AMBERTECH LIMITED — Annual Report 2023

Aug 22, 2023

FULL YEAR RESULTS FY 2023 INVESTOR UPDATE - AUGUST 2023

ASX: AMO

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Executive Summary

• Leading value-added distributor of high technology audio-visual (AV) and communications solutions.

• Distribution network of professional, commercial and residential installers, consumer electronics (CE) & musical instrument (MI) retailers, content creators, broadcasters, government and nongovernment users of communications infrastructure across Australia and NZ.

• Continuing success driven by of the adoption of AV technology across key markets.

• Delivering on clear strategy for growth via business and agency acquisition.

• Successful acquisition and integration of Hills AV business (Nov 19), Noise Toys Imports MI business (Sep 21), Connected Media Australia (Oct 21) and Convoy International business (Jan 23).

• Opportunities for growth via acquisition continue to emerge and we are active in this space.

Results Highlights

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Revenue EBITDA NPAT EPS DPS $84.2M $4.9m $1.9m 2.1c 1.5c Revenue growth of 9.4% on previous corresponding EPS of 2.1 cents.

Revenue growth of 9.4% on previous corresponding period.

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Revenue in line with company expectations, earnings impacted by increased costs. Investment to drive future growth. Final dividend of 1.0 cents, fully

Working Capital remains strong

Ongoing dividend payout commitment

franked

3

Business Segments

Integrated Solutions

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Supporting our dealer network with world class product solutions and support.

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• Acquisition provides additional scale and allows for the creation of a new dedicated Specialist HiFi sales team.

$0.5m to $43.6m 52% $2.0m

Key Brands

Strategic Acquisitions

• Australian Monitor - Sonance – Williams AV - RTI - Bluesound - NAD - Aver – Grandview - Newline

• Hills AV (Nov ‘19) - Connected Media Australia (Oct ‘21) – Convoy International (Jan ‘23)

Key Customers

• One Diversified - Fredon Technology - Programmed Electrical - Vizcom Technologies - Electronic Living - AV Australia - Concept AV - Pro AV Solutions - Melbourne HiFi – Harvey Norman Commercial

Business Segments

Professional

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Supporting a strong dealer network and a range of media and communications users with world class product solutions and ongoing support including SaaS.

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$1.0m to $29.2m 35% $12.0m

Key Brands

Strategic Acquisitions

• EVS –Telestream - Avid – Solid State Logic – Silvus – Neutrik – Canare – Radial - Strymon – Warwick Guitars

• Noise Toys (Sep ‘21)

Key Customers

• Department of Defence – Royal Australian Navy - ABC – Fox Sports – Seven Network – Nine Network – Network Ten - Soundbay – Factory Sound – Sounds Easy

Business Segments

Retail

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Exclusive brand representation in areas where product differentiation is clear in capability and value.

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$11.4m 13%

Key Brands

• One For All – Philips

Key Customers

• JB HiFi – Harvey Norman – Big W – The Good Guys – The Warehouse – Noel Leeming – Electus Distribution

Financials

Financial Highlights

Commentary

• Revenue growth across multiple sectors with further capacity from key brands in FY24.

• Travel, marketing and employment costs up reflecting increased business activity with greater dealer and supplier interaction – however we expect this investment to drive further growth in future reporting periods.

• Improved second half result underpinned by project work and acquisition.

Normalised NPBT by Half Year ($m)

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Normalised NPBT
2.5
2.3 2.3
2.0
2.1
2.0
1.5 1.7
1.0
1.0
0.5
-
1H FY21 2H FY21 1H FY22 2H FY22 1H FY23 2H FY23
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(A$m)	FY23	FY22
Revenue	84.2	77.0
Cost of Goods	(55.5)	(50.0)
Gross Profit	28.7	27.0
GP Margin (%)	34.1%	35.1%
EBITDA	4.9	7.5
EBITDA Margin (%)	5.8%	9.7%
EBIT	3.8	6.2
EBIT Margin (%)	4.5%	8.1%
NPBT	2.7	4.6
NPAT	1.9	3.7
Adjusted NPAT(Jobseeker FY22)	1.9	3.1
EPS (cents)	2.1	4.2
Div PS (cents)	1.5	3.1

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Balance Sheet

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Balance Sheet Summary

(A$m)	FY23	FY22
Current Assets	42.9	35.1
Current Liabilities	23.2	14.4
Working Capital	19.7	20.7
Adjusted Working Capital (excluding cash)	18.1	18.5
Non Current Assets	9.4	9.4
Non Current Liabilities	6.6	7.9
Net Assets	22.5	22.2
Intangibles	(4.7)	(4.3)
Net Tangible Assets	17.8	17.9

• Working capital and NTA steady during the period.

