AUDINATE GROUP LIMITED

Audinate Group Limited Appendix 4E Preliminary final report

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1. Company details

Name of entity: Audinate Group Limited ABN: 56 618 616 916 Reporting period: For the year ended 30 June 2018 Previous period: For the year ended 30 June 2017

2. Results for announcement to the market

				$
Revenue from ordinary activities	up	30.5%	to	19,653,493
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA)*	down	28.7%	to	558,933
Profit from ordinary activities after tax attributable to the owners of
Audinate Group Limited	up	>100%	to	2,544,339
Profit for the year attributable to the owners of Audinate Group Limited	up	>100%	to	2,544,339

Dividends

There were no dividends paid, recommended or declared during the current financial period.

Comments

The profit for the Group after providing for income tax amounted to $2,544,339 (30 June 2017: loss of $20,443,388).

The prior year loss was primarily due to a charge for the change in fair value of convertible redeemable preference shares, amounting to $18,547,790. EBITDA for the prior year excludes public company costs and LTI expenses which were incurred in FY 2018 (amounting to approximately $1.2m) and caused the decrease in EBITDA for the year ended 30 June 2018.

*The directors consider EBITDA to reflect the core earnings of the Group. EBITDA is a financial measure which is not prescribed by Australian Accounting Standards ('AAS') and represents the profit under AAS adjusted for non-cash and significant items.

Refer to the 'Review of operations' section of the Directors' report accompanying this Appendix 4E for further commentary.

3. Net tangible assets

Net tangible assets per ordinary security	Reporting period Cents 27.07	Previous period Cents 26.19

4. Control gained over entities

Not applicable.

5. Dividend reinvestment plans

Not applicable.

Audinate Group Limited Appendix 4E Preliminary final report

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6. Audit qualification or review

Details of audit/review dispute or qualification (if any):

The financial statements have been audited and an unqualified opinion has been issued.

7. Attachments

Details of attachments (if any):

The Directors' report and financial statements of Audinate Group Limited for the year ended 30 June 2018 is attached.

8. Signed

Signed _________

Date: 27 August 2018

David Krall Chairman Sydney

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ABN 56 618 616 916

Directors' report and financial statements - 30 June 2018

Audinate Group Limited
Contents
30 June 2018
Corporate directory	2
Directors' report	3
Auditor's independence declaration	19
Consolidated statement of profit or loss and other comprehensive income	20
Consolidated statement of financial position	21
Consolidated statement of changes in equity	22
Consolidated statement of cash flows	23
Notes to the consolidated financial statements	24
Directors' declaration	50
Independent auditor's report to the members of Audinate Group Limited	51

Audinate Group Limited Corporate directory 30 June 2018

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Directors	David Krall
	Lee Ellison
	John Dyson
	Roger Price
	Alison Ledger
	Tim Finlayson
Company secretary	Rob Goss
Registered office	Level 1
	458 Wattle Street
	Ultimo NSW 2007
	Tel: 02 8280 7100
Share register	Link Market Services Limited
	Level 12
	680 George Street
	Sydney NSW 2000
	Tel: 1300 554 474
Auditor	Deloitte Touche Tohmatsu
	Grosvenor Place
	225 George Street
	Sydney NSW 2000
Solicitors	Maddocks
	Level 27
	123 Pitt Street
	Sydney NSW 2000
Stock exchange listing	Audinate Group Limited shares are listed on the Australian Securities Exchange (ASX
	code: AD8)
Website	www.audinate.com
Corporate Governance Statement	The corporate governance statement which is approved at the same time as the
	Annual Report can be found at:
	https://www.audinate.com/company/governance

Audinate Group Limited Directors' report 30 June 2018

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The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Group') consisting of Audinate Group Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2018.

Directors

The following persons were directors of Audinate Group Limited during the whole financial year and up to the date of this report, unless otherwise stated:

David Krall Lee Ellison John Dyson Roger Price Alison Ledger Tim Finlayson

Principal activities

The Group's principal activity is the development and sale of digital Audio Visual ('AV') networking solutions. Dante is the Group’s technology platform that distributes uncompressed digital audio signals over computer networks. Dante comprises software and hardware that is sold to and integrated inside the AV products of its Original Equipment Manufacturer ('OEM') customers. Audinate also sells application software through its own channel to provide management and control for these installations.

Dividends

There were no dividends paid, recommended or declared during the current or previous financial year.

Review of operations

The directors consider EBITDA to reflect the core earnings of the Group. EBITDA is a financial measure which is not prescribed by Australian Accounting Standards ('AAS') and represents the profit under AAS adjusted for non-cash and significant items.

Profit/(loss) after income tax expense for the year Interest revenue Other expense/(revenue) Finance cost Income tax (benefit)/expense Depreciation and amortisation One-off impacts of: Conversion of redeemable preference shares Initial public offering expenses EBITDA	Consolidated 2018 2017 $ $ 2,544,339 (20,443,388) (227,285) (51,541) 70,028 (101,010) - 400 (3,279,906) 47,974 1,451,757 1,088,987 - 18,547,790 - 1,694,328	Consolidated 2018 2017 $ $ 2,544,339 (20,443,388) (227,285) (51,541) 70,028 (101,010) - 400 (3,279,906) 47,974 1,451,757 1,088,987 - 18,547,790 - 1,694,328
	558,933	783,540

For the year ended 30 June 2018, the Group reported an increase in revenue of 30.5% to $19.7 million from $15.1 million in the prior year. As the Group invoices its customers in US dollars, this currency is a more relevant measure of sales performance. In US dollars, revenue increased by 34.5% to US$15.2 million in 2018 from US$11.3 million in the prior year.

The Group has grown its OEM base to 438 manufacturer brands at 30 June 2018, up from 369 at 30 June 2017. Once the OEM has designed the Dante platform into one of its products, the Group will receive revenue at each production run in the form of sales of Dante chips, modules, cards and/or royalties. Dante enabled OEM products available for sale increased to 1,639 products, up 38.7% from 1,182 at the end of June 2017. Dante chips, modules and cards, shipped in 2018 increased to more than 248,000, a 37.9% increase over the prior year. Audinate revenue from software includes royalties, consumer software and Dante Domain Manager. During the year units of software sold increased to approximately 150,000 for the year ended 30 June 2018, up by 58.0% from 2017.

Audinate Group Limited Directors' report 30 June 2018

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Operating expenses, which consist of employee benefit expenses, marketing expenses and administration and other operating expenses increased by approximately 34.4% to $14.1 million in 2018 from $10.5 million in the prior year. This increase was due to additional headcount to drive new product initiatives and additional public company costs of approximately $0.9 million. Earnings before interest, tax, depreciation and amortisation ('EBITDA'), was $0.6 million in 2018 compared to $0.8 million in 2017. Prior year EBITDA excludes the additional one-off costs described above.

Following the Initial Public Offer ('IPO'), the Group entered into a tax consolidated group with effect from 1 July 2017 and the impact of this decision is recorded as an income tax benefit in the current year, amounting to approximately $2.4 million. The Group continues to be eligible for a research and development incentive from the Australian Tax Office which is now recorded as an income tax benefit in the profit or loss for the year ended 30 June 2018.

In the prior year the Group recorded a non-cash charge for the change in fair value of the convertible redeemable preference shares ('CRPS') issued by Audinate Pty Limited amounting to approximately $18.5 million. These instruments were converted into ordinary shares in Audinate Group Limited as a part of the capital reconstruction that occurred as a part of the IPO, that occurred on 30 June 2017.

The Group recorded a profit after tax of $2.5 million for the year ended 30 June 2018 compared to a loss of $20.4 million for the prior year, which included the expense for the CRPS described above.

Significant changes in the state of affairs

There were no significant changes in the state of affairs of the Group during the financial year.

Matters subsequent to the end of the financial year

No matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

Likely developments and expected results of operations

The Group will continue to execute on the strategy to maintain revenue growth in the core business.

The Group’s growth strategy is multi-faceted and seeks to:

drive market participants’ adoption of Dante by working with consultants, integrators, and major customers to create a "network effect" as the adoption of the Dante accelerates;
increase the adoption of Dante across a customer’s product portfolio to expand the ecosystem of available Dante enabled products;
continue to grow the OEMs adopting Dante;
extend the Dante portfolio of products for OEMs and end-users; and
deliver software and services to end-users to better manage and control Dante deployed systems.

As the Group increases its customer base, and the number of Dante-enabled devices within the ecosystem increases, more choices are available for consultants, system designers, integrators, and end users to design turnkey systems. This in turn, further entrenches Dante as the preferred networking technology for professional AV installations, and encourages OEMs to be part of the Dante ecosystem to ensure their products are considered for new installations as well as upgrades to existing installations.

In the coming year the Group will also focus upon initiatives to drive the uptake of the Dante Domain Manager software and Dante AVIO adaptors which were two key products launched earlier in 2018. Engineering resources will be focused upon the development of a video solution to deliver a commercially available product during FY 2019. Collectively, all of these new products and services are designed to more than double the Group’s total addressable market.

The Group will also continue to invest in the system and process improvements to support the ongoing growth of the business.

Environmental regulation

The Group is not directly subject to any significant environmental regulation under Australian Commonwealth or State law.

Audinate Group Limited Directors' report 30 June 2018

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Information on directors

Name: David Krall Title: Chairman and Non-Executive Director Qualifications: David has a Master of Business Administration from Harvard University and both a Bachelor of Science degree and Masters degree in Engineering from Massachusetts Institute of Technology.

Experience and expertise: David serves as a director and/or strategic advisor to several technology companies, combining a strong educational background in engineering and business with 30 years of professional experience. David currently acts as Strategic Advisor for Universal Audio. He is the former President and Chief Operating Officer of Roku Inc., a market leader in television streaming. He was also formerly President and Chief Executive Officer of Avid Technology Inc. (NASDAQ: AVID) Other current directorships: Director of Progress Software Corporation (NASDAQ: PRGS); Director of Harmonic Inc. (NASDAQ: HLIT) Former directorships (last 3 years): Director of Quantum Corp. (NYSE: QTM) Special responsibilities: Member of the Remuneration and Nomination Committee Interests in shares: 293,958 ordinary shares Interests in options: 186,042 options over ordinary shares Interests in rights: None

Name: Lee Ellison Title: Chief Executive Officer Qualifications: Lee has a Bachelor of Science degree from The Ohio State University. Lee also completed an executive management program at the University of Virginia's Darden Business School.

Experience and expertise: Lee has held a series of senior management roles in both start-up and listed companies in telecom and computer technology industries. Lee has held various senior executive and leadership roles over the last 30 years. Lee formerly served as founding Senior Vice President of Worldwide Sales at Dilithium Networks. Previously, Lee served as Vice President of Global Sales and International Operations for Tektronix, Inc. During his 16-year tenure with Glenayre Electronics, Lee held various executive management positions. Other current directorships: None Former directorships (last 3 years): None Special responsibilities: None Interests in shares: 820 ordinary shares Interests in options: 320,000 options over ordinary shares Interests in rights: 2,262,811 performance rights over ordinary shares

Audinate Group Limited Directors' report 30 June 2018

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Name: John Dyson Title: Non-Executive Director Qualifications: John has a Master of Business Administration from RMIT University and a Bachelor of Science degree from Monash University. He has a Graduate Diploma in Finance and Investment from the Securities Institute of Australia and is a member of the Australian Institute of Company Directors.

Experience and expertise: John is a director and one of the founders of Starfish Ventures. He played a crucial role in the establishment of Starfish Ventures and has personally overseen and managed investments across a range of technologies and industries. John is currently a director of Atmail Pty Ltd., Myriax Pty Ltd., Nitro Software Pty Ltd, Aktana Inc., Design Crowd Pty Ltd and Hearables 3D Pty Limited. John is also a director at the Walter and Eliza Hall Institute of Medical Research. Formerly, John was General Manager (Australia) of JAFCO Investment (Asia Pacific), a Singapore based private equity manager. Prior to joining JAFCO, John worked in the investment banking and stockbroking industries for Schroders, Nomura Securities, KPMG and ANZ McCaughan.

