Ambertech Limited
Annual Report 2018

Plain-text annual report

Annual Report 30 JUNE 2018 Mission Statement Ambertech Limited is an acknowledged leader in the identification, supply and distribution of advanced technologies for the Professional and Consumer audio/ visual markets within the Oceania region. Our purpose is to add significant operational value by developing and strengthening customer relationships, expanding horizons of opportunity and delivering strong and continuous financial growth to stake holders through our proven ability to integrate, implement and commercialise existing and emerging technologies. Contents 1. Letter to Shareholders 2. Our Business and Brands 3. Media Systems and Professional 4. Lifestyle Entertainment 5. New Zealand 6. A Year in Review 7. Financial Report 8. Shareholder Information 9. Corporate Directory Letter to Shareholders Dear Shareholders On behalf of your Board and executive management we would like to present you with your 2018 Annual Report. During the 2018 financial year we continued to work hard toward returning the business to sustainable profits. Our results were mixed across our various business units, with progress in some areas proving more difficult, especially in the smaller New Zealand market. Despite this, the Board and management of Ambertech believe the strategies in place are continuing to strengthen our presence in the markets in which we operate, and that the long-term goals of the business will be achieved. Our Lifestyle Entertainment Segment reported a stronger EBIT result on sales growth over the previous financial year of 7.5%. The main drivers of the improved result were sales into the residential and commercial installation markets, with display products leading the way. Sales into the major consumer electronics retail market remained consistent with the prior year, although the post-Christmas period remains difficult. We continue to see gains from the introduction of new brands into the commercial installation market and we are confident of further growth in this area in coming reporting periods. The Professional Segment sales results improved this year, with stronger results in our media systems business driving sales up over 10%. This growth had a limited impact on segment EBIT performance, as growth was primarily in areas where our business receives lower margins. We have done a significant amount of work in re-establishing some key new brands that we hope will assist with growth in future periods. The results from our New Zealand operation were poor during the year. Revenue was down in most areas of the business, and this led to a loss for the year. This business was supported for many years by project work that has not eventuated in recent reporting periods. We have completed a strategic review of the business in New Zealand and have implemented changes that we expect will assist in growing the sales in this area, as well as strengthening our marketing presence and brand management support. The Board of Ambertech are, collectively, substantial shareholders in Ambertech and their interests continue to be aligned with the interests of all shareholders. The Board would like to thank their skilled and dedicated management team and staff for their support, and believe they will be integral in achieving the strategic objectives of Ambertech in the future. Peter Wallace Chairman Peter Amos Managing Director Our Business PROFESSIONAL SEGMENT Media Systems The Media Systems team works with traditional television and radio broadcast industry as well as new media partners in diverse industries such as law enforcement and defence, sport, large scale events and education. From content creation and acquisition, delivery, processing and asset management, Amber Technology can offer turnkey packages for creating, delivering and managing all types of media content. Professional Products Amber’s Professional Products group has a strong reputation as a preferred supplier of high technology equipment for live sound in many different industry segments, including touring artists, live stage shows, film and television productions, broadcast news and sports, through to smaller sound installations in education facilities, houses of worship and smaller venues. LIFESTYLE ENTERTAINMENT SEGMENT Integrated Solutions The Integrated Solutions team offers cohesive systems for the custom installation and professional installation markets, with a portfolio of high end audio visual and infrastructure brands for residential and commercial installation projects. Customers typically engage the services of a professional installer for a full turnkey solution. Major Retail The Major Retail division works with home electronics retailers nationally, mass markets retail chains and independent specialist outlets to supply home entertainment solutions for consumers in the residential market. Our focus is on offering a comprehensive selection of high end audio visual and accessory brands for end users. Our Brands AC Infinity Dynaudio Professional NHT Tonebone Accent Audio Emotion Systems Niveo Professional T-Rex Effects Accent Visual EVS NTi Audio Accent Acoustics Framus Guitars NuVo Troll Systems Van Damme Videssence Vinten Vipranet GB Labs Gefen Haivision One For All Optoma Onkyo HDAnywhere Panasonic Warwick Basses Well Av Hercules iPort Integra Jet City Amplification Plura Primacoustic Proel Rean JTS Microphones Radial Engineering Launchport Solid State Logic Lenco Leon Speakers Sonance Sonarray Liberty AV Lumens LunaStone Litepanels Mackie Middle Atlantic MP Antennas Neutrik Newline Interactive Newtek Nexidia Silvus Technology SAM Snell Advanced Media Spectra Logic SurgeX Tannoy Tecxus Teradek TC Electronic TC Helicon Telestream Advanced Network Telemetry Aja Ambertec Cables Ampeg Apart Audio Arista Ateme AudioQuest Autoscipt Avid Aviwest BATS Wireless Blue Lucy Canare Cioks Contacta Cordial CP Cases David Horn Communications Digital Projection Dell EMC DPA Microphones Tactical Data Mesh Systems for Land, Sea and Air Media Systems and Professional Consolidation was the major feature of the media industry this financial year, with several significant mergers occurring. This was in part due to the change in media ownership laws in late 2017 and in part to a continuing need to reduce costs to remain competitive in the face of sustained pressure from media competitors in the streaming sector. There was also growth in broadcast service providers, and along with these changes in company structures there have come numerous changes in senior management. The ongoing consolidation during this financial year continued the uncertainty and instability from the previous year again impacting revenue from the major broadcasters. Many projects remained on hold during the company restructuring and management changes directly impacted our business. The positive is that now the majority of this restructuring has taken place the broadcasters are in a better position to move forward with plans. A number of broadcasters have announced much improved results and a number of technology projects are in the pipeline or underway. Highlights in the traditional broadcast space included significant business with Sky News Australia and Post Op Group, along with successfully introducing our new Ateme product line, with a number of substantial opportunities to be realised in the 2018/19 financial year. Ongoing Avid promotional events provide solid stepping stones into major ongoing opportunities, as well as an increased profile for Ambertech within a number of media organisations. Ambertech are well placed to capitalise on the shifts in the broadcast market, when the capital becomes available. With Ateme, we are a key player in the delivery of streaming video, and there are several high value projects on the table for this year that are driven by the changes in the market. Content production, particularly in sports, remains a key differentiator for players in the media space. Even as the delivery environment changes, new content will always be needed. Ambertech are placed very well in this area, with brands such as Vinten, EVS, AVID, Ateme, Telestream and Silvus all offering state-of the art and highly innovative solutions that are very attractive to content producers seeking to establish or maintain their profile in the market. There has been an increasing focus of the Emergency Services (Police, Fire, Ambulance, SES, RFS etc.) towards the deployment of networked command, control, communications and intelligence systems. Ambertech has two significant partners in the race to deploy networked systems for these services: Silvus and Viprinet. We are optimistic that the key capabilities of these partners will be well received and enable a substantial increase in deployment of networked solutions to Emergency Services. We also have several software products that can be implemented on top of such a network when the time comes. During the year we completed delivery of the first Silvus-based data systems to the Royal Australian Navy Anzac Frigate program as part of SEA 1442 Phase 4. In November 2017 Navy announced SEA 1442 Phase 5, which extends that deployment to the rest of the fleet, as well as allowing for wider deployment in naval operations. The establishment of Silvus as an accepted communications platform for the Australian Defence Force has significant ongoing potential, and although long term, these business threads are substantial and relatively reliable. Our divergence into these new markets also continues, with strong signs of success in the Defence, Law Enforcement and Security sectors. The initial Silvus deployments in these sectors have now proven themselves to be effective and reliable, and an ongoing purchasing program has been established with many of those customers. We have high hopes for the development of this market and have a significant focus on consolidating and expanding our presence there. Our professional products group added a new major brand, Mackie, to our portfolio in March 2018. Mackie is recognised as a market leader in providing products that have been making music across a wide- range of live sound and studio recording applications since 1988. The products will enhance our MI product offering and make us a key supplier in the dealer network. TC Electronic, DPA Microphones, Radial Engineering and Warwick continue to provide strong sales growth throughout the year which we are confident will continue. The need for Environmental Noise Monitoring is becoming mandatory in many areas and we are able to meet this demand with products from NTi Audio. Neutrik continue to provide innovative and high- quality products and the 2017/18 financial year saw record sales for this brand. This area of our business continues to remain stable, with the missing ingredient being some higher value capital purchases for the SSL brand. Lifestyle Entertainment In recent times the retail environment has seen broad changes due to a challenging economic environment and retailer consolidation in the categories we serve. Our aim is to provide continued merchandising support, deliver product at competitive prices and develop team members to be aware of new technological changes taking place in this market. During the financial year our major retail group focused on three clear objectives: • • Sustain a strong position in the supply of consumer electronics hardware to major retailers; Expand product and brand range in width and depth working with major retail partners; and • Drive awareness of technology and benefits through national training programs and incentives. Our major retail group continuously reviews our brand portfolio in order to strengthen the relationships with our retail partners. Our brands have benefited from these renewed strategies during the year, including: • Continuing education on Onkyo’s Dolby Atmos and Chromecast ready range in selected retail outlets, highlighting the benefits of voice control in home theatre; • Complementing the renewed home theatre range with accessories from Audioquest; and • Implementing merchandising standard for One For All products on floor through fixture development. Our integrated solutions group delivered worthwhile growth in sales and contribution to the Amber Technology business during the 2017/18 financial year. In a year of consolidation, growth came from increased sales of established brands in the portfolio. In particular: • Sales of our projection brands increased, based largely on the release and adoption of newer 4K models in both residential and commercial markets; • We continued to expand our footprint in the market for installed AV systems in small to medium-sized commercial applications; and • We achieved growth in the residential AV installation market, based on several longstanding and market-leading brand partnerships. • Sales growth was supported by several investments in increasing our on-the-ground engagement with customers: • We