Ambertech Limited
Annual Report 2023

Plain-text annual report

ANNUAL REPORT 2023 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. 2 CONTENTS Chairman’s Letter ............................................................................. 4 Business Overview and Update ................................................... 5 Our Business ..................................................................................... 8 Our Brands ........................................................................................ 9 Financial Report ............................................................................ 10 Shareholders Information ............................................................ 61 Corporate Directory ..................................................................... 63 3 CHAIRMAN’S LETTER On behalf of the Board of Ambertech I am pleased to present you with your Annual Report for 2023, a year that has been significant in the ongoing transformation of our business. With continued commitment to our strategic vision, we have navigated through challenges whilst capitalising on market opportunities and positioning Ambertech for a prosperous future. In the face of a dynamic economic backdrop and shifting market landscapes, our business has demonstrated resilience and agility. I am delighted to report that our financial position remained strong throughout the year. Revenues increased to $84.2m, an increase of 9.4% over the prior year, which was a pleasing result. It is important to note that this was accompanied by an increase in costs as we expanded our capabilities, enhanced our infrastructure, increased our market presence, and solidified our workforce to position ourselves for future growth. These strategic investments were essential in bolstering our competitive edge and ensuring that we are well prepared to take advantage of future opportunities. Dividends to shareholders relating to the financial year totaled 1.5 cents per share fully franked. With that, the Board maintained its target payout ratio of a minimum of 50% of the reported net profit after tax. At this point in time, it remains the intent of the Board to continue this target payout. In conclusion, I extend my deepest gratitude to our shareholders, employees, customers, and partners for their support and trust. Together, we have laid a strong foundation for future growth and success. I am excited about the journey that lies ahead and confident in our collective ability to achieve our shared vision. On behalf of the Board of Ambertech Limited Peter Wallace Chairman 4 BUSINESS OVERVIEW AND UPDATE In recent years the team at Ambertech has been focused on consolidating the financial position of the business, completing the strategy that had been put in place to turn around the results after a few tough financial years. The key to this strategy has been to focus the business in areas where we can leverage our full-service distribution model. We don’t just shift boxes, we are highly respected for our ability to source innovative product, design custom solutions, provide engineering support, market brands, and support our dealer network post sale. In executing that strategy, the business undertook and has integrated four acquisitions, each designed to significantly add to our existing business units. The addition and integration of these acquisitions successfully increased the scale our business required adding prestigious brands, quality personnel and leveraging the infrastructure investment that had already been made in the Ambertech business. The 2023 financial year was somewhat of a transitional year as we embark on a new growth strategy for the business. It was pleasing that we were able to maintain our growth trajectory, but the real key to future success has been the investment in face-to-face interactions with key stakeholders during the year. By engaging in trade shows and industry conferences we have been able to strengthen business relationships and explore new business collaborations. Through targeted campaigns, business development activities, and product roadshows we have been able to position our business as a supplier of choice. By investing in our people, we have been able to provide establish a competitive advantage and foster a motivated and engaged workforce. By making these investments, we are well positioned to drive revenue growth and maximise shareholder value. There remains significant opportunity for the business to grow with our existing brand portfolio. As international suppliers continue to consolidate through merger and acquisition, or expand their offering across various markets, the ability of our business to operate in multiple market segments becomes a genuine strength. DLES COMMERCIAL MEDIA SYSTEMS PROFESSIONAL RESIDENTIAL SPECIALIST HI FI MUSICAL INSTRUMENTS CE RETAIL Our brand portfolio is often sold across multiple markets in which Ambertech operates. This remains a strong competitive advantage over many of our competitors who are more narrowly focused. The history of this business is one that began in the professional and broadcast (media systems) areas, but we have evolved as the technology of our supply partners and the solutions required by our customers have changed over the last 36 years. 5 B U S I N E SS OV E R V I E W A N D U P DAT E ( C O N T ) OPERATIONAL HIGHLIGHTS The operations team has been very busy during the year with several projects that are critical to our business strategy. The upgrade of our Pronto ERP system is allowing us to improve the quality of access to and timeliness of business reporting for critical business decisions. We expect to see greater collaboration, superior business intelligence and enhanced productivity and decision making as we continue to leverage this investment. We also moved our team in Victoria to new premises during the year. Historically a sales-based team, in recent times we have added brand management and business development resources to the team. The new facility is cost competitive to the arrangement that predated it, whilst establishing an additional base for product demonstration and training for our dealers located in this area. Additionally, one of our General Managers, Richard Neale, retired during the financial year. Richard remains a strong supporter of Ambertech and was instrumental in the selection and induction of his successor Nathan Brady, providing us with an appropriate transition period in which we were able to ensure business continuity. CORPORATE GOVERNANCE We are conscious of the growing emphasis on sustainability and Environmental, Social and Governance (ESG) factors in Corporate Governance. We are a member of the Australian Packaging Covenant Organisation (APCO), reflecting our commitment to sustainable packaging practices and environmental responsibility. We are proud to represent brands such as Universal Electronics in Australia and New Zealand with their One For All brand. As a major global manufacturer of remote controls their commitment to creating a more sustainable future is highlighted in product design and packaging innovations that we challenge all our suppliers to match. Post year end we have also undertaken a review of Board diversity and business wide succession planning. The management team are excited to see what new skills, perspectives and ideas Janine Rolfe can bring to the decision-making process of the business and we welcome her to the business. We also thank David Swift for his many years of guidance to the organisation. We continue to look to grow and better inform our shareholder base. To assist with providing clarity around our strategy, we have recently engaged investor relations professionals. We hope that this will lead to a greater understanding of our competitive advantage, and of our investment narrative for all types of market investors. STRATEGY One of the main keys to the future success of Ambertech is the ability to achieve growth without a decline in focus. As an independent value add distributor of international brands, we are very conscious that each of these brands needs to see the focus of the brand owner themselves. We have developed a structure that can continue to support our growth ambitions in this way. 6 B U S I N E SS OV E R V I E W A N D U P DAT E ( C O N T ) Much of our strategy centers on the importance of representing brands with clear positioning and differentiation. We often conduct brand reviews and work collaboratively with our partners to ensure success in the market. We regularly identify brands outside of our portfolio which are market leaders or have significant market potential. This is where we focus our business development activities, and adding these brands may come through acquisition of a business, by presenting ourselves as an alternative to current distribution arrangements, or by finding new technologies from emerging companies around the world. Prioritising opportunities in the current market environment is also important, and we have a clear and disciplined M&A strategy that targets adding further scale to our business in a sustainable manner. We are currently evaluating opportunities across several of our market segments and in aligned markets that we can successfully address. FUTURE OUTLOOK The first half of the new financial year began with a major highlight for the business as we were awarded the contract for the supply of Solid State Logic audio consoles to the Sydney Opera House. The range of console models deployed signifies a significant upgrade to the venues within the Sydney Opera House in its 50th year of operation and is being supplied across the first half of the financial year and is valued at approximately $3.0m. The Network 10 news and production systems contract continues to see milestones with around $4.0m in revenue expected during this financial year. Revenue for this contract will continue to flow in coming years via a multi-year subscription and support services contract. Completion of several Defence industry supplies of Silvus radios has also boosted trading during this period and we continue to see major ongoing opportunities in this market. We are also confident in our offering in the Emergency Services space. With a strong and dedicated team in place we are confident in our business strategy. We want to thank each of them for their contributions this year, and we know their focus will lead to success in the future. Peter Amos Managing Director Robert Glasson Chief Operating Officer 7 OUR BUSINESS Our business segments operate across both the Australian and New Zealand markets. INTEGRATED SOLUTIONS SEGMENT Supporting our dealer network with world class product solutions and support. Residential installations Audio visual and infrastructure brands for home cinema, multi room AV and more. CommeRCial installations Audio visual and infrastructure brands for commercial custom installation projects. speCialist Hi Fi Renowned hi-fidelity brands for personal audio devices, advanced home audio components and digital accessories. PROFESSIONAL SEGMENT Supporting a strong dealer network and a range of media and communications users with world class product solutions and ongoing support including SaaS. media systems 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. deFenCe, law enFoRCement and seCuRity Specialised data communications and video technology for defence, law enforcement and security. 