Other current directorships: None Former directorships (last 3 years): None Special responsibilities: Member of the Remuneration and Nomination Committee and Audit and Risk Management Committee Interests in shares: 10,807,523 ordinary shares Interests in options: None Interests in rights: None

Name: Roger Price Title: Non-Executive Director Qualifications: Roger has an Engineering degree from the University of Technology, Sydney. Experience and expertise: Roger is also a director at Innovation Capital, a venture capital firm in Sydney, one of the early investors in the Group. Roger is currently the Chairman and Chief Executive Officer of Windlab Limited, a wind energy company. Roger has a depth of operational experience including senior engineering, manufacturing, information technology service and international business development roles for a number of technology based companies. Prior to joining Innovation Capital, Roger was the Chief Executive Officer of Reino Intl., a developer of advanced parking solutions. Roger commenced his career at Alcatel, and has held senior positions with a number of Australian technology businesses and NASDAQ listed software companies. Other current directorships: Director of Windlab Limited (ASX: WND) Former directorships (last 3 years): None Special responsibilities: Member of the Audit and Risk Management Committee Interests in shares: 67,356 ordinary shares Interests in options: None Interests in rights: None

Audinate Group Limited Directors' report 30 June 2018

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Name:	Alison Ledger
Title:	Non-Executive Director
Qualifications:	Alison has a Master of Business Administration from Harvard University and
	graduated magna cum laude, with a Bachelor of Arts degree in Economics from
	Boston College. She is a graduate and member of the Australian Institute of
	Company Directors.
Experience and expertise:	Alison has more than 30 years of experience and has held various leadership roles in
	Australia, the United Kingdom, and the United States of America. She is currently a
	Non-Executive Director of Latitude Financial Services. Alison held various senior
	management and strategic roles while at Insurance Australia Group for eight years,
	including Head of Group Strategy and Executive General Manager, Product, Pricing
	and eBusiness. During her tenure as a Partner with McKinsey and Company she
	advised some of the leading global and Australian banks on strategy and
	organisational change. Alison began her professional career in the banking industry
	working with leading financial institutions.
Other current directorships:	Non-Executive Director of Countplus Limited (ASX: CUP)
Former directorships (last 3 years):	None
Special responsibilities:	Chair of Remuneration and Nomination Committee
Interests in shares:	None
Interests in options:	None
Interests in rights:	None
Name:	Tim Finlayson
Title:	Non-Executive Director
Qualifications:	Tim has degrees in Economics and Laws from Macquarie University. He is a member
	of Chartered Accountants Australia and New Zealand and is admitted as a Solicitor of
	the Supreme Court of New South Wales.
Experience and expertise:	Tim is a chartered accountant with more than 25 years of experience in professional
	services, telecommunications and infrastructure industries and has held finance and
	operational leadership roles in Australia, Singapore and Vietnam. Tim is currently
	Chief Operating Officer with King & Wood Mallesons Australia, a leading international
	law firm. During his time at PricewaterhouseCoopers, Tim was a partner of Tax and
	Legal Services in Indochina advising foreign companies on setting up and operating
	in Vietnam, Cambodia and Laos, following tax advisory roles in Sydney and
	Singapore. Tim was previously Chief Financial Officer for Sydney Airport Corporation
	(ASX: SYD) and Hutchison Telecommunications (Australia) Limited (ASX: HTA).
Other current directorships:	None
Former directorships (last 3 years):	None
Special responsibilities:	Chair of Audit and Risk Management Committee
Interests in shares:	122,951 ordinary shares
Interests in options:	None
Interests in rights:	None

'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated.

'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated.

Company secretary

Rob Goss is the Chief Financial Officer and Company Secretary, responsible for finance and accounting operations and administration of the Group. Rob has extensive experience in finance in publicly listed companies. Rob is a member of the Chartered Accountants Australia and New Zealand and has a Bachelor of Business degree, majoring in Accounting, from the University of Technology, Sydney.

Before joining the Group in 2017, Rob served as Chief Financial Officer for BuildingIQ, Inc. (ASX: BIQ), a commercial energy platform to manage building heating and cooling via the cloud to save on energy costs. Prior to BuildingIQ, Rob was Chief Financial Officer at iProperty Group Limited (ASX: IPP), an online property and portal operating in Malaysia, Hong Kong, Indonesia, Singapore and Thailand. Previously, Rob held senior finance roles at ANZ Bank and Allco Finance Group after commencing his career as a chartered accountant at KPMG.

Audinate Group Limited Directors' report 30 June 2018

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Meetings of directors

The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held during the year ended 30 June 2018, and the number of meetings attended by each director were:

				Remuneration and	Remuneration and		Audit and Risk	Management
	Full	Board		Nomination Committee			Committee
	Attended	Held		Attended	Held		Attended	Held
David Krall	11		11		2	2	-	-
Lee Ellison	11		11		-	-	-	-
John Dyson	11		11		2	2	3	3
Roger Price	11		11		-	-	3	3
Alison Ledger	11		11		2	2	-	-
Tim Finlayson	11		11		-	-	3	3

Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.

Remuneration report (audited)

The remuneration report details the key management personnel remuneration arrangements for the Group, in accordance with the requirements of the Corporations Act 2001 and its Regulations.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors.

The remuneration report is set out under the following main headings:

Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to key management personnel

Principles used to determine the nature and amount of remuneration

The objective of the Group's executive reward framework is to ensure reward for performance is competitive, and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and it is considered to conform to good market practices for the delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance practices:

competitiveness and reasonableness;
acceptability to shareholders;
performance linkage / alignment of executive compensation; and
transparency.

The Remuneration and Nomination Committee is responsible for advising the Board on the composition of the Board and its committees, evaluating potential Board candidates and advising on their suitability, and ensuring appropriate succession plans are in place.

The Remuneration and Nomination Committee establishes, amends and reviews the compensation and equity incentive plans with respect to senior management and employees of the Group including determining individual elements of the total compensation of the chief executive officer, and other members of senior management.

The Remuneration and Nomination Committee may seek external advice to determine the appropriate level and structure of the remuneration packages from time to time (refer to the section 'Use of remuneration consultants' below).

The reward framework is designed to align executive reward to shareholders' interests. The Board have considered that it should seek to enhance shareholders' interests by:

focusing on sustained growth in shareholder wealth and delivering constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value; and
attracting and retaining high calibre executives.

Audinate Group Limited Directors' report 30 June 2018

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Additionally, the reward framework should seek to enhance executives' interests by:

rewarding capability and experience;
reflecting competitive reward for contribution to growth in shareholder wealth; and
providing a clear structure for earning rewards.

Non-executive directors remuneration

Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors' fees and payments are reviewed annually by the Board. The Board may, from time to time, receive advice from independent remuneration consultants to ensure non-executive directors' fees and payments are appropriate and in line with the market. The Chairman's fees are determined independently to the fees of other non-executive directors based on comparative roles in the external market. The Chairman is not present at any discussions relating to the determination of his own remuneration.

ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general meeting. This amount is currently capped under the Constitution at $750,000 per annum. Any increase to the aggregate amount needs to be approved by shareholders. Directors will seek approval from time to time, as appropriate. This aggregate annual sum does not include any special remuneration which the Board may grant to the directors for special exertions or additional services performed by a director for or at the request of the Group, which may be in addition to or in substitution of the director's fees.

The Company has entered into an appointment letter with each of its non-executive directors. Non-executive fees, inclusive of superannuation but exclusive of GST (where applicable), are currently as follows:

Name of Non-Executive Director


Name of Non-Executive Director	Fees per annum
David Krall	$120,000
John Dyson	$65,000
Roger Price	$65,000
Alison Ledger	$65,000
Tim Finlayson	$65,000

Non-executive directors also receive an additional $15,000 per annum for chairing a Board committee.

Executive remuneration

The Group aims to reward executives based on their position and responsibility, with a level and mix of remuneration which has both fixed and variable components.

The executive remuneration and reward framework has four components:

base pay and non-monetary benefits;
short-term performance incentives;
long-term performance incentives; and
other remuneration such as superannuation and long service leave.

The combination of these comprises the executive's total remuneration.

The Remuneration and Nomination Committee recommends to the Board the fixed remuneration packages for the executive team and these are reviewed annually.

Short-term incentive plan ('STI Plan')

The STI Plan is designed to reward eligible employees for their efforts toward the accomplishment of the Group's goals during the plan year. Under the STI Plan, the decision to pay any bonus remains at the full discretion of the Board, based on recommendations by the Remuneration and Nomination Committee.

The key components of the cash-based STI Plan are:

participants are entitled to receive a percentage of their fixed remuneration as an annual cash bonus;
payment of an annual cash bonus is based on individual key performance targets and objectives and the Group's performance against key performance indicators; and
key performance indicators are set annually and may include measures such as revenue, earnings before interest, tax, depreciation and amortisation ('EBITDA'), gross profit margin and growth targets, or other targets as considered appropriate and set by the Board.

Audinate Group Limited Directors' report 30 June 2018

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Long-term incentive plan ('LTI Plan')

The LTI Plan is designed to assist in the reward, retention and motivation of the Group's senior management and other key employees ('participants'). Under the rules of the LTI Plan, the Board has a discretion to offer awards (being options to acquire shares; performance rights to acquire shares; and/or shares, including those acquired under a limited recourse loan funded arrangement) to nominated participants.

A summary of the rules of the LTI Plan is set out below:

the LTI Plan is open to participants, as determined by the Board. Participation is voluntary;
the Board may determine the type/number of awards to be issued under the LTI Plan to each participant and other terms of issue such as: service-based conditions and/or performance hurdles; any amount payable on the grant of the awards; the exercise price of any option granted; the period during which a vested option can be exercised; and any forfeiture conditions or disposal restrictions applying to the awards and any shares that a participant receives upon exercise of their options or performance rights;
the Board may, in its discretion, also determine that the Company will issue limited recourse loans to participants to use for the purchase of shares as part of a share award under the LTI Plan;
when any service-based conditions and/or performance hurdles have been satisfied, participants will receive fully vested shares or their options/performance rights will become vested and will be exercisable over shares, as applicable;
each vested option and performance right enables the participant to be issued or to be transferred one share upon exercise, subject to the rules governing the LTI Plan and the terms of any particular offer;
participants holding options or performance rights are not permitted to participate in new issues of securities by the Company but adjustments may be made to the number of shares over which the options or performance rights are granted and/or the exercise price (if any) to take into account changes in the capital structure of the Company that occur by way of pro rata and bonus issues in accordance with the rules of the LTI Plan and the ASX Listing Rules.
the LTI Plan limits the aggregate number of awards that the Company may grant without shareholder approval, such that the sum of all awards on issue (assuming all options and performance rights were exercised) do not at any time exceed in aggregate 10% of the total issued capital of the Company as at the date of any proposed new awards; and
the Board may delegate management and administration of the LTI Plan, together with any of their powers or discretions under the LTI Plan, to a committee of the Board or to anyone or more persons selected by them as the Board thinks fit.

During the financial year the Group offered performance rights to eligible participants under the LTI Plan.

Group performance and link to remuneration

Remuneration for all staff is directly linked to the performance of the Group. The overall level of reward is based on the achievement of revenue and EBITDA thresholds as well as the individual's performance assessment score. No bonus is payable unless the thresholds are met and the ultimate amount payable remains at the discretion of the Board. Refer to the section ''Additional information" below for details of the total shareholders return and earnings. Total shareholders return represents a key measure for the LTI plan.

Use of remuneration consultants

The Group did not engage remuneration consultants during the year ended 30 June 2018 (2017: $30,000).

Voting and comments made at the Company's 2017 Annual General Meeting ('AGM')

At the AGM, 99.8% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2017. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.

Details of remuneration

Amounts of remuneration

Details of the remuneration of key management personnel of the Group are set out in the following tables.