added to our field sales team; • We continued a program of in-market Road Shows that allow our customers to experience new products in their local markets; and • Our new website increased the ease with which customers can access our products and do business with Amber Technology between sales visits. Several new brands have joined the integrated solutions portfolio for the 2018/19 Financial Year. We look forward to positive business performance based on sales of these new brands and of our established brands. New Zealand Our New Zealand operation returned a loss for the 2018 financial year. We implemented a strategic review of the operations during the year which has seen the New Zealand operation leverage the support of the Australian operations more than ever before in order to restore profitability to the business. This includes the use of the Australian operations for marketing, brand management, and sales support. Our Integrated Solutions group has been able to target additional revenue in the commercial market and we have seen growth in the Lumens and Optoma brands as we look to establish ourselves in this competitive market. The residential installation market has been inconsistent in the past 12 months with a noticeable market slowdown in the second half of the year, driven by a flat economy and a change of government. The past year has seen us expand our offering of consumer products in six major retail businesses throughout NZ with the highlight being the One For All brand growing three years in a row. Nonetheless, this market continues to be very competitive. Our professional products area showed some growth over last year and the addition of additional resources to call on music stores has shown some good early results. Our brands have expanded into more stores this past year and with a representative now operating a regular call cycle to visit our customer base we expect this area of our business to continue growing. The Canare and Neutrik brands continue to drive this growth. We were more active this financial year in chasing a number of large contracts in the NZ Broadcast market, however we were unable to secure any significant business. We continue to use the assistance of Australian sales staff to chase business in this market. AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT The directors present their report together with the financial statements of the consolidated entity consisting of Ambertech Limited and its controlled entites, ("company" or "economic entity") for the year ended 30 June 2018 and the auditor's report thereon. DIRECTORS The qualifications, experience and special responsibilities of each person who has been a director of the Company at any time during or since the end of the financial year are listed below, together with the details of the company secretary as at the end of the financial year. All directors were in office during the whole of the financial year and up to the date of this report unless otherwise stated. Information on directors Peter Francis Wallace Chairman - Non Executive Director Member of the Audit and Risk Management Committee and Chairman of the Remuneration and Nomination Committee. Peter Wallace is the founder and Managing Director of Endeavour Capital Pty Limited, an independent corporate advisory firm. Prior to establishing Endeavour Capital Pty Limited in 1998, he was an Investment Director with private equity company Hambro-Grantham. Mr Wallace has been a non-executive director of over 30 groups of companies. He was a non-executive director of the listed entity The Hydroponics Company Limited until 15 March 2018. Mr Wallace has a Bachelor of Commerce degree from the University of New South Wales and a Master of Business Administration degree from Macquarie University. He is a member of Chartered Accountants Australia and New Zealand, and a fellow of the Australian Institute of Company Directors. Mr Wallace has been a director of Ambertech’s Group companies since February 2000 and Chairman of Ambertech Limited since October 2002. Peter Andrew Amos Managing Director Peter Amos graduated from Sydney Technical College (now University of Technology, Sydney) with a Radio Trade Certificate and from North Sydney Technical College with an Electronics Engineering Certificate. He joined Rank Electronics, the Company from which Ambertech was formed via a management buyout, as a technician in the mid 1970s, rising from Senior Technician to Service Manager. Upon the formation of Ambertech Limited, Mr Amos became Technical Director of the Ambertech Group. He also served in a senior role as Marketing Director of Quantum Pacific Pty Ltd, another company owned by Ambertech Limited, until it was sold in the mid 1990s. Mr Amos has served as Managing Director of Ambertech Limited since 1995 and presided over the growth of the Company since that date. Mr Amos has been a director of Ambertech’s Group companies since 1987. Thomas Robert Amos Non-Executive Director Tom Amos founded telecommunications consultancy Amos Aked Pty Limited in the early 1980s. His career in telecommunications and media spans over 30 years, during which time he has been involved in all facets of the industry. An engineer by profession, Mr Amos holds a B.E. (Electrical Engineering) degree from Sydney University. Mr Amos has also been prominent in the telecommunication deregulation debate over a period of 15 years as a (former) director and Vice Chairman of Australian Telecommunications Users Group Limited (“ATUG”) and as an industry commentator. He is a director of Wave Link Systems Pty Limited and a non executive director of listed entity Big Tin Can Holdings Limited. Mr Amos has been a director of Ambertech’s Group companies since June 1997. 1AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT Edwin Francis Goodwin Non-Executive Director Chairman of the Audit and Risk Management Committee Ed Goodwin holds a BSc in economics from London University and an MBA from Sydney University. In recent years he has been working in new venture finance, following 25 years in senior finance and business development roles primarily in the telecommunications industry. Mr Goodwin has been a director of Ambertech’s Group companies since June 1997. David Rostil Swift Non-Executive Director Member of the Remuneration and Nomination Committee. David Swift, who holds a B.E. (Electrical Engineering) degree from the University of NSW, has extensive experience in both the telecommunications and professional electronics industries. Mr Swift, a co-founder of Amos Aked Swift Pty Ltd and the founder of AAS Consulting Pty Ltd, is currently an independent telecommunications management and technology consultant operating in the Australasian Pacific region. Mr Swift was a Director and the Chairman of the Australian Telecommunications Users Group Limited (ATUG) and a Director of Amos Aked Swift (NZ) Limited. In addition to his consulting experience he has had significant management experience through senior positions with both Westpac Banking Corporation and Telecom Australia. Mr Swift has been a director of Ambertech's Group companies since June 1997. Company Secretary and Chief Operating Officer The following person held the position of Company Secretary at the end of the financial year: Robert John Glasson Robert Glasson joined Ambertech Limited on 1 July 2002 and also holds the position of Chief Operating Officer. He previously held the position of Chief Financial Officer up until 30 June 2015. He has a Bachelor of Business degree from the University of Technology, Sydney, and is a member of Chartered Accountants Australia and New Zealand. He was appointed to the role of Company Secretary on 1 November 2004. CORPORATE INFORMATION Nature of operations and principal activities The principal activities of the economic entity during the financial year were the import and distribution of high technology equipment to the professional broadcast, film, recording and sound reinforcement industries; the import and distribution of home theatre products to dealers; distribution and supply of custom installation components for home theatre and commercial installations to dealers and consumers, and the distribution of projection and display products with business and domestic applications. There have been no significant changes in the nature of these activities since the end of the financial year. Employees The economic entity employed 101 employees as at 30 June 2018 (2017: 84 employees). 2AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT REVIEW AND RESULTS OF OPERATIONS The consolidated loss of the economic entity after providing for income tax for the financial year was $143,000. This was an improvement on the loss after tax of $634,000 in the previous period. Total revenues for the financial year increased by 7.6% to $51,839,000 (2017: $48,176,000). Further information on the operations is included in the Chairman's and Managing Director's Report section of the Annual Report, and in the ASX Appendix 4E. FINANCIAL POSITION The directors believe the economic entity is in a reasonably strong and stable financial position with the potential to expand and grow its current operations. Whilst borrowings were increased by $333,000 during the financial year, the economic entity maintained a healthy working capital ratio. The economic entity's working capital, being current assets less current liabilities, has decreased by $580,000 to $7,600,000 as at 30 June 2018 (2017: $8,180,000). The net assets of the economic entity have also decreased by $186,000 to $10,022,000 as at 30 June 2018 (2017: $10,208,000). SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There were no significant changes in the state of affairs of the economic entity during the financial year. EVENTS SUBSEQUENT TO REPORTING DATE There were no matters that have arisen since the end of the financial year that have significantly affected, or may significantly affect the operations or state of affairs of the economic entity in future financial years. FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES The 2018-19 financial year has begun well, and as a result the Board of Ambertech Limited ("the Board") is cautiously optimistic that it can deliver on business strategies, which continue to focus on returning positive results for investors in the short term. At this early stage the Board is unable to provide guidance on potential results with any certainty; however expects to be able to update investors by the time of holding the company's AGM. The board and management remain focused on utilising the traditional strengths of the Ambertech business as a technical distributor to bring new products and brands to market and to redefine the methods and channels in which the business operates. We are continuing to progress these initiatives which are the key drivers of future revenue and profit growth. ENVIRONMENTAL REGULATION The company is subject to regulation by the relevant Commonwealth and State legislation. The nature of the company's business does not give rise to any significant environmental issues. 3AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT REMUNERATION REPORT (AUDITED) The information provided below includes remuneration disclosures that are required under the Corporations Act 2001 and its regulations. The disclosures contained within the remuneration report have been audited. In recent years the remuneration policy of the company has had to take into account competing interests. On one hand, shareholder returns are inadequate, while Directors, faced with their responsibilities to the Company, need to retain an experienced, expert Board and executive management team. Directors are aware that these staff may have opportunities to pursue their careers in less challenging environments with prospects of greater remuneration. Consistent with this view, there have been no significant changes to the remuneration strategy employed by the Board for the 2018 financial year. There has been no change in the remuneration of non-executive directors since 1 January 2010. Remuneration Strategy Non-Executive Director Remuneration Remuneration of non-executive directors is determined by the Remuneration and Nomination Committee. In determining payments to non-executive directors, consideration is given to market rates for comparable companies for time, commitment and responsibilities. The Remuneration and Nomination Committee reviews the remuneration of non-executive directors annually, based on market practice, duties and accountability. Remuneration of non-executive directors comprises fees determined having regard to industry practice and the need to obtain appropriately qualified independent persons. Fees do not contain any non-monetary elements. In response to the financial performance of the company the remuneration of non-executive directors has remained unchanged since 1 January 2010. Executive Remuneration Managing Director and Chief Operating Officer Remuneration of the Managing Director and the Chief Operating Officer (COO) is determined by the Remuneration and Nomination Committee. In this respect, consideration is given to normal commercial rates of remuneration for similar levels of responsibility. Remuneration comprises salaries, bonuses, contributions to superannuation funds and options. The Managing Director and COO receive an incentive element of their salary which is based on achievement of Key Performance Indicators (KPIs) relevant to their responsibilities. This includes a component that is based on the company's profit targets. The total incentive amounts payable are capped at a fixed rate rather than as a percentage of total remuneration, however if paid on target these incentives would have represented approximately 20% of total salary for the Managing Director and 15% of total salary for the COO. KPIs are set annually by the Remuneration and Nomination Committee and based on company performance targets, and vary according to the roles and responsibilities of the executive. At the same time, these KPIs are aligned to reflect the common corporate goals such as growth in earnings and shareholders' wealth, and achievement of working capital targets. Performance against the KPIs is assessed annually by the Remuneration and Nomination Committee and recommendations for payments determined following the end of the financial year. As a result of the financial performance of the company, the Managing Director and COO have foregone the entirety of their short term incentive and KPI salary components for the past eight financial years. 4AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT REMUNERATION REPORT (continued) Other Executives Remuneration of other key executives is set by the Managing Director and Chief Operating Officer, with reference to guidelines set by the Remuneration and Nomination Committee. In this respect, consideration is given to normal commercial rates of remuneration for similar levels of responsibility. Remuneration comprises salaries, bonuses, contributions to superannuation funds and options. Approximately 5% of the aggregate remuneration of the senior sales executives comprises an incentive element which is related to the KPIs of those parts of the company's operations which are relevant to the executive's responsibilities. The senior sales executives may also receive a sales commission component, which will vary with the sales performance of those parts of the sales business for which they are responsible. KPIs are set annually by the Remuneration and Nomination Committee, with a degree of consultation with executives to ensure their commitment. The measures are tailored to the areas of each executive's involvement and over which they have control. They are based on company performance targets, and at the same time, these KPIs are aligned to reflect the common corporate goals such as growth in earnings and shareholders' wealth, and achievement of working capital targets. Performance against the KPIs is assessed annually by the Remuneration and Nomination Committee and recommendations for payments determined following the end of the financial year. The table below sets out the economic entity's key shareholder indicators for the past 5 financial years: Dividends paid (cents per share) Closing share price at 30 June ($) Net profit/(loss) after tax ($'000) Details of Remuneration 2018 - $0.16 (143) 2017 - $0.15 (634) 2016 - 2015 - $0.125 $0.135 2014 - $0.20 237 (1,654) (1,000) Details of the remuneration of the directors and the key management personnel (as defined in AASB 124 Related Party Disclosures) of the economic entity are set out in the following tables. The key management personnel of the economic entity includes the following: Name Position Name Position P Wallace Non-Executive Chairman R Glasson Group COO, Company Secretary P Amos T Amos Group Managing Director R Neale General Manager, Lifestyle Entertainment Non-Executive Director R Caston General Manager, Broadcast & Professional E Goodwin Non-Executive Director N Lee General Manager, Amber New Zealand D Swift Non-Executive Director Key management personnel are those directly accountable to the Managing Director and the Board and responsible for the operational management and strategic direction of the Company. The nature and amount of each major element of the remuneration of each director of the economic entity and each of the key management personnel of the parent and the economic entity for the financial year are set out in the following tables. 5 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT REMUNERATION REPORT (continued) Elements of Remuneration 2018 Directors P Amos P Wallace T Amos E Goodwin D Swift Executives R Glasson R Caston R Neale N Lee Short-term employment benefits Post employment benefits Salary fees and leave Cash Bonus $ $ Superannuation $ Long-term employment benefits LSL accrued/ (taken) $ Share based payments Options $ 361,463 55,046 32,111 32,111 10,119 490,850 198,651 198,379 257,985 97,218 752,233 - - - - - - - 4,050 18,850 - 22,900 25,000 5,229 3,051 3,051 24,961 61,292 18,303 19,064 24,996 6,081 68,444 3,029 - - - - 3,029 2,006 9,556 1,572 - 13,134 2,553 - - - - 2,553 - - - - - Total $ 392,045 60,275 35,162 35,162 35,080 557,724 218,960 231,049 303,403 103,299 856,711 % Performance Related % Relating to Options 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1.8% 6.2% 0.0% 2.7% 0.7% 0.0% 0.0% 0.0% 0.0% 0.5% 0.0% 0.0% 0.0% 0.0% 0.0% (1) On 15 August 2017, a cash bonus of $4,050 was paid to Mr Caston relating to performance against KPI's. The bonus is 100% of the total available to Mr Caston under his KPI scheme. (2) Quarterly cash bonuses totalling $18,850 were paid to Mr Neale relating to performance against KPI's. The bonuses are 100% of the total available to Mr Neale under his KPI scheme. 2017 Directors P Amos P Wallace T Amos E Goodwin D Swift Executives R Glasson R Caston R Neale N Lee Short-term employment benefits Post employment benefits Salary fees and leave Cash Bonus $ $ Superannuation $ Long-term employment benefits LSL accrued/ (taken) $ Share based payments Options $ 340,316 55,046 32,111 32,111 90 459,674 189,238 172,340 245,027 99,061 705,666 - - - - - - - 4,600 19,500 - 24,100 33,991 5,229 3,051 3,051 34,990 80,312 18,303 34,992 34,992 6,051 94,338 6,902 - - - - 6,902 3,723 2,147 590 - 6,460 1,434 - - - - 1,434 - - - - - Total $ 382,643 60,275 35,162 35,162 35,080 548,322 211,264 214,079 300,109 105,112 830,564 % Performance Related % Relating to Options 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 2.1% 6.5% 0.0% 2.9% 0.4% 0.0% 0.0% 0.0% 0.0% 0.3% 0.0% 0.0% 0.0% 0.0% 0.0% (1) On 15 February 2017, a cash bonus of $4,600 was paid to Mr Caston relating to performance against KPI's. The bonus is 100% of the total available to Mr Caston under his KPI scheme. (2) Quarterly cash bonuses totalling $19,500 were paid to Mr Neale relating to performance against KPI's. The bonuses are 100% of the total available to Mr Neale under his KPI scheme. 6 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT REMUNERATION REPORT (continued) Service agreements An executive agreement exists between Peter Amos, the Managing Director, and Amber Technology Limited. This agreement provides that Mr Amos, for a period of 12 months from the date of termination, will not engage in activities in competition with the Amber Group. There is a notice period by either party of 12 months. The agreement commenced on 31 May 1999 and continues indefinitely. In the event that the company was to exercise its right to terminate the contract, the current payout value would be $380,000 (2017: $380,000). Share based compensation The company has adopted an Employee Share Option Plan (ESOP). The Board of Directors may determine the executives and eligible employees who are entitled to participate in the ESOP. The options issued under the ESOP will expire 5 years after the issue date, or earlier on any of the following events: a b c d e the eligible employee is dismissed with cause or has breached a restriction contained in his/her employment contract; the eligible employee dies while in the employ of the Company; the eligible employee is made redundant by the Company; the eligible employee’s employment with the Company is voluntarily terminated by the eligible employee; or the eligible employee’s employment terminates by reason of normal retirement. The total number of shares reserved for issuance under the ESOP, together with shares reserved for issuance under any other Option Plan, shall not exceed 5% of the diluted ordinary share capital in the Company (comprising all Shares, all Options issued under the ESOP and under any other Option Plan, and all other convertible issued securities). The ESOP provides the Board with the ability to determine the exercise price of the options, the periods within which the options may be exercised, and the conditions to be satisfied before the option can be exercised. The ESOP provides for adjustments in accordance with ASX Listing Rules if there is a capital reconstruction, a rights issue or a bonus issue. Options granted as remuneration during the year are set out below. Grant Details Exercised Lapsed Balance at beginning Grant Date No. Value $ No. Value $ No. Balance at end of year P Amos 500,000 - - - 500,000 During the financial year, nil options vested with key management personnel (2017: 166,666). None of these options were exercisable (2017: Nil). The options have been granted subject to the individual meeting predetermined performance criteria as determined by the Board. The options vest as follows: (i) One third of the options have vested (ii) One third have been carried forward to vest on the second anniversary of the date of issue; and (iii) The remaining one third will vest on the second anniversary of the date of issue. Should the performance criteria not be met for a particular year then any unvested options may be carried forward for one more year. In the event that performance criteria for the following year is not met, then the portion of the options which were available for vesting for that year shall be considered forfeited. In relation to bonus issues, each outstanding option confers on the option holder the right to receive, on exercise of those outstanding options, not only one share for each of the outstanding options exercised but also the additional shares the option holder would have received had the option holder participated in that bonus issue as a holder of ordinary shares. 7AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT REMUNERATION REPORT (continued) Interests of Directors At the date of this report the following interests were held by directors: Director P Wallace P Amos T Amos E Goodwin D Swift Ordinary Shares 2018 2017 486,528 4,313,843 5,484,625 2,883,556 2,995,826 486,528 4,313,843 5,484,625 2,883,556 2,995,826 This concludes the Remuneration Report which has been audited. DIVIDENDS There were no dividends paid or declared by the Company to members since the end of the previous financial year. DIRECTORS' MEETINGS The number of directors' meetings (including meetings of committees of directors) and the number of meetings attended by each of the directors of the Company during the financial year are: Director P Wallace P Amos T Amos E Goodwin D Swift Board Meetings Attended Held Audit and Risk Management Committee Meetings Held Attended Nomination and Remuneration Committee Attended Held 9 9 9 9 7 9 9 9 9 9 4 - - 4 - 4 - - 4 - 1 - - - 1 1 - - - 1 8 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' REPORT NON-AUDIT SERVICES It is the economic entity's policy to employ BDO East Coast Partnership (BDO) for assignments additional to their annual audit duties, when BDO's expertise and experience with the economic entity are important. During the year these assignments comprised primarily tax compliance assignments. The Board of Directors is satisfied that the auditors' independence is not compromised as a result of providing these services because: - - All non-audit services have been reviewed by the Audit and Risk Management Committee to ensure they do not impact the impartiality and objectivity of the auditor, and None of the services undermines the general principles relating to the auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, including reviewing or auditing the auditors' own work, acting in a management or decision making capacity for the company, acting as an advocate for the company or jointly sharing economic risks and rewards. During the year fees that were paid or payable for services provided by the auditor of the parent entity and its related practices are disclosed at note 26. The directors are satisfied that the provision of non-audit services during the year by the auditor is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party, for the purpose of taking responsibility on behalf of the company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the company with leave of the Court under section 237 of the Corporations Act 2001. AUDITORS' INDEPENDENCE DECLARATION A copy of the auditors' independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 10. INDEMNIFICATION OF OFFICERS The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of liability and the amount of the premium. ROUNDING The company is an entity to which Class Order 98/100 applies and, in accordance with this class order, amounts in this report and the financial statements have been rounded off to the nearest thousand dollars unless otherwise indicated. Signed in accordance with a resolution of directors. Director: P F Wallace P A Amos Dated this 28th day of August 2018. Sydney 9Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret St Sydney NSW 2000 Australia INDEPENDENT AUDITOR'S REPORT To the members of Ambertech Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Ambertech Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ declaration. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial performance for the year ended on that date; and (ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees. 10 Revenue recognition Key audit matter How the matter was addressed in our audit For the year ended 30 June 2018 the Group recognised revenue of $51,839 (000’s), as disclosed in Note 3 of the financial report. The Group’s management focuses on revenue as a key driver by which performance is measured. This area is a key audit matter due to the volume of transactions and significance of the total balance of revenue. To determine whether revenue had been appropriately recognised we undertook, amongst others, the following audit procedures: • • • • • Assessed the Group’s accounting policy for revenue to ensure it has been correctly formulated in accordance with the Australian Accounting Standards; Analysed revenue by segment and by product group in comparison to the prior period and to our expectations; Tested the operating effectiveness of internal controls surrounding the existence and occurrence of revenues; Performed cut-off testing to ensure that revenue transactions around year end have been recorded in the correct reporting period; and Evaluated the disclosures for revenue and revenue recognition accounting policies. Valuation of inventory Key audit matter How the matter was addressed in our audit As at 30 June 2018 the Group held inventory of $13,302 (000’s), as disclosed in Note 7 to the financial report. Due to the nature of the industry in which the Group operates, products sold have an inherent risk of obsolescence. To determine whether the valuation of inventory was appropriate at reporting date we undertook, amongst others, the following audit procedures: • Agreed inventory on hand to initial purchase invoice and subsequent sales invoice on sample basis and compared the carrying amount to the realisable value; Valuation of inventory is a key audit matter due to the size of the balance and the degree of estimation and judgement required to be made by the Group in determining whether evidence of obsolescence arises. • • • • Assessed the assumptions applied by the Group in determining the provision for obsolescence in comparison to recent sales experience and ageing of inventory; Analysed inventory turnover by product group in comparison to prior period and to expectations; Performed gross margin analysis by product group in comparison to prior periods; and Evaluated management’s policy for provisioning of inventory obsolescence and assessed whether this had been consistently applied throughout the financial year. 11 Other information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2018, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf This description forms part of our auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 4 to 8 of the directors’ report for the year ended 30 June 2018. 12 In our opinion, the Remuneration Report of Ambertech Limited, for the year ended 30 June 2018, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO East Coast Partnership Paul Bull Partner Sydney, 28 August 2018 13 Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret St Sydney NSW 2000 Australia DECLARATION OF INDEPENDENCE BY PULL BULL TO THE DIRECTORS OF AMBERTECH LIMITED As lead auditor of Ambertech Limited for the year ended 30 June 2018, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Ambertech Limited and the entities it controlled during the period. Paul Bull Partner BDO East Coast Partnership Sydney, 28 August 2018 BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees. 14 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2018 Revenue Cost of sales Gross profit Other income Employee benefits expense Distribution costs Marketing costs Premises costs Depreciation and amortisation expenses Finance costs Travel costs Other expenses (Loss) before income tax Income tax benefit (Loss) after income tax Other comprehensive income Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign operations Other comprehensive income for the year, net of tax Total comprehensive income for the year Economic Entity Note 2018 $'000 2017 $'000 3 4 3 4 4 4 5 51,839 (35,735) 16,104 - (9,496) (1,460) (740) (1,971) (312) (670) (546) (1,096) (187) 44 (143) 48,176 (32,721) 15,455 94 (9,111) (1,558) (1,306) (1,984) (259) (555) (465) (975) (664) 30 (634) (46) (46) (189) 1 1 (633) Earnings per share Basic earnings per share (cents) Diluted earnings per share (cents) 24 24 (0.5) (0.5) (2.1) (2.1) The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the attached notes. 15 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018 ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories TOTAL CURRENT ASSETS NON-CURRENT ASSETS Plant and equipment Intangible assets Deferred tax assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables Other financial liabilities Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Provisions Deferred tax liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Share capital Reserves Accumulated losses TOTAL EQUITY Economic Entity Note 2018 $'000 2017 $'000 22 6 7 9 10 5 11 12 13 13 5 14 15 859 9,013 13,302 23,174 1,254 78 1,230 2,562 1,014 7,728 12,045 20,787 987 - 1,202 2,189 25,736 22,976 9,084 4,726 1,764 15,574 134 6 140 15,714 10,022 11,138 (10) (1,106) 10,022 6,600 4,393 1,614 12,607 143 18 161 12,768 10,208 11,138 33 (963) 10,208 The consolidated statement of financial position is to be read in conjuntion with the attached notes. 16 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018 Foreign Currency Translation Reserve $'000 Share Based Payments Reserve $'000 Share Capital $'000 Retained Earnings $'000 Total Equity $'000 Economic Entity Balance as at 30 June 2016 11,138 Loss for the year Exchange differences on translation of foreign operations Total comprehensive income for the year Transactions with equity holders: Costs of share based payments - - - - Balance as at 30 June 2017 11,138 Loss for the year Exchange differences on translation of foreign operations Total comprehensive income for the year Transactions with equity holders: Costs of share based payments - - - - Balance as at 30 June 2018 11,138 31 - 1 1 - 32 - (46) (46) - (14) - - - - 1 1 - - - 3 4 (329) (634) - (634) - (963) (143) - (143) 10,840 (634) 1 (633) 1 10,208 (143) (46) (189) - 3 (1,106) 10,022 The consolidated statement of changes in equity is to be read in conjunction with the attached notes. 17AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018 Economic Entity Note 2018 $'000 2017 $'000 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Interest and other costs of finance paid Goods and services tax remitted Net cash provided by/(used in) operating activities 22 CASH FLOWS FROM INVESTING ACTIVITIES Payments for plant and equipment Payments for intangible assets - website Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings Repayment of borrowings Net cash provided by financing activities Net increase/(decrease) in cash and cash equivalents held Cash and cash equivalents at beginning of year Effect of exchange rate changes on the balance of cash and cash equivalents held in foreign currencies at the beginning of the financial year Cash and cash equivalents at end of year 22 The consolidated statement of cash flows is to be read in conjunction with the attached notes. 55,489 (50,829) 16 (670) (3,845) 161 (574) (85) (659) 343 - 343 (155) 1,014 - 859 52,979 (49,481) 18 (555) (3,669) (708) (85) - (85) 893 (34) 859 66 948 - 1,014 18AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: INTRODUCTION The financial statements cover the economic entity consisting of Ambertech Limited and its controlled entities. Ambertech Limited is a company limited by shares, incorporated and domiciled in Australia. Operations and principal activities Ambertech Limited is a distributor of high technology equipment to the professional broadcast, film, recording and sound reinforcement industries and of consumer audio and video products in Australia and New Zealand. Currency The financial statements are presented in Australian dollars and rounded to the nearest one thousand dollars. Registered office Unit 1, 2 Daydream Street, Warriewood NSW 2102. Authorisation of financial statements The financial statements were authorised for issue on 23 August 2018 by the Directors. The company has the power to amend the financial statements. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A) Overall Policy The principal accounting policies adopted in the preparation of these consolidated financial statements are stated in order to assist in a general understanding of the financial statements. These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001, as appropriate for profit oriented entities. The financial statements have been prepared under the historic cost convention. Statement of Compliance The financial statements comply with Australian Accounting Standards which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial statements and notes of the economic entity comply with International Financial Reporting Standards (IFRS). Going Concern The consolidated financial statements have been prepared on a going concern basis. For the year ended 30 June 2018, the consolidated entity incurred a loss after income tax of $143,000 (2017: loss of $634,000). In the same period the consolidated entity had operating cash inflows of $161,000 (2017: cash outflow of $708,000) A cash flow forecast for the next 12 months prepared by management has indicated that the consolidated entity will have sufficient cash assets to be able to meet its debts as and when they are due. The directors have therefore concluded that there are reasonable grounds to believe that the basis for the preparation of the financial statements on a going concern basis is appropriate. New, revised or amending Accounting Standards and Interpretations adopted The economic entity has adopted all of the new, revised or amending Accounting Standards and interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. New Accounting Standards issued but not yet effective The following standards, amendments to standards and interpretations have been identified as those which may impact the economic entity in the period of initial application. They are available for early adoption at 30 June 2018, but have not been applied in preparing these financial statements. (i) AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting periods beginning on or after 1 July 2018). The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and includes revised requirements for the classification and measurement of financial instruments requirements for financial instruments and hedge accounting. The key changes that may affect the Group on initial application include certain simplifications to the classification of financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit loss, and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. 19AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) A) Overall Policy (continued) AASB 9 also introduces a new model for hedge accounting that will allow greater flexibility in the ability to hedge risk, particularly with respect to hedges of non-financial items. Should the entity elect to change its hedge policies in line with the new hedge accounting requirements of the Standard, the application of such accounting would be largely prospective. The Group has established an AASB 9 project team and is in the process of completing its impact assessment of AASB 9. Based on a preliminary assessment performed over each line of business and product type, the effects of AASB 9 are not expected to have a material effect on the Group. AASB 2014-7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2014). AASB 2014-7 (issued December 2014) gives effect to the consequential amendments to Australian Accounting Standards (including Interpretations) arising from the issue of AASB 9: Financial Instruments (December 2014). More significantly, additional disclosure requirements have been added to AASB 7: Financial Instruments: Disclosures regarding credit risk exposures of the entity. This Standard also makes various editorial corrections to Australian Accounting Standards and an Interpretation. AASB 2014-7 mandatorily applies to annual reporting periods beginning on or after 1 January 2018. Earlier application is permitted, provided AASB 9 (December 2014) is applied for the same period. (ii) AASB 15: Revenue from Contracts with Customers, and the relevant amending standards (applicable to annual reporting periods beginning on or after 1 January 2018). When effective, this Standard will replace the current accounting requirements applicable to revenue with a single, principles-based model. Apart from a limited number of exceptions, including leases, the new revenue model in AASB 15 will apply to all contracts with customers as well as non-monetary exchanges between entities in the same line of business to facilitate sales to customers and potential customers. The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. To achieve this objective, AASB 15 provides the following five-step process:The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. To achieve this objective, AASB 15 provides the following five-step process: - - - - - identify the contract(s) with a customer; identify the performance obligations in the contract(s); determine the transaction price; allocate the transaction price to the performance obligations in the contract(s); and recognise revenue when (or as) the performance obligations are satisfied. The Group has established an AASB 15 project team and is in the process of completing its impact assessment on its revenue streams as detailed in Note 3. The majority of the Group sales are for sale of goods, where there is a single performance obligation and revenue is recognised at the point of sale or, where later, delivery to the end customer. There is no material impact from the adoption of AASB 15 on these sales. The revenue recognition approach historically applied by the Group for these sales are consistent with the principals of AASB 15. Management have identified some potential areas that will require further assessment to determine the impact of implementing the new standard. Management’s preliminary assessment will continue with detailed assessments of the following aspects of the Group’s revenue generating activities before any conclusions as to the possible impact of the new standard can be formulated: - - Contract revenue with milestone arrangements; and Maintenance and support contracts. In addition, the financial impact is dependent on the facts and circumstances at the time of transition. For these reasons it is not yet practicable to determine a reliable estimate of the financial impact of the Group. 20AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) A) Overall Policy (continued) (iii) AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 July 2019). When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases. The main changes introduced by the new Standard are as follows: - - - - - recognition of a right-of-use asset and lease liability for all leases (excluding short-term leases with a lease term 12 months or less of tenure and leases relating to low-value assets); depreciation of right-of-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components; inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the lease liability using the index or rate at the commencement date; application of a practical expedient to permit a lessee to elect not to separate non-lease components and instead account for all components as a lease; and inclusion of additional disclosure requirements. The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of initial application. The Group has established an AASB 16 project team and is in the process of completing its impact assessment of AASB 16. As at 30 June 2018, the Group has non-cancellable operating lease commitments of $7.022m, (30 June 2017 $8.396m). AASB 17 does not require the recognition of any right-of-use asset or liability for future payments for these leases; instead, certain information is disclosed as operating lease commitments in note 16. A preliminary assessment indicates that these arrangements will meet the definition of a lease under AASB 16, and hence the Group will recognise a right-of-use asset and corresponding liability in respect of these leases unless they qualify for a low value or short-term lease upon application of AASB 16. A reliable estimate of the financial impact on the Group’s consolidated result is dependent on a number of unresolved areas, such as the choice of transition and discount rates. In addition, the financial impact is dependent on the facts and circumstances at the time of transition. For these reasons it is not yet practicable to determine a reliable estimate of the financial impact of the Group. B) Goods and Services Tax Revenues, expenses and assets are recognised net of the amount of GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows. 21AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 3: REVENUE A) Revenue - Sale of goods and services - Interest received Economic Entity 2018 $'000 2017 $'000 51,823 16 51,839 48,158 18 48,176 Revenue Recognition Sales revenue comprises revenue earned (net of returns, discounts and allowances) from the provision of goods and services to entities outside the economic entity. Sale of goods Revenue from the sale of goods is recognised when all significant risks and rewards of ownership have been transferred to the buyer. In most cases this coincides with the transfer of legal title, or the passing of possession to the buyer. Rendering of services Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. Interest revenue Interest revenue is recognised as it accrues using the effective interest method. B) Other income - Net foreign exchange gains - Net profit on disposal of plant and equipment Dividend revenue Dividends are recognised as income as they are received, net of any franking credits. NOTE 4: EXPENSES Additional information on the nature of expenses A) Inventories Cost of sales Movement in provision for inventory obsolescence B) Employee benefits expense Salaries and wages Defined contribution superannuation expense Employee termination expense Share-based payments expense - - - 93 1 94 35,735 32,721 (127) 131 8,552 790 151 3 9,496 7,888 891 331 1 9,111 22 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 4: EXPENSES (continued) C) Depreciation Plant and equipment Furniture and fittings Leasehold improvements Leased plant and equipment D) Amortisation Website costs E) Bad and doubtful debts F) Rental expense on operating leases: Minimum lease payments NOTE 5: INCOME TAX A) Major components of income tax Deferred tax Income tax (benefit) B) Reconciliation between income tax and prima facie tax on accounting profit/(loss) (Loss)/profit before income tax Tax at 30% (2017:30%) Tax effect of non deductible expenses/non assessable income - Entertainment - Other items Unused tax losses not recognised as deferred tax assets Recoupment of prior year tax losses not previously brought to account Income tax (benefit) C) Applicable tax rate The applicable tax rate is the national tax rate in Australia of 30%. D) Analysis of deferred tax assets Employee benefits Plant and equipment Accrued expenses Provision for impairment of receivables Provision for obsolesence Provision for warranty Inventory Other Economic Entity 2018 $'000 2017 $'000 83 67 139 16 305 7 42 61 31 144 16 252 7 32 1,480 1,463 (44) (44) (187) (56) 16 7 (11) - (44) 470 245 129 30 228 40 56 32 1,230 (30) (30) (664) (199) 12 4 - 153 (30) 450 205 149 18 266 36 62 16 1,202 23 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 5: INCOME TAX (continued) E) Analysis of deferred tax liabilities Unrealised foreign currency gain Other Economic Entity 2018 $'000 2017 $'000 - 6 6 10 8 18 F) Income Tax The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. G) Tax consolidated group Ambertech Limited and its Australian wholly owned controlled entities have implemented the tax consolidation legislation. The head entity, Ambertech Limited, and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a ‘stand-alone taxpayer’ in its own right. Current tax liabilities/assets and deferred tax assets arising from unused tax losses and tax credits are immediately transferred to the head entity. The tax consolidated group has entered a tax sharing agreement whereby each company in the group contributes to the income tax payable by the group in proportion to their contribution to the group’s taxable income. Differences between the amounts of net tax assets and liabilities derecognised and the net amounts recognised pursuant to the funding arrangement will be recognised as either a contribution by, or distribution to the head entity. H) Tax Losses In order to recognise a deferred tax asset relating to tax losses, the Directors must be satisfied that forecast results provide sufficient evidence that the economic entity will be able to utilise tax losses against future taxable profits of the economic entity. As a general rule, Directors will consider forecast reults over a three year period as a guide to determining the recoverability of the asset. In 2015 the board determined that it could no longer justify the recognition of a deferred tax asset resulting from accumulated tax losses. At balance date, total Australian unused tax losses available amounted to $5,102,633 (2017: $5,414,184). The potential tax benefit of these losses at 30% is $1,530,790 (2017: $1,624,255). 24 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 6: TRADE AND OTHER RECEIVABLES Current Trade receivables Provision for impairment of receivables Other receivables Prepayments Economic Entity 2018 $'000 2017 $'000 8,855 (101) 8,754 104 155 9,013 7,555 (59) 7,496 96 136 7,728 A) Current trade receivables are non-interest bearing loans, generally between 30 and 60 day terms. Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. B) A provision for impairment is recognised when there is objective evidence that a trade or other receivable is impaired. These amounts have been included in the other expenses item. The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision is assessed by taking into account the ageing of receivables, historical collection rates, and specific knowledge of the individual debtor's financial position. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that the economic entity will not be able to collect all amounts due according to the original terms of the receivables. C) Movement in the provision for impairment of receivables is as follows: Current trade receivables Opening balance Charge for the year Amounts written off Closing balance 59 42 - 101 160 48 (149) 59 D) The economic entity's exposure to credit risk and impairment losses related to trade and other receivables is disclosed at note 23. 25 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 7: INVENTORIES Current Finished goods Stock in transit Provision for obsolescence Economic Entity 2018 $'000 2017 $'000 12,112 1,962 14,074 (772) 13,302 11,859 1,085 12,944 (899) 12,045 Inventories A) Inventories include finished goods and stock in transit and are measured at the lower of weighted average cost and net realisable value. Costs are assigned on a first-in first-out basis and include direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenses. B) Provision for impairment of inventories Movement in the provision for obsolescence is as follows: Opening balance Charge for the year Amounts written off Closing balance 899 389 (516) 772 768 412 (281) 899 The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that affect inventory obsolescence. NOTE 8: CONTROLLED ENTITIES Entity Parent Entity - Ambertech Limited Subsidiaries of Ambertech Limited Amber Technology Limited - Subsidiaries of Amber Technology Limited - - Alphan Pty Limited Amber Technology (NZ) Limited Country of Incorporation Percentage Owned 2018 2017 Australia Australia 100% 100% Australia New Zealand 100% 100% 100% 100% A controlled entity is any entity controlled by Ambertech Limited. Control exists where Ambertech Limited has the capacity to dominate the decision-making in relation to the financial and operating policies of another entity so that the other entity operates with Ambertech Limited to achieve the objectives of Ambertech Limited. All inter-company balances and transactions between entities in the economic entity, including any unrealised profits or losses, have been eliminated on consolidation. 