Beyond International
Annual Report 2018

Plain-text annual report

2O18 BEYOND INTERNATIONAL ANNUAL REPORT contents 4 Chairman’s repOrt 6 managing DireCtOr’s repOrt 12 COrpOrate gOvernanCe 20 BOarD Of DireCtOrs 21 DireCtOrs’ repOrt 35 auDitOr’s inDepenDenCe DeClaratiOn 36 finanCial statements 82 DireCtOrs’ DeClaratiOn 83 inDepenDent auDitOr’s repOrt 89 sharehOlDer infOrmatiOn 91 COrpOrate DireCtOry Mythbusters Jr 2 2018 BEYOND INTERNATIONAL ANNUAL REPORT 3 Beyond InternatIonal AnnuAl RepoRt 2018chairman’s report On behalf of the Directors of Beyond International Limited (ASX:BYI) I am pleased to have this opportunity to add some comments on the 2017-18 Financial Year’s activities, results and outlook that are discussed much more fully in the Managing Director’s Report that follows. The Directors are obviously pleased by Beyond’s significantly improved financial performance in 2017-18. Three key financial improvements in 2017-18 over the previous year, were the $9,409,000 increase in EBITDA to $7,135,000, the reduction in bank debt by $3,907,000 to $1,837,000 and the cash balance held at 30th June, 2018 of $7,256,000. These are not the only financial indicators that Directors consider, particularly as there are 4 distinct operating divisions, however the improvements demonstrated in these numbers are indicative of improved financial performance in all 4 divisions. profitability over a period and meet key financial conditions necessary to fund the growth of the business despite volatile international markets and pay regular dividends to shareholders. We are very aware that the suspension of dividends from 2016-17 was a disappointment. Like all companies dealing in international markets we continue to face unpredictable changes in regulations, taxes and currencies. These are the ‘new normal’ and Beyond will continue to adapt to these changes and anticipate them where we can. Generally the Directors aim is to achieve an improving level of The Directors wish to thank the many people in Beyond’s various offices and our associates in different countries for their work and dedication during this year. Ian Ingram Non-Executive Chairman 4 chAIRmAN’s REpORT 2018 Love it or list it UK 5 Beyond InternatIonal AnnuAl RepoRt 2018managing Director’s report finanCial perfOrmanCe fOr the 12 mOnth periOD tO 30th June 2018 review Of OperatiOns By segment fOr the finanCial year enDeD 30th June 2018 • Operating revenue steady at $86,392,000; • EBITDA improved by $9,409,000 to $7,135,000 • EBIT improved by $8,549,000 to $354,000; • Net loss after tax and before outside equity interests of $1,174,000, an improvement of $6,164,000; • Cash flows from operating activities increased by 9.7% to $6,460,000 from $5,887,000; • The St George loan facility was drawn to $1,837,000 as at 30 June 2018, a reduction of $3,907,000. • Cash at bank as at 30 June 2018 was $7,256,000. Overview The Beyond Group has seen a significant improvement in the performance of its businesses in the 2018 financial year in the wake of one-off adjustments in the 2017 financial year, reporting a statutory net loss of $0.7 million. This compares to the previous corresponding year statutory net loss of $7.5 million. The Group delivered revenue of $86.4 million, up 0.1% from the previous year. EBITDA is $7.1 million compared to a loss of $2.3 million in the prior financial year, while EBIT improved by $8.5 million to $0.4 million. June 2018 $ 000’s June 2017 $ 000’s varianCe fav/(unfav) $ 000’s varianCe fav/(unfav) % Operating Revenue Expenses eBITDA Depreciation and Amortisation eBIT Net Interest Income/(Expense) Profit/(Loss) Before Tax Tax Benefit/(Expense) Profit/(Loss) After Tax Minority Interests Profit/(Loss) After Tax attributable to members ADDITIOnAL InFORMATIOn ePS (cents per share) Dividends per Share (cents) nTA (cents per share) 86,392 86,311 (79,257) (88,585) 81 9,328 9,409 (860) 8,549 (102) 8,448 (2,274) (5,921) (8,195) (139) (8,334) 997 (2,284) (7,337) (132) (7,469) (12.18) 2.00 44.37 6,164 598 6,762 11.03 (2.00) (1.7) 0.1% 10.5% nMF (14.5%) nMF (73.4%) nMF NMF 84% (454%) 90.5% 90.6% (100%) (3.8%) 7,135 (6,781) 354 (241) 114 (1,287) (1,173) 466 (707) (1.15) - 42.67 Revenue Productions & Copyright Home Entertainment Distribution Digital Marketing Other Revenue Total Revenue OPeRATInG eBIT Productions & Copyright Home Entertainment Distribution Digital Marketing Corporate 7Beyond Joint Venture Foreign Exchange Gain / (Loss) Operating eBIT non Operating Items Home Entertainment Distribution Digital Marketing Corporate eBIT NMF – Not a meaningful figure 30 June 2018 $ 000’s 30 June 2017 $ 000’s varianCe $ $ 000’s varianCe % 42,458 10,241 23,584 9,481 628 86,392 5,954 (1,331) 1,522 298 (5,934) 10 (164) 354 - - - - 50,971 2,113 21,877 10,549 803 86,312 7,566 429 845 (722) (5,702) (55) (542) 1,819 (8,611) (373) (607) (423) (8,512) 8,128 1,707 (1,068) (175) 80 (1,612) (1,760) 677 1,020 (232) 65 378 (16.7%) 384.7% 7.8% (10.1%) (21.8%) 0.1% (21.3%) NMF 80.1% NMF (4.1%) NMF 69.7% (1,465) (80.5%) 8,611 373 607 423 (100%) (100%) (100%) (100%) nMF 354 (8,195) 8,549 6 mANAGING DIREcTOR’s REpORT 2018 7 Beyond InternatIonal AnnuAl RepoRt 20181. televisiOn prODuCtiOns anD COpyright segment Segment revenue fell by $8.5 million or 16.7% to $42.5 million compared to the prior year. The 2017 financial year included $8.3 million related to the production of the ABC drama “Pulse”. Revenues associated with drama production were not replicated in 2018 but are expected to increase in the 2019 financial year. The segment EBIT of $6.0 million was 21.3% or $1.6 million lower than the $7.6 million reported in the 2017 financial year. While Copyright revenues were slightly higher than 2017, the Group’s conservative amortisation policies for capitalised production costs in relation to the MythBusters and Deadly Women franchises meant that an additional $1.0 million in amortisation was recognised in 2018 compared to that incurred in the 2017 financial year. The 2017 financial year included one- off fees relating to production services provided on the key animation series in production. The impact of this is that production EBIT fell by $0.6 million year on year. During the 2018 financial year, 164 hours of television commenced production, a growth of 20% over the 2017 financial year. This included 39 hours commissioned by US broadcasters. The Company has continued to focus on the emerging digital platforms such as Netflix. To date Beyond has produced or co-produced over 67 half hours of original animation and eight hours of factual programming with Netflix. We have also commenced production of a live action series commissioned by Facebook. Beyond has continued to produce programs for a number of USA based broadcasters including Discovery, HGTV, ID, Science, Velocity, Travel, The Food Network and FUSE. Commissions produced for the US broadcast market in 2018 included returning series of Deadly Women, now in its 12th season and MythBusters (season 11). New series include MythBusters Junior and Deadly Intelligence. In addition, RTL in Germany have commissioned Wow, That’s Amazing, a children’s live action series which looks at how science and maths can create magic for kids. HGTV in the USA have commissioned 7Beyond to produce a further four series of My Lottery Dream Home, 8 bringing the total to seven series (93 half hour episodes). New series produced by 7Beyond in the 2018 financial year were Coast To Coaster, Gingerbread House, Gingerbread Nation and Smoothini The Hip Hop Houdini. The popularity of Selling Houses Australia continues, with season 12 commissioned by Foxtel, together with a second season of Love It Or List It Australia. Other Australian program commissions produced during the period included the 2018 Santos Tour Down Under, A Team Of Champions, Backburning – a documentary on Midnight Oil, the animated series Dumbotz for the Nine Network, Pulse for the ABC and Gfinity eSports series for the digital platform Twitch. The strategic focus for the coming 12 months continues to be: • targeting buyers who value our ability to co-produce; • strengthening relationships with “new media” outlets, including SVOD and social media platforms; • capitalising on strong relationships with existing clients and within our proven genre strengths; and • early adoption of new technology to gain market leadership and reputation. This includes the production of Ultra High Definition (4k) content as well as Virtual Reality content to augment linear content production. 2. DistriButiOn tv anD film segment Revenue increased by $1.7 million or 7.8% to $23.6 million compared to the corresponding 2017 period. EBIT increased by 80.1% over the corresponding 2017 period (excluding impairment charges booked in 2017) to $1.5 million. During the year significant sales for third party producers were achieved for existing franchises of Highway Thru Hell and Love It or List It and Heavy Rescue: 401. MythBusters and Deadly Women from Beyond Productions continue to perform well. The share of revenue by third party produced programmes fell in 2018 compared to 2017, with externally produced shows generating 64% of distribution sales against 71% in 2017. Traditional cable broadcasters are still strong worldwide and this combined with the growth of Video on Demand (OTT) platforms continues to have a positive impact on revenues in this division. New releases acquired for the 2019 financial year include a continuing expansion of the Love It Or List It program franchise, new series of Highway Thru Hell and Heavy Rescue: 401. The Company has boosted the program acquisition team through the appointment of key executives in the London office and is focusing on building new relationships with program producers for the supply of quality long running returnable series. Third party programs are primarily sourced from independent producers in the US, UK and Canada. Product focus continues to be factual series, documentaries, family and children’s programs as there is a steady demand for these genres from broadcasters throughout the world. The client base has expanded during the past two years with the digital platforms (SVOD and AVOD) such as Netflix and You Tube rapidly becoming key customers for the Company’s products. 3. hOme entertainment segment (Bhe) BHE reported an operating loss of $1.3 million in the 2018 financial year. The operating loss of $8.2 million for 2017 included adjustments of $8.6 million for inventory returned to BHE as part of a transition to consignment stock The total physical DVD market in Australia contracted 17% for the twelve-months ending 30 June 2018 and Beyond’s share of the market for 2018 was 3.1%, down from 3.9% in 2017. The 2018 financial year was the first year operating under inventory consignment terms with major retail customers. BHE sold 829,000 units of content to end- consumers in fiscal year 2018. Revenues for the 2018 financial year were $10.2 million, compared to $2.1 million reported in the 2017 financial year. BHE have adopted an aggressive write-off policy in relation to the carrying value of its program assets, with depreciation and amortisation for the 2018 financial year of $2.9 million (2017: $2.7 million). The EBITDA contribution was $1.6 million for 2018 compared to a negative EBITDA of $5.5 million. Cash payments of $3.6 million were made to customers in relation to the stock buy-back initiated in 2017 and completed in 2018. mANAGING DIREcTOR’s REpORT 2018 5. 7BeyOnD JOint venture 7Beyond grew revenues by 43% in the 2018 financial year to $9.7 million from $6.8 million in the 2017 financial year. The joint venture contributed $10,000 of earnings to the group in the 2018 financial year compared to a loss of $55,000 in the 2017 financial year. HGTV in the USA have commissioned a further four series of My Lottery Dream Home, bringing the total to seven series. New series produced by 7Beyond in 2018 were Coast To Coaster, Gingerbread House, Gingerbread Nation and Smoothini The Hip Hop Houdini. The joint venture is cash flow positive and has not required any funding from the joint venture partners since September 2016. The joint venture now has a substantial forward order book and a deep slate of projects in development and is actively working with US broadcasters and digital platforms to develop and produce new programs for the US market. The amortisation policy will mean that BHE will report a negative EBIT in the 2019 financial year, but is expected to be cash flow positive. To complement our existing portfolio of content, BHE in fiscal 2019 will launch the following event level programming: • Pokémon Movie 21: The Power of Us!; • Pokémon Season 21: Sun & Moon - Ultra Adventures; • The 2018 AFL Grand Final; and • The 2018 National Rugby League (NRL) Grand Final. 4. Digital marketing segment (BeyOnDD) Full year revenues for BeyondD were $9.5 million, 10.1% down on last year’s total of $10.5 million. The reduction was due the close of the 3Di business at the end of the 2017 financial year. The operating result for the 12 months ended 30 June 2018 was an improvement of $1.0 million with a profit of $0.3 million against an operating loss of $0.7 million for the corresponding prior period. The year involved the final full exit from the 3Di data side of the business and a refocusing on the emerging AI Voice side of the business in general and the production of 3rd party Google Assistants in particular. This refocus led to an onboarding of many new exciting clients including KMART, Target, Suncorp and Woolmark as well as a deepening of relationships with Officeworks and the Finder Group. FIRST quickly positioned itself as a sought after market leader in the AI Voice space not only locally but also on the international stage, particularly the USA. This market position has led to a further enhancement in FIRST’s relationship with Google. In addition to the new voice AI, FIRST continues to be the leader in search and conversion consulting in the New Zealand market as well as continuing to produce quality large scale digital assets for its existing client base in Australia especially the Dymocks Group of companies, Bank of Queensland, Laser Sight and Blue Mountains City Council. The financial results for this business unit are expected to improve substantially compared to the prior periods. 