment reversal (loss) made during the period - - Foreign exchange translation - (13,195) Amounts written off 265,743 - Carrying amount at end of period - (265,743) 6. CURRENT TAX LIABILITIES The current tax liability of $17,546 (2007: $20,272) 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 Trade payables: Parent - 15,274 Other parties - - Other payables: - 15,274 Non-trade payables and accrued expenses: Other parties 6,093 22,478 6,093 22,478 Total trade and other payables 6,093 37,752 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 16(c) for a maturity analysis of all financial assets and financial liabilities. AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 page 18

19 Note $ $ 8. SHARE CAPITAL ISSUED AND FULLY PAID UP SHARE CAPITAL 19,600 ordinary shares (2007: 19,600 ordinary shares) of 100 Baht each fully paid and translated at $3.77 (2007: $3.77) per share in Australian dollars 73,960 73,960 20,400 preferred shares (2007: 20,400 preferred shares) of 100 Baht each fully paid and translated at $4.35 (2007: $4.35) per share in Australian dollars 88,696 88,696 SIGNIFICANT TERMS AND CONDITIONS 162, ,656 The preferred shares are held by the 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 per cent 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 of 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. 9. RESERVES (a) CARRYING AMOUNT Translation reserve (173,158) 12,899 (b) MOVEMENTS DURING THE REPORTING PERIOD Balance at beginning of period 12,899 (18,968) Translation adjustment on Financial Statements (186,057) 31,867 Balance at end of period (173,158) 12,899 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)). 10. RETAINED EARNINGS Balance at beginning of period 475, ,057 Net profit 127, ,244 Balance at end of period 602, ,301 AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 page 19

20 Note $ $ 11. TOTAL EQUITY RECONCILIATION Balance at beginning of period 650, ,745 Total recognised income and expense in the Statement of Recognised Income and Expense (58,827) 139,111 Balance at end of period 592, , NOTES TO THE CASH FLOW STATEMENT RECONCILIATION OF PROFIT TO NET CASH FROM OPERATING ACTIVITIES Profit for the period 127, ,244 Adjustments for: Net movement in Balance Sheet items applicable to operating activities: Trade and other receivables (48,562) (13,580) Trade and other payables (28,885) 11,966 Income tax assets and liabilities 2,820 7,949 Net cash from operating activities 52, ,579 The Company had no standby credit arrangements as at the end of the current or previous reporting period. 13. COMMITMENTS The Company had no commitments as at the end of the current or previous reporting period. 14. AUDITORS' REMUNERATION Audit services Remuneration for audit or review of the financial report of the Company: Auditors of the Company: - domestic auditors * 3,200 3,200 - overseas auditors 3,650 4,167 * This audit fee is paid or payable by the Parent. 6,850 7,367 AWT INTERNATIONAL (THAILAND) LIMITED - 30 June 2008 page 20