(A$m)	FY23	FY22
Inventory	23.1	17.3

Annualised GPROI (Average Inventory)

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182%
172%
142%
119%
115%
FY19 FY20 FY21 FY22 FY23
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• Holding stock for projects of approx. $2.0M at year end.

• Positioned to see significant improvement in this metric in H1

FY2024.

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Cash Flow and Net Debt

Cash Flow Summary

(A$m)	FY23	FY22
Cash provided by Operating Activities	0.4	1.9
Cash used in Investing Activities	(3.0)	(2.0)
Cash provided by Financing Activities	2.0	0.6
Net (decrease)/ increase in cash	(0.6)	0.5

(A$m)	FY23	FY22
Total Finance Debt	(6.3)	(1.2)
Cash	1.6	2.2
Net Cash/(Debt)	(4.7)	1.0

• Usage of Octet facility higher at balance date to manage inventory flows, including project deliveries.

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Net Cash/(Debt) ($m)

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2.0
1.0
1.0
-
FY19 FY20 FY21 FY22 FY23
(1.0)
(0.9)
(2.0)
(3.0)
(4.0)
(3.8)
(4.4)
(5.0) (4.7)
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• Convoy acquisition ($2.8m) and increase in inventory levels increased usage of debt facilities at balance date.

• Significant headroom remains available across all funding facilities with limits of up to $15M.

10

Structure

Capital Structure
Share price (21 August 2023)	$0.215
52 week range	$0.21/$0.40
Shares on Issue	93.2M
Options on Issue	1.1M
Market capitalisation	$20.0M
Net debt (30 June 2023)	$4.7M
Enterprise Value	$24.7M
Substantial Shareholders(21 August 23)	%
Appwam Pty Limited	29.8%
Wavelink Systems	7.9%
Amos Super Fund	5.7%
Greig & Harrison	5.5%
Sub-total	48.9%
Top 20	69.1%

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Dividends

• Final dividend 1.0 cents per share

• DRP invoked for final dividend

• Full year dividend payout ratio of 75% of NPAT

Dividend Cents per Share

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Interim FY21 1.5
Final FY21 1.6
Interim FY22 1.5
Final FY22 1.5
Interim FY23 0.5
Final FY23 1.0
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• Board target payout ratio of min 50% of NPAT

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Growth Strategy and Outlook

Executing Growth Strategy

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Key Drivers

• Current brand portfolio has capacity for further growth, including brands recently acquired.

• Clear M&A strategy to achieve strategic growth targets across all markets.

• Further growth possible in additional aligned verticals not currently serviced.

• Focused on value creating opportunities where with a clear commercial case supported by Board and management expertise.

Key Acquisition Attributes

• EPS positive

• High Inventory ROI

• Owned IP

• Recurring revenue

• Retention of key brands

• Retention of key people

• Limited brand conflict

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Ability in-house to identify opportunities in existing markets. Access to professionals to assist with other opportunities Ability to articulate acquisition benefits to investors Board and management aligned on priorities

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Proven track record of successful integration

Retain focus on all represented brands

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FY24 Outlook

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• Final Dividend of 1.0 cents per share fully franked. Full year payout of 1.5 cent represents payout ratio of 75% of NPAT.

• Strong start to first half of FY2024 with multiple project milestones completed.

• Dealer based business continues to grow despite difficult economic environment.

• Opportunities for growth via acquisition continue to emerge and we are active in this space.

• More information at the AGM.

