AMBERTECH LIMITED — Interim / Quarterly Report 2021

Feb 24, 2021

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AMBERTECH LIMITED ASX:AMO

1H FY21 Results 25 February 2021

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Executive Summary

• Ambertech Limited (ASX: AMO) is a leading value-added distributor of high technology audio-visual (AV) and communications solutions.

• Ambertech distributes these AV and communication solutions to a network of professional, commercial and residential installers, consumer electronics (CE) & musical instrument (MI) retailers, content creators, broadcasters, government and non-government users of communications infrastructure across Australia and NZ.

• Ambertech is well positioned to take advantage of strong macro growth and adoption of AV technology in light of COVID-19 across its key markets.

• • Ambertech has a strong technology and product suite that has allowed the business to achieve the following key highlights:

• Successful acquisition and integration of Hills AV business bringing scale, geographic spread and strengthening professional customer base.

• • Strong financial results for 1H FY21: • Revenue of $38.9m (52% growth vs 1H FY20), EBITDA of $4.6m and NPAT of $3.6m (including JobKeeper of $1.1m).

• • Interim Dividend of 1.5 cents per share for 1H FY21.

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Capital Structure	Capital Structure
Share price (22 Feb 2021)		$0.20
52 week high/low		$0.03/$0.35
Shares on Issue		76.5M
Options on Issue		2.1M
Market capitalisation		$15.3M
Net debt (31 Dec 2020)		$3.0M
Enterprise Value		$18.3M
Substantial Shareholders*	%
Appwam Pty Limited	34.3%
Wavelink Systems	9.4%
Amos Super Fund	6.2%
Sub-total	49.9%
Top 20	82.2%

• As at 23 February 2021

• Strong platform to build future growth through professional, commercial and residential dealer sales.

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Executive Summary

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Segments Integrated Solutions Professional Retail Products and Services Commercial Installations Media Systems Home Entertainment Supply, installation and support of major systems for A range of exclusive brands focusing on Focus on exclusive product representation in the Broadcast and Post-Production industry. commercial and educational clients areas where product differentiation is clear in capability and value, providing: Defence Law Enforcement Security Residential Installations Specific products focussed on defence and law • Universal Remote Controls A range of exclusive brands complementary to the enforcement. • Philips Projectors residential installation space. Professional Products • Audio Visual accessories Products for professional users spanning music, studios, broadcasters and post-production. Key Customers Diversify Electronic Living Department of Defense ABC Studio / Production Facility JB Hi-Fi Harvey Norman Fredon AV Australia Royal Australian Navy Channel 9 Other specialist AV retailers (with centralised Programmed JFK Australian Police Force Network 10 distribution) selling to consumers who require universal Vizcom Technologies Concept AV Attorney Generals Office Soundbay remotes and other basic electronic products. Revenue Contribution 1[st] Half 2021 $18.4M (47%) $14.5M (40%) including ~ $5M in SaaS recurring revenue $6.0M (13%) Contract Sizes $0.5M-$2.0M $1m-$6M N/A SOURCE SUPPLY SUPPORT

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Competitive Landscape

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Segments	Segments	Segments
Integrated Solutions	Professional	Retail
Market Opportunity
Streaming Audio/Video Home entertainment	Communications IP Radio Automation TV, Post-Production Music Production	Demand for small portable projection
Key Products
Streaming Technologies Supporting technologies (speakers, displays) Amplifiers and speakers Higher end systems	Silvus MIMO Mesh Radios Vinten Studio Robotics USB based Audio interfaces Studio Monitor systems	Introduction of Philips projectors – starting at low cost and size (Micro) to higher cost and size
Competitors
More competitors in this market segment Larger market	Limited competition Specialists markets	Low cost no name brands

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Financials

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Summary of Key Metrics

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Revenue up 52% to $38.9M over PCP NTA 14.0c, EPS 4.7c EBITDA $4.6M; NPAT $3.6M Interim Dividend 1.5c per share Net debt reduced to $3.0M Working Capital up 27.4% from 30/6/20

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Financial Highlights

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1H FY21 Commentary

(A$m)	1H FY21	2H FY20	1H FY20
Revenue	38.9	33.1	25.6
Cost of Goods	(26.7)	(22.2)	(18.3)
Gross Profit	12.2	10.9	7.3
EBITDA	4.6	3.7	(0.4)
EBIT	3.8	3.0	(1.0)
NPAT	3.6	2.4	(1.6)
EPS (cents)	4.7	3.1	(4.5)*
GP Margin (%)	31.4	32.9	28.5
EBITDA Margin (%)	11.7	11.1	(1.5)
EBIT Margin (%)	9.8	8.9	(0.4)

Major factors affecting the result:

• HAV acquired brands contributed $10.4M in revenue;

• ABC contract revenue in of $2.5M;

• Strong performance of CE Retail and MI Retail brands;

• COVID-19 impact on top line limited in Q2 with some impact on live entertainment and tertiary education customers;

• Positive JobKeeper cash boost ($1.5M) with impact on profit of $1.1M;

• Weighted average number of shares different for this half.