The key management personnel of the Group consisted of the following directors of Audinate Group Limited:

David Krall - Chairman and Non-Executive Director
Lee Ellison - Chief Executive Officer
John Dyson - Non-Executive Director
Roger Price - Non-Executive Director
Alison Ledger - Non-Executive Director
Tim Finlayson - Non-Executive Director

Audinate Group Limited Directors' report 30 June 2018

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And the following persons:

Rob Goss - Chief Financial Officer and Company Secretary
Aidan Williams - Chief Technology Officer

Short-term benefits Post- employment benefits Long-term benefits Share- based payments Cash salary Cash Non- Super- Long service Equity- and fees bonus monetary annuation leave settled Total 2018 $ $ $ $ $ $ $ Non-Executive Directors: David Krall (Chairman) 120,000 - - - - - 120,000 John Dyson 59,831 - - 5,169 - - 65,000 Roger Price 59,360 - - 5,640 - - 65,000 Alison Ledger 73,060 - - 6,940 - - 80,000 Tim Finlayson 73,079 - - 6,921 - - 80,000 Executive Directors: Lee Ellison 365,802 191,449 17,970 - - 58,684 633,905 Other Key Management Personnel: Rob Goss 237,830 64,969 - 19,940 - 19,561 342,300 Aidan Williams 203,256 58,937 - 19,940 12,401 39,123 333,657 1,192,218 315,355 17,970 64,550 12,401 117,368 1,719,862 The 2017 table below represents remuneration paid by the Group consisting of Audinate Pty Ltd and its subsidiaries for the entire financial year and Audinate Group Limited and its subsidiaries for the one day to 30 June 2017. Short-term benefits Post- employment benefits Long-term benefits Share- based payments Cash salary Cash Non- Super- Long service Equity- and fees bonus monetary annuation leave settled Total 2017 $ $ $ $ $ $ $ Non-Executive Directors: David Krall (Chairman) 69,370 - - - - - 69,370 John Dyson 12,970 - - - - - 12,970 Roger Price 11,845 - - 1,125 - - 12,970 Alison Ledger 10,892 - - 1,035 - - 11,927 Tim Finlayson 10,892 - - 1,035 - - 11,927 Executive Directors: Lee Ellison 335,964 167,905 18,249 - - 11,311 533,429 Other Key Management Personnel: Rob Goss 108,003 47,500 - 9,744 - 63,480 228,727 Aidan Williams 216,354 48,802 - 16,987 - 9,550 291,693 776,290 264,207 18,249 29,926 - 84,341 1,173,013	Short-term benefits Post- employment benefits Long-term benefits Share- based payments Cash salary Cash Non- Super- Long service Equity- and fees bonus monetary annuation leave settled Total 2018 $ $ $ $ $ $ $ Non-Executive Directors: David Krall (Chairman) 120,000 - - - - - 120,000 John Dyson 59,831 - - 5,169 - - 65,000 Roger Price 59,360 - - 5,640 - - 65,000 Alison Ledger 73,060 - - 6,940 - - 80,000 Tim Finlayson 73,079 - - 6,921 - - 80,000 Executive Directors: Lee Ellison 365,802 191,449 17,970 - - 58,684 633,905 Other Key Management Personnel: Rob Goss 237,830 64,969 - 19,940 - 19,561 342,300 Aidan Williams 203,256 58,937 - 19,940 12,401 39,123 333,657 1,192,218 315,355 17,970 64,550 12,401 117,368 1,719,862 The 2017 table below represents remuneration paid by the Group consisting of Audinate Pty Ltd and its subsidiaries for the entire financial year and Audinate Group Limited and its subsidiaries for the one day to 30 June 2017. Short-term benefits Post- employment benefits Long-term benefits Share- based payments Cash salary Cash Non- Super- Long service Equity- and fees bonus monetary annuation leave settled Total 2017 $ $ $ $ $ $ $ Non-Executive Directors: David Krall (Chairman) 69,370 - - - - - 69,370 John Dyson 12,970 - - - - - 12,970 Roger Price 11,845 - - 1,125 - - 12,970 Alison Ledger 10,892 - - 1,035 - - 11,927 Tim Finlayson 10,892 - - 1,035 - - 11,927 Executive Directors: Lee Ellison 335,964 167,905 18,249 - - 11,311 533,429 Other Key Management Personnel: Rob Goss 108,003 47,500 - 9,744 - 63,480 228,727 Aidan Williams 216,354 48,802 - 16,987 - 9,550 291,693 776,290 264,207 18,249 29,926 - 84,341 1,173,013	Short-term benefits Post- employment benefits Long-term benefits Share- based payments Cash salary Cash Non- Super- Long service Equity- and fees bonus monetary annuation leave settled Total 2018 $ $ $ $ $ $ $ Non-Executive Directors: David Krall (Chairman) 120,000 - - - - - 120,000 John Dyson 59,831 - - 5,169 - - 65,000 Roger Price 59,360 - - 5,640 - - 65,000 Alison Ledger 73,060 - - 6,940 - - 80,000 Tim Finlayson 73,079 - - 6,921 - - 80,000 Executive Directors: Lee Ellison 365,802 191,449 17,970 - - 58,684 633,905 Other Key Management Personnel: Rob Goss 237,830 64,969 - 19,940 - 19,561 342,300 Aidan Williams 203,256 58,937 - 19,940 12,401 39,123 333,657 1,192,218 315,355 17,970 64,550 12,401 117,368 1,719,862 The 2017 table below represents remuneration paid by the Group consisting of Audinate Pty Ltd and its subsidiaries for the entire financial year and Audinate Group Limited and its subsidiaries for the one day to 30 June 2017. Short-term benefits Post- employment benefits Long-term benefits Share- based payments Cash salary Cash Non- Super- Long service Equity- and fees bonus monetary annuation leave settled Total 2017 $ $ $ $ $ $ $ Non-Executive Directors: David Krall (Chairman) 69,370 - - - - - 69,370 John Dyson 12,970 - - - - - 12,970 Roger Price 11,845 - - 1,125 - - 12,970 Alison Ledger 10,892 - - 1,035 - - 11,927 Tim Finlayson 10,892 - - 1,035 - - 11,927 Executive Directors: Lee Ellison 335,964 167,905 18,249 - - 11,311 533,429 Other Key Management Personnel: Rob Goss 108,003 47,500 - 9,744 - 63,480 228,727 Aidan Williams 216,354 48,802 - 16,987 - 9,550 291,693 776,290 264,207 18,249 29,926 - 84,341 1,173,013	Short-term benefits Post- employment benefits Long-term benefits Share- based payments Cash salary Cash Non- Super- Long service Equity- and fees bonus monetary annuation leave settled Total 2018 $ $ $ $ $ $ $ Non-Executive Directors: David Krall (Chairman) 120,000 - - - - - 120,000 John Dyson 59,831 - - 5,169 - - 65,000 Roger Price 59,360 - - 5,640 - - 65,000 Alison Ledger 73,060 - - 6,940 - - 80,000 Tim Finlayson 73,079 - - 6,921 - - 80,000 Executive Directors: Lee Ellison 365,802 191,449 17,970 - - 58,684 633,905 Other Key Management Personnel: Rob Goss 237,830 64,969 - 19,940 - 19,561 342,300 Aidan Williams 203,256 58,937 - 19,940 12,401 39,123 333,657 1,192,218 315,355 17,970 64,550 12,401 117,368 1,719,862 The 2017 table below represents remuneration paid by the Group consisting of Audinate Pty Ltd and its subsidiaries for the entire financial year and Audinate Group Limited and its subsidiaries for the one day to 30 June 2017. Short-term benefits Post- employment benefits Long-term benefits Share- based payments Cash salary Cash Non- Super- Long service Equity- and fees bonus monetary annuation leave settled Total 2017 $ $ $ $ $ $ $ Non-Executive Directors: David Krall (Chairman) 69,370 - - - - - 69,370 John Dyson 12,970 - - - - - 12,970 Roger Price 11,845 - - 1,125 - - 12,970 Alison Ledger 10,892 - - 1,035 - - 11,927 Tim Finlayson 10,892 - - 1,035 - - 11,927 Executive Directors: Lee Ellison 335,964 167,905 18,249 - - 11,311 533,429 Other Key Management Personnel: Rob Goss 108,003 47,500 - 9,744 - 63,480 228,727 Aidan Williams 216,354 48,802 - 16,987 - 9,550 291,693 776,290 264,207 18,249 29,926 - 84,341 1,173,013	Post- employment benefits Super- annuation $ - 5,169 5,640 6,940 6,921 - 19,940 19,940	Long-term benefits Long service leave $ - - - - - - - 12,401	Share- based payments Equity- settled $ - - - - - 58,684 19,561 39,123	Total $ 120,000 65,000 65,000 80,000 80,000 633,905 342,300 333,657
	1,192,218	315,355	17,970	64,550	12,401	117,368	1,719,862
	776,290	264,207	18,249	29,926	-	84,341	1,173,013

The 2017 table below represents remuneration paid by the Group consisting of Audinate Pty Ltd and its subsidiaries for the entire financial year and Audinate Group Limited and its subsidiaries for the one day to 30 June 2017.

Audinate Group Limited Directors' report 30 June 2018

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The proportion of remuneration linked to performance and the fixed proportion are as follows:

	Fixed
	remuneration		At risk - STI		At risk - LTI
Name	2018	2017	2018	2017	2018	2017
Executive Directors:
Lee Ellison	61%	67%	30%	31%	9%	2%
Other Key Management
Personnel:
Rob Goss	75%	51%	19%	21%	6%	28%
Aidan Williams	71%	80%	18%	17%	11%	3%

Non-executive directors did not receive share options or other performance linked incentives during the year ended 30 June 2018 and 30 June 2017.

No cash bonus was forfeited by key management personnel for the year ended 30 June 2018 and 30 June 2017.

Service agreements

Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows:

Name: Lee Ellison Title: Chief Executive Officer Agreement commenced: 19 April 2017 Term of agreement: Ongoing, employed by Audinate, Inc. Details: Fixed: Lee receives a fixed remuneration package ('FRP') of US$283,000 and is eligible to participate in various employee benefit programs maintained by Audinate, Inc., which includes 80% company sponsored payment of health and dental insurance coverage, as well as other employee related benefits.

STI: Lee is also eligible to receive an annual STI of up to 50% of his FRP, subject to achieving the annual targets against key performance indicators and personal objectives as agreed with the Board for that year. Any payment for over achievement of annual targets, is at the discretion of the Board.

LTI: Lee has participated in the Company's legacy Employee Share Option Plan ('ESOP') and may exercise his vested options under the ESOP. Lee is also eligible to participate in the LTI Plan and was issued an initial grant of 267,811 performance rights for nil consideration on listing. In addition, subsequent to listing, the Company has granted Lee 1,995,000 performance rights which will be automatically exercised into shares on 15 September 2019 provided Lee does not resign for the period of nine months from the date of grant.

Termination: Either party may terminate the employment contract by giving 6 months' written notice. The Company can elect in its discretion to make a payment in lieu of notice or place Lee on garden leave for all or part of that notice period.

Restraint: After termination Lee will be subject to non-competition, non-solicitation of client and non-poaching of employees' restrictions, within the United States of America and Australia for a maximum period of 6 months.

Audinate Group Limited Directors' report 30 June 2018

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Name: Rob Goss Title: Chief Financial Officer and Company Secretary Agreement commenced: 19 April 2017 Term of agreement: Ongoing, employed by Audinate Group Limited Details: Fixed: Rob receives a FRP of $257,000 including mandatory superannuation contributions. STI: Rob is also eligible to receive an annual STI up to 25% of his FRP, subject to achieving the annual targets against key performance indicators and personal objectives as agreed with the Board for that year. Any payment for over achievement of annual targets, is at the discretion of the Board. LTI: Rob has participated in the Company's ESOP and may exercise his vested options under the ESOP. Termination: Either party may terminate the employment contract by giving 3 months' written notice. The Company can elect in its discretion to make a payment in lieu of notice or place Rob on garden leave for all or part of that notice period. Restraint: After termination Rob will be subject to non-competition, non-solicitation of client and non-poaching of employees' restrictions, within the United States of America, Australia and the United Kingdom for a maximum period of 12 months. Name: Aidan Williams Title: Chief Technology Officer Agreement commenced: 19 April 2017 Term of agreement: Ongoing, employed by Audinate Group Limited Details: Fixed: Aidan receives a fixed remuneration package of $235,000 including mandatory superannuation contributions. STI: Aidan is also eligible to receive an annual STI up to 25% of his FRP, subject to achieving the annual targets against key performance indicators and personal objectives as agreed with the Board for that year. Any payment for over achievement of annual targets, is at the discretion of the Board. LTI: Aidan has participated in the Company's ESOP and may exercise his vested options under the ESOP. Termination: Either party may terminate the employment contract by giving 6 months' written notice. The Company can elect in its discretion to make a payment in lieu of notice or place Aidan on garden leave for all or part of that notice period.