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. musiCal instRuments Guitars, instrument and music technology for musicians of all levels. RETAIL SEGMENT Our focus is on offering a comprehensive selection of high end audio visual and accessory brands for end users. The Major Retail division works with home electronics retailers nationally, mass market retail chains and independent specialist outlets to supply home entertainment solutions for consumers in the residential market. 8 OUR BRANDS AC Infinity Accent Visual Acrovista Advanced Network Telemetry Aja Amadeus Acoustics Ambertec Cables Araknis Arista ASL Ateme Australian Monitor Autoscript AVer Avid Barix BATS Wireless BirdDog Black Mountain Blue Lucy Bluesound Bluesound Professional Breedlove Canare Chiayo Electronics Cioks CP Cases DALI David Horn Communications Dell EMC Denon Pro LP Morgan Silvus Technologies Mark Levinson Solid State Logic Philips Projection Wampler Digital Projection MC2 DNH MP Antennas DPA Microphones NAD Electronics Dynaudio Professional Neutrik Embrionix Newline Interactive Emotion Systems Embrace Evoko EVS Newtek Nexidia NTi Audio One For All Framus Guitars One Systems GB Labs Grandview Screens Haivision HDAnywhere Hotone ICE Cables iPort ISO Acoustics Optoma Pakedge Panasonic Peterson Plura Primacoustic Pro Control Sonance Sonitus Soundsphere Spectra Logic Strymon SurgeX Teenage Engineering Telestream Troll Systems Van Damme Videssence Vinten Vipranet Walla Walla Guitars Warwick Basses Wasabi Wattbox Well AV James Loudspeaker PSB Speakers James Tyler Guitars Radial Engineering Williams AV Jays JBL Rean WolfVision Renkus Heinz Woody Technologies JBL Synthesis Revel WyreStorm JTS Microphones Rockboard Xilica Audio Design KASTA Rock-n-Roller XTA Electronics LEA Professional Liberty AV Litepanels Roland RTI Sadowsky Guitars Yamaha Revolabs 9 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023 10 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 entities, ("company" or "consolidated entity" or "economic entity") for the year ended 30 June 2023 and the auditor's report thereon. DDIIRREECCTTOORRSS 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. IInnffoorrmmaattiioonn oonn ddiirreeccttoorrss PPeetteerr FFrraanncciiss WWaallllaaccee CChhaaiirrmmaann -- NNoonn EExxeeccuuttiivvee DDiirreeccttoorr 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 entities THC Global Limited until 15 March 2018 and Range International Limited until 14 April 2020. 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. PPeetteerr AAnnddrreeww AAmmooss MMaannaaggiinngg DDiirreeccttoorr 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. TThhoommaass RRoobbeerrtt AAmmooss NNoonn--EExxeeccuuttiivvee DDiirreeccttoorr Chairman of the Audit and Risk Management Committee. 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. 2 11 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS’ REPORT SSaannttoo CCaarrlliinnii NNoonn--EExxeeccuuttiivvee DDiirreeccttoorr Mr Santo Carlini was appointed to the Board as a Non-Executive Director effective 1 March 2020. Mr Carlini brings to the Ambertech Board key Audio-Visual industry experience in the major professional and installation market segments, with over 20 years dedicated to achieving the best product and service outcomes for customers. Mr Carlini is General Manager at WES Alliance Pty Ltd (WES). The company was founded in 1984 and since 1995 he has successfully grown, first as part of the team and then as General Manager, the WES business from a specialist supplier of Electronic Parts to a leading supplier of audio, visual products and solutions to the domestic and commercial installation market. Mr Carlini has strong international products and supply experience. This expertise has been built from a business need to match the continuous domestic market demands by sourcing products from around the world that are the best fit audio and visual products to meet the demands of the competitive and evolving Australian marketplace. DDaavviidd RRoossttiill SSwwiifftt NNoonn--EExxeeccuuttiivvee DDiirreeccttoorr 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. CCoommppaannyy SSeeccrreettaarryy aanndd CChhiieeff OOppeerraattiinngg OOffffiicceerr The following person held the position of Company Secretary at the end of the financial year: RRoobbeerrtt JJoohhnn GGllaassssoonn 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. CCOORRPPOORRAATTEE IINNFFOORRMMAATTIIOONN NNaattuurree ooff ooppeerraattiioonnss aanndd pprriinncciippaall aaccttiivviittiieess 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. EEmmppllooyyeeeess The economic entity employed 131 employees as at 30 June 2023 (2022: 124 employees). 3 12 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS’ REPORT RREEVVIIEEWW AANNDD RREESSUULLTTSS OOFF OOPPEERRAATTIIOONNSS The consolidated profit of the economic entity after providing for income tax for the financial year was $1,930,000 (2022: $3,681,000). The reduction in profit from the prior year is essentially a result of the investment in a growth plan for the future of the business, with the increased spend on marketing, employment costs and travel expected to provide economic benefit to the business in future periods. Total revenues for the financial year increased by 9.4% to $84,226,000 (2022: $76,997,000). Further information on the operations, including the success of the acquisition during the reporting period, is included in the Chairman's and Managing Director's Report section of the Annual Report, and in the ASX Appendix 4E. FFIINNAANNCCIIAALL PPOOSSIITTIIOONN 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. At 30 June 2023 the economic entity had kept its working capital and net tangible asset ratios steady, whilst continuing to show positive operating cash flow during the financial year. The economic entity's working capital, being current assets less current liabilities, decreased by $1,082,000 to $19,683,000 as at 30 June 2023 (2022: $20,765,000). The net assets of the economic entity have increased by $186,000 to $22,460,000 as at 30 June 2023 (2022: $22,274,000). SSIIGGNNIIFFIICCAANNTT CCHHAANNGGEESS IINN TTHHEE SSTTAATTEE OOFF AAFFFFAAIIRRSS There were no significant changes in the state of affairs of the economic entity during the financial year. MMAATTEERRIIAALL BBUUSSIINNEESSSS RRIISSKKSS The material risks faced by the economic entity that are likely to have an effect on the financial prospects off the economic entity are outlined below: Market and Industry Risks: Market Competition: Ambertech operates in a competitive distribution industry, which could lead to price pressures, reduced margins, and loss of market share. Technological Disruption: Technological advancements could render existing distribution methods and systems obsolete, affecting our ability to meet customer demands and preferences. Economic Conditions: Fluctuations in economic conditions, such as recessions or economic downturns, could impact consumer spending, leading to reduced demand for our products in certain markets. Supply Chain and Operational Risks: Supply Disruptions: Interruptions in our supply chain, including transportation delays, production issues, or raw material shortages, could result in inventory shortages and impact our ability to fulfill orders. Regulatory Compliance: Non-compliance with regulatory requirements, such as import/export regulations or safety standards, could lead to fines, legal liabilities, and reputational damage. Financial Risks: Credit and Counterparty Risk: Exposure to credit risk from customers or suppliers facing financial difficulties could result in bad debts or supply disruptions. Currency Fluctuations: Ambertech sources from multiple regions, exposing us to foreign exchange rate fluctuations that could impact revenue and profitability. Legal and Regulatory Risks: Data Security and Privacy:: Breaches in data security and privacy could lead to legal actions, reputational damage, and loss of customer trust. EEVVEENNTTSS SSUUBBSSEEQQUUEENNTT TTOO RREEPPOORRTTIINNGG DDAATTEE On 31 July 2023, the economic entity entered into an agreement with Octet finance Pty Ltd in relation to extending its finance facilities for a further 12 months. The facilities include an invoice discounting facility with approval up to $12,000,000 and a business transaction facility with a limit of $2,000,000. On 17 August 2023 the Directors resolved to pay a dividend of 1.0 cents per share. 4 13 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS’ REPORT There were no other 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. FFUUTTUURREE DDEEVVEELLOOPPMMEENNTTSS,, PPRROOSSPPEECCTTSS AANNDD BBUUSSIINNEESSSS SSTTRRAATTEEGGIIEESS The 2023-24 financial year has begun well, and as a result the Board of Ambertech Limited ("the Board") is optimistic that it can deliver on business strategies, which continue to focus on growth and 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. EENNVVIIRROONNMMEENNTTAALL RREEGGUULLAATTIIOONN 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. RREEMMUUNNEERRAATTIIOONN RREEPPOORRTT ((AAUUDDIITTEEDD)) 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. For the 2023 financial year, staff remuneration increases were on average consistent with increases in the cost of living, except where roles and responsibilities changed. RReemmuunneerraattiioonn SSttrraatteeggyy 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. Until recently the financial performance of the company had not justified an increase to the remuneration of non-executive directors. 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 24% of total salary for the Managing Director and 21% of total salary for the COO. 5 14 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS’ REPORT RREEMMUUNNEERRAATTIIOONN RREEPPOORRTT ((ccoonnttiinnuueedd)) 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. OOtthheerr EExxeeccuuttiivveess 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) 22002233 1.5 $0.23 1,930 22002222 3.1 $0.27 3,681 22002211 1.8 $0.225 5,090 22002200 - $0.055 784 22001199 - $0.10 (1,332) DDeettaaiillss ooff RReemmuunneerraattiioonn 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 include the following: NNaammee P Wallace P Amos T Amos D Swift PPoossiittiioonn Non-Executive Chairman Group Managing Director Non-Executive Director Non-Executive Director S Carlini Non-Executive Director NNaammee R Glasson R Neale R Caston N Brady PPoossiittiioonn Group COO, Company Secretary General Manager, Integrated Solutions (retired 23rd December 2022) General Manager, Media Systems General Manager, Integrated Solutions (commenced 7th November 2022) 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. 