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Key Operating Metrics

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• Revenue growth in all segments

• Strong contribution from HAV acquired brands

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EBIT ($M)
Half on Half
5.0
4.0
3.0
2.0
1.0
-
1H F2019 2H F2019 1H F2020 2H F2020 1H F2021
(1.0)
(2.0)
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• Return to profits continued

• Economies of scale realised.

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Cash Flow & Balance Sheet

Cash Flow Summary

• Operating cash flow strong for 1H FY21.

• Cash flow provided reduction in net debt.

(A$m)	1H FY21	1H FY20
Cash provided by Operating Activities	1.5	0.9
Cash used in Investing Activities	(0.1)	(4.4)
Cash used in/provided by Financing Activities	(1.0)	3.3
Net increase in cash	0.4	(0.2)
(A$m)	1H FY21	FY20
Total Finance Debt	4.4	4.8
Cash	(1.4)	(1.0)
Net Debt	3.0	3.8

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Balance Sheet Summary

• Working capital improvement of 27.4%

• NTA increased to 14.0c per share.

(A$m)	1H FY21	FY20
Current Assets	31.9	32.3
Current Liabilities	(18.4)	(21.7)
Working Capital	13.5	10.6
Adjusted Working Capital (excluding cash)	12.1	9.6
Non Current Assets	10.8	10.8
Non Current Liabilities	(9.3)	(9.7)
Net Assets	15.0	11.7
Intangibles	(4.3)	(3.7)
Net Tangible Assets	10.7	8.0

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Growth Strategy and Outlook

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Executing Growth Strategy

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• AMO is focused on increasing market share in Professional and Integrated Solutions categories and increasing recurring revenues and margin through the following key growth initiatives

Organic		Professional	• Expanded our reach into more system sales where we take the role of a complete supplier. Recent examples being the ABC project and Ausbiz. • Focused on increasing our recurring services model where multi year support contracts are entered into. • Increasing our own IP capability with the acquisition of Australian Monitor. The R&D for new product development continues with four new products in development.
		Integrated Solutions	• There are a number of opportunities in the product portfolio to increase the depth of sales, being in the areas of Video conferencing and Streaming products – this has recently been expanded due to the high demand as a result of the work force working from home.
		Retail	• Market expansion of our new range of new low cost LED based projectors to the market. In addition to this we are expanding the representation of the current product to additional retailers.
Inorganic		Acquisition	• AMO is actively looking at acquisitions, with a number already identified in each area of the business. • We have a disciplined framework for approaching relevant acquisition opportunities.

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FY21 Outlook

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• Interim Dividend of 1.5 cents per share for 1H FY21. Board have reaffirmed its intention of target dividend pay-out ratio of 45% to 55% for the full year.

• All segments of the business remain strong; and the COVID-19 impacts on the events and entertainment markets are beginning to ease.

• Whilst it is too early to provide guidance for the full year results, the early trading in the second half has followed on from the trend of the first half of the financial year.

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Appendix

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Recent Contract Wins

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Professional

• AMO has been awarded a contract with Leonardo to upgrade the RAN Anzac fleet with Silvus radio solutions. Phase 2 is scheduled for delivery over the coming 12 months leaving one phase to be completed on the current contract.

• AMO was recently been awarded a contract with the ABC TV for the supply of acquisition and playout servers for their television operations. The deal is valued at $4.9m, including a $1.4m support contract over a five-year period. It is expected that the company will recognise $2.8m in revenue for the 2020/21 financial year. This project is nearing completion with project milestones being achieved.

• AMO was awarded a multimillion-dollar contract for Silvus radio solutions with the Department of Defense which was supplied as per contract and recognized in H2 FY21.

• H1 FY21 has seen further contract wins with delivery this financial year:

• Supply of display technology into a major tertiary education facility.

• Supply and support of communications equipment into a law enforcement facility.

• Supply and support of a transcode farm to Parliament House Canberra for use within their broadcast facility.

• Supply and support of Vinten robotics systems for two commercial broadcasters.

• Supply and support for a communication system to the emergency services.

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Important Notice and Disclaimer

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.

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