Restraint: After termination Aidan will be subject to non-competition, non-solicitation of client and non-poaching of employees' restrictions, within the United States of America, Australia and the United Kingdom for a maximum period of 12 months.

All other senior management are employed under written terms of employment with the Group. The key terms and conditions of their employment include:

remuneration packages;
eligibility to participate in the STI and LTI Plans;
notice of termination of employment provisions, with the relevant notice period of up to 3 months; and
for some of those executives, post-employment restrictions covering non-competition, non-solicitation of clients for a maximum duration of up to 3 months.

Key management personnel have no entitlement to termination payments in the event of removal for misconduct.

Audinate Group Limited Directors' report 30 June 2018

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Share-based compensation

Issue of shares

There were no shares issued to directors and other key management personnel as part of compensation during the year ended 30 June 2018.

Options

The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows:

				Fair value
	Vesting date and			per option
Grant date	exercisable date	Expiry date	Exercise price	at grant date
30/06/2017	30/06/2017	17/08/2019	$0.062	$0.022
30/06/2017	30/06/2017	23/06/2022	$0.260	$0.090
30/06/2017	30/06/2017	23/08/2022	$0.260	$0.090
30/06/2017	30/06/2017	16/01/2023	$0.260	$0.090

Options granted carry no dividend or voting rights. The options set out in the table above represent options granted in exchange for options in Audinate Group Limited as part of the restructure which took place at the date of the IPO on 30 June 2017.

There were no options over ordinary shares granted to or vested by directors and other key management personnel as part of compensation during the year ended 30 June 2018.

Performance rights

The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of the executive director and other key management personnel in this financial year or future reporting years are as follows:

	Number of			Share price	Fair value
	rights			hurdle for	per right
Name	granted	Grant date	Expiry date	vesting	at grant date
Lee Ellison	267,811	30/06/2017	30/06/2022	$0.000	$0.810
Lee Ellison	1,995,000	02/08/2017	15/09/2019	$0.000	$0.810
Rob Goss	89,270	30/06/2017	30/06/2022	$0.000	$0.810
Aidan Williams	178,541	30/06/2017	30/06/2022	$0.000	$0.810

Apart from the performance rights expiring in 2019, the remaining performance rights vest in three tranches after the release of the annual results in 2020, 2021 and 2022.

Performance rights commence vesting upon achieving total shareholder return equal to the 50th percentile of the ASX Emerging Companies Index and vest fully at the 75th percentile.

Performance rights granted carry no dividend or voting rights and no rights vested during the year ended 30 June 2018.

Additional information

The earnings of the Group for the five years to 30 June 2018 are summarised below:

	2014*	2015*	2016*	2017**	2018
	$	$	$	$	$
Sales revenue	6,519,830	8,035,464	11,903,452	15,062,845	19,653,493
EBITDA	(816,516)	25,944	(64,362)	783,540	558,933
Profit after income tax	(101,710)	516,383	54,451	(20,443,388)	2,544,339

Relates to the Group prior to the restructure that occurred at the time of the IPO at 30 June 2017.
** EBITDA in the 2017 financial year is calculated excluding the one-off impacts of IPO expenses and the change in fair value of redeemable preference shares.

Audinate Group Limited Directors' report 30 June 2018

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The factors that are considered to affect total shareholders return ('TSR') are summarised below:

	2017	2018
Share price at financial year end ($)	1.53	3.92
Basic earnings per share (cents per share)	(573.55)	4.20
Diluted earnings per share (cents per share)	(573.55)	3.96

Additional disclosures relating to key management personnel

Shareholding

The number of shares in the Company held during the financial year by each director and other members of key management personnel of the Group, including their personally related parties, is set out below:

Ordinary shares David Krall Lee Ellison John Dyson Roger Price Tim Finlayson Rob Goss* Aidan Williams	Balance at the start of the year 293,958 820 204,921 49,181 122,951 820 1,714,364	Received as part of remuneration - - - - - - -	Additions - - - 18,175 - 604,408 97,041	Disposals/ other - - - - - - -	Balance at the end of the year 293,958 820 204,921 67,356 122,951 605,228 1,811,405
	2,387,015	-	719,624	-	3,106,639

Entities associated with John Dyson hold 10,602,602 ordinary shares as at 30 June 2018.
** Includes indirect holdings

Option holding

The number of options over ordinary shares in the Company held during the financial year by each director and other members of key management personnel of the Group, including their personally related parties, is set out below:

Options over ordinary shares David Krall Lee Ellison Rob Goss Aidan Williams	Balance at the start of the year 186,042 320,000 690,000 204,000	Granted - - - -	Exercised - - (604,408) (97,041)	Expired/ forfeited/ other** - - (85,592) (2,959)	Balance at the end of the year 186,042 320,000 - 104,000
	1,400,042	-	(701,449)	(88,551)	610,042

Held indirectly
** Other includes the impact of cashless exercise

All of these options were fully vested and exercisable at 30 June 2018. However they are all subject to escrow provisions as described in the prospectus.

Audinate Group Limited Directors' report 30 June 2018

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Performance rights holding

The number of performance rights over ordinary shares in the Company held during the financial year by each director and other members of key management personnel of the Group, including their personally related parties, is set out below:

Performance rights over ordinary shares Lee Ellison Rob Goss Aidan Williams	Balance at the start of the year 267,811 89,270 178,541	Granted 1,995,000 - -	Vested - - -	Expired/ forfeited/ other - - -	Balance at the end of the year 2,262,811 89,270 178,541
	535,622	1,995,000	-	-	2,530,622

No performance rights over ordinary shares had vested at 30 June 2018.

This concludes the remuneration report, which has been audited.

Loans to directors and executives

Prior to the IPO, Audinate Pty Limited offered option-holders an interest bearing, non-recourse loan in order to fund the exercise price of options for shares in Audinate Pty Limited. As a part of the restructure described in the prospectus these shares were then exchanged for shares in Audinate Group Limited. The total value of the loans outstanding at 30 June 2018 was $90,738 (2017: $117,953), inclusive of a loan outstanding to Aidan Williams of $38,731 (2017: $36,613).

Shares under option

Unissued ordinary shares of Audinate Group Limited under option at the date of this report are as follows:

Exercise Grant date Expiry date price 30/06/2017 23/11/2018 $0.036 30/06/2017 17/10/2019 $0.062 30/06/2017 09/12/2019 $0.062 30/06/2017 09/01/2020 $0.062 30/06/2017 21/08/2020 $0.062 30/06/2017 09/12/2020 $0.062 30/06/2017 11/06/2022 $0.260 30/06/2017 23/08/2022 $0.260 30/06/2017 31/01/2023 $0.260	Number under option 30,000 448,042 10,000 10,000 42,000 460,000 158,000 508,800 48,000
	1,714,842

Shares under performance rights

Unissued ordinary shares of Audinate Group Limited under performance rights* at the date of this report are as follows:

Exercise Grant date Expiry date price 30/06/2017 30/06/2022 $0.000 02/08/2017 15/09/2019 $0.000 29/06/2018 30/06/2022 $0.000	Number under rights 1,038,509 1,995,000 34,566
	3,068,075

ASX restricted quoted performance rights

No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate in any share issue of the Company or of any other body corporate.

Audinate Group Limited Directors' report 30 June 2018

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Shares issued on the exercise of options

The following ordinary shares of Audinate Group Limited were issued during the year ended 30 June 2018 and up to the date of this report on the exercise of options granted:

Exercise Date options exercised price 31/08/2017 $0.260 31/08/2017 $0.062 23/10/2017 $0.260 23/10/2017 $0.062 17/11/2017 $0.062 01/02/2018 $0.260 01/02/2018 $0.062 21/02/2018 $0.260 21/02/2018 $0.062 23/03/2018 $0.260 23/03/2018 $0.062 23/04/2018 $0.062 04/05/2018 $0.260 21/05/2018 $0.260 12/06/2018 $0.036 25/06/2018 $0.260	Number of shares issued 813,209 402,567 24,000 10,000 19,734 7,290 9,788 4,000 20,000 45,896 29,412 10,000 8,000 3,652 5,943 9,354
	1,422,845

Shares issued on the exercise of performance rights

There were no ordinary shares of Audinate Group Limited issued on the exercise of performance rights during the year ended 30 June 2018 and up to the date of this report.

Indemnity and insurance of officers

During the financial year, the Company had a policy in place in respect of directors’ and officers’ liability and legal expenses insurance contracts, for current directors, including senior executives, employees and officers and for former directors, officers and employees of the Company for a period of 12 months and directors, senior executives, secretaries and employees of its Group, excluding actions brought in a court in the United States of America or Canada. The policy prohibits disclosure of the premiums paid.

The policy covers:

costs and expenses incurred by the relevant officers in defending proceedings, whether civil or criminal and whatever their outcome; and
other liabilities that may arise from their position, with the exception of conduct involving a wilful breach of duty or improper use of information or position to gain a personal advantage.

The Company has also entered into a Deed of Access ('Deed') and Indemnity with all past and present directors, which provides an indemnity to the directors for legal costs and any liability arising from negligence of the director, to the extent permitted by law. In addition, the Deed allows the Company to advance a director an interest free loan equal to any legal costs which, in the Company’s opinion, are not permitted to be indemnified under the law. Any such advance is repayable by the director at the conclusion of the proceedings.

Indemnity and insurance of auditor

The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor.

During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity.

Proceedings on behalf of the Company

No person has applied to the Court 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.

Audinate Group Limited Directors' report 30 June 2018

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Non-audit services

Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 21 to the financial statements.

The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

The directors are of the opinion that the services as disclosed in note 21 to the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for the following reasons:

all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.

Officers of the Company who are former partners of Deloitte Touche Tohmatsu

There are no officers of the Company who are former partners of Deloitte Touche Tohmatsu.

Auditor's independence declaration

A copy of the auditor's independence declaration is set out on the following page.

Auditor

Deloitte Touche Tohmatsu continues in office in accordance with section 327 of the Corporations Act 2001.

This report is made in accordance with a resolution of directors.

On behalf of the directors

_________David Krall Chairman

27 August 2018 Sydney

Deloitte Touche Tohmatsu ABN 74 490 121 060 Grosvenor Place 225 George Street Sydney, NSW, 2000 Australia

Phone: +61 2 9322 7000 www.deloitte.com.au

27 August 2018

The Board of Directors Audinate Group Limited Level 1, Suite 2 458 – 468 Wattle Street Ultimo, NSW 2007

Dear Board Members

Audinate Group Limited

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Audinate Group Limited.