9 Beyond InternatIonal AnnuAl RepoRt 2018fOreign exChange – impaCt On results The Group has significant exposure to foreign exchange fluctuations in the television production and distribution operating segments with over 40% of Group revenues derived from overseas. In the normal course, the company generally hedges production costs denominated in US$. Foreign currency contracts entered into by the distribution segment are generally not hedged. US dollar, 5.7% against the Euro and 4.6% against the pound sterling. There continued to be volatility in the currency markets during the reporting period, with the Australian dollar ranging from a high of $0.812 to a low of $0.735 against the US dollar. Across the year the Australian dollar fell by 3.7% against the The total foreign exchange loss for FY2018 is $164,000 (2017: $542,000). This loss is allocated to the operating segments as follows: item segment June 2018 June 2017 mOvement $ mOvement % Realised Gain/(Loss) Distribution/TV (69,783) Unrealised Gain/(Loss) Distribution/TV Realised (Loss)/Gain Unrealised Gain/(Loss) Realised (Loss)/Gain Unrealised (Loss)/Gain tOtal fx gain / (lOss) Production Production Other Other 119,711 (87,980) 50,603 (31,799) (145,044) (164,292) 25,947 (8,192) 59,640 (126,667) (92,847) (399,727) (541,845) (95,730) 127,903 (147,620) 177,270 61,048 254,682 377,553 369% 1561% 248% 140% 66% 64% (70%) inCOme tax Income tax expense was $1.3 million in the 2018 financial year. Tabled below is the break down of the expense booked. Current income tax expense/(benefit) Less current year tax losses not booked Income tax relating to the current year Add: Deferred income tax Adjustments relating to prior year income tax Reversal of tax losses previously booked Other Total income tax expense 2018 $000’s (708) 988 280 187 279 604 (63) 1,287 2017 $000’s 62 - 62 (3,449) 96 2,351 (57) (997) The tax benefit on taxable losses was $708,000. This included $988,000 of Australian consolidated tax group losses in the current financial year that have not been recognised due to uncertainty in the recoverability of the losses based on the cause of past losses. Past losses for the Australian consolidated tax group have been caused by the non-assessable nature of Australian production tax rebates which are treated as revenue in Beyond’s accounts. Total unrecognised tax losses within the Australian tax group are $21.5 million. Australian tax losses are able to be carried forward indefinitely subject to the satisfaction of continuity of ownership or same business tests under the Australian tax law. Unrecognised losses are able to be recognised and used in the future once taxable profits are generated. Other material adjustments to the income tax expense for the 2018 financial year are: • Adjustments to prior year income tax expense relating to the reversal of deferred tax assets; • The reversal of tax losses previously booked as a deferred tax asset for the reasons stated above. DiviDenD The Directors have determined that there will be no final dividend for the 2018 financial year. COnClusiOn The financial performance improved in the 2018 year on the strength of the Groups operating divisions across content production, international 10 mANAGING DIREcTOR’s REpORT 2018 content distribution, home entertainment and digital marketing. The content market is global and Beyond has been a part of the global production and distribution eco system for over 30 years. We were one of the first Australian based entertainment companies to recognise that the domestic market did not have sufficient opportunities to build a business of sufficient scale to compete internationally. We have been producing programming for US distribution platforms since the 1980’s and have weathered a number of changes that have occurred in the production and distribution of content over that period. Beyond established its international distribution business in London over 25 years ago and has now expanded this to include Dublin. This international focus has enabled the business to acquire the majority of its third-party content from producers in the UK, USA and Canada for distribution throughout the world. We have maintained production offices in the US for over 28 years. The international media business is experiencing rapid and fundamental changes to the way the industry has traditionally operated. In the past the industry functioned on a strict territorial basis in terms of licensing rights and media with the majority of distribution being via free to air and cable broadcast platforms. With the growth of high-speed internet access across the world these territorial and regional barriers no longer exist, and the internet distribution platforms have moved to a direct business to consumer relationship with the viewer, as opposed to an advertising driven “free tv” model. As a result, the nature and structure of television programs is also changing across all genres as the consumer has more choice both in terms of the programs they want to watch and when to watch them. Beyond has been able to adapt to these changes by creating programming that is suitable for these new platforms and by developing business models for the creation of such content. Our strategy is to develop, acquire and create content that is suitable for both the OTT market and the more traditional free to air and cable broadcasters. We believe that both of these content distribution models will co-exist in the market for some time and will continue to drive the demand for quality content. Beyond has built proven programs and business models that work for both traditional broadcast models and the OTT market and we intend to increase revenue and profits from production and distribution by working closely with all the available and emerging content distribution platforms both as an originator/producer of programs and a supplier of finished programs. Mikael Borglund CEO & Managing Director 31 August 2018 MythBusters Jr. 11 Beyond InternatIonal AnnuAl RepoRt 2018corporate governance statement beyond international limited Corporate Governance Statement, 30 June 2018 This Corporate Governance Statement of Beyond International Limited (the ‘company’) has been prepared in accordance with the 3rd Edition of the Australian Securities Exchange’s (‘ASX’) Corporate Governance Principles and Recommendations of the ASX Corporate Governance Council (‘ASX Principles and Recommendations’). The company’s ASX Appendix 4G, which is a checklist cross-referencing the ASX Principles and Recommendations to the relevant disclosures in either this statement, our website or Annual Report, is contained on our website at http://www.beyond.com.au/corporate/corporate-governance. This statement has been approved by the company’s Board of Directors (‘Board’) and is current as at 30 August 2018. The ASX Principles and Recommendations and the company’s response as to how and whether it follows those recommendations are set out below. prinCiple 1: lay sOliD fOunDatiOns fOr management anD Oversight reCOmmenDatiOn 1.1 - a listeD entity shOulD DisClOse: (a) the respeCtive rOles anD respOnsiBilities Of its BOarD anD management; anD (B) thOse matters expressly reserveD tO the BOarD anD thOse DelegateD tO management. The Board is ultimately accountable for the performance of the company and provides leadership and sets the strategic objectives of the company. It appoints all senior executives and assesses their performance on at least an annual basis. It is responsible for overseeing all corporate reporting systems, remuneration frameworks, governance issues, and stakeholder communications. Decisions reserved for the Board relate to those that have a fundamental impact on the company, such as material acquisitions and takeovers, dividends and buybacks, material profits upgrades and downgrades, and significant closures. Management is responsible for implementing Board strategy, day-to-day operational aspects, and ensuring that all risks and performance issues are brought the Boards attention. They must operate within the risk and authorisation parameters set by the Board. reCOmmenDatiOn 1.2 - a listeD entity shOulD: (a) unDertake apprOpriate CheCks BefOre appOinting a persOn, Or putting fOrwarD tO seCurity hOlDers a CanDiDate fOr eleCtiOn, as a DireCtOr; anD (B) prOviDe seCurity hOlDers with all material infOrmatiOn in its pOssessiOn relevant tO a DeCisiOn On whether Or nOt tO eleCt Or re-eleCt a DireCtOr. The company undertakes comprehensive reference checks prior to appointing a director, or putting that person forward as a candidate to ensure that person is competent, experienced, and would not be impaired in any way from undertaking the duties of director. The company provides relevant information to shareholders for their consideration about the attributes of candidates together with whether the Board supports the appointment or re-election. reCOmmenDatiOn 1.3 - a listeD entity shOulD have a written agreement with eaCh DireCtOr anD seniOr exeCutive setting Out the terms Of their appOintment. The terms of the appointment of a non-executive director, executive directors and senior executives are agreed upon and set out in writing at the time of appointment. reCOmmenDatiOn 1.4 - the COmpany seCretary Of a listeD entity shOulD Be aCCOuntaBle DireCtly tO the BOarD, thrOugh the Chair, On all matters tO DO with the prOper funCtiOning Of the BOarD. The Company Secretary reports directly to the Board through the Chairman and is accessible to all directors. reCOmmenDatiOn 1.5 - a listeD entity shOulD (a) have a Diversity pOliCy whiCh inCluDes requirements fOr the BOarD Or a relevant COmmittee Of the BOarD tO set measuraBle OBJeCtives fOr aChieving genDer Diversity anD tO assess annually BOth the OBJeCtives anD the entity’s prOgress in aChieving them; (B) DisClOse that pOliCy Or a summary Of it; anD (C) DisClOse as at the enD Of eaCh repOrting periOD the measuraBle OBJeCtives fOr aChieving genDer Diversity set By the BOarD Or a relevant COmmittee Of the BOarD in aCCOrDanCe with the entity’s Diversity pOliCy anD its prOgress tOwarDs aChieving them, anD either: (1) the respeCtive prOpOrtiOns Of men anD wOmen On the BOarD, in seniOr exeCutive pOsitiOns anD aCrOss the whOle OrganisatiOn (inCluDing hOw the entity has DefineD “seniOr exeCutive” fOr these purpOses); Or (2) if the entity is a “relevant emplOyer” unDer the wOrkplaCe genDer equality aCt, the entity’s mOst reCent “genDer equality inDiCatOrs”, as DefineD in anD puBlisheD unDer that aCt. The company does not have a formal diversity policy. The company however undertakes to assess an individual’s credentials on their merit, with complete objectivity and cORpORATE GOvERNANcE sTATEmENT 2018 13 Motown Magic Beat Bugs 12 Beyond InternatIonal AnnuAl RepoRt 2018without bias so that the company may attract, appoint and retain the best people to work within the company where all persons have equal opportunity. prinCiple 2: struCture the BOarD tO aDD value As at the date of this report, 57% of the organisation were women (43% men); and 49% of senior executive positions were occupied by women (51% men). For this purpose, the Board defines a senior executive as a person who makes, or participates in the making of, decisions that affect the whole or a substantial part of the business or has the capacity to affect significantly the company’s financial standing. This therefore includes all senior management and senior executive designated positions as well as senior specialised professionals. No entity within the consolidated entity is a ‘relevant employer’ for the purposes of the Workplace Gender Equality Act 2012 and therefore no Gender Equality Indicators to be disclosed. reCOmmenDatiOn 2.1 - the BOarD Of a listeD entity shOulD: (a) have a nOminatiOn COmmittee whiCh: (1) has at least three memBers, a maJOrity Of whOm are inDepenDent DireCtOrs; anD (2) is ChaireD By an inDepenDent DireCtOr, anD DisClOse: (3) the Charter Of the COmmittee; (4) the memBers Of the COmmittee; anD reCOmmenDatiOn 1.6 - a listeD entity shOulD (a) have anD DisClOse a prOCess fOr periODiCally evaluating the perfOrmanCe Of the BOarD, its COmmittees anD inDiviDual DireCtOrs; anD (B) DisClOse, in relatiOn tO eaCh repOrting periOD, whether a perfOrmanCe evaluatiOn was unDertaken in the repOrting periOD in aCCOrDanCe with that prOCess. The company does not currently have a formal process for evaluating the performance of the Board, its committees or individual directors. The Board conducts an introspective annual discussion of its performance on a collective basis to identify general aspects of its performance that could be improved upon, and such analysis includes the roles played by each Board member. Such reviews therefore encapsulate collective discussion around the performance of individual Board members, their roles on specific projects during the financial year, and where relevant, how their role could be modified or suggestions for individual development or performance improvement for the future. Until such time as the company expands to justify an expansion of Board members, the Board is of the current opinion that such performance evaluation is suitable for the company. reCOmmenDatiOn 1.7 - a listeD entity shOulD (a) have anD DisClOse a prOCess fOr periODiCally evaluating the perfOrmanCe Of its seniOr exeCutives; anD (B) DisClOse, in relatiOn tO eaCh repOrting periOD, whether a perfOrmanCe evaluatiOn was unDertaken in the repOrting periOD in aCCOrDanCe with that prOCess. The Board conducts an annual performance assessment of the CEO against agreed performance measures determined at the start of the year. The CEO undertakes the same assessments of senior executives. In assessing the performance of the individual, the review includes consideration of the senior executive’s function, individual targets, group targets, and the overall performance of the company. Such reviews are conducted during the first quarter of a new financial year. (5) as at the enD Of eaCh repOrting periOD, the numBer Of times the COmmittee met thrOughOut the periOD anD the inDiviDual attenDanCes Of the memBers at thOse meetings; Or (B) if it DOes nOt have a nOminatiOn COmmittee, DisClOse that faCt anD the prOCesses it emplOys tO aDDress BOarD suCCessiOn issues anD tO ensure that the BOarD has the apprOpriate BalanCe Of skills, knOwleDge, experienCe, inDepenDenCe anD Diversity tO enaBle it tO DisCharge its Duties anD respOnsiBilities effeCtively. The Board does not maintain a Nomination Committee as it is considered that the current size of the Board does not warrant the formal establishment of a separate committee. The Board therefore performs the function of such a committee which includes the identification of skills and competencies required for the Board and related committees, as well as nomination, selection and performance evaluation of non-executive directors. The Board does not actively manage succession planning and instead relies upon the Board’s extensive networking capabilities and/or executive recruitment firms to identify appropriate candidates when a Board vacancy occurs or when a vacancy is otherwise envisaged. Attributes of candidates put forward will be considered for ‘best-fit’ to the needs of the Board which are assessed at the time of the vacancy. reCOmmenDatiOn 2.2 - a listeD entity shOulD have anD DisClOse a BOarD skills matrix setting Out the mix Of skills anD Diversity that the BOarD Currently has Or is lOOking tO aChieve in its memBership. The Board’s skills matrix indicates the mix of skills, experience and expertise that are considered necessary at Board level for optimal performance of the Board. The matrix reflects the Board’s objective to have an appropriate mix of industry and professional experience including skills such as leadership, governance, strategy, finance, risk, IT, HR, policy development, international business and customer relationship. External consultants may be brought in with specialist knowledge to address areas where this is an attribute deficiency in the Board. reCOmmenDatiOn 2.3 - a listeD entity shOulD DisClOse: (a) the names Of the DireCtOrs COnsiDereD By the BOarD tO Be inDepenDent DireCtOrs; (B) if a DireCtOr has an interest, pOsitiOn, assOCiatiOn Or relatiOnship Of the type DesCriBeD in BOx 2.3 But the BOarD is Of the OpiniOn that it DOes nOt COmprOmise the inDepenDenCe Of the DireCtOr, the nature Of the interest, pOsitiOn, assOCiatiOn Or relatiOnship in questiOn anD an explanatiOn Of why the BOarD is Of that OpiniOn; anD (C) the length Of serviCe Of eaCh DireCtOr. Details of the Board of directors, their appointment dated, length of service as independence status is as follows: DireCtOr’s name Date appOinteD Ian Robertson 27 September 2005 length Of serviCe at repOrting Date 12 years inDepenDenCe status Independent Non- executive The Board may determine that a director is independent notwithstanding the existence of an interest, position, association or relationship of the kind identified in the examples listed under Recommendation 2.3 of the ASX Principles and Recommendations. reCOmmenDatiOn 2.4 - a maJOrity Of the BOarD Of a listeD entity shOulD Be inDepenDent DireCtOrs. There are currently 4 members on the company’s Board. Having regard to the company’s response to Recommendation 2.3 above, the majority of the Board are not independent. The Board considers that the company is reliant upon the business relationships and interests that it has with the non-independent directors in order to achieve its objectives at this time. Until such time as the company is of a size that warrants the appointment of additional non- executive and independent directors, the Board is of the view that the absence of a majority of independent directors is not an impediment to its operations, shareholders or other stakeholders reCOmmenDatiOn 2.5 - the Chair Of the BOarD Of a listeD entity shOulD Be an inDepenDent DireCtOr anD, in partiCular, shOulD nOt Be the same persOn as the CeO Of the entity. The roles of the Chair of the Board and Chief Executive Officer are separate. Ian Ingram is Chair of the Board and is not considered to be an independent director of the company. Mikael Borglund is the CEO. The Board acknowledges the ASX Recommendation that the Chair of the Board be an independent director, however the Board has formed the view that Mr Ingram is the most appropriate person to lead the Board given his experience and skills. reCOmmenDatiOn 2.6 - a listeD entity shOulD have a prOgram fOr inDuCting new DireCtOrs anD prOviDe apprOpriate prOfessiOnal DevelOpment OppOrtunities fOr DireCtOrs tO DevelOp anD maintain the skills anD knOwleDge neeDeD tO perfOrm their rOle as DireCtOrs effeCtively. New directors undertake an induction program coordinated by the Company Secretary that briefs and informs the director on all relevant aspects of the company’s operations and background. A director development program is also available to ensure that directors can enhance their skills and remain abreast of important developments. prinCiple 3: aCt ethiCally anD respOnsiBly reCOmmenDatiOn 3.1 - a listeD entity shOulD: (a) have a CODe Of COnDuCt fOr its DireCtOrs, seniOr exeCutives anD emplOyees; anD (B) DisClOse that CODe Or a summary Of it. The company maintains a code of conduct for its directors, senior executives and employees. In summary, the code requires that each person act honestly, in good faith and in the best interests of the company; exercise a duty of care; use the powers of office in the best interests of the company and not for personal gain, declare any conflict of interest; safeguard company’s assets and information and undertake any action that may jeopardise the reputation of company. That code is available on the company’s website. prinCiple 4: safeguarD integrity in COrpOrate repOrting reCOmmenDatiOn 4.1 - the BOarD Of a listeD entity shOulD: (a) have an auDit COmmittee whiCh: (1) has at least three memBers, all Of whOm are nOn-exeCutive DireCtOrs anD a maJOrity Of whOm are inDepenDent DireCtOrs; anD (2) is ChaireD By an inDepenDent DireCtOr, whO is nOt the Chair Of the BOarD, anD DisClOse: (3) the Charter Of the COmmittee; (4) the relevant qualifiCatiOns anD experienCe Of the memBers Of the COmmittee; anD (5) in relatiOn tO eaCh repOrting periOD, the numBer Of times the COmmittee met thrOughOut the periOD anD the inDiviDual attenDanCes Of the memBers at thOse meetings; Or (B) if it DOes nOt have an auDit COmmittee, DisClOse that faCt anD the prOCesses it emplOys that inDepenDently verify anD safeguarD the integrity Of its COrpOrate repOrting, inCluDing the prOCesses fOr the appOintment anD remOval Of the external auDitOr anD the rOtatiOn Of the auDit engagement partner. 14 cORpORATE GOvERNANcE sTATEmENT 2018 15 Beyond InternatIonal AnnuAl RepoRt 2018The Board maintains a combined Audit and Risk Committee, the members of which are:- DireCtOr’s name Anthony Lee – Chair exeCutive status inDepenDenCe status Non-Executive Not independent Ian Ingram Non-Executive Not independent The majority of the Committee members and the Chair are not independent. The current size of the Board does not allow for this recommendation to be met. obligations. Where any such person is of any doubt as to whether they possess information that could be classified as market sensitive, they are required to notify the Company Secretary immediately in the first instance. The Company Secretary is required to consult with the CEO in relation to matters brought to his or her attention for potential announcement. Generally, the CEO is ultimately responsible for decisions relating to the making of market announcements. The Board is required to authorise announcements of significance to the company. No member of the company shall disclose market sensitive information to any person unless they have received acknowledgement from the ASX that the information has been released to the market. Details of the qualifications and experience of the members of the Committee is detailed in the ‘Information of directors’ section of the Directors’ report. prinCiple 6: respeCt the rights Of seCurity hOlDers The Charter of the Committee is available at the company’s website. The number of Committee meetings held and attended by each member is disclosed in the ‘Meetings of directors’ section of the Directors’ report. reCOmmenDatiOn 4.2 - the BOarD Of a listeD entity shOulD, BefOre it apprOves the entity’s finanCial statements fOr a finanCial periOD, reCeive frOm its CeO anD CfO a DeClaratiOn that, in their OpiniOn, the finanCial reCOrDs Of the entity have Been prOperly maintaineD anD that the finanCial statements COmply with the apprOpriate aCCOunting stanDarDs anD give a true anD fair view Of the finanCial pOsitiOn anD perfOrmanCe Of the entity anD that the OpiniOn has Been fOrmeD On the Basis Of a sOunD system Of risk management anD internal COntrOl whiCh is Operating effeCtively. For the financial year ended 30 June 2018 and the half-year ended 31 December 2017, the company’s CEO and CFO provided the Board with the required declarations. reCOmmenDatiOn 4.3 - a listeD entity that has an agm shOulD ensure that its external auDitOr attenDs its agm anD is availaBle tO answer questiOns frOm seCurity hOlDers relevant tO the auDit. The audit engagement partner attends the AGM and is available to answer shareholder questions from shareholders relevant to the audit. prinCiple 5: make timely anD BalanCeD DisClOsure reCOmmenDatiOn 5.1 - a listeD entity shOulD (a) have a written pOliCy fOr COmplying with its COntinuOus DisClOsure OBligatiOns unDer the listing rules; anD (B) DisClOse that pOliCy Or a summary Of it. The company maintains a written policy that outlines the responsibilities relating to the directors, officers and employees in complying with the company’s disclosure reCOmmenDatiOn 6.1 - a listeD entity shOulD prOviDe infOrmatiOn aBOut itself anD its gOvernanCe tO investOrs via its weBsite. The company maintains information in relation to governance documents, directors and senior executives, Board and committee charters, annual reports, ASX announcements and contact details on the company’s website. reCOmmenDatiOns 6.2 anD 6.3 A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors (6.2). A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders (6.3). In order for the investors to gain a greater understanding of the company’s business and activities, the company schedules regular interactions between the CEO, CFO and/ or Managing Director where it engages with institutional and private investors, analysts and the financial media. These meetings are not held within a four week blackout period in advance of the release of interim or full-year results. The company encourages shareholders to attend its AGM and to send in questions prior to the AGM so that they may be responded to during the meeting. It also encourages ad hoc enquiry via email which are responded to. Written transcripts of the meeting are made available on the company’s website. reCOmmenDatiOn 6.4 - a listeD entity shOulD give seCurity hOlDers the OptiOn tO reCeive COmmuniCatiOns frOm, anD senD COmmuniCatiOns tO, the entity anD its seCurity registry eleCtrOniCally. The company engages its share registry to manage the majority of communications with shareholders. Shareholders are encouraged to receive correspondence from the company electronically, thereby facilitating a more effective, efficient and environmentally friendly communication mechanism with shareholders. Shareholders not already receiving information electronically can elect to do so through the share registry, Computershare Australia Limited at https://www-au.computershare.com/investor/?gcc=au. prinCiple 7: reCOgnise anD manage risk reCOmmenDatiOns 7.1 & 7.2 The board of a listed entity should: (a) have a committee or committees to oversee risk, each of which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework (7.1). The board or a committee of the board should: (a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and (b) disclose, in relation to each reporting period, whether such a review has taken place (7.2). The Board maintains a combined Audit and Risk Committee. The members of the Committee are detailed in Recommendation 4.2 above. The charter of the Risk Committee can be found on the company’s website. The Audit and Risk Committee reviews the company’s risk management framework annually to ensure that it is still suitable to the company’s operations and objectives and that the company is operating within the risk parameters set by the Board. As a consequence of the last review undertaken for the year ended 30 June 2018, there were no significant recommendations made. The Board acknowledges that it has not followed the ASX Recommendations in relation to the number of members and independence due to the size of the Board. The company maintains internal controls which assist in managing enterprise risk, and these are reviewed as part of the scope of the external audit, with the auditor providing the Board with commentary on their effectiveness and the need for any additional controls. The Managing Director and CEO are responsible for monitoring operational risk, ensuring all relevant insurances are in place, and ensuring that all regulatory and compliance obligations of the company are satisfied. reCOmmenDatiOn 7.3 - a listeD entity shOulD DisClOse: (a) if it has an internal auDit funCtiOn, hOw the funCtiOn is struCtureD anD what rOle it perfOrms; Or (B) if it DOes nOt have an internal auDit funCtiOn, that faCt anD the prOCesses it emplOys fOr evaluating anD COntinually imprOving the effeCtiveness Of its risk management anD internal COntrOl prOCesses. The company does not have a dedicated internal audit function. The responsibility for risk management and internal controls lies with both the Managing Director and CFO who continually monitor the company’s internal and external risk environment. Necessary action is taken to protect the integrity of the company’s books and records including by way of design and implementation of internal controls, and to ensure operational efficiencies, mitigation of risks, and safeguard of company assets. reCOmmenDatiOn 7.4 - a listeD entity shOulD DisClOse whether it has any material expOsure tO eCOnOmiC, envirOnmental anD sOCial sustainaBility risks anD, if it DOes, hOw it manages Or intenDs tO manage thOse risks. Refer to the company’s Annual Report for disclosures relating to the company’s material business risks (including any material exposure to economic, environmental or social sustainability risks). Refer to commentary at Recommendations 7.1 and 7.2 for information on the company’s risk management framework. prinCiple 8: remunerate fairly anD respOnsiBly reCOmmenDatiOn 8.1 - the BOarD Of a listeD entity shOulD: (a) have a remuneratiOn COmmittee whiCh: (1) has at least three memBers, a maJOrity Of whOm are inDepenDent DireCtOrs; anD (2) is ChaireD By an inDepenDent DireCtOr, anD DisClOse: (3) the Charter Of the COmmittee; (4) the memBers Of the COmmittee; anD (5) as at the enD Of eaCh repOrting periOD, the numBer Of times the COmmittee met thrOughOut the periOD anD the inDiviDual attenDanCes Of the memBers at thOse meetings; Or (B) if it DOes nOt have a remuneratiOn COmmittee, DisClOse that faCt anD the prOCesses it emplOys fOr setting the level anD COmpOsitiOn Of remuneratiOn fOr DireCtOrs anD seniOr exeCutives anD ensuring that suCh remuneratiOn is apprOpriate anD nOt exCessive. The Board maintains a combined Nomination and Remuneration Committee. The members of the Committee are detailed below. DireCtOr’s name exeCutive status inDepenDenCe status Ian Robertson – Chair Non-Executive Independent Anthony Lee Non-Executive Not independent Ian Ingram Non-Executive Not independent Details of the qualifications and experience of the members of the Committee is detailed in the ‘Information of directors’ section of the Directors’ report. The Remuneration Committee oversees remuneration policy and monitors remuneration outcomes to promote the interests of shareholders by rewarding, motivating and retaining employees. The committee’s charter sets out the roles and responsibilities, composition and structure of the Committee and is available on the company’s website. The number of Committee meetings held and attended by each member is disclosed in the ‘Meetings of directors’ section of the Directors’ report. 