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Appendix

Acquisition Success

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Acquisition	Date	Market	Acquisition Price	Goodwill	Annual Revenue^
• Hills AV Business	Nov 2019	Commercial AV	$4.6m	$0.8m	$25M
• Noise Toys	Sep 2021	Musical Instruments	$0.6m	$0.2m	$2M
• Connected Media Australia	Oct 2021	Commercial & Residential AV	$1.3m	$0.3m	$3M
• Convoy International*	Jan 2023	Specialist HiFi	$2.8m	$0.5m	$5M

^ Based on preliminary FY24 estimates.

Acquisition Price

• Acquisition prices included stock at discounted value and may include accounts receivable and other identifiable assets

• Funding for acquisitions has been a combination of debt and equity

Recent Contract Wins and Agency Gains

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New Agencies

Projects

• Contract for the supply of $3m worth of SSL consoles with delivery in H1 FY2024.

• Ongoing contribution of the Network Ten contract. Revenue in the order of $12m over 5 years with $4.0M due in FY2024.

• Major law enforcement agency contract for $2.2M.

• Several upgrades with national broadcasters.

During the year:

 Breedlove Guitars  Kasta Technologies  James Tyler Guitars  LEA Professional  Amadeus Acoustics  NAD

 Bluesound  JBL

 ISO Acoustics

Acquisition

Convoy International (Jan ‘23)

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Important Notice and Disclaimer

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Future performance

This Presentation contains certain “forward looking statements”. Forward looking statements can generally be identified by the use of forward looking words such as, “expect”, “anticipate”, “likely”, “intend”, “should”, “could”, “may”, “predict”, “plan”, “propose”, “will”, “believe”, “forecast”, “estimate”, “target” “outlook”, “guidance” and other similar expressions within the meaning of securities laws of applicable jurisdictions and include, but are not limited to, indications of, or guidance or outlook on, future earnings or financial position or performance of Ambertech, the outcome and effects of the Offer and the use of proceeds, including the impact of the acquisition. The forward looking statements contained in this Presentation are not guarantees or predictions of future performance and involve known and unknown risks and uncertainties and other factors, many of which are beyond the control of Ambertech, and may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct. Refer to the risks section of this Presentation for a summary of certain general and Ambertech specific risk factors that may affect Ambertech. There can be no assurance that actual outcomes will not differ materially from these forward-looking statements. A number of important factors could cause actual results or performance to differ materially from the forward looking statements, including the risk factors set out in this Presentation. Investors should consider the forward looking statements contained in this Presentation in light of those disclosures. The forward looking statements are based on information available to Ambertech as at the date of this Presentation. Except as required by law or regulation (including the ASX Listing Rules), Ambertech undertakes no obligation to provide any additional or updated information whether as a result of new information, future events or results or otherwise. Indications of, and guidance or outlook on, future earnings or financial position or performance are also forward looking statements.

Effect of rounding

A number of figures, amounts, percentages, estimates, calculations of value and fractions in this Presentation are subject to the effect of rounding. Accordingly, the actual calculation of these figures may differ from the figures set out in this Presentation.

Investment risk

An investment in New Shares is subject to investment and other known and unknown risks, some of which are beyond the control of Ambertech including possible loss of income and principal invested. Ambertech does not guarantee any particular rate of return or the performance of Ambertech, nor does it guarantee the repayment of capital from Ambertech or any particular tax treatment. In considering an investment in Ambertech shares, investors should have regard to (amongst other things) the risks outlined in this Presentation.

Disclaimer

To the maximum extent permitted by law, no representation or warranty, express or implied, is made as to the currency, accuracy, reliability or completeness of information in this Presentation and each of Ambertech and their respective advisers, affiliates, related bodies corporate, directors, officers, partners, employees and agents excludes and disclaims all liability, including without limitation for negligence or for any expenses, losses, damages or costs incurred by you as a result of your participation in the Offer and the information in this Presentation being inaccurate or incomplete in any way for any reason, whether by negligence or otherwise. Ambertech, the lead manager and their advisors make no recommendations as to whether investors or their related parties should participate in the Offer. Statements made in this Presentation are made only as at the date of this Presentation. The information in this Presentation remains subject to change without notice. Ambertech reserves the right to withdraw the Offer or vary the timetable for the Offer without notice.