As lead audit partner for the audit of the financial statements of Audinate Group Limited for the financial year ended 30 June 2018, I declare that to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely

DELOITTE TOUCHE TOHMATSU

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Joshua Tanchel Partner Chartered Accountant

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

Audinate Group Limited Consolidated statement of profit or loss and other comprehensive income For the year ended 30 June 2018

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Note Revenue Sales Cost of goods sold Gross margin Expenses Employee expenses 5 Marketing expenses Administration and other operating expenses Depreciation and amortisation 5 Initial public offering expenses Conversion of redeemable preference shares Finance costs Total expenses Operating loss Other income 6 Loss before income tax (expense)/benefit Income tax (expense)/benefit 7 Profit/(loss) after income tax (expense)/benefit for the year attributable to the owners of Audinate Group Limited Other comprehensive income Items that may be reclassified subsequently to profit or loss Foreign currency translation Other comprehensive income for the year, net of tax Total comprehensive income for the year attributable to the owners of Audinate Group Limited Basic earnings per share 8 Diluted earnings per share 8	Consolidated 2018 2017 $ $ 19,653,493 15,062,845 (5,011,451) (3,802,226)	Consolidated 2018 2017 $ $ 19,653,493 15,062,845 (5,011,451) (3,802,226)
	14,642,042 (8,838,047) (2,337,707) (2,907,355) (1,451,757) - - -	11,260,619 (7,289,702) (1,603,253) (1,584,124) (1,088,987) (1,694,328) (18,547,790) (400)
	(15,534,866)	(31,808,584)
	(892,824) 157,257	(20,547,965) 152,551
	(735,567) 3,279,906	(20,395,414) (47,974)
	2,544,339 (16,162)	(20,443,388) (103,955)
	(16,162)	(103,955)
	2,528,177	(20,547,343)
	Cents 4.20 3.96	Cents (573.55) (573.55)

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

Audinate Group Limited Consolidated statement of financial position As at 30 June 2018

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Note Assets Current assets Cash and cash equivalents 9 Trade and other receivables 10 Receivable from issue of shares Current tax asset 7 Inventories 11 Other assets 12 Total current assets Non-current assets Property, plant and equipment 13 Intangibles 14 Deferred tax 7 Total non-current assets Total assets Liabilities Current liabilities Trade and other payables 15 Payable to selling shareholders Income tax payable 7 Employee benefits Provisions Unearned revenue Total current liabilities Non-current liabilities Employee benefits Total non-current liabilities Total liabilities Net assets Equity Contributed capital 16 Reserves 17 Accumulated losses Total equity	Consolidated 2018 2017 $ $ 13,631,026 18,694,193 1,819,323 2,030,127 - 4,062,354 1,344,029 901,936 1,224,814 767,015 276,247 246,346	Consolidated 2018 2017 $ $ 13,631,026 18,694,193 1,819,323 2,030,127 - 4,062,354 1,344,029 901,936 1,224,814 767,015 276,247 246,346
	18,295,439	26,701,971
	691,011 3,879,196 1,874,195	365,447 2,000,750 -
	6,444,402	2,366,197
	24,739,841	29,068,168
	2,165,151 - 22,742 1,662,980 72,633 133,689	2,557,814 7,029,899 34,216 1,359,954 33,285 163,705
	4,057,195	11,178,873
	308,836	304,818
	308,836	304,818
	4,366,031	11,483,691
	20,373,810	17,584,477
	63,287,617 521,535 (43,435,342)	63,261,592 302,566 (45,979,681)
	20,373,810	17,584,477

The above consolidated statement of financial position should be read in conjunction with the accompanying notes

Audinate Group Limited Consolidated statement of changes in equity For the year ended 30 June 2018

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Contributed capital $ 29,392 - -	Reserves $ 243,672 - (103,955)	Accumulated losses $ (25,536,293) (20,443,388) -	Total equity $ (25,263,229) (20,443,388) (103,955)
- 63,035,050 - 138,126 59,024	(103,955) - 162,849 - -	(20,443,388) - - - -	(20,547,343) 63,035,050 162,849 138,126 59,024
63,261,592	302,566	(45,979,681)	17,584,477
Contributed capital $ 63,261,592 - -	Reserves $ 302,566 - (16,162)	Accumulated losses $ (45,979,681) 2,544,339 -	Total equity $ 17,584,477 2,544,339 (16,162)
- - 43,512 (17,487)	(16,162) 235,131 - -	2,544,339 - - -	2,528,177 235,131 43,512 (17,487)
63,287,617	521,535	(43,435,342)	20,373,810

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes

Audinate Group Limited Consolidated statement of cash flows For the year ended 30 June 2018

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Note Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received Interest and other finance costs paid Research and development incentive received for research activities Income taxes paid Net cash from operating activities 27 Cash flows from investing activities Payments for property, plant and equipment Payments for intangibles Research and development incentive received for development activities Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Payments to selling shareholders Share issue transaction costs Net cash from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the financial year 9	Consolidated 2018 2017 $ $ 19,678,955 15,079,335 (19,166,193) (14,407,491) 251,490 51,541 - (1,562) 334,210 598,975 (62,066) (80,440) 1,036,396 1,240,358 (627,030) (138,903) (3,028,735) (2,307,518) 680,000 580,955 (2,975,765) (1,865,466) 4,086,341 16,987,866 (7,029,899) - (115,204) (777,000) (3,058,762) 16,210,866 (4,998,131) 15,585,758 18,694,193 3,108,435 (65,036) - 13,631,026 18,694,193
	1,036,396
	(627,030) (3,028,735) 680,000
	(2,975,765)
	4,086,341 (7,029,899) (115,204)
	(3,058,762)
	(4,998,131) 18,694,193 (65,036)
	13,631,026

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 1. General information

The financial statements cover Audinate Group Limited ('Company' or 'parent entity') as a consolidated entity consisting of Audinate Group Limited and the entities it controlled (collectively referred to as the 'Group') at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Audinate Group Limited's functional and presentation currency.

Audinate Group Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Level 1, 458 Wattle Street Ultimo NSW 2007

A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of directors, on 24 August 2018. The directors have the power to amend and reissue the financial statements.

Note 2. Significant accounting policies

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

New or amended Accounting Standards and Interpretations adopted

The Group has adopted all of the new and amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Group.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB'), as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board ('IASB').

Historical cost convention

The financial statements have been prepared under the historical cost convention.

Critical accounting estimates

The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3.

Parent entity information

These financial statements present the results of the Group only. Supplementary information about the parent entity is disclosed in note 28.

Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Audinate Group Limited as at 30 June 2018 and the results of all subsidiaries for the year then ended.

Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group 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. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 2. Significant accounting policies (continued)

Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and noncontrolling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

Operating segments

Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.

Foreign currency translation

The financial statements are presented in Australian dollars, which is Audinate Group Limited's functional and presentation currency.

Foreign currency transactions

Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Foreign operations

The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.

The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed.

Revenue recognition

Revenue is recognised when it is probable that the economic benefit will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.

Sales revenue

Sales revenue includes sale of goods and licence fee revenue.

Sale of goods revenue is recognised at the point of sale, when the risks and rewards are transferred to the customer and there is a valid sales contract. Amounts disclosed as revenue are net of sales returns and trade discounts.

Revenue from licence fees, on software sales, is recognised on the transferring of significant risk and rewards of the software which normally occurs when the customer has access to the software.

Unearned revenue represents amounts received from customers in advance of the services to be provided. Typically this relates to discreet maintenance contracts or the maintenance element of a bundled customer contract. They are recognised as unearned revenue in the statement of financial position and transferred to profit or loss when the support and maintenance services have been provided.

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 2. Significant accounting policies (continued)

Government grants including research and development incentives

Government grants and the research and development incentives are recognised when there is reasonable assurance that the entity will comply with the conditions attaching to them and the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate.

In the prior year the incentive receivable was apportioned between other income and the development asset based on the split of expenditure in the claim, in accordance with the requirements of AASB 120 'Accounting for Government Grants and Disclosure of Government Assistance'. Upon entering into a tax consolidated group Audinate recognised the incentive through profit or loss as an income tax benefit in accordance with AASB 112 'Income Taxes'.

Interest

Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

Other revenue

Other revenue is recognised when it is received or when the right to receive payment is established.

Income tax

The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:

when the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or
when the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

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.

The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.

During the financial year, Audinate Group Limited (the 'head entity') and its wholly-owned Australian subsidiaries formed an income tax consolidated group under the tax consolidation regime, which has resulted in a deferred tax asset being recognised.

The head entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group.

In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax consolidated group.

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 2. Significant accounting policies (continued)

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.

Current and non-current classification

Assets and liabilities are presented in the statement of financial position based on current and non-current classification.

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments (more than 90 days overdue) are considered indicators that the trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

Other receivables are recognised at amortised cost, less any provision for impairment.

Inventories

Raw materials and finished goods are stated at the lower of cost and net realisable value on a 'weighted average cost' basis. Cost comprises of direct materials and delivery costs, direct labour, import duties and other taxes, an appropriate proportion of variable and fixed overhead expenditure based on normal operating capacity, and, where applicable, transfers from cash flow hedging reserves in equity. Costs of purchased inventory are determined after deducting rebates and discounts received or receivable.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Property, plant and equipment

Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 2. Significant accounting policies (continued)

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment over their expected useful lives as follows:

Leasehold improvements Lease term Furniture and fittings 4 - 10 years Computer and engineering equipment 1 - 10 years

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.

Intangible assets

Intangible assets are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method of amortisation and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.

Research and development

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 Group is able to use or sell the asset; the Group has sufficient resources; and intent to complete the development and its costs can be measured reliably. Capitalised development costs are amortised, commencing from the time the asset's development reaches the condition necessary for it to be capable of operating in the manner intended by management. Amortisation is calculated on a straight-line basis over the period of their expected benefit, being their finite useful life of three years.

Other intellectual property with an indefinite useful life

Significant costs associated with intellectual property are deferred and not amortised. Intellectual property has an indefinite life and is tested for impairment annually. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Software

Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their expected benefit, being their finite life of 3-5 years.

Impairment of non-financial assets

Non-financial assets are reviewed 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.

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 2. Significant accounting policies (continued)

Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and 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.

Redeemable preference shares

Preference shares which are redeemable at the option of the noteholder are classified as a liability in the statement of financial position. Due to the operability of the anti-dilution clauses in the preference shareholder agreements, the preference shares are considered to include a derivative liability. As such the preference shares are considered to represent a liability with an equity conversion option derivative with the entire instrument being accounted for at fair value through profit or loss.

Provisions

Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.

Employee benefits

Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.

Other long-term employee benefits

The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee related cost in profit or loss when they are due.

Share-based payments

Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services.

The cost of equity-settled transactions are measured at fair value on grant date. Fair value is determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 2. Significant accounting policies (continued)

The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.

If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.

If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.

If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.

Fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.

Issued capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to the owners of Audinate Group Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 2. Significant accounting policies (continued)

Diluted earnings per share

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.

Goods and Services Tax ('GST') and other similar taxes

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the 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 tax authority is included in other receivables or other 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 tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.

New Accounting Standards and Interpretations not yet mandatory or early adopted

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2018. The Group's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out below.

AASB 9 Financial Instruments

This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all previous versions of AASB 9 and completes the project to replace AASB 139 'Financial Instruments: Recognition and Measurement'. AASB 9 introduces new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost, if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows, which arise on specified dates and solely principal and interest. All other financial instrument assets are to be classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive income ('OCI'). For financial liabilities, the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management activities of the entity. New impairment requirements will use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment will be measured under a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. The standard introduces additional new disclosures. The Group will adopt this standard from 1 July 2018. It is not expected to significantly impact the financial statements on the basis that the main financial assets recognised represent cash and cash equivalent and trade receivables that do not carry a significant financing component and involve a single cash flow representing the repayment of principal, which in the case of trade receivables is the transaction price. Both asset classes will continue to be measured at face value. Other financial asset classes are not material to the Group. Financial liabilities of the Group are not impacted as the Group does not carry them at fair value. and the impact of its adoption will be minimal.

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 2. Significant accounting policies (continued)

AASB 15 Revenue from Contracts with Customers

This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or implied) to be identified, together with the separate performance obligations within the contract; determine the transaction price, adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate performance obligations on a basis of relative stand-alone selling price of each distinct good or service, or estimation approach if no distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied. Credit risk will be presented separately as an expense rather than adjusted to revenue. For goods, the performance obligation would be satisfied when the customer obtains control of the goods. For services, the performance obligation is satisfied when the service has been provided, typically for promises to transfer services to customers. For performance obligations satisfied over time, an entity would select an appropriate measure of progress to determine how much revenue should be recognised as the performance obligation is satisfied. Contracts with customers will be presented in an entity's statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Sufficient quantitative and qualitative disclosure is required to enable users to understand the contracts with customers; the significant judgements made in applying the guidance to those contracts; and any assets recognised from the costs to obtain or fulfil a contract with a customer. The Group will adopt this standard from 1 July 2018. It is not expected to significantly impact the financial statements on the basis that most of the Group's revenue is recognised at the time of transfer of goods and services to customer which represents the satisfaction of the primary performance obligation. Revenue related to maintenance performance obligations is already deferred and amortised over the service period.