16 cORpORATE GOvERNANcE sTATEmENT 2018 17 Beyond InternatIonal AnnuAl RepoRt 2018 The Board acknowledges that it has not followed the ASX Recommendations in relation to the number of members and independence due to the size of the Board. reCOmmenDatiOn 8.2 - a listeD entity shOulD separately DisClOse its pOliCies anD praCtiCes regarDing the remuneratiOn Of nOn- exeCutive DireCtOrs anD the remuneratiOn Of exeCutive DireCtOrs anD Other seniOr exeCutives. Non-executive directors are remunerated by way of cash fees, superannuation contributions and non-cash benefits in lieu of fees. The level of remuneration reflects the anticipated time commitments and responsibilities of the position. Performance based incentives are not available to non-executive directors. Executive directors and other senior executives are remunerated using combinations of fixed and performance based remuneration. Fees and salaries are set at levels reflecting market rates and performance based remuneration is linked directly to specific performance targets that are aligned to both short and long term objectives. Further details in relation to the company’s remuneration policies are contained in the Remuneration Report, within the Directors’ report. reCOmmenDatiOn 8.3 - a listeD entity whiCh has an equity-BaseD remuneratiOn sCheme shOulD: (a) have a pOliCy On whether partiCipants are permitteD tO enter intO transaCtiOns (whether thrOugh the use Of Derivatives Or Otherwise) whiCh limit the eCOnOmiC risk Of partiCipating in the sCheme; anD (B) DisClOse that pOliCy Or a summary Of it The use of derivatives or other hedging arrangements for unvested securities of the company or vested securities of the company which are subject to escrow arrangements is prohibited. Where a director or other senior executive uses derivatives or other hedging arrangements over vested securities of the company, this will be disclosed. Wow, That’s Amazing 18 cORpORATE GOvERNANcE sTATEmENT 2018 19 Beyond InternatIonal AnnuAl RepoRt 2018boarD of Directors Directors’ report mikael BOrglunD managing DireCtOr anD CeO BBus, Ca A founding director of Beyond International in 1984, Mikael Borglund became Managing Director of the Beyond International Limited Group of companies in 1991 having been responsible for production, international sales and finance. During an outstanding career in the film and television industry Mikael has executive produced a number of Australian award winning feature films including Kiss Or Kill (1996), Lantana (2001), and James Cameron’s Deepsea Challenge (2014). Mikael has been Executive Producer of hundreds of hours of television for broadcasters around the globe. His credits include a number of internationally successful shows including, MythBusters, Stingers, Good Guys/Bad Guys, Halifax Fp, Deepsea Challenge, Motown Magic and the animated series Beat Bugs. A highly regarded member of the Australian film and television industry, Mikael was elected to the council of the Screen Producers Association of Australia (SPAA) in 1994, and appointed to the Board of the Australian Film Institute in 1997 – 2005. ian rOBertsOn nOn-exeCutive DireCtOr aO faiCD Ian Robertson is a corporate, regulatory and media lawyer and the National Managing Partner of national law firm Holding Redlich. He is also the President of the Board of the Victorian Government screen agency Film Victoria. His former appointments include Deputy Chair of the Australian Government screen agency Screen Australia, board member of the Australian Broadcasting Authority, Director and Chair of Ausfilm, Director and Deputy Chair of Film Australia Limited, and Director of the predecessor agency to Film Victoria, Cinemedia. Mr Robertson is also a Fellow of the Australian Institute of Company Directors. He was appointed as an Officer in the General Division of the Order of Australia on 26 January 2018 for distinguished service to the arts, particularly the Australian film industry and screen production sector, and to the law. ian ingram Chairman Ba, BsC (eCOn) (hOns), Barrister at law Mr Ingram was the founding Chairman of Beyond International Limited when it was formed in September 1986 and is currently the Non Executive Chairman. During his tenure, Beyond has emerged as one of the world’s leading film and television production, sales and distribution organisations. anthOny hsien pin lee nOn-exeCutive DireCtOr B.a. prinCetOn university new Jersey usa, mBa the Chinese university Of hOng kOng Mr Lee is a private investor and a Director of Aberon Pty Limited, his investment company. Prior to moving to Sydney from Hong Kong in 1987, Mr Lee was a corporate finance executive with a leading British merchant bank. yOur DireCtOrs present their repOrt On the COmpany anD its COntrOlleD entities (“COnsOliDateD entity” Or “grOup”) fOr the finanCial year enDeD 30 June 2018. 1. DireCtOrs The names of Directors in office at any time during or since the end of the financial year are; IAn InGRAM Non-Executive Chairman MIkAeL BORGLunD Managing Director AnThOny Lee Non-Executive Director IAn ROBeRTSOn Non-Executive Director Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. 2. COmpany seCretary The following person held the position of Company Secretary during and at the end of the financial year: Mr. Paul Wylie, joined Beyond on the 7 November 2013 and was appointed Company Secretary on 7 November 2013. Mr. Wylie is also the General Manager of Finance for the Group. 3. prinCipal aCtivities Of the grOup The principal activities of the group during the financial year were television program production, international sales of television programs, home entertainment distribution/sales and digital marketing. There was no significant change in the nature of those activities during the financial year. 4. Operating results The consolidated loss attributable to members of the Company for the financial year was $707,000 (2017: $7,469,000). 5. DiviDenDs No dividends have been declared in relation to the 2018 financial year. 6. review Of OperatiOns Revenue from operations for the year remained steady at $86,311,000 to $86,392,000 with operating expenses reducing by $9,329,000 or 10.5% year on year. Net loss after tax before minority interests is $707,000 for the 2018 financial year – this compares favourably to the loss after tax of $7,469,000 reported for the 2017 financial year. hOme entertainment segment (Bhe) Revenue increased to $10,241,000 (2017: $2,113,000) compared to the corresponding 12-month period. In fiscal year 2017, BHE reached agreement with a number of customers to adopt consignment based trading terms. The impact of this change on BHE’s operations in the period, was to complete a buy-back of all inventory from those customers. BHE terms of trade are now on a consignment basis with all significant customers and aligned with the majority of the home entertainment industry. BHE recorded a loss of $1,331,000 in the fiscal 2018 year compared to a loss of $8,182,000 in the 2017 year. BHE have adopted an aggressive write-off policy in relation to its content assets, with depreciation and amortisation for the 2018 financial year of $2,931,000. The EBITDA contribution was $1,597,000 for 2018 compared to a negative EBITDA of $5,549,000 in 2017. The amortisation policy will mean that BHE will report a negative EBIT in the 2019 financial year, but is expected to be cash flow positive. The total physical DVD market contracted 17% for the twelve-months ending 30 June 2018. To complement our existing portfolio of content, BHE in fiscal 2019 will launch the following event level programming: • Pokémon Movie 21: The Power of Us!; • Pokémon Season 21: Sun & Moon - Ultra Adventures; • The 2018 AFL Grand Final; and • The 2018 National Rugby League (NRL) Grand Final. Net cash flow from operating activities was $6,460,000 (2017: $5,887,000). A revolving bill facility of $6,000,000 was secured through St George to fund Australian tax credits relating to the Producer Offset and Post, Digital and Visual Effects Offset (PDV) of which $1,837,000 was drawn as at 30 June 2018. televisiOn prODuCtiOns anD COpyright segment Television production external revenue fell by $8,513,000 or 16.7% to $42,458,000. In 2018 the net “copyright income” from the further exploitation of the programs by Beyond Distribution is $4,324,000 compared to $4,301,000 in 2017. Segment operating EBIT for the 12-month period decreased 21.3% to $5,954,000 (2017: $7,566,000). The television series produced for the US market during the year includes returning titles MythBusters, with new hosts, Deadly Women (series 11 and 11), My Lottery Dream Home (series 4 and 5) and Deadly Intelligence. New commissions in the year include Akakor and MythBusters Junior. New programs produced by 7Beyond include Gingerbread House and Smoothini. Australian program commissions during the period include 2018 Santos Tour Down Under, Love It Or List It Australia 2, A Team Of Champions, and season 11 and season 12 of Selling Houses Australia. The 7Beyond joint venture result for the current year includes a 50% share of net operating profits of $10,000. This is an improvement to the share of costs in 2017 of $55,000. The venture has received a fifth and sixth commission from HGTV for My Dream Lottery Home in the 2018 financial year, with a seventh season expected to be commissioned in 2019. 20 BOARD Of DIREcTORs 2018 21 Beyond InternatIonal AnnuAl RepoRt 2018tv anD film DistriButiOn segment (BeyOnD DistriButiOn) Segment revenue has increased by $1,707,000 or 7.8% to $23,584,000 compared to the corresponding 12 month period (2017: $21,877,000). The segment EBIT for the twelve months increased by 80% to $1,522,000 from $845,000 in 2017 (excluding impairment charges booked in 2017). During the year successful sales were achieved for in house produced series’, which include MythBusters and Deadly Women. The most successful third party products sold were Highway Thru Hell, Love It Or List It and Heavy Rescue: 401. Digital marketing segment (BeyOnD D) Segment revenue has decreased by $1,068,000 or 10.1% to $9,481,000 compared to the corresponding 12 month period (2017: $10,549,000). The decline in revenue was due to the close of 3Di in June 2017. The division reported a profit of $298,000 for the 12 months compared to a loss of $722,000 before impairment and restructuring costs in 2017. The year involved the final full exit from the 3Di data side of the business and a refocusing on the emerging AI Voice side of the business in general and the production of 3rd party Google Assistants in particular. This refocus led to an onboarding of many new exciting clients including KMART, Target, Suncorp and Woolmark as well as a deepening of relationships with Officeworks and the Finder Group. FIRST quickly positioned itself as a sought after market leader in the AI Voice space not only locally but also on the international stage, particularly the USA. This market position has led to a further enhancement in FIRST’s relationship with Google. In addition to the new voice AI, FIRST continues to be the leader in search and conversion consulting in the New Zealand market as well as continuing to produce quality large scale digital assets for its existing client base in Australia especially the Dymocks Group of companies, Bank of Queensland, Laser Sight and Blue Mountains City Council. 9. likely DevelOpments anD expeCteD results Of OperatiOns The Beyond International Group of companies operates in challenging and competitive sectors. This makes it difficult to detail expected results of operations for the 2019 financial year. The television production and distribution segments operate in an international environment and are subject to economic fluctuations that occur in the different markets in which they operate. The growth of the OTT (Over The Top) platforms as a significant method of content distribution to the consumer has proved disruptive to the traditional free to air and cable platforms. This results in both opportunities and challenges for the Group – to date this disruption has proved somewhat of an opportunity as the Group has achieved significant sales to both OTT platforms and traditional platforms during the year, with productions commissioned by Facebook and Snapchat. Programming concepts are currently being considered by Netflix and YouTube Red. Long running brands Selling Houses Australia, MythBusters and Deadly Women provide a solid foundation for Beyond Productions in the 2018 financial year. New productions including a second season of Love It or List It Australia (Lifestyle Channel) and Gingerbread Giants (The Food Network) have long running series potential. Program development continues to target our strong relationships both in the United States and Australia and covers both traditional cable and network buyers as well as all OTT platforms. The highly rated 7Beyond series My Lottery Dream Home is in production of season 5 for HGTV and a further season has also recently been agreed. A number of funded pilots and network presentations are currently in production or under consideration. Beyond Distribution is looking forward to a strong year with the release of Wow, That’s Amazing, produced for Super RTL in Germany. The division will be launching season two of the children’s series Beat Bugs and the first series of Motown Magic to broadcasters around the world in November 2018. 7. signifiCant Changes in the state Of affairs Highly successful third party titles such as Highway Thru Hell, Heavy Rescue: 401 and Love It or List It will also have new series launched internationally in this coming financial year. There were no significant changes in the state of affairs of the Group during the financial year ended 30 June 2018. 8. matters suBsequent tO the enD Of the finanCial year Subsequent to 30 June 2018, the Group received a waiver in relation to the breaches to its banking covenants. No other 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 years. Home Entertainment (BHE) face the challenges of a continually declining physical DVD market. The aggressive amortisation policy will likely mean that BHE will operate at a loss for 2019, but is expected to be cash flow positive. Beyond D will continue to develop technology opportunities with Google, growing the number of applications to maximise voice activated user engagements. Over the next twelve months the Company’s focus will be to further strengthen the financial performance in all operating segments of the Group to generate surplus cash to invest in working capital and new content. The focus will be on organic growth in the production and distribution business segments. DIREcTORs’ REpORT 2018 23 Nyoongar Footy Magic Grudge Race 22 Beyond InternatIonal AnnuAl RepoRt 201810. infOrmatiOn On DireCtOrs & COmpany seCretary DireCtOr qualifiCatiOns & experienCe speCial respOnsiBilities DireCtOrs’ interests in shares Of BeyOnD internatiOnal limiteD I INgRAM BA, Bsc(Econ), Honours Barrister at Law Chairman of Winchester Investments Group Pty Ltd and Sealion Media Ltd as well as Chairman of various private venture capital and investment companies. Member of the Board since 1986 Chairman, member of the Audit Committee, member of the Remuneration Committee, and Chairman of the Nomination Committee. 19,487,059 direct/indirect M BORgLUND B.Bus, CA Extensive management & finance experience. Former member of the board of the Australian Film Institute. Member of the Board since 1990 A LEE BA, MBA Director of Aberon Pty Ltd, a private investment company, a substantial shareholder in the company. Member of the Board since 1990 IAN ROBERTsON LL.B. BComm, FAICD PAUL WYLIE BA Acctg, CPA A media and corporate lawyer who heads the media and entertainment practice of national law firm Holding Redlich and is the Managing Partner of the firm’s Sydney office. He is President of the Board of the Victorian Government screen agency Film Victoria, and the former Deputy Chair of the Australian Government film agency Screen Australia. Member of the Board since 2006 Extensive media finance experience with over 30 years in broadcast and subscription television and television production industries. Company Secretary roles for a number of entities during this period Managing Director, CEO and member of the Nomination Committee. 3,150,949 direct/indirect Non-Executive Director, Chairman of the Audit Committee, member of the Remuneration Committee, and member of the Nomination Committee. 5,474,997 direct/indirect Non-Executive Director, Chairman of the Remuneration Committee and member of the Nomination Committee. 110,000 direct/indirect General Manager, Finance Company Secretary. 2,000 indirect The particulars of Directors’ interests in shares are as at the date of this report. 