26 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 9: PLANT AND EQUIPMENT Non-Current A) Carrying amounts Cost Accumulated depreciation 2018 $'000 2017 $'000 2018 $'000 2017 $'000 Net carrying amount 2017 2018 $'000 $'000 Economic Entity Plant and equipment Furniture and fittings Leasehold improvements Leased plant and equipment Total plant and equipment 1,434 942 1,415 171 3,962 1,327 484 1,412 171 3,394 (1,233) (480) (884) (111) (2,708) (1,153) (413) (745) (96) (2,407) 201 462 531 60 1,254 B) Reconciliation of carrying amounts: 2018 Plant and equipment $'000 Furniture and fittings $'000 Leasehold improvements $'000 Balance at the beginning of the year Additions Disposals Depreciation and amortisation expense Carrying amount at the end of the year 174 110 - (84) 200 71 460 - (67) 464 667 3 - (139) 531 2017 Plant and equipment $'000 Furniture and fittings Leasehold improvements $'000 $'000 Balance at the beginning of the year Additions Disposals Depreciation and amortisation expense Carrying amount at the end of the year 149 88 (2) (61) 174 102 - - (31) 71 812 - - (145) 667 Leased plant and equipment $'000 75 - - (16) 59 Leased plant and equipment $'000 90 - - (15) 75 174 71 667 75 987 Total $'000 987 573 - (306) 1,254 Total $'000 1,153 88 (2) (252) 987 Recognition and measurement C) Plant and equipment is stated at historical cost less depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation of property, plant and equipment D) Plant and equipment is depreciated over its estimated useful life taking into account estimated residual values. The straight line method is used. 27 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 9: PLANT AND EQUIPMENT Non-Current (continued) D) Depreciation of property, plant and equipment (continued) Plant and equipment is depreciated from the date of acquisition or, in respect of leasehold improvements, from the time the asset is completed and ready for use. The depreciation rates used for each class of plant and equipment remain unchanged from the previous year and are as follows: Class of Asset Useful life Plant and equipment Furniture and fittings Leasehold improvements Leased plant and equipment 3-8 years 3-8 years Term of the lease Term of the lease The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the plant and equipment or cash generating units to which the plant and equipment belong are written down to their recoverable amount. NOTE 10: INTANGIBLE ASSETS Non-Current Net carrying amounts and movements during the year Goodwill at cost Less impairment Website at cost Less accumulated amortisation Economic Entity 2018 $'000 2017 $'000 2,970 (2,970) - 85 (7) 78 78 2,970 (2,970) - 173 (173) - - Reconciliation of written down values: Opening balance at 1 July 2017 Additions Impairment Amortisation expense Closing balance at 30 June 2018 Goodwill Website $'000 - $'000 - Total $'000 - - - - - 85 - (7) 78 85 - (7) 78 Recognition and measurement A) Goodwill All business combinations are accounted for by applying the acquisition method. Goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired. Goodwill is stated at cost less any accumulated impairment. Goodwill is allocated to cash generating units and is not subject to amortisation, but tested annually for impairment. Goodwill has been fully impaired. Where the recoverable amount of the cash generating unit is less than the carrying amount, an impairment loss is recognised. 28 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 10: INTANGIBLE ASSETS Non-Current (continued) Impairment of Assets B) Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash- generating units). If there is evidence of impairment for any of the company’s financial assets carried at amortised cost, the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, excluding future credit losses that have not been incurred. The cash flows are discounted at the economic entity's weighted average cost of capital. The loss is recognised in the statement of profit or loss and other comprehensive income. C) Website Costs Significant costs associated with website costs are deferred and amortised on a straight-line basis over the period of their expected benefit, being a finite life of 5 years. NOTE 11: TRADE AND OTHER PAYABLES Current Trade accounts payable Other accounts payable Economic Entity 2018 $'000 2017 $'000 6,109 2,975 9,084 3,667 2,933 6,600 These amounts represent liabilities for goods and services provided to the economic entity prior to the end of financial year which are unpaid. Due to their short term nature, they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. Amounts payable in foreign currencies: Trade accounts payable: - US Dollars - British Pounds - Euro - - New Zealand Dollars Swiss Francs NOTE 12: OTHER FINANCIAL LIABILITIES Current Debtor finance Business transaction facility 3,430 221 434 552 442 5,079 4,469 257 4,726 1,948 331 170 166 461 3,076 4,393 - 4,393 29 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 12: OTHER FINANCIAL LIABILITIES (continued) Details of the economic entity's exposure to interest rate changes on other financial liabilities is outlined in note 23. The fair value of the financial liabilities approximates their carrying value. A) Debtor finance On 24 July 2018, the economic entity extended the Scottish Pacific Business Finance facility for a further term of two years. This new agreement is an invoice discounting solution with approval up to $8.0M for Amber Technology Ltd and $1.3M for Amber Technology (NZ) Ltd. The economic entity did not breach any covenants during the financial year. B) Business transaction facility On 16 June 2017 the economic entity entered into an agreement with Octet Finance Pty Ltd to provide a Business Transaction Facility. On 5 June 2018 the facility limit was reduced from $1,000,000 to $400,000 with no fixed term. As at 30 June 2018, the amount drawn under this facility was $257,440. C) Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the statement of profit or loss and other comprehensive income over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates. Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Other borrowing costs are expensed. NOTE 13: PROVISIONS Current Service warranty Employee benefits Non Current Employee benefits Economic Entity 2018 $'000 2017 $'000 327 1,437 1,764 134 134 255 1,359 1,614 143 143 A) Service warranty Provision is made for the estimated warranty claims in respect of products sold which are still under warranty at balance date. These claims are expected to be settled in the next financial year. Management estimates the provision based on historical warranty claim information and any recent trends that may suggest future claims could differ from historical amounts. In determining the level of provision required for warranties, the economic entity has made judgements in respect of the expected performance of the product, expected customer claims and costs of fulfilling the conditions of warranty. The provision is based on estimates made from historical warranty costs associated with similar products. 30 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 13: PROVISIONS (Continued) Service warranty (continued) A) Movements in provisions, other than employee benefits are set out below: Opening balance at 1 July 2017 Additional provision recognised Reductions resulting from payments Closing balance at 30 June 2018 Service warranty $'000 255 299 (227) 327 Employee benefits B) Short term employee benefits are employee benefits (other than termination benefits and equity compensation benefits) which fall due wholly within 12 months after the end of the period in which employee services are rendered. They comprise wages, salaries, commissions, social security obligations, short-term compensation absences and bonuses payable within 12 months and non-mandatory benefits such as car allowances. The undiscounted amount of short-term employee benefits expected to be paid is recognised as an expense. Other long-term employee benefits include long-service leave payable 12 months or more after the end of the financial year. The liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account. Amounts not expected to be settled within the next twelve months: C) The current provisions for annual leave and long service leave include all unconditional entitlements where employees have completed the required period of service. The entire amount is presented as current, since the economic entity does not have an unconditional right to defer settlement. However, based on past experience, the economic entity does not expect all employees to take the full amount of accrued leave or require payment within the next twelve months. The following amounts reflect leave that is not expected to be taken within the next twelve months: Current annual leave obligation expected to be settled after 12 months Current long service leave obligation expected to be settled after 12 months Economic Entity 2018 $'000 2017 $'000 267 411 241 398 31 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 14: SHARE CAPITAL Economic Entity Economic Entity 2018 Shares 2017 Shares # 2018 $'000 2017 $'000 A) Ordinary Shares fully paid (no par value) 30,573,181 30,573,181 11,138 11,138 Details Balance 30 June 2017 Shares bought back Balance 30 June 2018 No of shares 30,573,181 - 30,573,181 $'000 11,138 - 11,138 Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. B) Voting Rights On a show of hands, one vote for every registered shareholder, and for a poll, one vote for every share held by a registered shareholder. C) Options At reporting date, there were 500,000 ordinary shares reserved for issue under options (2017: 500,000) D) Dividends Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the year but not distributed at balance date. NOTE 15: RESERVES Foreign currency translation reserve Share base payments reserve (14) 4 (10) 32 1 33 For an explanation of movements in reserve accounts refer to the Statement of Changes in Equity. Nature and purpose of reserves A) Foreign currency translation reserve The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to Australian dollars at exchange rates prevailing at the balance sheet date. The revenues and expenses of foreign operations are translated to Australian dollars at rates approximating to the exchange rates prevailing at the dates of the transactions. Exchange differences arising on translation of the foreign controlled entity are taken to the foreign currency translation reserve. The reserve is recognised in profit and loss when the net investment is disposed of. B) Share Base Payments Reserve The share based payments reserve is used to recognise the fair value of options issued but not exercised. NOTE 16: CAPITAL & LEASING COMMITMENTS A) Operating lease commitments Payable: Not later than 1 year Later than 1 year but not later than 5 years Later than 5 years Minimum lease payments 1,503 5,519 - 7,022 1,480 6,916 - 8,396 B) Warriewood property lease The Warriewood property lease is a non-cancellable lease ending on 13 January 2023, with rent payable monthly in advance. Contingent rental provisions within the lease agreement require that the minimum lease payments shall be increased at review dates at 3.75% per annum. 32 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 16: CAPITAL & LEASING COMMITMENTS (continued) C) Operating leases Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred. Lease incentives under operating leases are recognised as a liability and amortised on a straight–line basis over the life of the lease term. D) Capital Commitments The economic entity had no commitments for capital expenditure as at 30 June 2018 (2017: NOTE 17: CONTINGENT LIABILITIES Estimates of the maximum amounts of contingent liabilities that may become payable: - Bank guarantee by Amber Technology Limited in respect of Sydney property lease Economic Entity 2018 $'000 2017 $'000 612 612 638 638 No material losses are anticipated in respect of any of the above contingent liabilities. NOTE 18: EVENTS SUBSEQUENT TO REPORTING DATE There were no matters that have arisen since the end of the financial year that have significantly affected, or may significantly affect the operations or state of affairs of the economic entity in future financial years. NOTE 19: RELATED PARTY TRANSACTIONS Key management personnel compensation Key management personnel comprises directors and other persons having authority and responsibility for planning, directing and controlling the activities of the economic entity. Summary - - - - Short term employee benefits Post employment benefits Long term employee benefits Share-based employee benefits Economic Entity 2018 $'000 2017 $'000 1,265,983 129,736 16,163 2,553 1,414,435 1,189,440 174,650 13,362 1,434 1,378,886 NOTE 20: SHARE BASED PAYMENT ARRANGEMENTS On 24 November 2016, 500,000 share options were granted to Managing Director, Peter Amos under the Ambertech Limited Executive Share Option Scheme to take up ordinary shares at an exercise price of $0.15 each. The options are exercisable on or before 30 November 2021. The options hold no voting or dividend rights and are not transferable. These options vest as follows: (i) One third of the options have vested (ii) One third have been carried forward to vest on the second anniversary of the date of issue; and (iii) The remaining one third will vest on the second anniversary of the date of issue. Vesting subsequent to grant date is also subject to key management personnel meeting specified performance criteria. Further details of these options are provided in the directors’ report. The options hold no voting or dividend rights but have been listed. The options lapse when a director ceases their employment with the Group. During the financial year, nil options vested with key management personnel (2017: 166,666). 