AASB 16 Leases

This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating or financing activities) component. For lessor accounting, the standard does not substantially change how a lessor accounts for leases. Had the standard been adopted from 1 July 2017, and using the transitional rules available, the Group would have recognised a lease liability, being the present value of the lease commitments as disclosed in note 23 discounted using the Group’s incremental borrowing rate, with a corresponding increase in property, plant and equipment. However, the Group will adopt this standard from 1 July 2019 and the actual impact will depend on the operating lease assets held by the Group as at 1 July 2019 and the transitional elections made at that time.

IASB revised Conceptual Framework for Financial Reporting

The revised Conceptual Framework has been issued by the International Accounting Standards Board ('IASB'), but the Australian equivalent has yet to be published. The revised framework is applicable for annual reporting periods beginning on or after 1 January 2020 and the application of the new definition and recognition criteria may result in future amendments to several accounting standards. Furthermore, entities who rely on the conceptual framework in determining their accounting policies for transactions, events or conditions that are not otherwise dealt with under Australian Accounting Standards may need to revisit such policies. The Group will apply the revised conceptual framework from 1 July 2020 and is yet to assess its impact.

Other amending accounting standards

Other amending accounting standards issued are not considered to have a significant impact on the financial statements of the Group as their amendments provide either clarification of existing accounting treatment or editorial amendments.

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 3. Critical accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.

Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or BlackScholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.

Income tax

The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on the Group's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Useful life of capitalised development costs

The Group regularly considers the useful life of development costs, which is currently estimated to be three years. In determining the appropriate useful life for these assets a range of factors are taken into account including the specific nature of the asset created, risk of technical obsolescence, business performance and market conditions. To the extent that there is a change to the useful life of these assets (not related to impairment) the amortisation charge is changed prospectively.

Note 4. Operating segments

Identification of reportable operating segments

The Group operates in one segment, based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.

As a result, the operating segment information is as disclosed in the statements and notes to the financial statements throughout the report.

Major customers

Most of the Group’s major customers are multinational companies that Audinate may transact with in multiple countries. Due to the corporate structure of the Group this revenue is accounted for by Audinate Pty Limited in Australia. The top ten customers represent approximately 50% (2017: 52%) of the Group’s revenue during the year ended 30 June 2018 and of that amount the largest customer represents approximately 15% (2017: 23%) of the Group’s revenue.

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 4. Operating segments (continued)

Geographical information

Australia United Kingdom Hong Kong United States of America	Sales to external customers Geographical non-current assets 2018 2017 2018 2017 $ $ $ $ 19,566,426 14,939,667 6,299,814 2,275,099 - - 17,267 12,098 - - 1,016 1,671 87,067 123,178 126,305 77,329	Sales to external customers Geographical non-current assets 2018 2017 2018 2017 $ $ $ $ 19,566,426 14,939,667 6,299,814 2,275,099 - - 17,267 12,098 - - 1,016 1,671 87,067 123,178 126,305 77,329	Sales to external customers Geographical non-current assets 2018 2017 2018 2017 $ $ $ $ 19,566,426 14,939,667 6,299,814 2,275,099 - - 17,267 12,098 - - 1,016 1,671 87,067 123,178 126,305 77,329	Sales to external customers Geographical non-current assets 2018 2017 2018 2017 $ $ $ $ 19,566,426 14,939,667 6,299,814 2,275,099 - - 17,267 12,098 - - 1,016 1,671 87,067 123,178 126,305 77,329
	19,653,493	15,062,845	6,444,402	2,366,197

The majority of the Group's revenue is generated from sales contracts between Audinate Pty Limited and a range of international companies. The geographic split of this revenue is: a) Americas 40% (2017: 38%); b) Asia 24% (2017: 33%); and c) Europe and Middle East 36% (2017:29%). Occasionally the international offices may generate some revenue related to marketing activities.

Note 5. Expenses

Loss before income tax includes the following specific expenses: Depreciation and amortisation Depreciation of property, plant and equipment Amortisation of intangibles Total depreciation and amortisation Rental expense relating to operating leases Minimum lease payments Employee benefit expenses Salaries and wages Superannuation Share-based payments Other costs Total employee benefit expenses	Consolidated 2018 2017 $ $ 130,229 103,326 1,321,528 985,661	Consolidated 2018 2017 $ $ 130,229 103,326 1,321,528 985,661
	1,451,757	1,088,987
	364,157	366,287
	7,190,559 508,201 235,131 904,156	6,162,134 428,203 67,443 631,922
	8,838,047	7,289,702

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 6. Other income

Net foreign exchange loss Research and development incentive Interest revenue	Consolidated 2018 2017 $ $ (70,028) (219,972) - 320,982 227,285 51,541	Consolidated 2018 2017 $ $ (70,028) (219,972) - 320,982 227,285 51,541
	157,257	152,551

For the year ended 30 June 2018 the research and development incentive was accounted for as an income tax benefit as explained in note 2 under the section headed 'Government grants including research and development incentives'.

Note 7. Income tax

The Group incurs an income tax expense in its overseas subsidiaries relating to the net taxable profit generated on services provided to the Group.

Income tax expense/(benefit) Current tax Deferred tax - origination and reversal of temporary differences Prior period adjustment Adjustment recognised on tax consolidation Adjustment recognised on tax consolidation - impact of change of tax rate Adjustment recognised on tax consolidation - impact of change of tax rate on DTA Aggregate income tax expense/(benefit) Numerical reconciliation of income tax expense/(benefit) and tax at the statutory rate Loss before income tax (expense)/benefit Tax at the statutory tax rate of 27.5% (2017: 30%) Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Conversion of redeemable preference shares Amortisation of development costs (pre 30 June 2017) Expenditure claimed for research and development incentive Other non-assessable items Utilisation of prior period losses Reduction in current period research and development incentive Non-deductible expenses Research and development incentive benefit Adjustment recognised on tax consolidation Adjustment recognised on tax consolidation - impact of change of tax rate Adjustment recognised on tax consolidation - impact of change of tax rate on DTA Income tax expense/(benefit)	Consolidated 2018 2017 $ $ (1,300,121) 47,974 473,310 - (105,590) - (2,443,181) - (117,733) - 213,409 -	Consolidated 2018 2017 $ $ (1,300,121) 47,974 473,310 - (105,590) - (2,443,181) - (117,733) - 213,409 -
	(3,279,906)	47,974
	(735,567)	(20,395,414)
	(202,281) - 111,416 556,670 (122,653) - - 68,476 (1,344,029)	(6,118,624) 5,564,337 - 993,063 526,265 (376,373) (540,694) - -
	(932,401) (2,443,181) (117,733) 213,409	47,974 - - -
	(3,279,906)	47,974

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 7. Income tax (continued)

Deferred tax asset Net deferred tax asset comprises temporary differences attributable to: Intangible assets Employee liabilities Blackhole expenditure Accrued expenses Other Provisions Prepayments Depreciation - ACA adjustment Development costs Deferred tax asset	Consolidated 2018 2017 $ $ 1,693,897 - 395,233 - 258,966 - 73,724 - 27,283 - 19,187 - (1,467) - (38,135) - (554,493) -	Consolidated 2018 2017 $ $ 1,693,897 - 395,233 - 258,966 - 73,724 - 27,283 - 19,187 - (1,467) - (38,135) - (554,493) -
	1,874,195	-

During the year, Audinate Group Limited (the 'head entity') and its wholly-owned Australian subsidiaries formed an income tax consolidated group under the tax consolidation regime, which has resulted in a deferred tax asset being recognised.

Current tax asset Current tax asset	Consolidated 2018 2017 $ $ 1,344,029 901,936

Current tax asset represents an estimate of the amount receivable from the Australian Tax Office inclusive of the research and development incentive.

Income tax payable Income tax payable Note 8. Earnings per share Profit/(loss) after income tax attributable to the owners of Audinate Group Limited Weighted average number of ordinary shares used in calculating basic earnings per share Adjustments for calculation of diluted earnings per share: Options over ordinary shares Performance rights Weighted average number of ordinary shares used in calculating diluted earnings per share	Consolidated 2018 2017 $ $ 22,742 34,216	Consolidated 2018 2017 $ $ 22,742 34,216
	Consolidated 2018 2017 $ $ 2,544,339 (20,443,388)
	Number 60,598,965 1,627,891 1,995,000	Number 3,564,389 - -
	64,221,856	3,564,389

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 8. Earnings per share (continued)

	Cents	Cents
Basic earnings per share	4.20	(573.55)
Diluted earnings per share	3.96	(573.55)

At 30 June 2018, there were no (2017: 3,265,042) options over ordinary shares excluded from the calculation of the weighted average number of ordinary shares used in calculating diluted earnings per share due to being anti-dilutive.

Note 9. Current assets - cash and cash equivalents

Cash at bank Cash on deposit	Consolidated 2018 2017 $ $ 1,810,453 17,138,351 11,820,573 1,555,842	Consolidated 2018 2017 $ $ 1,810,453 17,138,351 11,820,573 1,555,842
	13,631,026	18,694,193

Note 10. Current assets - trade and other receivables

Trade receivables Other receivables	Consolidated 2018 2017 $ $ 1,738,464 1,717,594 80,859 312,533	Consolidated 2018 2017 $ $ 1,738,464 1,717,594 80,859 312,533
	1,819,323	2,030,127

Past due but not impaired

Customers with balances past due but without provision for impairment of receivables amount to $34,464 as at 30 June 2018 ($16,320 as at 30 June 2017).

The Group did not consider a credit risk on the aggregate balances after reviewing the credit terms of customers based on recent collection practices.

The ageing of the past due but not impaired receivables are as follows:

3 to 6 months overdue Note 11. Current assets - inventories Raw materials - at cost Finished goods - at cost	Consolidated 2018 2017 $ $ 34,464 16,320	Consolidated 2018 2017 $ $ 34,464 16,320
	Consolidated 2018 2017 $ $ 364,181 345,456 860,633 421,559
	1,224,814	767,015

Note 11. Current assets - inventories

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 12. Current assets - other assets

Prepayments Deposits	Consolidated 2018 2017 $ $ 170,448 140,940 105,799 105,406	Consolidated 2018 2017 $ $ 170,448 140,940 105,799 105,406
	276,247	246,346

Note 13. Non-current assets - property, plant and equipment

Leasehold improvements - at cost Less: Accumulated depreciation Furniture and fittings - at cost Less: Accumulated depreciation Computer and equipment - at cost Less: Accumulated depreciation	Consolidated 2018 2017 $ $ 192,291 175,711 (87,645) (55,118)	Consolidated 2018 2017 $ $ 192,291 175,711 (87,645) (55,118)
	104,646	120,593
	76,864 (22,351)	67,385 (18,402)
	54,513	48,983
	1,039,273 (507,421)	607,872 (412,001)
	531,852	195,871
	691,011	365,447

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

Consolidated Balance at 1 July 2016 Additions Depreciation expense Balance at 30 June 2017 Additions Depreciation expense Balance at 30 June 2018	Leasehold improvements $ 105,687 40,065 (25,159)	Furniture and fittings $ 15,950 35,882 (2,849)	Computer and equipment $ 201,909 69,280 (75,318)	Total $ 323,546 145,227 (103,326)
	120,593 16,580 (32,527)	48,983 9,377 (3,847)	195,871 429,836 (93,855)	365,447 455,793 (130,229)
	104,646	54,513	531,852	691,011

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 14. Non-current assets - intangibles

Development costs Less: Accumulated amortisation Intellectual property Less: Accumulated amortisation Software - at cost	Consolidated 2018 2017 $ $ 6,685,734 3,762,932 (3,171,819) (1,860,206)	Consolidated 2018 2017 $ $ 6,685,734 3,762,932 (3,171,819) (1,860,206)
	3,513,915	1,902,726
	259,917 (65,875)	116,860 (18,836)
	194,042	98,024
	171,239	-
	3,879,196	2,000,750

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

Consolidated Balance at 1 July 2016 Additions* Amortisation expense Balance at 30 June 2017 Additions Amortisation expense Balance at 30 June 2018	Development costs $ 1,265,022 1,604,529 (966,825)	Intellectual property $ 3,846 113,014 (18,836)	Software $ - - -	Total $ 1,268,868 1,717,543 (985,661)
	1,902,726 2,922,802 (1,311,613)	98,024 105,933 (9,915)	- 171,239 -	2,000,750 3,199,974 (1,321,528)
	3,513,915	194,042	171,239	3,879,196

Net of research and development incentive received for development activities.