11. DireCtOrs’ meetings The numbers of meetings of the Company’s Board of Directors and of each Committee held during the financial year ended 30 June 2018, and the number of meetings attended by each Director was: BOarD Of DireCtOrs meetings auDit COmmittee meetings remuneratiOn COmmittee meetings nOminatiOn COmmittee meetings Director I Ingram M Borglund A Lee I Robertson number eligible to attend number attended number eligible to attend number attended number eligible to attend number attended number eligible to attend number attended 9 9 9 9 9 9 9 9 2 - 2 - 2 - 2 - 2 - 2 2 2 - 2 2 2 2 2 2 2 2 2 2 12. inDemnifiCatiOn anD insuranCe Of DireCtOrs anD OffiCers The Company has entered into agreements to indemnify all Directors of the Company named in section 1 of this report, and current and former executive officers of the Group, against all liabilities to persons (other than the Company or a related body corporate) which arise out of the performance of their normal duties as Director or executive officer, unless the liability relates to conduct involving a lack of good faith. The Group has agreed to indemnify the Directors and executive officers against all costs and expenses incurred in defending an action that falls within the scope of the indemnity and any resulting payments. The Group paid insurance premiums totalling $21,700 (2017: $16,653) in respect of Directors’ and officers’ liability insurance. The policy does not specify the premium of individual Directors and executive officers. The directors’ and officers’ liability insurance provides cover against all costs and expenses involved in defending legal actions, and any resulting payments arising from a liability to persons (other than the Company or a related body corporate) incurred in their position as Director or executive officer, unless the conduct involves a wilful breach of duty or an improper use of inside information or position to gain advantage. 24 DIREcTORs’ REpORT 2018 Gym Stars 25 Beyond InternatIonal AnnuAl RepoRt 201813. remuneratiOn repOrt (auDiteD) Current rates effective 1 October 2013 paid to Non-Executive Directors are: a) remuneratiOn pOliCy The broad approach by the Group to remuneration is to ensure that remuneration packages: • properly reflect individual’s duties and responsibilities; Chairman $188,714 p.a. Non-Executive Director $50,000 p.a. • are competitive in attracting, retaining and motivating Additional Duties staff of the highest quality; and • uphold the interests of shareholders. The remuneration policies adopted are considered to have contributed to the growth of the Group’s profits and shareholder benefit by aligning remuneration with the performance of the Group. B) remuneratiOn apprOaCh – nOn-exeCutive DireCtOrs Non-Executive Directors are remunerated from a maximum aggregate amount of $350,000 per annum. Chairman of a board committee $10,000 p.a. Member of a board committee $5,000 p.a. The Board’s policy is to remunerate Non-Executive Directors at market rates from comparable companies having regard to the time commitments and responsibilities assumed. There are no termination payments to Non-Executive Directors on retirement from office other than payments relating to their accrued superannuation entitlements. C) COntraCtual arrangements – key management persOnnel name position Duration of Contract period of notice to terminate the Contract M Borglund Managing Director No Fixed term Either party may terminate on twelve months notice J Luscombe General Manager - Productions & Senior Vice President No Fixed term Either party may terminate on twelve months notice P Tehan T McGee General Manager - Legal & Business Affairs General Manager - Business Development No Fixed term One month notice given by either party No Fixed term One month notice given by either party M Murphy General Manager - Distribution No Fixed term Three months notice given by either party P Wylie General Manager - Finance & Company Secretary P Maddison J Ward General Manager - Home Entertainment General Manager - Digital Marketing No Fixed term Three months notice given by either party No Fixed term One month notice given by either party No Fixed term Three months notice given by either party The contracts referred to are currently on foot and variously part performed as to the duration of them. The contracts are terminable by the Company in the event of serious misconduct or non-rectified breach. Only remuneration that is due but unpaid up to the date of termination and normal statutory benefits will be paid in these circumstances. 26 DIREcTORs’ REpORT 2018 Buyers Bootcamp Xxxx 27 Beyond InternatIonal AnnuAl RepoRt 2018D) key management persOnnel remuneratiOn The Board undertakes an annual review of its performance and the performance of the Board Committees against goals set at the start of the financial year. Any performance related bonuses are available to executives of the Company and thus no bonuses are payable to Non-Executive Directors. Any performance related bonuses will be based on the divisional net profit before tax exceeding the annual budget approved by the Board prior to the commencement of the relevant financial year by a minimum percentage, and achieving pre-agreed KPI’s. Details of the nature and the remuneration of each Director of Beyond International Limited and each of the seven executives with the greatest authority for the strategic direction and management of the Company and the Group are set out in the following tables. DireCtOrs Of BeyOnD internatiOnal limiteD 2018 name salary & fees BOnus nOn- mOnetary Benefits pOst-emplOyment Benefits (superannuatiOn) share BaseD payments Other lOng term Benefits (leave) tOtal share BaseD payments % Of tOtal M Borglund $766,469 I Ingram A Lee $188,714 $54,795 I Robertson $54,795 tOtal $1,064,773 - - - - - - - - - - $20,049 $67,526 - $854,044 - $5,205 $5,205 - - - - - - $188,714 $60,000 $60,000 $30,459 $67,526 - $1,162,758 0% 0% 0% 0% 0% Mikael Borglund’s bonus as a percentage of his salary and fees is 0% (2017: 13.3%). 2017 name salary & fees BOnus nOn- mOnetary Benefits pOst-emplOyment Benefits (superannuatiOn) share BaseD payments Other lOng term Benefits (leave) tOtal share BaseD payments % Of tOtal M Borglund $751,440 $100,000 I Ingram $188,025 A Lee $54,795 I Robertson $54,795 - - - tOtal $1,049,055 $100,000 - - - - - $19,616 $70,189 - $5,205 $5,205 - - - - - - - $941,245 $188,025 $60,000 $60,000 $30,026 $70,189 - $1,249,270 0% 0% 0% 0% 0% Mikael Borglund is the only Executive Director employed by Beyond International Limited. For the 2018 financial year the Group did not exceed the budget by the set criteria and as such Mikael Borglund was not entitled to a performance bonus. During the 2017 financial year the Group did not exceed the budget by the set criteria and as such Mikael Borglund was not entitled to a performance bonus, however the Board, at its discretion granted Mikael Borglund a one-off bonus of $100,000. exeCutive OffiCers’ remuneratiOn 2018 name salary & fees BOnus J Luscombe $581,142 $358,019 P Wylie $259,443 T McGee $253,152 M Murphy $319,677 P Tehan $236,675 P Maddison $347,615 J Ward tOtal 2017 name $227,766 $2,225,470 $358,019 salary & fees BOnus J Luscombe $567,171 $555,370 P Wylie $254,356 T McGee $248,189 M Murphy $288,772 P Tehan $232,035 P Maddison $344,912 J Ward tOtal $223,300 $2,158,735 $555,370 nOn- mOne- tary Benefits pOst- emplOyment Benefits (super- annuatiOn) Other lOng term Benefits (leave) termin- atiOn Benefits share BaseD pay- ments tOtal share BaseD payments % Of tOtal - - - - - - - - $20,049 $8,437 $20,049 $2,620 $20,049 $14,166 $16,832 ($156) $20,049 $12,608 $20,049 $13,549 $20,049 ($19,509) $137,126 $31,715 - - - - - - - - - - - - - - - $967,647 $282,112 $287,367 $336,353 $269,332 $381,213 $228,306 - $2,752,330 0% 0% 0% 0% 0% 0% 0% 0% nOn- mOne- tary Benefits pOst- emplOyment Benefits (super- annuatiOn) Other lOng term Benefits (leave) termin- atiOn Benefits share BaseD pay- ments tOtal share BaseD payments % Of tOtal - - - - - - - - $19,616 $33,374 $19,616 $8,038 $19,616 ($20,217) $15,800 $630 $19,616 $7,973 $19,616 $13,499 $19,616 $8,236 $133,495 $51,533 - - - - - - - - - - - - - - - $1,175,531 $282,010 $247,588 $305,202 $259,624 $378,027 $251,152 - $2,899,134 0% 0% 0% 0% 0% 0% 0% 0% - - - - - - - - - - - - John Luscombe’s bonus as a percentage of his salary and fees is 61.6% (2017: 97.9%). The bonus calculation is based on the financial performance of programs created and produced, and divisional net profit before tax performance to budget. During the 2018 financial year, the Group did not exceed the budget by the set criteria or for the individual divisions. As such no executives, other than John Luscombe were entitled to a performance bonus. This has been received and is detailed above. In the 2017 financial year the budget criteria was not met and consequently those executives other than John Luscombe were not entitled to this bonus. 28 DIREcTORs’ REpORT 2018 29 Beyond InternatIonal AnnuAl RepoRt 2018 exeCutive OffiCers’ sharehOlDings 2018 entity J Luscombe T McGee P Tehan P Maddison P Wylie M Murphy J Ward tOtal 2017 entity J Luscombe T McGee P Tehan P Maddison P Wylie M Murphy J Ward tOtal Opening BalanCe 1.07.17 nO. aCquireD (On mkt) nO. aCquireD (Off mkt) nO. aCquireD (ess) nO. DispOseD BalanCe 30.06.17 273,478 75,000 75,000 50,000 2,000 - - 475,478 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 273,478 75,000 75,000 50,000 2,000 - - 475,478 Opening BalanCe 1.07.16 nO. aCquireD (On mkt) nO. aCquireD (Off mkt) nO. aCquireD (ess) nO. DispOseD BalanCe 30.06.17 273,478 75,000 75,000 50,000 2,000 - - 475,478 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 273,478 75,000 75,000 50,000 2,000 - - 475,478 * The net change from the opening balance represents sale or purchase of shares during the year. Love It Or List It Australia 30 DIREcTORs’ REpORT 2018 31 Beyond InternatIonal AnnuAl RepoRt 2018transaCtiOns with Other relateD parties J Luscombe is a director of Ryzara Pty Ltd. The company has received payments for services rendered by J Luscombe during the year. These fees are included as part of the Executive Remuneration disclosed in Note 30 and the Director’s Report. vOting anD COmments maDe at the COmpany’s 2017 annual general meeting (agm) The company received 98.6% of “for” votes in relation to its remuneration report for the year ended 30 June 2017. The company did not receive any specific feedback at the AGM regarding its remuneration policy. BeyOnD internatiOnal emplOyee share plan The Board has adopted an employee share plan (note 27) under which employees and Directors of the Group may subscribe for shares in the Company using funds loaned to them by the Group. The Board has also adopted a share plan on substantially the same terms for consultants of the Group (Consultant Plan). The purpose of the Employee Share Plan is to: • assist in the retention and motivation of employees and Directors of the Group by providing them with a greater opportunity to participate as shareholders in the success of the group; and • create a culture of share ownership amongst the employees of the Group. The employee share plan was approved by shareholders at the Company’s extraordinary general meeting on 12th April 2006. 2,587,500 shares were originally issued under the Employee Share Plan to eligible employees and Directors and the Group has entered into loan agreements with participants to provide the funds necessary to subscribe for those shares. Shares have been issued in accordance with the Employee Share Plan rules. There are 1,525,000 shares still subject to the Employee Share Plan. Under the Employee Share Plan rules the Board of the Group has the power to decide which full time or permanent part- time employees and Directors of the Group will participate in the Employee Share Plan and the number of shares offered to each participant. The number of shares offered to be issued under the Employee Share Plan and Consultants Plan in a five year period must not exceed 5% of the total number of issued shares at the time of the offer, disregarding certain share issues. The shares granted under the Employee Share Plan may be subject to any restrictions the Board considers appropriate and the Board may implement any procedure the Board considers appropriate to restrict the disposal of shares acquired under the Employee Share Plan. The Board also has the power to vary or terminate the Employee Share Plan at any time, subject to the ASX Listing Rules and the Corporations Act 2001. Below are the key financial indicators for the previous 5 years. This concludes the remuneration report that has been audited. eBit 000s net prOfit 000s eps (Cents per share) nta (Cents per share) tOtal equity 000s DiviDenDs (Cents per share) 2014 2015 2016 2017 2018 8,837 5,964 5,553 (8,195) 354 7,975 5,885 5,317 (7,469) (707) 13.00 9.59 8.67 (12.18) (1.15) 62.48 62.19 61.37 44.37 42.67 44,158 44,009 43,326 32,085 30,919 9.00 10.00 10.00 2.00 0.00 32 DIREcTORs’ REpORT 2018 33 MythBusters Series 11 Beyond InternatIonal AnnuAl RepoRt 2018aUDitor’s inDepenDence DecLaration Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret St Sydney NSW 2000 Australia DECLARATION OF INDEPENDENCE BY MARTIN COYLE TO THE DIRECTORS OF BEYOND INTERNATIONAL LIMITED As lead auditor of Beyond International Limited for the year ended 30 June 2018, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Beyond International Limited and the entities it controlled during the financial year. Martin Coyle Partner BDO East Coast Partnership Sydney, 31 August 2018 22. auDitOrs inDepenDenCe DeClaratiOn A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is included on page 28 of the Directors’ Report. auDitOr Details BDO East Coast Partnership continues in office in accordance with section 327 of the Corporations Act 2001. This report is made in accordance with a resolution of the Board of Directors. For and on behalf of the Board Mikael Borglund Managing Director 31 August 2018 Sydney 14. tOtal numBer Of emplOyees 20. prOCeeDings On Behalf Of COmpany The total number of fulltime equivalent employees employed by the Group at 30 June 2018 was 113 as compared with 105 at 30 June 2017. 15. shares unDer OptiOn At the date of this report, there are no un-issued ordinary shares of Beyond International Limited under option. No person has applied for leave of court to bring proceedings on behalf of the Company or 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 any part of those proceedings. The Company was not a party to any such proceedings during the year. 21. nOn auDit serviCes During the year BDO, the Company’s auditor, delivered tax services and performed audits in relation to non- statutory submissions. The following fees for non-audit services were paid/payable to BDO and other BDO Network firms per note 5(c) during the year ended 30 June 2018: Tax compliance and other assurance services – $125,225 When considering BDO to provide additional services the Board considers the non-audit services provided to ensure it is satisfied that the provision of these non-audit services by the auditor is compatible with, and will not compromise the auditor independence requirements of the Corporations Act 2001. In particular it ensures that: • All non-audit services are reviewed and approved by the Audit Committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and • Non-audit services provided do not undermine the general principles relating to audit in a management or decision making capacity for the Company, acting as an advocate for the Company, or jointly sharing risks and rewards. 