6 15 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS’ REPORT RREEMMUUNNEERRAATTIIOONN RREEPPOORRTT ((ccoonnttiinnuueedd)) EElleemmeennttss ooff RReemmuunneerraattiioonn 22002233 DDiirreeccttoorrss P Amos P Wallace T Amos S Carlini D Swift Executives R Glasson R Caston R Neale N Brady SShhoorrtt--tteerrmm eemmppllooyymmeenntt bbeenneeffiittss PPoosstt eemmppllooyymmeenntt bbeenneeffiittss LLoonngg--tteerrmm eemmppllooyymmeenntt bbeenneeffiittss SShhaarree bbaasseedd ppaayymmeennttss SSaallaarryy ffeeeess aanndd lleeaavvee $$ 348,847 68,182 40,909 40,909 17,709 516,556 CCaasshh BBoonnuuss $$ 119,000 - - - - - 119,000 SSuuppeerraannnnuuaattiioonn $$ 27,501 7,159 4,295 4,295 27,495 LLSSLL aaccccrruueedd// ((ttaakkeenn)) $$ 23,156 - - - - OOppttiioonnss $$ 7,068 - - - - TToottaall $$ 525,572 75,341 45,204 45,204 45,204 %% PPeerrffoorrmmaannccee RReellaatteedd 22.6% 0.0% 0.0% 0.0% 0.0% %% RReellaattiinngg ttoo OOppttiioonnss 1.3% 0.0% 0.0% 0.0% 0.0% 70,745 23,156 7,068 736,525 16.2% 1.0% 195,304 246,778 124,098 145,731 711,911 42,172 27,075 40,541 - 109,788 26,283 29,247 18,819 15,302 89,651 7,930 7,447 - - 15,377 4,241 4,415 4,241 - 12,897 275,930 314,962 187,699 161,033 939,624 15.3% 8.6% 21.6% 0.0% 14.1% 1.5% 1.4% 2.3% 0.0% 1.7% (1) On 15 July 2022, a cash bonus of $119,000 was paid to Mr P Amos relating to performance against KPIs. The bonus was 86% of the total available to Mr P Amos under his KPI scheme. (2) On 15 July 2022, a cash bonus of $42,172 was paid to Mr Glasson relating to performance against KPIs. The bonus was 82% of the total available to Mr Glasson under his KPI scheme. (3) On 15 July 2022, a cash bonus of $27,075 was paid to Mr Caston relating to performance against KPI's. The bonus was 90% of the total available to Mr Caston under his KPI scheme. (4) On 15 July 2022, a cash bonus of $30,541 was paid to Mr Neale relating to performance against KPI's. The bonus was 100% of the total available to Mr Neale under his KPI scheme. On 15 January 2023 a further cash bonus of $10,000 was paid to Mr Neale relating to performance against KPI's. The bonus was 100% of the total available to Mr Neale under his KPI scheme. Cash bonuses in relation to performance against KPI’s the year ended 30 June 2023 for Mr Amos, Mr Glasson, Mr Caston and Mr Brady had not yet been determined at year end and therefore have yet to be paid. The total amount for each is a maximum of $130,000 for Mr Amos, $60,000 for Mr Glasson, $30,000 for Mr Caston, and $16,000 for Mr Brady. (5) 22002222 DDiirreeccttoorrss P Amos P Wallace T Amos S Carlini D Swift Executives R Glasson R Caston R Neale SShhoorrtt--tteerrmm eemmppllooyymmeenntt bbeenneeffiittss PPoosstt eemmppllooyymmeenntt bbeenneeffiittss LLoonngg--tteerrmm eemmppllooyymmeenntt bbeenneeffiittss SShhaarree bbaasseedd ppaayymmeennttss SSaallaarryy ffeeeess aanndd lleeaavvee $$ 374,275 68,182 40,909 40,909 17,509 541,784 CCaasshh BBoonnuuss $$ - - - - - - SSuuppeerraannnnuuaattiioonn $$ 27,500 6,818 4,091 4,091 27,491 69,991 LLSSLL aaccccrruueedd// ((ttaakkeenn)) $$ 16,111 - - - - 16,111 OOppttiioonnss $$ 7,068 - - - - 7,068 TToottaall $$ 424,954 75,000 45,000 45,000 45,000 634,954 %% PPeerrffoorrmmaannccee RReellaatteedd 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% %% RReellaattiinngg ttoo OOppttiioonnss 1.7% 0.0% 0.0% 0.0% 0.0% 1.1% 195,712 225,481 271,921 693,114 - 10,000 20,000 30,000 20,000 27,382 26,525 73,907 960 690 - 1,650 4,241 4,415 4,241 12,897 220,913 267,968 322,687 811,568 0.0% 3.7% 6.2% 3.7% 1.9% 1.6% 1.3% 1.6% (1) On 13 August 2021, a cash bonus of $10,000 was paid to Mr Caston relating to performance against KPI's. The bonus is 50% of the total available to Mr Caston under his KPI scheme. (2) On 13 August 2021, a cash bonus of $20,000 was paid to Mr Neale relating to performance against KPI's. The bonus is 50% of the total available to Mr Neale (3) under his KPI scheme. Cash bonuses in relation to performance against KPI’s the year ended 30 June 2022 for Mr Amos, Mr Glasson, Mr Caston and Mr Neale had not yet been determined at year end and therefore have yet to be paid. The total amount for each is a maximum of $130,000 for Mr Amos, $50,000 for Mr Glasson, $20,000 for Mr Caston, and $40,000 for Mr Neale. 7 16 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS’ REPORT RREEMMUUNNEERRAATTIIOONN RREEPPOORRTT ((ccoonnttiinnuueedd)) SSeerrvviiccee aaggrreeeemmeennttss 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 $435,000 (2022: $417,500). OOtthheerr ttrraannssaaccttiioonnss wwiitthh KKeeyy MMaannaaggeemmeenntt PPeerrssoonnnneell aanndd tthheeiirr RReellaatteedd PPaarrttiieess During the financial year, sales totaling $371,203 to Wes Components Pty Ltd (director-related entity of Santo Carlini) were made. The current trade receivable balance as at 30 June 2023 is $27,749. All transactions were made on normal commercial terms and conditions at market rates. SShhaarree bbaasseedd ccoommppeennssaattiioonn 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 previously granted as remuneration which remain exercisable at year end are set out below. P Amos R Glasson R Neale R Caston BBaallaannccee aatt bbeeggiinnnniinngg BBaallaannccee aatt eenndd ooff yyeeaarr - - - 62,500 - 75,000 - 125,000 During the financial year, 337,500 options vested with key management personnel (2022: 337,500). During the year 250,000 options were exercised (2022: 612,500), and 75,000 options were forfeited (2022: Nil). 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. 8 17 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS’ REPORT RREEMMUUNNEERRAATTIIOONN RREEPPOORRTT ((ccoonnttiinnuueedd)) IInntteerreessttss ooff DDiirreeccttoorrss At the date of this report the following interests were held by directors: Director P Wallace P Amos T Amos D Swift S Carlini Ordinary Shares 22002233 22002222 2,861,194 5,322,555 7,339,975 3,352,703 29,886,239 2,654,400 5,197,555 7,289,975 3,161,735 29,720,872 VVoottiinngg aanndd CCoommmmeennttss mmaaddee aatt tthhee CCoommppaannyy’’ss 22002222 AAnnnnuuaall GGeenneerraall MMeeeettiinngg ((‘‘AAGGMM’’)) The Company received 96% of “for” votes in relation to its remuneration report for the year ended 30 June 2022. No issues were raised with Directors concerning the Report. This concludes the Remuneration Report which has been audited. DDIIVVIIDDEENNDDSS On 18 August 2022 the Board of Ambertech resolved to pay a final dividend of 1.5 cents per share, fully franked. The record date for the dividend was 12 September 2022, with a payment date of 30 September 2022. On 21 February 2023 the Board of Ambertech resolved to pay an interim dividend of 0.5 cents per share, fully franked. The record date for the dividend was 6 March 2023, with a payment date of 31 March 2023. On 17 August 2023 the Board of Ambertech resolved to pay a final dividend of 1.0 cents per share, fully franked. The record date for the dividend is 29 September 2023, with a payment date of 17 October 2023. The Company’s Dividend Reinvestment Plan will be active for this dividend, with a discount rate of 3% to the volume weighted average price of shares traded from 26 September 2023 to 29 September 2023. DDIIRREECCTTOORRSS'' MMEEEETTIINNGGSS 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: BBooaarrdd MMeeeettiinnggss AAuuddiitt aanndd RRiisskk MMaannaaggeemmeenntt CCoommmmiitttteeee MMeeeettiinnggss NNoommiinnaattiioonn aanndd RReemmuunneerraattiioonn CCoommmmiitttteeee DDiirreeccttoorr P Wallace P Amos T Amos D Swift S Carlini AAtttteennddeedd 9 9 9 9 9 HHeelldd 9 9 9 9 9 AAtttteennddeedd 3 - 3 - - HHeelldd 3 - 3 - - AAtttteennddeedd 2 - - 2 - HHeelldd 2 - - 2 - OOPPTTIIOONNSS Shares under option There were 1,050,000 unissued ordinary shares of Ambertech Limited under option at the date of this report which have a weighted average exercise price of 22 cents and a weighted average remaining contractual life of 3.5 years. Shares issued on the exercise of options There were 250,000 ordinary shares of Ambertech Limited issued during the year ended 30 June 2023 and up to the date of this report on the exercise of options previously granted. 9 18 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS’ REPORT NNOONN--AAUUDDIITT SSEERRVVIICCEESS BDO Audit Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001. It is the economic entity's policy to employ BDO Audit Pty Ltd and their respective related entities (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 29. 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. PPRROOCCEEEEDDIINNGGSS OONN BBEEHHAALLFF OOFF TTHHEE CCOOMMPPAANNYY 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. AAUUDDIITTOORRSS'' IINNDDEEPPEENNDDEENNCCEE DDEECCLLAARRAATTIIOONN A copy of the auditors' independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 11. IINNDDEEMMNNIIFFIICCAATTIIOONN OOFF OOFFFFIICCEERRSS 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. RROOUUNNDDIINNGG The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar. Signed in accordance with a resolution of directors. Director: P F Wallace P A Amos Dated this 23rd day of August 2023 Sydney 10 19 Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret Street Sydney NSW 2000 Australia DECLARATION OF INDEPENDENCE BY MARTIN COYLE TO THE DIRECTORS OF AMBERTECH LIMITED As lead auditor of Ambertech Limited for the year ended 30 June 2023, 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. Martin Coyle Director BDO Audit Pty Ltd Sydney, 23 August 2023 BDO Audit Pty Ltd ABN 33 134 022 870 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 Audit Pty Ltd 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. 20 Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret Street 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 2023, 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 2023 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 (including Independence Standards) (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. BDO Audit Pty Ltd ABN 33 134 022 870 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 Audit Pty Ltd 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. 21 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. Revenue recognition Key audit matter How the matter was addressed in our audit As disclosed in Note 3, the Group To determine whether revenue was appropriately accounted for and recognised revenue of $84,224,000 disclosed within the financial statements, we performed, amongst during the financial year ended 30 June others, the following audit procedures: 2023 (2022: $76,995,000). Due to the overall significance of revenue to the Group as a key performance indicator, and the judgement involved in assessing the performance obligations in respect to project based revenue, we considered this area to be a key audit matter. • • • • • Reviewed a sample of large, open contracts at year end and ensured revenue had been recognised in line with AASB 15: Revenue from Contracts with Customers; Tested the operating effectiveness of internal controls surrounding the existence of revenues; Substantively tested a sample of revenue transactions during the year and deferred revenue balance at year end and ensured they had been appropriately recognised and aligned with the goods and services supplied per the terms of the respective customer orders / agreements; Performed detailed cut-off testing to ensure that revenue transactions around the year end had been recorded in the correct period including testing of post year-end credit notes; and Performed substantive analytical procedures over gross margins by segment in comparison to the prior period, budget and our expectations. 