33 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 20: SHARE BASED PAYMENT ARRANGEMENTS (continued) The consolidated entity established the Ambertech Limited Employee Share Option Plan on 5 November 2004 as a long- term incentive scheme to strive for improved group performance. The options are issued for no consideration and carry no entitlements to voting rights or dividends of the Group. The number available to be granted is determined by the Board and is based on performance measures including profitability, return on capital employed and dividends. The options are issued with a strike price representing a discount of 6% to the average market price of the underlying shares determined at the time the shares were granted. A summary of the movements of all options issued is as follows: Number Weighted Average Exercise Price Options outstanding as at 1 July 2017 500,000 $0.15 Granted Foreited Exercised Expired - - - - - - - - Options outstanding as at 30 June 2018 500,000 $0.15 Options exercisable as at 30 June 2018 Options exercisable as at 30 June 2017 - - - - The weighted average remaining contractual life of options outstanding at year-end was 2.75 years. The exercise price of outstanding shares at the end of the reporting period was $0.15. The fair value of the options granted to key management personnel is considered to represent the value of the employee services received over the vesting period. Options issued over ordinary shares are valued using the Black-Scholes pricing model which takes into account the option exercise price, the current level and volatility of the underlying share price, the risk free interest rate, the expected dividends on the underlying share, the current market price of the underlying share and the expected life of the option. The value of the options is recognised in an option reserve until the options are exercised, forfeited or expire. The weighted average fair value of options granted during the year was nil (2017: $0.05). These values were calculated using the Black-Scholes option pricing model applying the following inputs: - Weighted average exercise price: - Weigted average life of the option - Expected share volitility - Risk free interest rate $0.15 5 Years 25% 2% Historical share price volatility has been the basis for determining expected share price volatility as it is assumed that this is indicative of future volatility. The life of the options is based on the historical exercise patterns, which may not eventuate in the future. These shares were issued as compensation to key management personnel of the Group. Further details are provided in the directors’ report. Included under employee benefits expense in the statement of profit or loss is $2,553, which relates to equity-settled share-based payment transactions (2017: $1,434). 34 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 21: SEGMENT REPORTING (a) Description of segments Management has determined the operating segments based on the internal reports that are reviewed and used by the Board of Directors in assessing performance and determining the allocation of resources. The economic entity comprises the following operating segments: Professional Lifestyle Entertainment Distribution of high technology equipment to professional broadcast, film, recording and sound reinforcement industries. Distribution of home theatre products to dealers, distribution and supply of custom installation components for home theatre and commercial installations to dealers and consumers, and the distribution of projection and display products with business and domestic applications. New Zealand Distribution of a wide range of quality products for both professional and consumer markets in New Zealand. (b) Segment information 2018 Revenue - - Revenue from external customers Total segment revenue Inter-segment revenue Professional Lifestyle Entertainment New Zealand Eliminations $'000 $'000 $'000 $'000 Economic Entity $'000 20,869 13 20,882 27,577 362 27,939 3,377 1 3,378 - (376) (376) 51,823 - 51,823 (35) 1,027 (223) Segment EBIT Result - - Unallocated / corporate result - EBIT - - - Profit before income tax - Income tax expense - profit for the year Interest revenue Interest and finance costs Assets - Segment Assets - Unallocated/corporate assets - Total assets Liabilities - Segment Liabilities - Unallocated/corporate liabilities - Total liabilities 7,804 14,152 1,826 4,965 4,315 992 Other - Acquisition of non current segment assets 79 576 - Depreciation and amortisation of segment assets 107 198 3 7 - - - - - 769 (302) 467 16 (670) (187) 44 (143) 23,782 1,954 25,736 10,272 5,442 15,714 658 658 312 312 35 Professional Lifestyle Entertainment New Zealand Eliminations $'000 $'000 $'000 $'000 Economic Entity $'000 18,897 62 18,959 25,663 324 25,987 3,598 14 3,612 - (400) (400) 48,158 - 48,158 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 21: SEGMENT REPORTING (continued) 2017 Revenue - Total segment revenue - Inter-segment revenue Revenue from external customers Result - Segment EBIT Interest revenue Interest and finance costs - Unallocated / corporate result - EBIT - - - Profit before income tax Income tax expense - - profit for the year Assets - Segment Assets - Unallocated/corporate assets - Total assets Liabilities - Segment Liabilities - Unallocated/corporate liabilities - Total liabilities (44) 208 (143) 6,327 12,585 1,815 3,005 3,938 770 Other - Acquisition of non current segment assets 32 49 - Depreciation and amortisation of segment assets 102 154 7 3 - - - - - 21 (148) (127) 18 (555) (664) 30 (634) 20,727 2,249 22,976 7,713 5,055 12,768 88 88 259 259 36 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 21: SEGMENT REPORTING (continued) (c) Segment information on geographical region Segment Revenues from Sales to External Customers 2018 $'000 2017 $'000 Carrying Amount of Segment Non Current Assets 2018 $'000 2017 $'000 Acquisition of Non- Current Assets 2018 $'000 2017 $'000 Geographical Location Australia - - New Zealand 48,446 3,377 51,823 44,560 3,598 48,158 1,332 6 1,338 978 9 987 655 3 658 81 7 88 (i) Carrying amount of segment non current assets These amounts include all non current assets other than deferred tax assets located in the country of domicile. (d) Other segment information (i) Accounting Policies Segment revenues and expenses are those directly attributable to the segments and include any joint revenues and expenses where a reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally of cash, receivables, inventories and property, plant and equipment and goodwill. All remaining assets of the economic entity are considered to be unallocated assets. Segment liabilities consist principally of accounts payable, employee entitlements, accrued expenses, provisions and borrowings. Segment assets and liabilities do not include income taxes. (ii) Intersegment Transfers Segment revenues, expenses and result include transfers between segments. The prices charged on intersegment transactions are the same as those charged for similar goods to parties outside of the economic entity. These transfers are eliminated on consolidation. (iii) Major Customers During the year ended 30 June 2018, $6,183,573 or 12% (2017: $5,447,393 or 11%) of the consolidated entity's external revenue was derived from sales to a major Australian retailer through the Lifestyle Entertainment segment. 37 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 22: CASH FLOW INFORMATION (i) Cash and cash equivalents Cash and cash equivalents included in the statement of cash flows comprise the following amounts: Cash on hand At call deposits with financial institutions (ii) Reconciliation of net cash provided by operating activities to (loss) after income tax (loss) for the year Depreciation and amortisation Net profit on disposal of plant and equipment Foreign exchange loss/(gain) Impairment (income) Non-cash share based payments Changes in operating assets and liabilities (Increase)/decrease in trade and other receivables Increase in prepayments (Increase)/decrease in inventories Increase/(decrease) in trade and other payables Increase/(decrease) in provisions Increase in deferred taxes Net cash provided by/(used in) operating activities Economic Entity 2018 $'000 2017 $'000 2 857 859 (143) 312 - 74 - 4 (1,085) (19) (1,305) 2,221 146 (44) 161 4 1,010 1,014 (634) 259 (1) (83) (101) 1 586 (23) 896 (1,555) (23) (30) (708) (iii) Non Cash Financing and Investing Activities There were no non-cash financing or investing activities during the financial year. A) Cash and Cash Equivalents For the purposes of the statement of cash flows, cash and cash equivalents includes cash on hand, deposits at call with banks or financial institutions, investments in money market instruments maturing within three months, and bank overdrafts. 38AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 23: FINANCIAL RISK MANAGEMENT The economic entity's financial risk management policies are established to identify and analyse the risks faced by the business, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the economic entity's activities. The economic entity's activities expose it to a wide variety of financial risks, including the following: credit risk liquidity risk - - - market risk (including foreign currency risk and interest rate risk) This note presents information about the economic entity's exposure to each of the above risks, the objectives, policies and processes for measuring and managing risk and how the economic entity manages capital. Liquidity and market risk management is carried out by a central treasury department (Group Treasury) in accordance with risk management policies. The Board has overall responsibility for the establishment and oversight of the risk management framework. The Board, through the Audit and Risk Management Committee, oversees how management monitors compliance with the risk management policies and procedures and reviews the adequacy of the risk management framework in relation to risks. The economic entity uses derivative financial instruments such as foreign exchange contracts to hedge certain risk exposures. Derivatives are used exclusively for hedging purposes. The economic entity does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. A) Credit Risk Credit risk is the risk of financial loss to the economic entity if a customer or the counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the economic entity's receivables from customers. The maximum exposure to credit risk is the carrying amount of the financial assets. Trade and other receivables Exposure to credit risk is influenced mainly by the individual characteristics of each customer. The customer base consists of a wide variety of customer profiles. New customers are analysed individually for creditworthiness, taking into account credit ratings where available, financial position, past experience and other factors. This includes major contracts and tenders approved by executive management. Customers that do not meet the credit policy guidelines may only purchase using cash or recognised credit cards. The general terms of trade for the economic entity are between 30 and 60 days. In monitoring credit risk, customers are grouped by their debtor ageing profile. Monitoring of receivable balances on an ongoing basis minimises the exposure to bad debts. Impairment allowance The impairment allowance relates to specific customers, identified as being in trading difficulties, or where specific debts are in dispute. The impairment allowance does not include debts past due relating to customers with a good credit history, or where payments of amounts due under a contract for such customers are delayed due to works in dispute and previous experience indicates that the amount will be paid in due course. 39AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 23: FINANCIAL RISK MANAGEMENT (continued) The ageing of trade receivables at the reporting date was: Not past due Past due up to 30 days Past due 31-60 days Past due 61 days and over Total trade receivables not impaired Trade receivables impaired Total trade receivables Economic Entity 2018 $'000 2017 $'000 4,275 3,383 404 692 8,754 101 8,855 3,670 3,055 398 373 7,496 59 7,555 The economic entity does not have other receivables which are past due (2017: Nil). B) Liquidity Risk Liquidity risk is the risk that the economic entity will not be able to meet its financial obligations as they fall due. The economic entity's policy for managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity (cash reserves and finance facilities) to meet its liabilities when due, under both normal and stressed conditions. The objective of the policy is to maintain a balance between continuity of funding and flexibility through the use of finance facilities. The economic entity monitors liquidity risk by maintaining adequate cash reserves and financing facilities and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The table below summarises the maturity profile of the economic entity's financial liabilities based on contractual undiscounted payments: 2018 Financial liabilities due for payment Trade and other payables Other financial liabilities Total expected outflows Financial assets - cash flows realisable Trade receivables Total anticipated inflows Net (outflow) on financial instruments Contractual Cash Flows Within 1 Year $'000 1 to 5 Years $'000 Over 5 Years $'000 Total $'000 6,109 5,062 11,171 8,754 8,754 (2,417) - - - - - - - - - - - - 6,109 5,062 11,171 8,754 8,754 (2,417) 40 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 23: FINANCIAL RISK MANAGEMENT (continued) 2017 Financial liabilities due for payment Trade and other payables Debtor Finance Total expected outflows Financial assets - cash flows realisable Trade receivables Total anticipated inflows Net (outflow) on financial instruments Contractual Cash Flows Within 1 Year $'000 1 to 5 Years $'000 Over 5 Years $'000 3,667 4,757 8,424 7,496 7,496 (928) - - - - - - - - - - - - Total $'000 3,667 4,757 8,424 7,496 7,496 (928) The economic entity also has a number of premises under operating lease commitments. The future contracted commitment at year end is disclosed at note 16. The carrying amounts of cash and cash equivalents, trade and other receivables and trade and other payables are assumed to approximate their fair values due to their short term nature. The fair value of debtor finance and lease liabilities is estimated by discounting the remaining contractural maturities at the current market interest rate that is available for similar financial liabilities. C) Market Risk Market risk is the risk that changes in market prices will affect the economic entity's income or the value of its holdings of financial instruments. The activities of the ecomonic entity expose it primarily to the financial risks of changes in foreign currency rates and interest rates. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, whilst optimising the returns. Foreign Currency Risk The following table demonstrates the impact on the profit and equity of the economic entity, if the Australian Dollar weakened/strengthened by 10%, which management consider to be reasonably possible at balance date against the respective foreign currencies, with all other variables remaining constant: Impact on profit/(loss) Impact on equity Weakening of 10% 2018 2017 $'000 $'000 (564) (342) (564) (342) Strengthening of 10% 2018 2017 $'000 $'000 462 462 280 280 41 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 23: FINANCIAL RISK MANAGEMENT (continued) Interest Rate Risk The economic entity has a debtor financing facility. The use of the facility exposes the economic entity to cash flow interest rate risk. As at the reporting date, the economic entity had the following fixed and variable rate borrowings: Debtor finance Business transaction facility Other financial liabilities Weighted average interest rate Note 2018 % 7.06% 7.93% 7.11% 2017 % 8.31% - 8.31% 12 12 Balance 2018 $'000 2017 $'000 4,469 257 4,726 4,392 - 4,392 The following table demonstrates the impact on the profit and equity of the economic entity if the average interest rate on the borrowing facility had either increased or decreased by 1%, which management consider to be reasonably possible over the whole year ending 30 June 2018, with all other variables remaining constant: Impact on profit/(loss) Impact on equity Increase of 1% of average interest rate Decrease of 1% of average interest rate 2018 $'000 2017 $'000 2018 $'000 2017 $'000 (47) (47) (44) (44) 47 47 44 44 D) Net Fair Values The net fair values of assets and liabilities approximate their carrying values. No financial assets or liabilities are readily traded on organised markets. E) Capital Management The Board's aim is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. Total capital is defined as shareholders' equity. The Board monitors the return on capital, which is defined as net operating income divided by total shareholders' equity. The Board also establishes a dividend payout policy which is targeted as being greater than 50% of earnings, subject to a number of factors, including the capital expenditure requirements and the company's financial and taxation position. Dividends paid for the year ended 30 June 2018 were nil (2017: nil). There were no changes to the economic entity's approach to capital management during the financial year. 42 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 24: EARNINGS PER SHARE A) Basic earnings per share (cents) Weighted average number of ordinary shares (number) Earnings used to calculate basic earnings per share ($) Economic Entity 2018 2017 (0.5) 30,573,181 (143,000) (2.1) 30,573,181 (634,000) Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted for bonus elements in ordinary shares issued during the year. B) Diluted earnings per share (cents) Weighted average number of ordinary shares (number) Earnings used to calculate diluted earnings per share ($) (0.5) 30,573,181 (143,000) (2.1) 30,573,181 (634,000) Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. NOTE 25: DIVIDEND FRANKING CREDITS Tax rate Amount of franking credits available for subsequent reporting periods ($'000) NOTE 26: AUDITORS' REMUNERATION During the year the following fees were paid or payable for services provided by the auditor of the parent and its related practices: Audit services BDO East Coast Partnership Audit and review of financial reports, and other work under the Corporations Act Total remuneration for audit services Non-audit services BDO East Coast Partnership 30% 6,139 30% 6,139 $ 111,500 111,500 $ 111,500 111,500 Tax compliance services, including review of company income tax returns 19,180 25,498 Other practices - BDO Auckland Tax compliance services, including review of company income tax returns Total remuneration for non-audit services 7,115 26,295 7,333 32,831 It is the economic entity's policy to employ BDO on assignments additional to their statutory audit duties where BDO's expertise and experience with the economic entity are important. These assignments are principally tax compliance assignments. 43 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 27: PARENT ENTITY INFORMATION Information relating to Ambertech Limited (parent entity): - Current Assets - Total Assets - Current Liabilities - Total Liabilities - Share capital - Share issue cost reserve - Retained earnings Profit/(loss) of the parent entity Total comprehensive income of the parent entity Contingent Liabilites The parent entity had no contingent liabilities as at 30 June 2018 (2017: Nil). Parent Entity 2018 $'000 2017 $'000 11,053 15,611 1,462 1,462 11,044 15,601 1,462 1,462 11,138 11,138 4 1 3,007 3,001 6 6 (1) (1) Capital Commitments The parent entity had no capital commitments for property, plant and equipment as at 30 June 2018 (2017: Nil) Significant Accounting Policies The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1 and throughout the notes. 44 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS' DECLARATION The directors of the company declare that: 1. The financial statements, comprising the statement of profit or loss and other comprehensive income, statement of financial position, statement of cash flows, statement of changes in equity and accompanying notes, are in accordance with the Corporations Act 2001 and: (a) (b) comply with Accounting Standards and the Corporations Regulations 2001 ; and give a true and fair view of the consolidated entity's financial position as at 30 June 2018 and of its performance for the year ended on that date. The company has included in the notes to the financial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards. In the directors' opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. The directors have been given the declarations by the chief executive officer and chief operating officer required by Section 295A of the Corporations Act 2001. 2. 3. 4. This declaration is made in accordance with a resolution of the Board of Directors persuant to section 295(5)(a) of the Corporations Act 2001, and is signed for and on behalf of the directors by: P F Wallace Director Dated this 28th day of August 2018. Sydney P A Amos Director 45Shareholders Information The following information is required by the Australian Securities Exchange Limited. Distribution of equity security by size of holding: Number of shareholders Number of Ordinary Shares % of total capital 1 1,001 5,001 10,001 100,001 Total - - - - and 1,000 5,000 10,000 100,000 over 70 55 29 38 22 214 63,259 204,563 259,550 1,220,891 28,824,918 30,573,181 0.21 0.67 0.85 3.99 94.28 100.00 The number of security investors holding less than a marketable parcel of 2,703 securities is 86 and they hold 94,472 securities. Equity Security Holders The twenty largest shareholders as at 15 October 2018 were: Rank Twenty largest holders Number of shares % of total capital 1 Appwam Pty Limited 2 Crowton Pty Ltd (Amos Super Fund) 3 Mr Edwin Goodwin & Ms Julia Griffith (EFG Investments A/C) 4 Wavelink Systems Pty Ltd 5 Wavelink Systems Pty Ltd (Employee Superannuation Fund) 6 Wygrin Pty Ltd 7 Wygrin Pty Ltd (Wygrin Pension Fund) 8 Crowton Pty Limited 9 Mr David Scicluna & Mr Anthony Scicluna 10 Mr Nathan Carlini 11 Mr Ralph McCleery 12 Wallace Capital Pty Ltd (Super Fund A/C) 13 Mr Joseph Paul Grech & Ms Deborah Lee Grech 14 Henriksen Consulting Pty Ltd (Henriksen Consulting S/F AC) 15 Super Accumulation Pty Ltd (M Robinson Super Fund A/C) 16 Mr David Le Cornu & Mrs Betty Le Cornu 17 HSBC Custody Nominees (Australia) Limited A/C 2 18 BNP Paribas Nominees Pty Ltd 19 Citicorp Nominees Pty Limited 20 Xanthippus Pty Ltd 8,853,716 3,231,681 2,883,556 2,784,625 2,650,000 1,507,556 1,488,270 1,082,162 804,000 757,507 357,599 333,928 333,261 315,059 250,000 220,000 202,576 188,353 163,169 28,562,318 155,300 28.96 10.57 9.43 9.11 8.67 4.93 4.87 3.54 2.63 2.48 1.17 1.09 1.09 1.03 0.82 0.72 0.66 0.61 0.53 93.42 0.51 Source: Boardroom Pty Limited Substantial Shareholders Substantial shareholders with a relevant interest of 5% or more of total issued shares, based on notifications provided to the company under the Corporations Act 2001 include: Shareholder Number of shares % of total capital Appwam Pty Limited Wavelink Systems Pty Ltd Crowton Pty Limited Wygrin Pty Ltd Howbay Pty Ltd On-Market Buy Back 8,853,716 5,484,625 4,313,843 2,995,826 2,883,556 28.96 17.94 14.11 9.80 9.43 On 2 September 2005, the company lodged an Appendix 3C announcing an on-market buy-back of up to 1,543,150 ordinary shares on issue. On 28 September 2006 the company lodged an Appendix 3D amending the buy-back duration to unlimited. The company has not lodged an Appendix 3F to finalise the buy back as at 15 October 2018. The buy back is a part of the company's capital management and is designed to improve shareholder returns. During the year ended 30 June 2018 no shares were bought back by the company. Voting rights On a show of hands, one vote for every registered shareholder, and for a poll, one vote for every share held by a registered shareholder. Corporate Directory Directors Peter F Wallace - Chairman Peter A Amos - Managing Director Tom R Amos Edwin F Goodwin David R Swift Bankers Scottish Pacific Business Finance Level 5, 20 Bond Street Sydney NSW 2000 T: +61 2 9372 9999 Auditors BDO East Coast Partnership Level 11, 1 Margaret Street Sydney NSW 2000 T: + 61 2 9251 4100 ASX Listing AMO ambertech.com.au Company Secretary Robert J Glasson Share Registry Boardroom Pty Limited GPO Box 3993 Sydney NSW 2001 or Level 12, 255 George Street Sydney NSW 2000 T: +61 2 9290 9600 or T: 1300 737 760 Registered Office Unit 1, 2 Daydream Street Warriewood NSW 2102 T: +61 2 9998 7600 Melbourne Suite 12, 79-83 High Street Kew VIC 3101 T: +61 3 9853 0401 Brisbane Unit 35, 28 Burnside Road Yatala QLD 4207 T: +61 7 3287 2928 Auckland Unit 3, 77 Porana Road Glenfield, Auckland 0672 New Zealand T: + 64 9 443 0753 Corporate Governance Statement ambertech.com.au/investors/corporate-governance A Year in Review Ambertech Limited PO Box 955 Mona Vale Unit 1, 2 Daydream St Warriewood NSW 2102 Email: info@ambertech.com.au Phone: 02 9998 7600 Fax: 02 9999 0770 ACN 079 080 158 

Continue reading text version or see original annual report in PDF format above