16. shares reDeemeD unDer the emplOyee share plan No shares have been redeemed from the Beyond International Limited employee share plan during or since the end of the financial year. No further shares have been approved by the Board of Directors under this plan. 17. envirOnmental regulatiOns The Group has assessed whether there are any particular or significant environmental regulations which apply to it and has determined that there are none. 18. COrpOrate gOvernanCe statement Please see the following URL of the company website page where the statement is located. http://www.beyond.com.au/corporate/ corporate-governance 19. rOunDing Of amOunts The Group is of a kind referred to in ASIC Corporations (Rounding in Financial Director’s Report) Instrument 2016/191, issued by the Australian Securities and Investment Commission, relating to the “rounding off” of amounts in the report. Amounts in the financial report have been rounded off in accordance with that Legislative instrument to the nearest thousand dollars, or in certain cases, to the nearest dollar. 34 DIREcTORs’ REpORT 2018 35 BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved 28 under Professional Standards Legislation, other than for the acts or omissions of financial services licensees. Beyond InternatIonal AnnuAl RepoRt 2018 financiaL statements 36 fINANcIAL sTATEmENTs 2018 Chasing Monsters 37 Beyond InternatIonal AnnuAl RepoRt 2018statement Of prOfit Or lOss anD Other COmprehensive inCOme fOr the year enDeD 30 June 2018 statement Of finanCial pOsitiOn as at 30 June 2018 Revenue from continuing operations Other income Share of profits of joint ventures accounted for using the equity method 5 (a) 5 (a) 16 Royalty expense Production costs Home entertainment direct costs Digital marketing direct costs Administration costs Employee benefits expense Finance costs (Reversals)/provisions Depreciation and amortisation expense Net foreign exchange loss Investment write off Loss on disposal of property, plant and equipment Share of loss of joint venture accounted for using the equity method 16 Profit/(loss) before income tax Income tax (expense)/benefit Loss after income tax for the year Other comprehensive income Items that may be reclassified subsequently to profit or loss: De-recognition of available for sale financial asset Changes in the fair value of available-for-sale financial assets Foreign currency translation Other comprehensive income for the year, net of tax Total comprehensive income for the year Loss is attributable to: Owners of Beyond International Limited Non-controlling interest Total comprehensive income for the year is attributable to: Owners of Beyond International Limited Non-controlling interest earnings per share attributable to the owners of Beyond International Limited Basic and diluted loss per share Dividends per share 7 24 nOtes COnsOliDateD entity 2017 $000's 86,379 2018 $000’s 86,431 6 (a) (1,287) 997 (1,173) (7,337) 303 10 174 - 13,159 13,364 33,273 42,038 6,416 6,640 5,010 7,899 5,237 5,402 14,760 13,911 261 (61) 184 99 6,781 5,921 164 - 1 - 542 423 40 55 114 (8,334) - - 62 62 423 (14) (47) 362 (1,111) (6,975) (707) (7,469) (466) 132 (1,173) (7,337) (645) (466) (7,107) 132 (1,111) (6,975) Cents (1.15) Cents (12.18) - 2.00 nOtes COnsOliDateD entity 2017 $000's 2018 $000’s ASSeTS CuRRenT ASSeTS Cash and cash equivalents Trade and other receivables Current tax receivables Inventories Other current assets Financial assets TOTAL CuRRenT ASSeTS nOn-CuRRenT ASSeTS Trade and other receivables Investments accounted for using the equity method Property plant and equipment Intangible assets Deferred tax assets Other non-current assets TOTAL nOn-CuRRenT ASSeTS TOTAL ASSeTS LIABILITIeS CuRRenT LIABILITIeS Trade and other payables Financial liabilities Employee benefits Current tax liabilities Other financial liabilities Other current liabilities Borrowings TOTAL CuRRenT LIABILITIeS nOn-CuRRenT LIABILITIeS Deferred tax liabilities Employee benefits Other financial liabilities Other non-current liabilities TOTAL nOn-CuRRenT LIABILITIeS TOTAL LIABILITIeS neT ASSeTS eQuITy Issued capital Reserves Accumulated losses Non-controlling interests TOTAL eQuITy 9 10 11 12 9 16 13 14 6(c) 11 15 12 17 6(d) 18 19 20 6(c) 17 18 19 7,256 7,645 27,780 25,704 62 116 2,943 3,624 13,073 14,048 - 62 51,114 51,199 1,835 6,825 414 2,048 4,750 89 7,867 313 2,414 4,870 943 7,421 17,003 22,786 68,117 73,984 6,414 8,324 161 - 3,691 3,419 187 261 2,399 2,373 20,171 15,607 1,837 5,744 34,860 35,727 1,364 218 600 155 2,337 1,183 287 2,340 2,362 6,173 37,197 41,900 30,919 32,085 21 34,018 34,018 331 269 (3,095) (2,333) (334) 132 30,919 32,085 The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. 38 fINANcIAL sTATEmENTs 2018 39 Beyond InternatIonal AnnuAl RepoRt 2018statement Of Changes in equity fOr the year enDeD 30 June 2018 statement Of Cash flOws fOr the year enDeD 30 June 2018 issueD Capital reserves $000’s $000's retaineD earnings/ (aCCumulateD lOsses) $000's nOn- COntrOlling interests $000's tOtal equity $000's tOtal $000's COnsOliDateD entity Balance at 01 July 2017 34,018 269 (2,333) 31,953 132 32,085 Loss for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year - - - - 62 62 (707) (54) (707) 8 (466) (1,173) - 8 (761) (699) (466) (1,165) Balance at 30 June 2018 34,018 331 (3,095) 31,253 (334) 30,919 Balance at 01 July 2016 33,991 Profit/(loss) for the year Other comprehensive income for the year, net of tax Other movements in reserves Total comprehensive income for the year - - - - (94) - 362 1 9,429 43,326 - 43,326 (7,469) (7,469) 132 (7,337) - - 362 1 - - 362 1 363 (7,469) (7,106) 132 (6,975) Transactions with owners in their capacity as owners: Dividends paid or provided for Employee share plan - 26 - - (4,294) (4,294) - (4,294) - 26 - 26 Balance at 30 June 2017 34,018 269 (2,333) 31,953 132 32,085 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. CASh FLOWS FROM OPeRATInG ACTIvITIeS Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received Finance costs paid Income tax paid COnsOliDateD entity nOtes 2018 2017 $000’s $000's 93,452 101,440 (86,369) (94,901) 20 45 (261) (383) (184) (513) net cash provided by operating activities 8(a) 6,460 5,887 CASh FLOWS FROM InveSTInG ACTIvITIeS Purchase of property, plant and equipment Investment in websites and databases Distribution guarantees paid Distribution guarantees recouped Prepaid royalties Prepaid royalties recouped Proceeds from disposal of property, plant and equipment Payment for investments and joint venture Investments in development projects net cash flows used in investing activities CASh FLOWS FROM FInAnCInG ACTIvITIeS (Repayment of)/proceeds from borrowings Proceeds from share issue Dividend paid net cash flows (used in)/provided by financing activities Net (decrease)/increase in cash held Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year (851) (1,133) - (131) (2,921) (2,913) 2,667 1,764 (1,399) (2,537) 1,153 2,044 9 8 (893) (341) (706) (2,858) (2,942) (6,097) (3,907) 5,744 - - 26 (4,294) (3,907) 1,476 (389) 1,266 7,645 6,379 7,256 7,645 27 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. 40 fINANcIAL sTATEmENTs 2018 41 Beyond InternatIonal AnnuAl RepoRt 2018notes to the financiaL statements for the year enDeD 30 jUne 2018 1. repOrting entity Beyond International Limited is a company limited by shares, incorporated and domiciled in Australia and whose shares are publicly traded on the Australian Securities Exchange. The financial report covers the consolidated entity of Beyond International Limited and its controlled entities (the Consolidated Entity and/or the group) as at and for the year ended 30 June 2018. The financial report of Beyond International Limited for the year ended 30 June 2018 was authorised for issue in accordance with a resolution of the Board of Directors on 31 August 2018. 2. statement Of COmplianCe The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001, as appropriate for profit oriented entities. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards, as issued by the International Accounting Standards Board (IASB). 3. signifiCant aCCOunting pOliCies This section sets out the significant accounting policies upon which the financial statements are prepared as a whole. Specific accounting policies are described in their respective notes to the financial statements. This section also shows information on new accounting standards, amendments and interpretations, and whether they are effective in the current or later years. The accounting policies have been consistently applied to all periods presented in these financial statements, unless otherwise stated. Basis Of preparatiOn The financial report has been prepared on an accruals basis and is based on historical costs, except where stated. The Consolidated Entity has not adopted a policy of revaluing its non- current assets on a regular basis. Non- current assets are revalued from time to time as considered appropriate by the directors and are not stated at amounts in excess of their recoverable amounts. These financial statements are presented in Australian dollars, which is the Company’s functional currency. rOunDing The Consolidated Entity is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Report) Instrument 2016/191 and in accordance with that Corporations Instrument, amounts in the directors’ report and the financial statements are rounded off to the nearest thousand, or in certain cases, the nearest dollar. Basis Of COnsOliDatiOn The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Beyond International Limited (‘company’ or ‘parent entity’) as at 30 June 2018 and the results of all subsidiaries for the year then ended. Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity 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 consolidated entity. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity 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 consolidated entity. 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. Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results in a deficit balance. Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity 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. A list of controlled entities is contained in note 28 to the financial statements. Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. fOreign OperatiOns Transactions denominated in a foreign currency are converted to Australian currency at the exchange rate at the date of the transaction. Foreign currency receivables and payables at the reporting date are translated at exchange rates at the reporting date. Exchange gains and losses are brought to account in determining the profit or loss for the year. Exchange gains and losses arising on forward foreign exchange contracts entered into as hedges of specific commitments are deferred and included in the determination of the amounts at which the transactions are brought to account. Specific hedging is undertaken in order to avoid or minimise possible adverse financial effects of movements in foreign exchange rates. If the hedging transaction is terminated prior to its maturity date and the hedged transaction is still expected to occur, deferral of any gains and losses which arose prior to termination continues, and those gains and losses are included in the measurement of the hedged transaction. In those circumstances where a hedging transaction is terminated prior to maturity because the hedged transaction is no longer expected to occur, any previous deferred gains or losses are recognised in the Statement of Profit or Loss and Other Comprehensive Income at the date of termination. All exchange gains and losses relating to other hedge transactions are brought to account in the Statement of Financial Position in the same period as the exchange differences on the items covered by the hedge transactions. Costs on such contracts are expensed as incurred. 42 NOTEs TO ThE fINANcIAL sTATEmENTs 2018 Exchange gains and losses on the other hedge transactions entered into as hedges of general commitments are brought to account in the Statement of Profit or Loss and Other Comprehensive Income in the financial year in which the exchange rate changes. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Assets and liabilities of overseas controlled entities and branches are translated at exchange rates existing at the reporting date and the exchange gain or loss arising on translation is carried directly to a foreign currency translation reserve. gOODs anD serviCes tax (“gst”) anD value aDDeD tax (“vat”) “Revenues, expenses and assets are recognised net of the amount of GST, except when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable. Receivables and payables in the Statement of Financial Position are shown inclusive of GST.“ The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position. Cash flows are presented in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. use Of JuDgements anD estimates The Directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group. Sections within this financial report whereby estimates and judgments have a material impact are as follows: • The recoverability of distribution advances and prepaid royalties detailed in Note 11. • The recoverability of capitalised development costs detailed in Note 11. • Capitalised production costs in Note 11 are amortised using an estimate of future sales on a specified title. The recoverability of this asset is assessed annually based on a judgment as to whether the initial estimated sales will be reached. • The valuation of goodwill and other intangible assets detailed in Note 14. • The recoverability of deferred tax assets as detailed in Note 6. new stanDarDs anD interpretatiOns A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2018, and have not been applied in preparing these financial statements. Those which may be relevant to the Group are are set out below. (i) aasB 9 finanCial instruments AASB 9 Financial Instruments becomes mandatory for the Group’s 2019 annual financial statements and includes changes to the classification and measurement of financial assets, including a new expected credit loss model for calculating impairment. It also includes a new hedge accounting model to simplify hedge accounting requirements and more closely align hedge accounting with risk management activities. The Group continues to focus on the retrospective application of their existing impairment practices against the requirements of the expected credit loss model before applying AASB 9 on 1 July 2018. The Group will assess which transition method is most appropriate if any adjustments are required on transition. However, management expect the carrying value of trade receivables and rebate recievables to decrease, while the provision for doubtful debts and the associated expense is expected to increase. (ii) aasB 15 revenue frOm COntraCts with CustOmers AASB 15 Revenue from Contracts becomes mandatory for the Group’s 2019 annual financial statements and outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The core principle is that an entity recognises 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. Management has commenced assessing the impact of AASB 15 on its revenue streams as detailed in note 5, and have identified some potential areas that will require further assessment to determine the impact of implementing the new standard. Management’s preliminary assessment will continue with detailed assessments of the following aspects of the Group’s revenue generating activities before any conclusions as to the possible impact of the new standard can be formulated: • Whether production titles and subsequent re-licensing should be recognised at a point in time, rather than over time; • Whether any changes may be needed considering when the performance obligations for some digital marketing contracts are satisfied; and • Whether some digital marketing contracts may have potential contract modifications and/or multiple performance obligations. (iii) aasB 16 leases AASB 16 Leases will be early adopted for the Group’s 2019 annual financial statements. 