22 Valuation of inventory Key audit matter How the matter was addressed in our audit As disclosed in Note 7, the Group held Our audit procedures for addressing this key audit matter included, inventory with a carrying value of but were not limited to, the following: $23,070,000 as at 30 June 2023 (2022: $17,360,000) which represented approximately 44% of the Group’s total assets. • • Reviewed the inventory obsolescence policy and assessed the assumptions applied by management in determining the provision for obsolescence; Observed the cyclical inventory count procedures Inventory valuation was considered a key performed by management and assessed, by inspection, audit matter due to the significant value whether there was any evidence of damaged or obsolete of these assets in the Consolidated inventory; Statement of Financial Position and the • Tested a sample of inventory items on hand at year end key estimates and judgements applied by and as at the date of acquisition of Convoy International to management in assessing the net ascertain whether these balances were being recognised at realisable value (‘NRV’) of inventory due the lower of cost and net realisable value; to the nature of the industry in which the Group operates in. • • Obtained supplier invoices for a sample of inventory items on hand to determine whether the pricing was accurate; and Performed various analytical procedures in relation to inventory including analysing inventory turnover by product group and gross margin in comparison to prior periods and our expectations. Other information The directors are responsible for the other information. The other information comprises the information contained in the Directors’ Report (excluding the audited Remuneration Report section) for the year ended 30 June 2023, but does not include the financial report and our auditor’s report thereon, which we obtained prior to the date of this auditor’s report, and the Annual Report to Shareholders, which is expected to be made available to us after that date. 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 identified above 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 on the other information that we obtained prior to the date of this auditor’s report, 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. When we read the Annual Report to the Shareholders, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and will request that it is corrected. If it is not corrected, we will seek to have the matter appropriately brought to the attention of users for whom our report is prepared. 23 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: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.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 the Directors’ Report for the year ended 30 June 2023. In our opinion, the Remuneration Report of Ambertech Limited, for the year ended 30 June 2023, 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 Audit Pty Ltd Martin Coyle Director Sydney, 23 August 2023 24 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 2023 RReevveennuueess Cost of sales GGrroossss PPrrooffiitt Other income Employee benefits expense Distribution costs Marketing costs Premises costs Travel costs Depreciation and amortisation expense Finance costs Other expenses PPrrooffiitt bbeeffoorree iinnccoommee ttaaxx Income tax expense PPrrooffiitt aafftteerr iinnccoommee ttaaxx ffoorr tthhee yyeeaarr OOtthheerr ccoommpprreehheennssiivvee iinnccoommee Exchange differences on translation of foreign operations TToottaall ccoommpprreehheennssiivvee iinnccoommee ffoorr tthhee yyeeaarr NNoottee 22002233 $$''000000 22002222 $$''000000 3 4 3 4 4 4 5 84,224 76,995 (55,495) (49,995) 2288,,772299 2277,,000000 2 (17,256) (1,868) (1,085) (762) (678) (1,112) (1,085) (2,152) 22,,773333 (803) 11,,993300 283 (15,197) (1,775) (647) (716) (235) (1,260) (925) (1,263) 55,,226655 (1,584) 33,,668811 30 11,,996600 (64) 33,,661177 EEaarrnniinnggss ppeerr sshhaarree Basic earnings per share (cents) Diluted earnings per share (cents) 27 27 2.1 2.1 4.2 4.2 The Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the attached notes. 25 16 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 JUNE 2023 NNoottee 22002233 $$''000000 22002222 $$''000000 CCUURRRREENNTT AASSSSEETTSS Cash and cash equivalents Trade and other receivables Inventories Current tax assets TTOOTTAALL CCUURRRREENNTT AASSSSEETTSS NNOONN--CCUURRRREENNTT AASSSSEETTSS Plant and equipment Right-of-use assets Intangible assets Deferred tax assets TTOOTTAALL NNOONN--CCUURRRREENNTT AASSSSEETTSS TTOOTTAALL AASSSSEETTSS CCUURRRREENNTT LLIIAABBIILLIITTIIEESS Trade and other payables Financial liabilities Contract Liabilities Lease liabilities Provisions Current tax liabilities TTOOTTAALL CCUURRRREENNTT LLIIAABBIILLIITTIIEESS NNOONN--CCUURRRREENNTT LLIIAABBIILLIITTIIEESS Contract liabilities Provisions Lease liabilities Deferred tax liabilities TTOOTTAALL NNOONN--CCUURRRREENNTT LLIIAABBIILLIITTIIEESS TTOOTTAALL LLIIAABBIILLIITTIIEESS NNEETT AASSSSEETTSS EEQQUUIITTYY Share capital Reserves Retained earnings TTOOTTAALL EEQQUUIITTYY 25 6 7 5 9 10 11 5 12 14 13 15 16 5 13 16 15 5 17 18 1,568 18,061 23,070 246 4422,,994455 436 4,251 2,144 2,534 99,,336655 5522,,331100 8,852 6,324 4,230 1,438 2,418 - 2,225 15,576 17,360 - 3355,,116611 341 4,726 1,532 2,759 99,,335588 4444,,551199 6,817 1,255 2,169 1,247 2,570 338 2233,,226622 1144,,339966 90 291 6,050 157 66,,558888 2299,,885500 2222,,446600 21,837 24 599 2222,,446600 346 281 7,098 124 77,,884499 2222,,224455 2222,,227744 21,781 (37) 530 2222,,227744 The above Consolidated Statement of Financial Position is to be read in conjunction with the attached notes. 17 26 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2023 SShhaarree CCaappiittaall FFoorreeiiggnn CCuurrrreennccyy TTrraannssllaattiioonn RReesseerrvvee SShhaarree BBaasseedd PPaayymmeennttss RReesseerrvvee RReettaaiinneedd eeaarrnniinnggss// ((AAccccuummuullaatteedd lloosssseess)) TToottaall EEqquuiittyy $$''000000 $$''000000 $$''000000 $$''000000 $$''000000 BBaallaannccee aass aatt 11 JJuullyy 22002211 1155,,994477 Profit for the year Exchange differences on translation of foreign operations - - TToottaall ccoommpprreehheennssiivvee iinnccoommee ffoorr tthhee yyeeaarr -- TTrraannssaaccttiioonnss wwiitthh eeqquuiittyy hhoollddeerrss:: Share issue net of transaction cost Shares issued on exercised options Costs of share based payments Dividends declared, paid and reinvested as part of the Dividend Reinvestment Plan (note 28) 5,078 160 - 596 ((1100)) - (64) ((6644)) - - - -- BBaallaannccee aass aatt 3300 JJuunnee 22002222 2211,,778811 ((7744)) BBaallaannccee aass aatt 11 JJuullyy 22002222 2211,,778811 ((7744)) Profit for the year Exchange differences on translation of foreign operations TToottaall ccoommpprreehheennssiivvee iinnccoommee ffoorr tthhee yyeeaarr TTrraannssaaccttiioonnss wwiitthh eeqquuiittyy hhoollddeerrss:: Shares issued on exercised options Costs of share based payments Dividends declared and paid (note 28) - - -- 56 - - - 30 3300 - - - BBaallaannccee aass aatt 3300 JJuunnee 22002233 2211,,883377 ((4444)) -- - -- -- - - 37 -- 3377 3377 - -- -- - 31 - 6688 ((552255)) 3,681 1155,,441122 3,681 - (64) 33,,668811 33,,661177 - - - 5,078 160 37 (2,626) (2,030) 553300 2222,,227744 553300 2222,,227744 1,930 1,930 - 30 11,,993300 11,,996600 - - 56 31 (1,861) (1,861) 559999 2222,,446600 The above Consolidated Statement of Changes in Equity is be read in conjunction with the attached notes. 18 27 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2023 CCAASSHH FFLLOOWWSS FFRROOMM OOPPEERRAATTIINNGG AACCTTIIVVIITTIIEESS Receipts from customers Receipts from government grants Payments to suppliers and employees Interest received Interest and other costs of finance paid Goods and services tax remitted Income tax remitted NNeett ccaasshh ffrroomm ooppeerraattiinngg aaccttiivviittiieess CCAASSHH FFLLOOWWSS FFRROOMM IINNVVEESSTTIINNGG AACCTTIIVVIITTIIEESS Payments for plant and equipment Payment for intangible assets Payment for the acquisition of businesses, net of cash acquired NNeett ccaasshh uusseedd iinn iinnvveessttiinngg aaccttiivviittiieess CCAASSHH FFLLOOWWSS FFRROOMM FFIINNAANNCCIINNGG AACCTTIIVVIITTIIEESS Proceeds from borrowings Repayment of borrowings Repayment of leases Proceeds from share issue, net of transaction costs Dividends paid to shareholders NNeett ccaasshh pprroovviiddeedd bbyy ffiinnaanncciinngg aaccttiivviittiieess Net (decrease)/increase in cash and cash equivalents held Cash and cash equivalents at beginning of period Effect of exchange rate changes on cash and cash equivalents held in foreign currencies at the beginning of the financial year NNoottee 22002233 $$''000000 22002222 $$''000000 93,420 83,824 - 770 (84,920) (74,731) 2 2 (1,085) (924) (5,865) (5,503) (1,127) (1,588) 25 425 1,850 (240) (11) (160) (49) (2,803) (1,824) (3,054) (2,033) 5,411 1 (342) (1,412) (1,290) (1,199) 55 5,238 28 (1,861) (2,030) 1,973 (656) 2,225 598 415 1,788 (1) 22 CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt eenndd ooff ppeerriioodd 25 1,568 2,225 The above Consolidated Statement of Cash Flows is to be read in conjunction with the attached notes. 28 19 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 11:: IINNTTRROODDUUCCTTIIOONN 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. OOppeerraattiioonnss aanndd pprriinncciippaall aaccttiivviittiieess 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. CCuurrrreennccyy The financial statements are presented in Australian dollars, which is the Company’s functional and presentation currency. All financial information presented in Australian dollars has been rounded to the nearest one thousand, unless otherwise stated. RReeggiisstteerreedd ooffffiiccee Unit 1, 2 Daydream Street, Warriewood NSW 2102. AAuutthhoorriissaattiioonn ooff ffiinnaanncciiaall ssttaatteemmeennttss The financial statements were authorised for issue on 23 August 2023 by the Directors. The company has the power to amend the financial statements. NNOOTTEE 22:: SSUUMMMMAARRYY OOFF SSIIGGNNIIFFIICCAANNTT AACCCCOOUUNNTTIINNGG PPOOLLIICCIIEESS ((AA)) OOvveerraallll PPoolliiccyy 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 the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and the discharge of liabilities in the normal course of business. For the year ended 30 June 2023, the consolidated entity recorded profit after income tax of $1,930,000 (2022: $3,681,000) and net operating cash inflows of $425,000 (2022: $1,850,000). The Directors believe that there are reasonable grounds to conclude that the Group will continue as a going concern, after consideration of the following factors: • Management have prepared forecasts for the 12 months following date of approval of the financial report, which indicate that the Group can continue to pay its debts as and when they become due and payable; 29 20 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 22:: SSUUMMMMAARRYY OOFF SSIIGGNNIIFFIICCAANNTT AACCCCOOUUNNTTIINNGG PPOOLLIICCIIEESS ((ccoonnttiinnuueedd)) • The group continues to have available significant debt headroom on the primary business finance facilities with limits of up to $12,000,000 in invoice discounting and $2,000,000 in trade finance as disclosed in note 14; ((BB)) GGooooddss aanndd SSeerrvviicceess TTaaxx 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. ((CC)) GGoovveerrnnmmeenntt GGrraannttss Government grants are recognised as income when it is reasonably certain that the Group will comply with the conditions attached to them and when the right to receive payment is established. The Group has elected to recognise grant income as an offset to the directly attributable expenditure in the financial statements. New, revised or amending Accounting Standards and Interpretations adopted The Consolidated 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. There was no material impact on the financial statements from the adoption of these new accounting standards. New Accounting Standards and Interpretations not yet mandatory or early adopted The Consolidated Entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted 30 21 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 