Note 15. Current liabilities - trade and other payables

Trade payables Accrued expenses Other payables	Consolidated 2018 2017 $ $ 1,201,252 734,529 403,815 1,561,711 560,084 261,574	Consolidated 2018 2017 $ $ 1,201,252 734,529 403,815 1,561,711 560,084 261,574
	2,165,151	2,557,814

Refer to note 19 for further information on financial instruments.

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 16. Equity - contributed capital

Fully paid ordinary shares

Ordinary shares - fully paid	2018 Shares 60,936,358	Consolidated 2017 2018 Shares $ 59,513,513 63,287,617	2017 $ 63,261,592

Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital.

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Share buy-back

There is no current on-market share buy-back.

Capital risk management

The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.

Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The capital risk management policy remains unchanged from the 30 June 2017 financial statements.

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 16. Equity - contributed capital (continued)

Movements in ordinary share capital

Details Date Balance 01 July 2016 Issue of shares in Audinate Pty Ltd - exercise of options 29 November 2016 Issue of shares in Audinate Pty Ltd - exercise of options 29 November 2016 Issue of shares in Audinate Pty Ltd - exercise of options 11 May 2017 Issue of shares in Audinate Pty Ltd - exercise of options 2 June 2017 Conversion of shares on group reorganisation - two shares in the Company for each existing share in Audinate Pty Ltd 30 June 2017 Issue of shares in the Company - conversion of convertible redeemable preference shares 30 June 2017 Issue of shares in the Company - employee gift offer 30 June 2017 Issue of shares in the Company - IPO 30 June 2017 Share issue costs Balance 30 June 2017 Issue of shares in the Company - exercise of options 31 August 2017 Issue of shares in the Company - exercise of options 31 August 2017 Issue of shares in the Company - exercise of options 23 October 2017 Issue of shares in the Company - exercise of options 23 October 2017 Issue of shares in the Company - exercise of options 17 November 2017 Issue of shares in the Company - exercise of options 1 February 2018 Issue of shares in the Company - exercise of options 1 February 2018 Issue of shares in the Company - exercise of options 21 February 2018 Issue of shares in the Company - exercise of options 21 February 2018 Issue of shares in the Company - exercise of options 23 March 2018 Issue of shares in the Company - exercise of options 23 March 2018 Issue of shares in the Company - exercise of options 23 April 2018 Issue of shares in the Company - exercise of options 4 May 2018 Issue of shares in the Company - exercise of options 21 May 2018 Issue of shares in the Company - exercise of options 12 June 2018 Issue of shares in the Company - exercise of options 25 June 2018 Share issue costs Balance 30 June 2018	Shares Issue price 1,549,303 5,000 $0.072 7,083 $0.124 45,000 $0.072 1,856,221 $0.072 3,462,607 $0.000 41,064,509 $1.220 48,380 $1.220 11,475,410 $1.220 - $0.000 59,513,513 813,209 $0.260 402,567 $0.062 24,000 $0.260 10,000 $0.062 19,734 $0.062 7,290 $0.260 9,788 $0.062 4,000 $0.260 20,000 $0.062 45,896 $0.260 29,412 $0.062 10,000 $0.062 8,000 $0.260 3,652 $0.260 5,943 $0.036 9,354 $0.260 - $0.000 60,936,358	$ 29,392 360 878 3,240 133,648 - 50,098,701 59,024 14,000,000 (1,063,651)
		63,261,592 5,824 7,805 6,240 620 620 1,895 607 1,040 1,240 11,933 1,824 620 2,080 950 214 - (17,487)
		63,287,617

The table above includes shares issued to employees under a cashless exercise election.

Note 17. Equity - reserves

Foreign currency reserve Share-based payments reserve

Consolidated 2018 2017 $ $ (104,906) (88,744) 626,441 391,310	Consolidated 2018 2017 $ $ (104,906) (88,744) 626,441 391,310
521,535	302,566

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 17. Equity - reserves (continued)

Foreign currency reserve

The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Australian dollars.

Share-based payments reserve

The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties as part of their compensation for services.

Movements in reserves

Movements in each class of reserve during the current and previous financial year are set out below:

Consolidated Balance at 1 July 2016 Foreign currency translation Share-based payments Balance at 30 June 2017 Foreign currency translation Share-based payments Balance at 30 June 2018	Foreign currency $ 15,211 (103,955) -	Share-based payments $ 228,461 - 162,849	Total $ 243,672 (103,955) 162,849
	(88,744) (16,162) -	391,310 - 235,131	302,566 (16,162) 235,131
	(104,906)	626,441	521,535

Note 18. Equity - dividends

There were no dividends paid, recommended or declared during the current or previous financial year.

Note 19. Financial instruments

Financial risk management objectives

The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management program seeks to minimise potential adverse effects on the financial performance of the Group.

The Group's policy is not to trade in or use financial instruments to hedge it's risks.

Risk management is carried out by the Board of Directors ('the Board'). The Board uses different methods to measure different types of risks to which the Group is exposed. These methods include ageing analysis for credit risk and sensitivity analysis in the case of interest rate risk.

Market risk

Foreign currency risk

The Group's US dollar denominated sales for the year ended 30 June 2018 was approximately US$15.2 million (2017: US$11.2 million) on which the risk of foreign exchange movement was partially offset against exchange rate movement of US dollar denominated for purchases of approximately US$8.5 million (2017: US$7.2 million).

Interest rate risk

At the reporting date, the Group had no variable rate borrowings. Cash at bank earns interest at floating rates based on daily bank deposit rates.

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 19. Financial instruments (continued)

As at the reporting date, the Group had the following variable rate cash and cash equivalents:

	2018	2018	2017
	Weighted		Weighted
	average		average
	interest rate	Balance	interest rate	Balance
Consolidated	%	$	%	$
Cash at bank	-	1,810,453	-	17,138,351
Cash on deposit	1.90%	11,820,573	2.50%	1,555,842
Net exposure to cash flow interest rate risk		13,631,026		18,694,193

No sensitivity analysis has been performed for the exposure to interest rate risk on the Group's bank balance as the exposure is not significant.

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.

The Group trades only with recognised and creditworthy independent third parties. The Group has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The Group monitors the receivables on an ongoing basis and its exposure to bad debts is not significant.

There is no significant concentration of credit risk as the Group’s trade receivables are spread over a number of diversified customers. The Group does not hold any collateral or other credit enhancements over these balances.

The Group's bank balance are deposited with creditworthy banks with no recent history of default.

The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements.

Liquidity risk

Prudent liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) to be able to pay debts as and when they become due and payable.

The Group manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.

Remaining contractual maturities

The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid.

Weighted average interest rate Consolidated - 2018 % Non-interest bearing Trade payables - Other payables - Accrued expenses - Total non-derivatives	1 year or less $ 1,201,252 560,084 403,815	Between 1 and 2 years $ - - -	Between 2 and 5 years $ - - -	Over 5 years $ - - -	Remaining contractual maturities $ 1,201,252 560,084 403,815
	2,165,151	-	-	-	2,165,151

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 19. Financial instruments (continued)

Weighted average interest rate Consolidated - 2017 % Non-interest bearing Trade payables - Other payables - Accrued expenses - Payable to selling shareholders - Total non-derivatives	1 year or less $ 734,529 261,574 1,561,711 7,029,899	Between 1 and 2 years $ - - - -	Between 2 and 5 years $ - - - -	Over 5 years $ - - - -	Remaining contractual maturities $ 734,529 261,574 1,561,711 7,029,899
	9,587,713	-	-	-	9,587,713

The cash flows in the maturity analysis above are not expected to occur earlier than contractually disclosed above.

Note 20. Fair value measurement

The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their short-term nature.

Note 21. Remuneration of auditors

During the financial year the following fees were paid or payable for services provided by Deloitte Touche Tohmatsu, the auditor of the Company:

Audit services - Deloitte Touche Tohmatsu Audit or review of the financial statements Other services - Deloitte Touche Tohmatsu Investigating accountant services Additional accounting and tax advice	Consolidated 2018 2017 $ $ 100,000 100,000	Consolidated 2018 2017 $ $ 100,000 100,000
	- -	235,000 120,000
	-	355,000
	100,000	455,000

Note 22. Contingent liabilities

The Group had no contingent liabilities at 30 June 2018 and 30 June 2017.

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 23. Commitments

Lease commitments - operating Committed at the reporting date but not recognised as liabilities, payable: Within one year One to five years	Consolidated 2018 2017 $ $ 385,314 368,539 742,098 1,126,145	Consolidated 2018 2017 $ $ 385,314 368,539 742,098 1,126,145
	1,127,412	1,494,684

Operating lease commitments includes contracted amounts for offices. The leases have various escalation clauses. On renewal, the terms of the leases may be renegotiated. Refer to note 2 for details on the impact of AASB 16 'Leases' which applies to the Group from 1 July 2019.

Note 24. Key management personnel disclosures

Compensation

The aggregate compensation made to directors and other members of key management personnel of the Group is set out below:

Short-term employee benefits Post-employment benefits Share-based payments	Consolidated 2018 2017 $ $ 1,537,944 1,058,746 64,550 29,926 117,368 84,341	Consolidated 2018 2017 $ $ 1,537,944 1,058,746 64,550 29,926 117,368 84,341
	1,719,862	1,173,013

Note 25. Related party transactions

Parent entity

Audinate Group Limited is the parent entity.

Subsidiaries

Interests in subsidiaries are set out in note 26.

Key management personnel

Disclosures relating to key management personnel are set out in note 24 and the remuneration report included in the directors' report.

Transactions with related parties

There were no transactions with related parties during the current and previous financial year.

Receivable from and payable to related parties

There were no trade receivables from or trade payables to related parties at the current and previous reporting date.

Loans to/from related parties

As described in the directors' report, Audinate Pty Limited offered employees interest bearing, non-recourse loans in order to fund the exercise of options prior to the IPO. The total value of the loans outstanding at 30 June 2018 was $90,738 (2017: $117,953), inclusive of a loan outstanding to Aidan Williams of $38,731 (2017: $36,613).

There were no other loans to or from related parties at the current and previous reporting date.

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 25. Related party transactions (continued)

Terms and conditions

All transactions were made on normal commercial terms and conditions and at market rates.