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. Management anticipate that the Group’s operating lease contracts currently in effect will be impacted by the introduction of AASB 16. With implementation of AASB 16, the present value of the operating lease commitments disclosed in note 26 after factoring in the probability of lease options, will be recognised as a lease liability with a corresponding right of use asset. The impact on the statement of profit or loss and other comprehensive income will be that operating lease expenditure will decrease and depreciation and finance charges will increase. Management’s initial assessment has concluded that the quantum of the impact is not expected to be material to the net 43 Beyond InternatIonal AnnuAl RepoRt 2018assets of the group when the current operating leases are capitalised in the Group’s statement of financial position. gOing COnCern For the year ended 30 June 2018, the Consolidated Entity made a loss of $1,173,000 (2017: $7,337,000) and was in breach of its banking covenants as disclosed in Note 20. The Directors are of the opinion that the Consolidated Entity will be able to continue as a going concern given that the bank waived the breach of covenants on 15 August 2018 and the Directors anticipate that the current years loss was an anomaly due to continuing trading difficulties in the Home Entertainment segment, with the Consolidated Entity expecting to return to a profitable position for the year ending 30 June 2019. 4. Operating segments Management, as the chief operating decision maker, has determined the operating segments based on the reports reviewed by the Board that are used to make strategic decisions. The Board considers the business on a global basis in the following four operating divisions: 1. Tv production and copyright Production of television programming and ownership of television product copyright. North America A portion of the group’s production, film and television sales are generated from North America, with production offices in Los Angeles. Europe Substantial film and television distribution proceeds are derived from European markets. The group’s head office for multinational activities is located in Dublin. This office is responsible for production and development, and for the acquisition and international sales of all television programmes and feature films. The Dublin office manages the direct sales and marketing activities of the office located in London, which represents the second overseas sales office base. Rest of World The Rest of World comprises all other territories from which film and television distribution income is derived including the Middle East, Asia, and Latin America. 2. Film and Television distribution International distribution of television programmes and feature films. 3. home entertainment Distribution in Australia and New Zealand of DVDs. 4. Digital Marketing Online search optimisation, website creation, development and performance and online media sales in Australia and New Zealand. Corporate benefit/(expense) Includes the parent entity, centralised administrative support services to the group comprising legal and business affairs, finance and human resources, in addition to internet development. None of these activities constitute a separately reportable business segment. Geographical segments Although the Consolidated Entity’s divisions are managed on a global basis they operate in four main geographical areas: Australia The home country of the parent entity. The areas of operation include all core business segments. Operating Segment REVENUE tV prOductiOn & cOpyright Film & teleViSiOn diStributiOn hOme entertainment digital marketing Other & inter Segment eliminatiOnS cOnSOlidatiOn 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S External revenues excluding fx, interest 42,458 50,971 23,584 21,877 10,241 2,113 9,481 10,549 802 86,392 86,311 - - 86,311 3,658 Other income Other segments Total revenue - - 7,742 6,489 - - - - - - - - - 300 - 17 - - - (8,042) (6,506) 50,200 57,460 23,584 21,877 10,241 2,113 9,781 10,565 (7,414) (5,704) 86,392 Result before fx, interest and D&A 8,689 8,754 2,191 809 1,600 (5,477) 422 Depreciation & amortisation Impairment of assets (2,725) (1,243) (670) (338) (2,931) (2,705) (124) - - - - - - - (428) (457) (444) Result before interest, fx & other unallocated expenses 5,964 7,511 1,522 472 (1,331) (8,182) 298 (1,329) - - - - - - - - Net interest expense Foreign exchange loss Corporate expenses Profit/(loss) before income tax Income tax (expense)/benefit Loss after income tax Non-controlling interest loss/(profit) Loss for the year 12,902 (6,449) (4,742) - (444) 6,453 (1,528) (241) (164) (139) (542) (5,934) (6,125) 114 (8,334) (1,287) 997 (1,173) (7,337) 466 (132) (707) (7,469) 628 - Operating Segment ASSETS Segment assets Deferred tax assets & other non-current assets Corporate assets Total assets LIABILITIES Segment liabilities Deferred tax liabilities Corporate liabilities Total liabilities Other Capital expenditure Other non cash expenses Impairment of assets tV prOductiOn & cOpyright Film & teleViSiOn diStributiOn hOme entertainment digital marketing Other & inter Segment eliminatiOnS cOnSOlidatiOn 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S 15,041 18,200 31,948 27,955 11,782 14,713 3,282 3,397 (29,194) (28,865) 32,859 35,401 89 943 35,169 37,640 68,117 73,984 9,390 9,752 16,199 13,784 1,588 5,480 1,151 1,302 (300) 277 28,028 30,593 1,364 7,805 1,183 10,124 37,197 41,900 211 261 - 315 222 - 26 351 - 1 872 - 424 580 2 - 1 - 7 (21) 6 26 444 183 (68) - 231 (380) - 851 525 - 1,133 741 444 geOgraphiCal infOrmatiOn segment revenues frOm external CustOmers Carrying amOunt Of segment assets aCquisitiOn Of nOn Current segment assets Australia North America Europe Rest of World 2018 $000's 34,687 27,194 18,273 6,238 86,392 2017 $000's 38,493 29,653 12,300 5,866 86,312 2018 $000's 31,303 2,392 33,897 525 68,117 2017 $000's 37,648 2,696 32,848 792 73,984 2018 $000's 804 14 26 7 851 2017 $000's 1,122 4 1 6 1,133 notes to and forming part of the segment information (a) Accounting policies Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment and the relevant portion that can be allocated to the segment on a reasonable basis. Segment assets include all assets used by a segment and consist primarily of operating cash, receivables, inventories, capitalised production and development costs, investments, distribution advances, inventories, property, plant and equipment and goodwill and other intangible assets, net of any related provisions. While most of these assets can be directly attributable to individual segments, the carrying amounts of certain assets used jointly by segments are allocated based on reasonable estimates of usage. Segment liabilities consist primarily of trade and other creditors, producers share payable, bills of exchange and employee entitlements. (b) Other segments Segment revenues, expenses and results include transfers between segments. Such transfers are priced on an “arm’s length” basis and are eliminated on consolidation. (c) Major customers Included in total revenues is revenue from customers in excess of 10% of total revenue individually. Total revenues relating to these customers are $35m (2017: $32m) within the TV Production & Copyright and Film & Television distribution segments, $7.1m (2017: $4.9m) within the Home Entertainment segment and $1.1m (2017: $1m) within the Digital Marketing segment. (d) Film & Television Distribution and Home Entertainment 2017 have been restated for depreciation and amortisation, which were previously classified in Home Entertainment direct costs amd provisions. Film and Television Distribution has been restated by $0.3m and Home Entertainment by $2.012m. These restatements have also been reflected in note 5(b) below. 44 NOTEs TO ThE fINANcIAL sTATEmENTs 2018 45 Beyond InternatIonal AnnuAl RepoRt 20185. revenues anD expenses 5. revenues anD expenses (continued) (a) Revenue and other income Revenue Sales revenue Royalty revenue Rental revenue Other income Management service fees External interest Gain on the sale of property, plant and equipment Total revenue and other income Recognition and measurement COnsOliDateD entity 2017 $000's 2018 $000's 85,872 85,045 558 1,333 1 2 86,431 86,379 283 20 - 128 45 1 86,734 86,553 Revenue from operating activities represents revenue earned from the sale and licensing of the Consolidated Entity’s products and services, net of returns and trade allowances. Other revenue from outside the operating activities includes interest income on short term investments, proceeds from sale of plant and equipment and net gains on foreign currency transactions. Revenue is recognised to the extent that it is probable that the economic benefit will flow to the Consolidated Entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: Revenue from Australian and international television production contracts is recognised using the percentage of completion method. Revenues from international television and feature film licensing contracts are recognised when the programming is able to be delivered and a licence agreement is signed by both parties. When the contract outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable. Royalty revenue within the Distribution and Film divisions is recognised when received. Revenues from the sale of DVD inventory is recognised at the time the goods are dispatched, apart from consignment arrangements where revenue is recognised upon sale to the end customer. Rending of services revenue from a digital marketing contract to provide services is recognised by reference to the stage of completion of the project. Other digital marketing revenue is recognised when it is received or when the right to receive payment is established. Where amounts are invoiced before revenue is earned, a deferred revenue liability is brought to account. (b) Profit / (loss) before tax includes the following: Bad and doubtful debts - Trade receivables written off / (recovered) during the period - Trade receivables movement in provision (Note 9) Rental expense on operating leases - Minimum lease payments Depreciation and amortisation - Property, plant and equipment assets (note 13) - Intangible assets (note 14) - Other assets (Note 11) - Impairment of assets (Note 14) Foreign exchange loss / (gain) Fair value decrease/(increase) in derivative financial instruments (note 12) Other realised/unrealised foreign currency translation (gains) (c) Auditors' Remuneration Remuneration of the auditor of the parent entity and its controlled entities for: - Audit or review of the financial report - Other assurance services - Tax compliance services Remuneration of network firms for: - Tax compliance services Remuneration of other auditors of subsidiaries for: - Audit or review of the financial report - Other assurance services - Tax compliance services COnsOliDateD entity 2017 $000's 2018 $000's 37 (424) (387) (59) 83 24 1,715 1,660 1,207 119 5,455 6,781 - 223 (59) 164 1,262 497 4,162 5,921 444 (66) 608 542 316,165 10,000 62,114 312,000 - 26,793 53,111 62,032 44,532 27,135 16,697 58,489 3,548 15,561 46 NOTEs TO ThE fINANcIAL sTATEmENTs 2018 47 Beyond InternatIonal AnnuAl RepoRt 20186. inCOme tax expense 6. inCOme tax expense (continued) The components of tax expense/(benefit) comprise: Current income tax Deferred income tax Withholding tax Adjustments in respect of current income tax of previous years Derecognition of the tax losses previously brought to account Tax losses not brought to account Other Income tax expense/(benefit) reported in the Statement of Profit or Loss and Other Comprehensive Income The prima facie tax on profit/(loss) from ordinary activities before income tax is reconciled to the income tax expense/(benefit) as follows: Profit/(loss) before income tax Prima facie tax payable on profit/(loss) from ordinary activities before income tax at 30% (2017: 30%) Less: Tax effect of : - Other non-assesable/deductible items Less: Tax effect of : - Adjustments in respect of current income tax of previous years - Derecognition of the tax losses previously brought to account - Tax losses not brought to account - Effect of lower tax rate on overseas income - Other Add: Withholding tax expense Add: US State tax Income tax expense/(benefit) The applicable weighted average effective tax rates are as follows: Deferred Tax Deferred tax liabilities Distribution guarantees and unrecouped program expenses Capitalised production costs and other expenses Offset deferred tax liabilities against deferred tax assets Deferred tax assets expected to be recovered within 12 months Deferred tax assets expected to be recovered after more than 12 months Deferred tax liabilities expected to be due within 12 months Deferred tax liabilities expected to be due after more than 12 months Deferred tax assets Provisions and accruals Tax losses Offset deferred tax liabilities against deferred tax assets net deferred tax liabilities Movements: Opening balance (Charged)/credited to profit or loss Closing Balance COnsOliDateD entity 2017 $000's 2018 $000's (708) 187 - 279 604 988 (63) 62 (3,449) (20) 96 2,351 - (37) 1,287 (997) 114 (8,334) 34 (2,500) 254 288 95 (2,405) 279 604 988 (816) (58) - 2 1,287 1129% (1,998) (1,278) 1,912 (1,364) 24 65 89 (1,345) (19) (1,364) 1,734 267 (1,912) 89 (1,275) (240) (1,035) (1,275) 96 - 2,351 (992) (26) (20) - (997) 12% (2,749) (146) 1,712 (1,183) 758 185 943 (551) (632) (1,183) 1,783 871 (1,712) 943 (240) (2,180) 1,940 (240) (a) (b) (c) 48 (d) Liabilities Current Income tax COnsOliDateD entity 2017 $000's 2018 $000's (187) (261) The above is a current provision for income tax payable by the parent and subsidiaries of the Consolidated Entity. Recognition and measurement In accordance with the details below, deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to offset current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. The Group has recognised tax losses as shown above only to the extent that these balances offset deferred tax liabilities. The Australian tax group has unrecognised tax losses available totalling $21,485,905 (2017: $17,240,343). Movement in deferred tax assets and deferred tax liabilities has gone through the Statement of Profit or Loss and Other Comprehensive Income. 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 changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at the reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (or recovered from) the relevant tax authority. Deferred tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also arise where amounts have been fully expensed but future deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at the reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to offset current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. Tax Consolidation Beyond International Limited and its wholly owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidated regime. Each entity in the group recognises its own current and deferred tax assets, except for any deferred tax assets resulting from unused tax losses and tax credits, which are immediately assumed by the head entity, being Beyond International Limited. The current tax liability for each group entity is then subsequently assumed by the parent entity. The tax consolidated group has entered into a tax funding arrangement whereby each company in the group contributes to the income tax payable by the group in proportion to their contribution to the group’s taxable income. Pursuant to the funding arrangement, transfers of tax losses or tax liabilities are assumed by the head entity through intercompany loans. 