33:: RREEVVEENNUUEE RReevveennuuee - Sale of goods - Rendering of services EEccoonnoommiicc EEnnttiittyy 22002233 $$''000000 80,827 3,397 84,224 22002222 $$''000000 72,784 4,211 76,995 RReevveennuuee RReeccooggnniittiioonn 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 at a point in time when control transfers to the customer. In most cases this coincides with the transfer of legal title, or the passing of possession to the customer. In arrangements whereby the consolidated entity is required to meet contractually agreed upon specifications, control over the goods generally occurs when the customer has confirmed acceptance. Rendering of services Revenue from the rendering of services is recognised at the point in time in which the service is provided to the customer. Maintenance and support contracts extend for between one and five years. Revenue is respect to these services are generally recognised overtime as the customer simultaneously receives and consumes the benefits of the services as the Group provides the services. Where amounts are invoiced before revenue is earned, a deferred revenue liability is brought to account. These contract liabilities reflect the consideration received in respect of unsatisfied performance obligations. Interest revenue Interest revenue is recognised as it accrues using the effective interest method. OOtthheerr iinnccoommee Net Foreign exchange gains Interest received NNOOTTEE 44:: EEXXPPEENNSSEESS Additional information on the nature of expenses AA)) IInnvveennttoorriieess Cost of sales Movement in provision for inventory obsolescence BB)) EEmmppllooyyeeee bbeenneeffiittss eexxppeennssee Salaries and wages* Defined contribution superannuation expense - 2 2 281 2 283 55,495 (344) 49,995 (966) 15,883 1,373 17,256 13,996 1,201 15,197 * There were no Government grants received during FY23 relating to the COVID-19 pandemic (FY22: $769,782). 31 22 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 44:: EEXXPPEENNSSEESS ((ccoonnttiinnuueedd)) CC)) DDeepprreecciiaattiioonn Plant and equipment Furniture and fittings Leasehold improvements Leased property plant and equipment Buildings right-of-use assets Plant and equipment right-of-use assets DD)) AAmmoorrttiissaattiioonn Website costs Customer/Supplier Relationships EE)) BBaadd ddeebbttss aanndd eexxppeecctteedd ccrreeddiitt lloosssseess FF)) RReennttaall eexxppeennssee oonn ooppeerraattiinngg lleeaasseess:: Minimum lease payments GG)) FFiinnaannccee ccoossttss Interest and finance charges paid/payable on borrowings Interest and finance charges paid/payable on lease liabilities NNOOTTEE 55:: IINNCCOOMMEE TTAAXX AA)) MMaajjoorr ccoommppoonneennttss ooff iinnccoommee ttaaxx Current year Deferred tax Income tax expense BB)) RReeccoonncciilliiaattiioonn bbeettwweeeenn iinnccoommee ttaaxx aanndd pprriimmaa ffaacciiee ttaaxx oonn aaccccoouunnttiinngg pprrooffiitt//((lloossss)) Profit before income tax Entertainment Tax at 30% (2022:30%) Tax effect of non deductible expenses/non assessable income • • Other items Recognition of movements in deferred tax Previous tax return adjustments Unused tax losses not recognised as deferred tax assets Income tax expense EEccoonnoommiicc EEnnttiittyy 22002233 $$''000000 118 2 25 - 849 80 1,074 8 30 38 10 - 591 494 1,085 22002222 $$''000000 125 1 133 7 838 76 1,180 25 55 80 31 - 352 573 925 545 258 803 1,115 469 1,584 2,733 5,265 820 1,580 23 12 (63) 11 - 803 9 20 (53) 111 (83) 1,584 23 32 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 55:: IINNCCOOMMEE TTAAXX ((ccoonnttiinnuueedd)) CC)) AApppplliiccaabbllee ttaaxx rraattee The applicable tax rate is the national tax rate in Australia of 30%. DD)) AAnnaallyyssiiss ooff ddeeffeerrrreedd ttaaxx aasssseettss Employee benefits Plant and equipment Right-of-use assets Lease Liability Accrued expenses Provision for impairment of receivables Provision for obsolescence Provision for warranty Inventory Other EE)) AAnnaallyyssiiss ooff ddeeffeerrrreedd ttaaxx lliiaabbiilliittiieess Unrealised foreign currency gain Plant and equipment Other EEccoonnoommiicc EEnnttiittyy 22002233 $$''000000 798 324 (1,274) 2,246 35 13 230 3 125 34 2,534 93 61 3 157 22002222 $$''000000 773 359 (1,418) 2,503 29 8 333 67 76 29 2,759 75 47 2 124 FF)) IInnccoommee TTaaxx 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. 24 33 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 55:: IINNCCOOMMEE TTAAXX ((ccoonnttiinnuueedd)) Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. GG)) TTaaxx ccoonnssoolliiddaatteedd ggrroouupp 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. NNOOTTEE 66:: TTRRAADDEE AANNDD OOTTHHEERR RREECCEEIIVVAABBLLEESS CCuurrrreenntt Trade receivables Allowance for expected credit losses Other receivables Prepayments EEccoonnoommiicc EEnnttiittyy 22002233 $$''000000 14,890 (44) 14,846 1,473 1,742 18,061 22002222 $$''000000 13,696 (27) 13,669 1,472 435 15,576 A) Current trade receivables are non-interest bearing, generally received between 30 and 60 day terms. Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less any expected credit loss. B) An allowance for expected credit losses (ECLs) is required when a difference arises between the contracted cashflows and the amount expected to be received, discounted at the original effective interest rate. For trade receivables, a simplified approach is applied in calculating the ECLs. Loss allowances recognised are based on lifetime ECLs at each reporting date. This is established from historical credit losses, adjusted for forward looking factors specific to the receivable. C) Movement in the allowance for expected credit losses is as follows: Current trade receivables Opening balance (Reversal)/charge for the year Amounts written off Closing balance 27 40 (23) 44 216 (158) (31) 27 D) The economic entity's exposure to credit risk and impairment losses related to trade and other receivables is disclosed at note 26. 34 25 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 77:: IINNVVEENNTTOORRIIEESS CCuurrrreenntt Finished goods Stock in transit Provision for obsolescence EEccoonnoommiicc EEnnttiittyy 22002233 $$''000000 21,881 1,960 23,841 (771) 23,070 22002222 $$''000000 16,523 1,952 18,475 (1,115) 17,360 AA)) IInnvveennttoorriieess 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. BB)) PPrroovviissiioonn ffoorr iimmppaaiirrmmeenntt ooff iinnvveennttoorriieess Movement in the provision for obsolescence is as follows: Opening balance Charge for the year Amounts written off Closing balance 1,115 174 (518) 771 2,080 380 (1,345) 1,115 Key Estimate and Judgement: Provision for Obsolescence 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. NNOOTTEE 88:: CCOONNTTRROOLLLLEEDD EENNTTIITTIIEESS EEnnttiittyy PPaarreenntt EEnnttiittyy • Ambertech Limited SSuubbssiiddiiaarriieess ooff AAmmbbeerrtteecchh LLiimmiitteedd • Amber Technology Limited SSuubbssiiddiiaarriieess ooff AAmmbbeerr TTeecchhnnoollooggyy LLiimmiitteedd • • • Alphan Pty Limited Connected Media Australia Amber Technology (NZ) Limited CCoouunnttrryy ooff IInnccoorrppoorraattiioonn PPeerrcceennttaaggee OOwwnneedd 22002222 22002233 Australia Australia 100% 100% Australia Australia New Zealand 100% 100% 100% 100% 100% 100% A controlled entity is any entity controlled by Ambertech Limited. Control exists where Ambertech Limited is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the 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. 35 26 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 99:: PPLLAANNTT AANNDD EEQQUUIIPPMMEENNTT NNoonn--CCuurrrreenntt AA)) CCaarrrryyiinngg aammoouunnttss CCoosstt 22002233 $$''000000 1,760 959 1,640 112 4,471 22002222 $$''000000 1,660 941 1,547 112 4,260 EEccoonnoommiicc EEnnttiittyy Plant and equipment Furniture and fittings Leasehold improvements Leased plant and equipment Total plant and equipment BB)) RReeccoonncciilliiaattiioonn ooff ccaarrrryyiinngg aammoouunnttss AAccccuummuullaatteedd ddeepprreecciiaattiioonn 22002233 $$''000000 22002222 $$''000000 NNeett ccaarrrryyiinngg aammoouunntt 22002233 $$''000000 22002222 $$''000000 (1,523) (938) (1,462) (112) (4,035) (1,434) (936) (1,437) (112) (3,919) 237 21 178 - 436 22002233 Balance at the beginning of the year Additions Disposals Depreciation and amortisation expense Carrying amount at the end of the year PPllaanntt aanndd eeqquuiippmmeenntt FFuurrnniittuurree aanndd ffiittttiinnggss LLeeaasseehhoolldd iimmpprroovveemmeennttss $$''000000 226 129 - (118) 237 $$''000000 5 18 - (2) 21 $$''000000 110 93 - (25) 178 22002222 PPllaanntt aanndd eeqquuiippmmeenntt FFuurrnniittuurree aanndd ffiittttiinnggss LLeeaasseehhoolldd iimmpprroovveemmeennttss Balance at the beginning of the year Additions Disposals Depreciation and amortisation expense Carrying amount at the end of the year CC)) RReeccooggnniittiioonn aanndd mmeeaassuurreemmeenntt $$''000000 221 132 (2) (125) 226 $$''000000 6 - - (1) 5 $$''000000 208 35 - (133) 110 LLeeaasseedd ppllaanntt aanndd eeqquuiippmmeenntt $$''000000 - - - - - LLeeaasseedd ppllaanntt aanndd eeqquuiippmmeenntt $$''000000 7 - - (7) - Plant and equipment is stated at historical cost less depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. DD)) DDeepprreecciiaattiioonn ooff pprrooppeerrttyy,, ppllaanntt aanndd eeqquuiippmmeenntt Plant and equipment is depreciated over its estimated useful life taking into account estimated residual values. The straight line method is used. Plant and equipment is depreciated from the date of acquisition or, in respect of leasehold improvements, from the time the asset is completed and ready for use. 27 36 226 5 110 - 341 TToottaall $$''000000 341 240 - (145) 436 TToottaall $$''000000 442 167 (2) (266) 341 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 99:: PPLLAANNTT AANNDD EEQQUUIIPPMMEENNTT ((ccoonnttiinnuueedd)) DD)).. DDeepprreecciiaattiioonn ooff pprrooppeerrttyy,, ppllaanntt aanndd eeqquuiippmmeenntt ((ccoonnttiinnuueedd)) The depreciation rates used for each class of plant and equipment remain unchanged from the previous year and are as follows: CCllaassss ooff AAsssseett UUsseeffuull lliiffee Plant and equipment Furniture and fittings Leasehold improvements Leased plant and equipment 3-8 years 3-8 years Term of the lease Term of the lease The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the plant and equipment or cash generating units to which the plant and equipment belong are written down to their recoverable amount. NNOOTTEE 1100:: RRIIGGHHTT--OOFF--UUSSEE AASSSSEETTSS NNoonn--CCuurrrreenntt Land and buildings - right-of-use Less: Accumulated amortisation Plant and equipment - right-of-use Less: Accumulated amortisation Balance at 30 June 2022 Additions Amortisation Balance at 30 June 2023 EEccoonnoommiicc EEnnttiittyy 22002233 $$''000000 7,478 (3,364) 4,114 22002222 $$''000000 7,152 (2,516) 4,636 180 (90) 90 4,726 308 (171) 137 4,251 TToottaall $$''000000 4,726 454 (929) 4,251 LLaanndd aanndd bbuuiillddiinnggss $$''000000 PPllaanntt aanndd eeqquuiippmmeenntt $$''000000 4,636 327 (849) 4,114 90 127 (80) 137 Land and buildings – right-of-use The land and buildings right of use asset related to a lease for the consolidated entities property lease for its premises at Unit 1, 2 Daydream Street, Warriewood NSW 2102. The lease has a lease term of 5 years commencing 14 January 2023 with rent payable monthly. An option exists to renew the lease at the end of this time for an additional term of 5 years with a final expiry date being 13 January 2033. The lease has rent increases of at least 3.0% (capped at 4.5%) each year. 28 37 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 1100:: RRIIGGHHTT--OOFF--UUSSEE AASSSSEETTSS ((ccoonnttiinnuueedd)) A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. KKeeyy EEssttiimmaattee aanndd JJuuddggeemmeenntt:: LLeeaassee tteerrmm The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease commencement date. Factors considered may include the importance of the asset to the Groups operations; comparison of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of significant leasehold improvements; and the costs and disruption to replace the asset. The Group reassesses whether it is reasonably certain to exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in circumstances. 