Note 26. Interests in subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2:

		Ownership	interest
	Principal place of business /	2018	2017
Name	Country of incorporation	%	%
Audinate Pty Limited	Australia	100%	100%
Audinate, Inc.	United States of America	100%	100%
Audinate Limited	United Kingdom	100%	100%
Audinate Limited	Hong Kong	100%	100%
Audinate Holdings Limited	Australia	100%	100%

Note 27. Reconciliation of profit/(loss) after income tax to net cash from operating activities

Profit/(loss) after income tax (expense)/benefit for the year Adjustments for: Depreciation and amortisation Fair value on redeemable preference shares Share-based payments Employee gift shares Change in operating assets and liabilities: Decrease in trade and other receivables Increase in inventories Increase in deferred tax assets Increase in current tax asset Increase in other operating assets Increase/(decrease) in trade and other payables Increase/(decrease) in other operating liabilities Net cash from operating activities	Consolidated 2018 2017 $ $ 2,544,339 (20,443,388) 1,451,757 1,088,987 - 18,547,790 235,131 162,849 - 59,024 210,804 51,490 (457,799) (345,962) (1,874,195) - (442,093) (298,065) (29,901) (46,880) (434,153) 1,393,838 (167,494) 1,070,675	Consolidated 2018 2017 $ $ 2,544,339 (20,443,388) 1,451,757 1,088,987 - 18,547,790 235,131 162,849 - 59,024 210,804 51,490 (457,799) (345,962) (1,874,195) - (442,093) (298,065) (29,901) (46,880) (434,153) 1,393,838 (167,494) 1,070,675
	1,036,396	1,240,358

Note 28. Parent entity information

Set out below is the supplementary information about the parent entity.

Statement of profit or loss and other comprehensive income

Profit/(loss) after income tax Total comprehensive income	Parent 2018 2017 $ $ 1,344,029 (1,694,328)	Parent 2018 2017 $ $ 1,344,029 (1,694,328)
	1,344,029	(1,694,328)

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 28. Parent entity information (continued)

Statement of financial position

Total current assets Total assets Total current liabilities Total liabilities Equity Contributed capital Accumulated losses Total equity	Parent 2018 2017 $ $ 15,370,125 21,029,899	Parent 2018 2017 $ $ 15,370,125 21,029,899
	73,976,610	79,636,384
	2,757,979	9,787,878
	2,757,979	9,787,878
	71,568,930 (350,299)	71,542,834 (1,694,328)
	71,218,631	69,848,506

Guarantees entered into by the parent entity in relation to the debts of its subsidiaries

The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2018 and 30 June 2017.

Parent entity information

The information presented for the current period is from 1 July 2017 to 30 June 2018 and the comparative information is presented from the date of incorporation of the Company on 19 April 2017 to 30 June 2017.

Contingent liabilities

The parent entity had no contingent liabilities as at 30 June 2018 and 30 June 2017.

Capital commitments - Property, plant and equipment

The parent entity had no capital commitments for property, plant and equipment as at 30 June 2018 and 30 June 2017.

Significant accounting policies

The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the following:

Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the investment.

Note 29. Share-based payments

Options

Under the Employee Share Option Plan ('ESOP'), the Company’s Board of Directors ('Board'), or a committee of the Board, may grant incentive and non-qualified stock options to employees, officers, directors, consultants, independent contractors, and advisors to the Company, or to any parent, subsidiary, or affiliate of the Company. The purpose of the ESOP is to attract, retain, and motivate eligible persons whose present and potential contributions are important to the Group’s success by offering them an opportunity to participate in the Company’s future performance through equity awards of stock options and stock bonuses.

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 29. Share-based payments (continued)

Set out below are summaries of options granted under the plan:

2018

2018
Exercise Start date End date price 30/06/2017 23/11/2018 $0.036 30/06/2017 17/10/2019 $0.062 30/06/2017 09/12/2019 $0.062 30/06/2017 09/01/2020 $0.062 30/06/2017 21/08/2020 $0.062 30/06/2017 09/12/2020 $0.062 30/06/2017 11/06/2022 $0.260 30/06/2017 23/08/2022 $0.260 30/06/2017 31/01/2023 $0.260 30/06/2017 03/04/2023 $0.260	Balance at the start of the year 36,000 913,042 40,000 10,000 58,000 460,000 188,000 740,000 770,000 50,000 -	Granted - - - - - - - - - - -	Exercised (6,000) (465,000) (30,000) - (16,000) - (30,000) (231,200) (722,000) (50,000) 127,355	Expired/ forfeited/ other* - - - - - - - - - - (127,355)	Balance at the end of the year 30,000 448,042 10,000 10,000 42,000 460,000 158,000 508,800 48,000 - -
	3,265,042	-	(1,422,845)	(127,355)	1,714,842

Other includes the impact of cashless exercise

2017

2017
Exercise Start date End date price 30/06/2017 23/11/2018 $0.036 30/06/2017 17/10/2019 $0.062 30/06/2017 09/12/2019 $0.062 30/06/2017 09/01/2020 $0.062 30/06/2017 21/08/2020 $0.062 30/06/2017 09/12/2020 $0.062 30/06/2017 11/06/2022 $0.260 30/06/2017 23/08/2022 $0.260 30/06/2017 31/01/2023 $0.260 30/06/2017 03/04/2023 $0.260	Balance at the start of the year - - - - - - - - - -	Granted* 36,000 913,042 40,000 10,000 58,000 460,000 188,000 740,000 770,000 50,000	Exercised - - - - - - - - - -	Expired/ forfeited/ other - - - - - - - - - -	Balance at the end of the year 36,000 913,042 40,000 10,000 58,000 460,000 188,000 740,000 770,000 50,000
	-	3,265,042	-	-	3,265,042

The options over shares in Audinate Pty Ltd were cancelled in exchange for options in the Company under the restructure.

1,714,842 options were exercisable at the end of the financial year (2017: 3,265,042).

The weighted average share price during the financial year was $2.95 (2017: $1.50).

Share Rights

Set out below are summaries of performance rights granted:

2018

Exercise Grant date Expiry date price 30/06/2017 30/06/2022 $0.000 02/08/2017 15/09/2019 $0.000 29/06/2018 30/06/2022 $0.000	Balance at the start of the year 1,038,509 - -	Granted - 1,995,000 34,566	Exercised - - -	Expired/ forfeited/ other - - -	Balance at the end of the year 1,038,509 1,995,000 34,566
	1,038,509	2,029,566	-	-	3,068,075

Audinate Group Limited Notes to the consolidated financial statements 30 June 2018

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Note 29. Share-based payments (continued)

2017 Exercise Grant date Expiry date price 30/06/2017 30/06/2022 $0.000	Balance at the start of the year -	Granted 1,038,509	Exercised -	Expired/ forfeited/ other -	Balance at the end of the year 1,038,509
	-	1,038,509	-	-	1,038,509

The weighted average remaining contractual life of performance rights outstanding at the end of the financial year was 3 years (2017: 4).

The performance rights issued on 29 June 2018 were valued based on a share price of $1.22, an exercise price of zero, volatility of 51%, a risk-free interest rate of 2.63% and probability weighting reflecting the probability of meeting the vesting conditions. The fair value of the share rights based on these inputs is $0.81.

Apart from the performance rights expiring in 2019, the remaining performance rights vest in three tranches after the release of the annual results in 2020, 2021 and 2022.

Performance rights commence vesting upon achieving total shareholder return equal to the 50th percentile of the ASX Emerging Companies Index and vest fully at the 75th percentile.

Note 30. Events after the reporting period

Audinate Group Limited Directors' declaration 30 June 2018

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In the directors' opinion:

the attached financial statements and notes comply with the Accounting Standards and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June 2018 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

The directors have been given the declarations required by section 295A of the Corporations Act 2001.

On behalf of the directors

_________David Krall Chairman

27 August 2018 Sydney

Deloitte Touche Tohmatsu ABN 74 490 121 060 Grosvenor Place 225 George Street Sydney, NSW, 2000 Australia

Phone: +61 2 9322 7000 www.deloitte.com.au

Independent Auditor’s Report to the members of Audinate Group Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Audinate Group Limited (the “Company”) and its subsidiaries (the “Group”) which comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial performance for the year then ended; 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 auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for 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.

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

Key Audit Matter

How the scope of our audit responded to the Key Audit Matter

Tax consolidation

As at 30 June 2018 the Group has recognised Deferred tax assets to the value of $1.874 million as disclosed in Note 7.

Significant judgement is required by management due to:

A new tax consolidated group was formed on 1 July 2017. Upon joining the tax consolidated group, for tax purpose, the value of the assets held by Audinate Pty Ltd were reset and an Allocable Cost Amount “ACA” calculation was required; and
Assessment of the recoverability of the deferred tax asset requires significant management judgement regarding the generating of future taxable income.

Our audit procedures included, but were not limited to:

Understanding the process that management undertakes to develop the forecast model and evaluating whether the forecasts had been appropriately adjusted for the differences between accounting profits and taxable profits;
Comparing forecasts to Board approved business plans;
Assessing historical forecasting accuracy by comparing actual performance to budgets;
Testing on a sample basis management’s model for future taxable profit for mathematical accuracy;
Evaluating the recoverability of deferred tax assets;
Recalculating deferred tax asset balances which comprise a combination of timing differences between tax and accounting values.
Reviewing management’s valuations of the reset assets;
Reviewing management’s assessment for adoption of the relevant accounting standards;
Engaging the use of our Deloitte Tax and Corporate Finance experts to assist with: o Reviewing the ACA calculation; o Reviewing of the tax calculation; o Reviewing the external valuation supporting the value of the software and patents;

We also assessed the appropriateness of the disclosures in Note 7 to the financial statements.

Other Information

The directors are responsible for the other information. The other information comprises the information included in the Directors’ Report and ASX Additional Information, which we obtained prior to the date of this auditor’s report, the other information also includes the annual report (but does not include the financial report and our auditor’s report thereon) 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 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, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and use our professional judgement to determine the appropriate action.

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.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group’s audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included on pages 8 to 16 of the Directors’ Report for the year ended 30 June 2018.

In our opinion, the Remuneration Report of Audinate Group Limited, for the year ended 30 June 2018, complies with section 300A of the Corporations Act 2001.

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

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DELOITTE TOUCHE TOHMATSU

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Joshua Tanchel Partner Chartered Accountants Sydney, 27 August 2018

AI assistant

AUDINATE GROUP LIMITED — Annual Report 2018

64298_rns_2018-08-26_d73c8081-2c19-4225-9ec6-2b8f02a13106.pdf

1. Company details

2. Results for announcement to the market

Dividends

Comments

3. Net tangible assets

4. Control gained over entities

5. Dividend reinvestment plans

6. Audit qualification or review

7. Attachments

8. Signed

Audinate Group Limited

ABN 56 618 616 916

Directors

Principal activities

Dividends

Review of operations

Audinate Group Limited Directors' report 30 June 2018

Significant changes in the state of affairs

Matters subsequent to the end of the financial year

Likely developments and expected results of operations

Environmental regulation

Information on directors

Company secretary

Meetings of directors

Remuneration report (audited)

Principles used to determine the nature and amount of remuneration

Non-executive directors remuneration

Executive remuneration

Short-term incentive plan ('STI Plan')

Long-term incentive plan ('LTI Plan')

Group performance and link to remuneration

Use of remuneration consultants

Voting and comments made at the Company's 2017 Annual General Meeting ('AGM')

Details of remuneration

Amounts of remuneration

Service agreements

Share-based compensation

Issue of shares

Options

Performance rights

Additional information

Additional disclosures relating to key management personnel

Shareholding

Option holding

Performance rights holding

This concludes the remuneration report, which has been audited.

Loans to directors and executives

Shares under option

Shares under performance rights

Shares issued on the exercise of options

Shares issued on the exercise of performance rights

Indemnity and insurance of officers

The policy covers:

Indemnity and insurance of auditor

Proceedings on behalf of the Company

Non-audit services

Officers of the Company who are former partners of Deloitte Touche Tohmatsu

Auditor's independence declaration

Auditor

Audinate Group Limited

Audinate Group Limited Consolidated statement of profit or loss and other comprehensive income For the year ended 30 June 2018

Audinate Group Limited Consolidated statement of changes in equity For the year ended 30 June 2018

Audinate Group Limited Consolidated statement of cash flows For the year ended 30 June 2018

Note 1. General information

Note 2. Significant accounting policies

New or amended Accounting Standards and Interpretations adopted

Historical cost convention

Critical accounting estimates

Parent entity information

Principles of consolidation

Note 2. Significant accounting policies (continued)

Operating segments

Foreign currency translation

Foreign currency transactions

Foreign operations

Revenue recognition

Sales revenue

AUDINATE GROUP LIMITED Annual Report 2018