38 29 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 1111:: IINNTTAANNGGIIBBLLEE AASSSSEETTSS NNoonn--CCuurrrreenntt NNeett ccaarrrryyiinngg aammoouunnttss aanndd mmoovveemmeennttss dduurriinngg tthhee yyeeaarr Goodwill at cost Less impairment Website at cost Less accumulated amortization Brand name Less impairment Customer/Supplier relationships Less accumulated amortisation Research & Development Less accumulated amortisation EEccoonnoommiicc EEnnttiittyy 22002233 $$''000000 4,766 (2,971) 1,795 94 (94) - 100 - 100 230 (131) 99 375 (225) 150 2,144 22002222 $$''000000 4,136 (2,926) 1,210 94 (86) 8 100 - 100 175 (101) 74 365 (225) 140 1,532 RReeccoonncciilliiaattiioonn ooff wwrriitttteenn ddoowwnn vvaalluueess:: GGooooddwwiillll WWeebbssiittee BBrraanndd nnaammee CCuussttoommeerr//SSuupppplliieerr rreellaattiioonnsshhiippss Opening balance at 1 July 2022 Additions (note 31) Amortisation expense (note 4) Closing balance at 30 June 2023 $$''000000 1,210 585 - 1,795 $$''000000 8 - (8) - $$''000000 100 - - 100 $$''000000 74 55 (30) 99 RReesseeaarrcchh DDeevveelloopp mmeenntt $$''000000 140 10 - 150 TToottaall $$''000000 1,532 650 (38) 2,144 RReeccooggnniittiioonn aanndd mmeeaassuurreemmeenntt AA)) GGooooddwwiillll 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. Where the recoverable amount of the cash generating unit is less than the carrying amount, an impairment loss is recognised. 39 30 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IImmppaaiirrmmeenntt ooff AAsssseettss NNOOTTEE 1111:: IINNTTAANNGGIIBBLLEE AASSSSEETTSS ((ccoonnttiinnuueedd)) BB)) 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). The consolidated entity determined the recoverable amount of assets based on a value-in-use calculation, using cash flow projections based on financial budgets approved by management covering a five-year period. The following assumptions have been applied by management in the 30 June 2023 calculation of value-in-use based on past performance and expectations for the future: • • • Annual sales growth of between 11% to 19% over the three-year forecast period Terminal value factor of 2.07 Post-tax discount rate of 15.67% Management have performed sensitivity analysis and assessed reasonable changes for key assumptions and have not identified any instances that could cause the carrying amount of the consolidated entity’s assets to exceed its recoverable amount. If there is evidence of impairment for any of the company’s assets, the loss is measured as the difference between the asset’s carrying amount and the recoverable amount. The loss is recognised in the statement of profit or loss and other comprehensive income. CC)) WWeebbssiittee CCoossttss 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. DD)) CCuussttoommeerr//SSuupppplliieerr RReellaattiioonnsshhiippss Significant costs associated with customer/supplier costs on acquisition are deferred and amortised on a straight-line basis over the period of their expected benefit, being a finite life of 5 years. EE)) BBrraanndd NNaammeess Brand names have an indefinite useful life and are not subject to amortisation but are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. FF)) RReesseeaarrcchh && DDeevveellooppmmeenntt Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is probable that the project will be a success considering its commercial and technical feasibility; the consolidated entity is able to use or sell the asset; the consolidated entity has sufficient resources and the intent to complete the development; and its costs can be measured reliably. 40 31 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 1122:: TTRRAADDEE AANNDD OOTTHHEERR PPAAYYAABBLLEESS CCuurrrreenntt Trade accounts payable Other accounts payable EEccoonnoommiicc EEnnttiittyy 22002233 $'000 6,331 2,521 8,852 22002222 $'000 3,994 2,823 6,817 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. AAmmoouunnttss ppaayyaabbllee iinn ffoorreeiiggnn ccuurrrreenncciieess:: Trade accounts payable: - - - - - US Dollars British Pounds Euro Swiss Francs New Zealand Dollars NNOOTTEE 1133:: CCOONNTTRRAACCTT LLIIAABBIILLIITTIIEESS CCuurrrreenntt Deferred Revenue NNoonn CCuurrrreenntt Deferred Revenue NNOOTTEE 1144:: FFIINNAANNCCIIAALL LLIIAABBIILLIITTIIEESS CCuurrrreenntt Debtor finance Business transaction facility 4,256 78 495 0 109 4,938 4,230 90 4,320 5,930 394 6,324 2,227 39 195 34 309 2,804 2,169 346 2,515 927 328 1,255 Details of the economic entity's exposure to interest rate changes on financial liabilities is outlined in note 26. The fair value of the financial liabilities approximates their carrying value. AA)) DDeebbttoorr ffiinnaannccee On 31 July 2023, the economic entity entered into an agreement with Octet finance Pty Ltd in relation to extending the invoice discounting solution for a further 12 months. The facility has approval of a limit of up to $12,000,000 (2022: $$9,000,000). The economic entity did not breach any covenants during the financial year. BB)) BBuussiinneessss ttrraannssaaccttiioonn ffaacciilliittyy On 10 June 2022 the economic entity entered into an agreement with Octet Finance Pty Ltd to extend the Business Transaction Facility with a limit of $1,000,000 with no fixed term. During the year this limit was increased to $2,000,000. As at 30 June 2023, the amount drawn under this facility was $390,571 (2022:Nil). Additionally, there is a Scottish Pacific Business Finance facility held in New Zealand with no fixed term and a limit of $1,209,865. As at 30 June 2023 the amount drawn under this facility was $3,000 (2022:$328,000). CC)) BBoorrrroowwiinnggss 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 41 32 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 1144:: FFIINNAANNCCIIAALL LLIIAABBIILLIITTIIEESS ((ccoonnttiinnuueedd)) 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. NNOOTTEE 1155:: LLEEAASSEE LLIIAABBIILLIITTIIEESS CCuurrrreenntt Lease liabilities NNoonn CCuurrrreenntt Lease liabilities EEccoonnoommiicc EEnnttiittyy 22002233 $'000 22002222 $'000 1,438 1,247 6,050 7,098 A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index, or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. KKeeyy EEssttiimmaattee aanndd JJuuddggeemmeenntt:: IInnccrreemmeennttaall bboorrrroowwiinngg rraattee Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to discount future lease payments to measure the present value of the lease liability at the lease commencement date. Such a rate is based on what the Group estimates it would have to pay a third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment. NNOOTTEE 1166:: PPRROOVVIISSIIOONNSS CCuurrrreenntt Service warranty Employee benefits NNoonn CCuurrrreenntt Employee benefits 45 2,373 2,418 291 291 274 2,296 2,570 281 281 AA)) SSeerrvviiccee wwaarrrraannttyy 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. 42 33 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 1166:: PPRROOVVIISSIIOONNSS ((ccoonnttiinnuueedd)) 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. Movements in provisions, other than employee benefits are set out below: Opening balance at 1 July 2022 Reduction due to reduced warranty requirements Reductions resulting from payments Closing balance at 30 June 2023 SSeerrvviiccee wwaarrrraannttyy $$''000000 274 (228) (1) 45 BB)) EEmmppllooyyeeee bbeenneeffiittss 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. CC)) AAmmoouunnttss nnoott eexxppeecctteedd ttoo bbee sseettttlleedd wwiitthhiinn tthhee nneexxtt ttwweellvvee mmoonntthhss:: 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 EEccoonnoommiicc EEnnttiittyy 22002233 $$''000000 484 291 22002222 $$''000000 419 435 43 34 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 1177:: SSHHAARREE CCAAPPIITTAALL AA)).. OOrrddiinnaarryy SShhaarreess ffuullllyy ppaaiidd ((nnoo ppaarr vvaalluuee)) 93,244,819 92,994,819 21,837 21,781 EEccoonnoommiicc EEnnttiittyy 22002233 SShhaarreess 22002222 SShhaarreess EEccoonnoommiicc EEnnttiittyy 22002233 $$''000000 22002222 $$''000000 MMoovveemmeennttss iinn sshhaarree ccaappiittaall Balance at the start of the financial year SShhaarreess NNoo.. 92,994,819 IIssssuuee PPrriiccee $$ TToottaall $$’’000000 21,781 Shares issued on exercise of Options 250,000 0.22 56 BBaallaannccee aatt tthhee eenndd ooff tthhee ffiinnaanncciiaall yyeeaarr 93,244,819 21,837 BB)).. VVoottiinngg RRiigghhttss 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. CC)).. OOppttiioonnss At reporting date, there were 1,050,000 ordinary shares reserved for issue under the Employee Share Option Plan (2022: 1,375,000). DD)).. DDiivviiddeennddss 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. 44 35 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 1188:: RREESSEERRVVEESS Foreign currency translation reserve Share base payments reserve EEccoonnoommiicc EEnnttiittyy 22002233 $$''000000 (44) 68 24 22002222 $$''000000 (74) 37 (37) For an explanation of movements in reserve accounts refer to the Statement of Changes in Equity. NNaattuurree aanndd ppuurrppoossee ooff rreesseerrvveess FFoorreeiiggnn ccuurrrreennccyy ttrraannssllaattiioonn rreesseerrvvee 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. SShhaarree BBaassee PPaayymmeennttss RReesseerrvvee The share based payments reserve is used to recognise the fair value of options issued but not exercised. NNOOTTEE 1199:: CCAAPPIITTAALL CCaappiittaall CCoommmmiittmmeennttss The economic entity had no commitments for capital expenditure as at 30 June 2023 (2022: Nil). NNOOTTEE 2200:: CCOONNTTIINNGGEENNTT LLIIAABBIILLIITTIIEESS Estimates of the maximum amounts of contingent liabilities that may become payable: - Bank guarantee by Amber Technology Limited in respect of Sydney property lease No material losses are anticipated in respect of any of the above contingent liabilities. EEccoonnoommiicc EEnnttiittyy 22002233 $$''000000 718 718 22002222 $$''000000 612 612 NNOOTTEE 2211:: EEVVEENNTTSS SSUUBBSSEEQQUUEENNTT TTOO RREEPPOORRTTIINNGG DDAATTEE On 31 July 2023, the economic entity entered into an agreement with Octet finance Pty Ltd in relation to extending its finance facilities for a further 12 months. The facilities include an invoice discounting facility with approval up to $12,000,000 and a business transaction facility with a limit of $2,000,000. The Directors have resolved to pay a dividend of 1.0 cents per share. Other than the above, 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. 45 36 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 2222:: RREELLAATTEEDD PPAARRTTYY TTRRAANNSSAACCTTIIOONNSS KKeeyy mmaannaaggeemmeenntt ppeerrssoonnnneell ccoommppeennssaattiioonn 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 EEccoonnoommiicc EEnnttiittyy 22002233 22002222 1,457,255 1,264,898 160,396 143,898 38,533 19,965 17,761 19,965 1,676,149 1,446,522 KKeeyy MMaannaaggeemmeenntt PPeerrssoonnnneell ttrraannssaaccttiioonnss The following transactions occurred with related parties: - Sale of goods to Wes Components Pty Ltd (director-related entity of Santo Carlini) 371,203 298,910 The following balances are outstanding at the reporting date in relation to transactions with related parties: - Sale of goods to Wes Components Pty Ltd (director-related entity of Santo Carlini) 27,749 32,228 NNOOTTEE 2233:: SSHHAARREE BBAASSEEDD PPAAYYMMEENNTT AARRRRAANNGGEEMMEENNTTSS On 18 December 2020, 2,100,000 share options were granted under the Ambertech Limited Executive Share Option Scheme to take up ordinary shares at an exercise price of $0.22 each. The options are exercisable on or before 18 December 2025. The options hold no voting or dividend rights and are not transferable. These options vest as follows: I. II. Three quarters of the options have vested (tranche 1, tranche 2 and tranche 3) and One quarter of the options vest on 30 September 2024. Vesting subsequent to grant date is also subject to Key Management Personnel (KMP) 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 KMP ceases their employment with the Group. During the financial year 337,500 options vested with KMPs (2022: 337,500). 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. 46 37 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 2233:: SSHHAARREE BBAASSEEDD PPAAYYMMEENNTT AARRRRAANNGGEEMMEENNTTSS ((ccoonnttiinnuueedd)) A summary of the movements of all options issued is as follows: OOppttiioonnss oouuttssttaannddiinngg aass aatt 11 JJuullyy 22002222 Granted Forfeited Exercised Expired OOppttiioonnss oouuttssttaannddiinngg aass aatt 3300 JJuunnee 22002233 Options exercisable as at 30 June 2023 Options exercisable as at 30 June 2022 NNuummbbeerr WWeeiigghhtteedd AAvveerraaggee EExxeerrcciissee PPrriiccee 11,,337755,,000000 - 75,000 250,000 - 11,,005500,,000000 600,000 325,000 $$00..2222 - - $0.22 - $$00..2222 $0.22 $0.22 NNOOTTEE 2233:: SSHHAARREE BBAASSEEDD PPAAYYMMEENNTT AARRRRAANNGGEEMMEENNTTSS ((ccoonnttiinnuueedd)) The weighted average remaining contractual life of options outstanding at year-end was 3.5 years. The exercise price of outstanding shares at the end of the reporting period was $0.22. 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 (2022: Nil). These values were calculated using the Black-Scholes option pricing model applying the following inputs: - Weighted average exercise price: - Weighted average life of the option - - Expected share volatility Risk free interest rate $0.22 5 Years 50% 1.20% 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 and other executives of the Group. Further details relating to key management personnel are provided in the directors’ report. 47 38 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 2244:: SSEEGGMMEENNTT RREEPPOORRTTIINNGG (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: Retail Distribution of home entertainment solutions to dealers. Integrated Solutions 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. Professional Distribution of high technology equipment to professional broadcast, film, recording and sound reinforcement industries. (b) Segment information 22002233 RReevveennuuee Total segment revenue - Inter-segment revenue - Revenue from external customers RReessuulltt - - - - - - - - - Segment Contribution Unallocated / corporate result EBITDA Depreciation and amortisation EBIT Interest and finance costs Profit before income tax Income tax expense Profit for the year AAsssseettss - - - Segment Assets Unallocated/corporate assets Total assets LLiiaabbiilliittiieess - - - Segment liabilities Unallocated/corporate liabilities Total liabilities RReettaaiill $$''000000 11,389 - 11,389 IInntteeggrraatteedd SSoolluuttiioonnss $$''000000 43,598 - 43,598 PPrrooffeessssiioonnaall EElliimmiinnaattiioonnss $$''000000 $$''000000 EEccoonnoommiicc EEnnttiittyy $$''000000 29,237 - 29,237 - - - 84,224 - 84,224 701 3,404 1,842 8,795 23,981 14,918 2,017 5,462 7,866 5,947 (1,017) 4,930 (1,112) 3,818 (1,085) 2,733 (803) 1,930 47,694 4,616 52,310 15,345 14,505 29,850 240 240 - - - 48 39 OOtthheerr - Acquisition of non current segment assets 36 108 96 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 2244:: SSEEGGMMEENNTT RREEPPOORRTTIINNGG ((ccoonnttiinnuueedd)) 22002222 RReevveennuuee Total segment revenue - Inter-segment revenue - Revenue from external customers RReessuulltt - - - - - - - - - Segment Contribution Unallocated / corporate result EBITDA Depreciation and amortisation EBIT Interest and finance costs Profit before income tax Income tax expense Profit for the year AAsssseettss - - - Segment Assets Unallocated/corporate assets Total assets LLiiaabbiilliittiieess - - - Segment liabilities Unallocated/corporate liabilities Total liabilities PPrrooffeessssiioonnaall EElliimmiinnaattiioonnss $$''000000 $$''000000 EEccoonnoommiicc EEnnttiittyy $$''000000 RReettaaiill $$''000000 14,408 - 14,408 IInntteeggrraatteedd SSoolluuttiioonnss $$''000000 39,602 - 39,602 22,985 - 22,985 2,286 3,497 1,635 6,249 20,565 12,647 2,264 4,595 4,727 OOtthheerr - Acquisition of non current segment assets 25 75 67 - - - - - - - 76,995 - 76,995 7,418 32 7,450 (1,260) 6,190 (925) 5,265 (1,584) 3,681 39,461 5,058 44,519 11,586 10,659 22,245 167 167 49 40 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 2244:: SSEEGGMMEENNTT RREEPPOORRTTIINNGG ((ccoonnttiinnuueedd)) (c) Segment information on geographical region Geographical Location - - Australia New Zealand SSeeggmmeenntt RReevveennuueess ffrroomm SSaalleess ttoo EExxtteerrnnaall CCuussttoommeerrss 22002222 $$''000000 22002233 $$''000000 CCaarrrryyiinngg AAmmoouunntt ooff SSeeggmmeenntt NNoonn CCuurrrreenntt AAsssseettss 22002222 $$''000000 22002233 $$''000000 AAccqquuiissiittiioonn ooff NNoonn-- CCuurrrreenntt AAsssseettss 22002233 $$''000000 22002222 $$''000000 78,986 5,240 84,224 71,460 5,535 76,995 6,740 6,532 92 67 6,832 6,599 228 12 240 160 7 167 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 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. 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. Major Customers During the year ended 30 June 2023, $5,518,776 or 6.2% (2022: $8,142,385 or 11%) of the consolidated entity's external revenue was derived from sales to a major Australian retailer through the Major Retail segment. 50 41 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 2255:: CCAASSHH FFLLOOWW IINNFFOORRMMAATTIIOONN ((ii)).. CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss Cash and cash equivalents included in the statement of cash flows comprise the following amounts: Cash on hand At call deposits with financial institutions TToottaall ccaasshh aanndd ccaasshh eeqquuiivvaalleennttss ((iiii)) RReeccoonncciilliiaattiioonn ooff nneett ccaasshh pprroovviiddeedd bbyy ooppeerraattiinngg aaccttiivviittiieess ttoo pprrooffiitt aafftteerr iinnccoommee ttaaxx PPrrooffiitt ffoorr tthhee yyeeaarr Adjustments for: Depreciation and amortization Foreign exchange loss/(gain) Net loss on sale of plant and equipment Non-cash share based payments Changes in operating assets and liabilities (net of business combinations): (Increase) in trade and other receivables (Increase)/decrease in prepayments (Increase) in inventories Increase/(Decrease) in trade and other payables Increase contract liabilities (Decrease)/Increase in provisions (Decrease) in income taxes payable Decrease in deferred taxes NNeett ccaasshh pprroovviiddeedd bbyy ooppeerraattiinngg aaccttiivviittiieess EEccoonnoommiicc EEnnttiittyy 22002233 $$''000000 22002222 $$''000000 2 1,566 11,,556688 3 2,222 22,,222255 1,930 3,681 1,112 23 - 31 (403) (1,553) (4,235) 2,015 1,805 (220) (338) 258 442255 1,260 (281) 10 37 (924) 1,153 (3,626) (633) 913 264 (473) 469 11,,885500 ((iiiiii)) NNoonn CCaasshh FFiinnaanncciinngg aanndd IInnvveessttiinngg AAccttiivviittiieess There were no non-cash financing or investing activities during the financial year. ((AA)) CCaasshh aanndd CCaasshh EEqquuiivvaalleennttss 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. 51 42 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 2266:: FFIINNAANNCCIIAALL RRIISSKK MMAANNAAGGEEMMEENNTT 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: - - - market risk (including foreign currency risk and interest rate risk) credit risk liquidity 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 function (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. AA)).. CCrreeddiitt RRiisskk 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, considering 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. Expected credit loss allowance The expected credit loss allowance relates to specific customers, identified as being in trading difficulties, or where specific debts are in dispute. The expected credit loss 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. 52 43 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 2266:: FFIINNAANNCCIIAALL RRIISSKK MMAANNAAGGEEMMEENNTT ((ccoonnttiinnuueedd)) 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 EEccoonnoommiicc EEnnttiittyy 22002233 $$''000000 9,596 3,919 254 1,077 14,846 44 14,890 22002222 $$''000000 7,301 4,979 784 605 13,669 27 13,696 The economic entity does not have other receivables which are past due (2022: Nil). The consolidated entity increased its monitoring of debt recovery as there was an increased probability of customers delaying payment or being unable to pay, due to the current economic environment. At this time this concern has not materialized with credit losses only marginally increased. BB)).. LLiiqquuiiddiittyy RRiisskk 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: CCoonnttrraaccttuuaall CCaasshh FFlloowwss 11 ttoo 55 YYeeaarrss $$''000000 OOvveerr 55 YYeeaarrss $$''000000 22002233 FFiinnaanncciiaall lliiaabbiilliittiieess dduuee ffoorr ppaayymmeenntt Trade payable Other accounts payable Financial liabilities Lease liability Total expected outflows FFiinnaanncciiaall aasssseettss -- ccaasshh fflloowwss rreeaalliissaabbllee Trade receivables Total anticipated inflows WWiitthhiinn 11 YYeeaarr $$''000000 6,331 2,521 6,324 1,784 16,960 14,890 14,890 - - - 6,512 6,512 - - Net inflow / (outflow) on financial instruments (2,070) (6,512) - - - - - - - - TToottaall $$''000000 6,331 2,521 6,324 8,296 23,472 14,890 14,890 (8,582) 53 44 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 2266:: FFIINNAANNCCIIAALL RRIISSKK MMAANNAAGGEEMMEENNTT ((ccoonnttiinnuueedd)) 22002222 FFiinnaanncciiaall lliiaabbiilliittiieess dduuee ffoorr ppaayymmeenntt Trade payable Other accounts payable Financial liabilities Lease liability Total expected outflows FFiinnaanncciiaall aasssseettss -- ccaasshh fflloowwss rreeaalliissaabbllee Trade receivables Total anticipated inflows WWiitthhiinn 11 YYeeaarr $$''000000 3,994 2,823 1,255 1,739 9,811 13,669 13,669 CCoonnttrraaccttuuaall CCaasshh FFlloowwss 11 ttoo 55 YYeeaarrss $$''000000 OOvveerr 55 YYeeaarrss $$''000000 - - - 8,190 8,190 - - TToottaall $$''000000 3,994 2,823 1,255 9,929 18,001 13,669 13,669 (4,332) - - - - - - - - Net inflow/(outflow) on financial instruments 3,858 (8,190) 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 contractual maturities at the current market interest rate that is available for similar financial liabilities. CC)).. MMaarrkkeett RRiisskk 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 economic 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 Impact on equity WWeeaakkeenniinngg ooff 1100%% 22002233 $$''000000 (101) 22002222 $$''000000 (311) SSttrreennggtthheenniinngg ooff 1100%% 22002233 $$''000000 83 22002222 $$''000000 255 (101) (311) 83 255 45 54 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 2266:: FFIINNAANNCCIIAALL RRIISSKK MMAANNAAGGEEMMEENNTT ((ccoonnttiinnuueedd)) 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: Note WWeeiigghhtteedd aavveerraaggee iinntteerreesstt rraattee BBaallaannccee 22002233 %% 22002222 %% 22002233 $$''000000 22002222 $$''000000 Debtor finance Business transaction facility Financial liabilities 14 14 5.80% 5.80% 5.80% 6.20% 6.20% 6.20% 5,930 394 6,324 927 328 1,255 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 2023, with all other variables remaining constant: Impact on profit Impact on equity IInnccrreeaassee ooff 11%% ooff aavveerraaggee iinntteerreesstt rraattee 22002222 $$''000000 (13) 22002233 $$''000000 (38) DDeeccrreeaassee ooff 11%% ooff aavveerraaggee iinntteerreesstt rraattee 22002222 $$''000000 13 22002233 $$''000000 38 (38) (13) 38 13 DD)) NNeett FFaaiirr VVaalluueess The net fair values of assets and liabilities approximate their carrying values. No financial assets or liabilities are readily traded on organised markets. EE)) CCaappiittaall MMaannaaggeemmeenntt 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 or reinvested as part of the Dividend Reinvestment Plan during the year ended 30 June 2022 were $1,861,000 (2022: $2,626,000). There were no changes to the economic entity's approach to capital management during the financial year. 46 55 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 2277:: EEAARRNNIINNGGSS PPEERR SSHHAARREE AA)) BBaassiicc eeaarrnniinnggss ppeerr sshhaarree ((cceennttss)) Weighted average number of ordinary shares (number) Earnings used to calculate basic earnings per share ($) EEccoonnoommiicc EEnnttiittyy 22002233 $$''000000 2.1 22002222 $$''000000 4.2 93,106,394 87,694,207 1,930,000 3,681,000 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. BB)) DDiilluutteedd eeaarrnniinnggss ppeerr sshhaarree ((cceennttss)) Weighted average number of ordinary shares (number) Earnings used to calculate diluted earnings per share ($) 2.1 4.2 93,712,490 88,114,892 1,930,000 3,681,000 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. NNOOTTEE 2288:: DDIIVVIIDDEENNDD FFiinnaall DDiivviiddeennddss Final dividend for the year ended: - - Paid in Cash Reinvested as part of the Dividend Reinvestment Plan 30 June 2022, 1.5 cents per share, fully franked paid on 30 September 2022 30 June 2021, 1.6 cents per share, fully franked paid on 5 October 2021 IInntteerriimm DDiivviiddeennddss Interim dividend for the year ended: - - Paid in Cash 30 June 2023, 0.5 cents per share, fully franked, paid on 31 March 2023 30 June 2022, 1.5 cents per share, fully franked, paid on 31 March 2022 TToottaall DDiivviiddeennddss Franking credits available for subsequent financial years at the 30% corporate tax rate after allowing for tax payable in respect of current year's profit and tax rules DDiivviiddeennddss nnoott rreeccooggnniisseedd aatt yyeeaarr eenndd Since year end, the Directors have declared a fully franked final dividend of 1.0 cents per share. The total amount of the dividend expected to be paid on the 17 October 2023 out of retained profits, but not recognised as a liability at year end; EEccoonnoommiicc EEnnttiittyy 22002233 $$''000000 22002222 $$''000000 11,,339955 -- 1,395 - -- 11,,223311 635 596 446666 -- 466 -- 11,,339955 1,395 11,,886611 22,,662266 55,,997722 66,,447755 993322 11,,339955 56 47 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 2299:: AAUUDDIITTOORRSS'' RREEMMUUNNEERRAATTIIOONN The disclosures include amounts received or due and receivable by BDO Audit Pty Ltd and their respective related entities. AAuuddiitt sseerrvviicceess BDO Audit Pty Ltd Audit and review of financial reports under the Corporations Act 2001. Total remuneration for audit services NNoonn--aauuddiitt sseerrvviicceess BDO Services Pty Ltd Tax compliance services, including review of company income tax returns Other practices - BDO Auckland Tax compliance services, including review of company income tax returns Total remuneration for non-audit services 22002233 $$ 22002222 $$ 145,186 145,186 136,771 136,771 20,240 21,480 5,322 25,562 6,742 28,222 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. 57 48 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 3300:: PPAARREENNTT EENNTTIITTYY IINNFFOORRMMAATTIIOONN Information relating to Ambertech Limited (parent entity): Current Assets Total Assets Current Liabilities Total Liabilities Share capital Share issue cost reserve Retained earnings (Loss)/Profit of the parent entity Total comprehensive income of the parent entity CCoonnttiinnggeenntt LLiiaabbiilliittiieess The parent entity had no contingent liabilities as at 30 June 2023 (2022: Nil). PPaarreenntt EEnnttiittyy 22002233 $$''000000 22002222 $$''000000 23,085 21,865 27,642 26,422 3,067 1,674 3,067 1,674 21,837 21,782 68 37 2,943 (272) 2,929 2,584 (272) 2,584 CCaappiittaall CCoommmmiittmmeennttss The parent entity had no capital commitments for property, plant and equipment as at 30 June 2023 (2022: Nil) SSiiggnniiffiiccaanntt AAccccoouunnttiinngg PPoolliicciieess The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1 and throughout the notes. 58 49 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NNOOTTEE 3311:: BBUUSSIINNEESSSS CCOOMMBBIINNAATTIIOONNSS • On 1 February 2023, Ambertech Limited acquired the assets of Convoy International Pty Ltd, a specialist Hi-Fi distributor. Cash on completion Cash on final settlement Consideration - - Total asset purchase/investment TTrraannssaaccttiioonn ccoossttss TToottaall CCoonnssiiddeerraattiioonn Net identifiable assets acquired Supplier Relationships - Customer Relationships - Trade and Other receivables - Inventories - - Employee Entitlements Total net identifiable assets acquired Goodwill on acquisition OOuuttffllooww ooff ccaasshh uusseedd ttoo aaccqquuiirree bbuussiinneesssseess TToottaall Fair Value $'000 2,422 368 2,790 20 22,,881100 35 20 775 1,475 (79) 2,226 584 22,,881100 CCoonnvvooyy IInntteerrnnaattiioonnaall -- IImmppaacctt ooff aaccqquuiissiittiioonn oonn tthhee rreessuullttss ooff tthhee GGrroouupp AASB 3 Business Combinations requires disclosure of both the revenue and profit and loss of the acquired business from the date of acquisition, and disclosure of revenue and profit and loss for the current reporting period as though the acquisition date had been as of the commencement of the financial period. Since the acquisition date; • Convoy International Brands have contributed $1,170,000 of revenue to the group. Management has however determined that disclosure of the profit and loss of the acquired business from date of acquisition is impracticable, given it has now consolidated with the existing business of Ambertech Limited. Management has also determined that it is impractical to determine the revenue and profit and loss of the entity for the current reporting period as though the acquisition date occurred at the beginning of the reporting period. This is due to the consolidation of the acquired business into the existing business of Ambertech Limited during the year and the cessation of various lines of business previously undertaken by the business of the acquiree. 59 50 AMBERTECH LIMITED AND CONTROLLED ENTITIES ACN 079 080 158 DIRECTORS’ DECLARATION The directors of the company declare that: 1. The financial statements, comprising the consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity and accompanying notes, are in accordance with the Corporations Act 2001 and: (a) comply with Australian Accounting Standards and the Corporations Regulations 2001; and (b) give a true and fair view of the consolidated entity's financial position as at 30 June 2023 and of its performance for the year ended on that date. 2. The company has included in the notes to the financial statements an explicit and unreserved statement of 3. 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. 4. 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. This declaration is made in accordance with a resolution of the Board of Directors pursuant to section 295(5)(a) of the Corporations Act 2001, and is signed for and on behalf of the directors by: P F Wallace DDiirreeccttoorr Dated this 23rd day of August 2023 Sydney P A Amos DDiirreeccttoorr 60 51 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 - - - - 1,000 5,000 10,000 100,000 100,001 and over 107 256 115 308 92 57,929 724,353 911,627 11,666,009 79,884,901 0.06 0.78 0.98 12.51 85.67 Total 878 93,244,819 100.00 The number of security investors holding less than a marketable parcel of 2,381 securities is 216 and they hold 247,108 securities. EQUITY SECURITY HOLDERS The twenty largest shareholders as at 10 October 2023 were: Rank Twenty largest holders 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Appwam Pty Limited Crowton Pty Ltd (Amos Super Fund A/C) Wavelink Systems Pty Ltd (Employee Super Fund) Mr Nathan Carlini Wygrin Pty Ltd (Wygrin Pension Fund) Horrie Pty Ltd (Horrie Superannuation) Mr Edwin Goodwin & Ms Julia Griffith (EFG Investments) Wavelink Systems Pty Ltd Wallace Capital Pty Ltd (Super Fund) SI Corporation Pty Ltd (Santo Carlini DT) Martini Super Pty Ltd (Martini Super Fund) R&B Invest Pty Ltd Mrs Gail Sharron Rubino Terry Morris Pty Ltd (Morris Family Super A/C) Hillmorton Custodians Pty Ltd (The Lennox Unit) Mr Michael Carman & Mrs Alisha Carman (M Carman Investment Fund) BNP Paribas Noms Pty Ltd (DRP) Finclear Pty Ltd (Superhero Securities A/C) Mr Robert Douglas Lewin Breuer Investments Pty Ltd (Mark Breuer Family) Source: Boardroom Pty Limited Number of shares % of total capital 27,923,724 29.95 5,322,555 4,455,350 3,635,514 3,352,703 3,075,000 2,883,556 2,784,625 2,600,000 1,640,182 1,000,000 1,000,000 887,067 722,632 686,000 614,023 597,521 490,308 472,991 455,000 5.71 4.78 3.90 3.60 3.30 3.09 2.98 2.79 1.76 1.07 1.07 0.95 0.77 0.74 0.66 0.64 0.52 0.51 0.49 64,598,751 69.28 61 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 Greig and Harrison Pty Ltd 27,923,724 7,289,975 5,322,555 4,980,000 29.95 7.82 5.71 5.47 UNQUOTED SECURITIES There are a total of 1,050,000 unquoted securities on issue as follows: Description Number of Options Number of holders Options over ordinary shares 1,050,000 7 ON-MARKET BUY BACK 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 10 October 2023. 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 2023 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. 62 CORPORATE DIRECTORY Financiers Octet Level 3, 10-14 Waterloo St Surry Hills NSW 2010 T: +61 2 9356 6300 Auditors BDO Audit Pty Ltd Level 11, 1 Margaret Street Sydney NSW 2000 T: + 61 2 9251 4100 ASX Listing AMO Registered Office Unit 1, 2 Daydream Street Warriewood NSW 2102 T: +61 2 9998 7600 Melbourne Ground Floor 737 Burwood Road Hawthorn VIC 3122 T: +61 2 9998 7600 Auckland Unit 3, 77 Porana Road Glenfield, Auckland 0672 New Zealand T: + 64 9 443 0753 Directors Peter Wallace Chairman Peter Amos Managing Director Tom Amos David Swift Santo Carlini Company Secretary Robert 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 Web www.ambertech.com.au Corporate Governance Statement www.ambertech.com.au/investors/corporate-governance 63 AMBERTECH LIMITED PO Box 955, Mona Vale NSW 1660 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 64 

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