49 Beyond InternatIonal AnnuAl RepoRt 2018notes to the financial statements 20187. earnings per share 8. Cash flOw infOrmatiOn Basic and diluted loss per share: COnsOliDateD entity 2017 Cents per share 2018 Cents per share (1.15) (12.18) The following reflects the income and share data used in the basic and diluted earnings per share computations Net loss attributable to ordinary equity holders (used in calculating basic earning and diluted per share) COnsOliDateD entity 2017 2018 $000's (707) $000's (7,469) Net loss attributable to ordinary equity holders (used in calculating diluted earning per share) (707) (7,469) Weighted average number of ordinary shares in calculating basic earnings and diluted per share Recognition and measurement number Number 61,336,968 61,336,968 Basic earnings per share is calculated as net (loss)/profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for: • costs of servicing equity (other than dividends) and preference share dividends; (a) Reconciliation of cash flows from operations with net loss after income tax Loss after income tax Adjustment for non-cash flow in loss: Depreciation and amortisation Net gain on sale of property, plant and equipment Share of Joint venture operation Unrealised foreign exchange (gain)/loss Write off investments revalualtion reserve Changes in assets and liabilities: Decrease in trade and other receivables Decrease/(increase) in inventory Increase in other assets Increase/(decrease) in deferred tax assets and liabilities Decrease in trade and other creditors Decrease in other financial liabilities Increase in other liabilities Increase/(decrease) in provisions Cash flow from operations • the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and (b) Financing facilities available • other non-discretionary changes in revenues or expenses during the period that would result from the dilution At reporting date, the following financing facilities had been negotiated and were available of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. Secured multi option facility Used at reporting date * Unused at reporting date Total facility * The amount of the facility used at reporting date is for bank guarantees on various building leases held by the Group The multi option facility may be drawn at any time and may be terminated by the bank on demand. The interest rate on the facility is the commercial base rate of 8.22% at 30 June 2018 (8.22% at 30 June 2017). Bill acceptance/discount facility Used at reporting date* Unused at reporting date Total facility * The amount of the facility used at reporting date is for funding production offsets The bill acceptance/discount facility may be drawn at any time and may be terminated by the bank on demand. The interest rate on the facility is the discount base rate of 3.59% at 30 June 2018 (3.2% at 30 June 2017). COnsOliDateD entity 2017 2018 $000's $000's (1,173) (7,337) 6,781 5,921 1 (10) - - 39 55 542 423 3,306 12,337 681 (742) (3,287) (4,145) 1,035 (1,940) (1,936) (174) (1,714) (2,267) 2,572 204 6,460 3,345 (170) 5,887 603 2,193 2,796 579 2,186 2,765 1,837 4,163 5,744 256 6,000 6,000 50 NOTEs TO ThE fINANcIAL sTATEmENTs 2018 51 Beyond InternatIonal AnnuAl RepoRt 2018 8. Cash flOw infOrmatiOn (continued) 9. traDe anD Other reCeivaBles (continued) The facilities are secured by certain covenants on the Consolidated Entity that these financial conditions are met - a) Minimum capital adequacy rate of 42.5% b) Gross debt less cash cannot be more than 2 x EBITDA c) Interest cover ratio of 5x d) Total bill facility drawndowns cannot exceed 85% of total producer offsets Secured credit card facilities Used at reporting date Unused at reporting date Total facility Secured equipment loan facility Unused at reporting date Total facility The interest rate on the facility is determined on usage as at the time. As no facility is being used no rate is applicable. Amount of Assets Pledged as Security Fixed and floating charge over assets Total assets pledged as security Recognition and measurement COnsOliDateD entity 2017 2018 $000's $000's 187 78 265 500 500 181 84 265 500 500 68,117 73,984 68,117 73,984 Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and in hand and short term deposits with an original maturity of three months or less. Cash and Cash equivalents has an element of restricted cash totalling $1,211,772 (2017: Nil). For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. 9. traDe anD Other reCeivaBles Current Trade receivables Provision for impairment of receivables non-current Trade receivables COnsOliDateD entity 2017 2018 $000's $000's 27,796 26,144 (16) (440) 27,780 25,704 1,835 1,835 6,825 6,825 Ageing of debtors Not past due Past due 0-90 days Past due 91-180 days Past due 180+ days Reconciliation of provision for impairment of receivables Opening balance Additional provision recognised Utilised Closing balance Recognition and measurement 2018 $000's COnsOliDateD entity 2017 $000’s Gross Provision Gross Provision 26,232 2,550 74 774 29,631 - - - (16) (16) 29,474 2,116 556 823 32,969 - - - (440) (440) COnsOliDateD entity 2017 2018 $000's $000's (440) (2) 426 (16) (357) (103) 20 (440) Trade receivables are recognised and carried at original invoice amount less an allowance for any uncollectable amounts or impairment. The following specific recognition criteria must also be met before a receivable is recognised: Production debtors - receivables are recognised as they are due for settlement, within a term of no more than 30 days. Licensing debtors - receivable is recognised once a licence agreement is signed by both parties and the programme is able to be delivered. Payment terms are usually based upon signature, delivery and acceptance. In certain contracts instalment payments may extend over the term of the licence agreement. A provision for doubtful debts is raised when there is objective evidence that the Consolidated Entity will not be able to collect the debts based on a review of all outstanding amounts at the reporting date. Bad debts are written off when they are identified. Credit terms for the Consolidated Entity’s receivables vary between individual divisions. Distribution, Films and Productions debtors are generally due based on milestones achieved. Debtors within other divisions have credit terms ranging from 30 to 90 days. An allowance has been made for estimated irrecoverable trade receivable amounts arising from the past sale of goods and rendering of services, based on an assessment of individual debtors and the likelihood of recoverability. For Distribution & Films debtors, the Consolidated Entity provides fully for receivables over 360 days, with the exception of specific identifiable receivables which are still considered recoverable. Distribution and Film debtors consist largely of television networks, many of which are government owned, or are listed entities whose published annual reports indicate they continue to be credit-worthy. Debtors within other divisions, including the Beyond D business unit, are provided for on a specific basis based on an assessment of recoverability. Home Entertainment debtors largely consist of multi-national retail chains, many of which are listed and whose published annual reports indicate they continue to be credit-worthy. In 2016 a 100% owned special purpose entity, HL Beyond Limited, took out a limited recourse facility to fund production on the The White Rabbit Project. Trade receivables in relation to the transaction have ben recognised as current or non current to reflect the payment schedule of licence fees by the commissioning broadcaster to the facility provider. The amount in current is $2,399,061 (2017: $2,373,427) and the amount in non current is $599,765 (2017: $2,339,833) 52 53 Beyond InternatIonal AnnuAl RepoRt 2018notes to the financial statements 2018 10. inventOries Current DVD Stock - raw material at cost DVD Stock - finished goods at net realisable value Stock footage - at cost Recognition and measurement COnsOliDateD entity 2017 2018 $000's $000's 85 104 2,848 3,480 10 40 2,943 3,624 Inventories are measured at the lower of cost and net realisable value. Inventories represent stock TV footage and DVD stock at cost. As the footage is used it will be included within the production cost of the programme. Costs of purchasing inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completionand estimated costs to make the sale. Inventories sold on consignment remain in the financial statements as stock on hand until sold to the end customer. Costs are assigned to an individual item of inventory on the basis of weighed average costs. 11. Other assets Current Capitalised development costs Less: deferred revenue Distribution advances Accumulated amortisation of distribution advances Prepaid royalties Capitalised production costs Prepayments non-current Distribution advances Capitalised Production Costs Investment in 3rd Party Copyright COnsOliDateD entity 2017 2018 $000's $000's 3,085 (1,675) 1,410 18,412 2,307 (1,412) 895 17,619 (14,211) (13,584) 4,201 4,696 1,854 912 2,767 4,034 6,805 1,387 928 2,313 13,073 14,048 - - 6,634 1,234 7,867 90 90 6,989 341 7,421 11. Other assets (continued) Recognition and measurement Capitalised development costs Costs of developing new programme concepts, which the Directors believe are probable of being recovered from future revenues, are capitalised. Capitalised costs are costed into the production or are written off in the event that the programme does not proceed. These costs are classified as current assets as the costs of developing new programmes are expected to be realised within one year. Capitalised production costs Television production costs are capitalised and amortised against future sales revenue. Forecast sales revenues are reviewed regularly and the amortisation rate is adjusted to reflect the estimates of future licensing revenue of each production. Where doubt exists as to the ability to recover the expenditure from future sales, the amounts in doubt are provided for in the year in which the assessment is made. If a title has not been fully amortised after six years the balance is written off. The 2018 accounts includes an amount of $212,204 (2017: $192,000). The estimates relating to future licencing revenues of each production have been re-assessed in the 2018 financial year and amounts that are not expected to be recouped within 12 months have been reclassified as non-current in the 2018 financial year. Capitalised production costs are disclosed in the accounts net of any cash progress payments received on projects. Where such progress payments exceed these costs the net amounts are disclosed as deferred revenue. Distribution advances and capitalised production costs are monitored on a title by title basis. The provision detailed above is included within the depreciation and amortisation expense disclosed in the Statement of Profit or Loss and Other Comprehensive Income. Distribution advances Distribution advances for television and feature film distribution rights, and prepaid royalties for the DVD rights, are capitalised at cost as paid, and recouped from future sales on cash receipt. If a title has an unrecouped distribution advance after 3 years the balance is written off in full at the start of the fourth year. Any unrecouped prepaid royalty for DVD rights are amortised over the final two years of the licence period. The 2018 accounts includes an adjustment of $641,985 (2017: $291,000). Prepaid Royalties The Home Entertainment division recognises royalties paid in advance initially at cost. This amount is reduced when sales are made. Prepayments Amounts paid in advance are recorded at cost and are subsequently expensed based on the actual month of expenditure. Investment in 3rd party copyright The Company has invested in the rights to receive future revenue streams from 3rd party produced programs, and will be recouped from future sales. 54 NOTEs TO ThE fINANcIAL sTATEmENTs 2018 55 Beyond InternatIonal AnnuAl RepoRt 2018 12. finanCial assets & finanCial liaBilities 12. finanCial assets & finanCial liaBilities 12. finanCial assets & finanCial liaBilities (continued) Derivative financial (liabilities) / assets Derivative financial (liabilities) / assets COnsOliDateD entity 2018 $000's (161) (161) 2017 $000's 62 62 COnsOliDateD entity 2017 $000's 62 2018 $000's (161) (161) 62 There has been no change in the valuation technique used in the current or previous reporting period. During the current and previous reporting periods, there were no transfers between levels. Fair value of financial instruments not measured at fair value on a recuring basis The following financial instruments are not measured at fair value in the statement of financial position. These had the following fair values: Fair value of financial instruments measured on a recuring basis Fair value of financial instruments measured on a recuring basis The financial instruments recognised and disclosed at fair value in the Statement of Financial Position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following levels: The financial instruments recognised and disclosed at fair value in the Statement of Financial Position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following levels: – quoted prices in active markets for identical assets or liabilities (Level 1); – quoted prices in active markets for identical assets or liabilities (Level 1); – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and – inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). – inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). Financial assets and financial liabilities: Available-for-sale financial assets: – listed investments Financial liabilities at fair value through profit or loss: – derivative instruments - - - COnsOliDateD entity COnsOliDateD entity 2017 2016 level 1 level 2 $000's $000's tOtal $000's level 1 level 2 $000's $000's tOtal $000's Financial assets and financial liabilities: Financial (liabilities)/assets at fair value through profit or loss: – derivative instruments - - (161) (161) (161) (161) - - 62 62 62 62 - - 14 - 14 During the 2018 financial period, the Consolidated Entity had nil value of Level 3 financial assets and financial liabilities (2017: nil). 62 62 62 62 - 14 (4) (4) (4) 10 Included within Level 1 of the hierarchy are listed investments. The fair values of these financial assets have been based on the closing quoted bid prices at reporting date, excluding transaction costs. There has been no change in the valuation technique used in the current or previous reporting period. Included within Level 2 of the hierarchy are derivatives not traded in an active market (foreign currency forward contracts). The fair values of these derivatives are determined using valuation techniques which uses only observable market data relevant to the hedged position. nOn-CuRRenT ASSeTS Trade and other receivables nOn-CuRRenT LIABILITIeS Other non-current liabilities Recognition and measurement COnsOliDateD entity COnsOliDateD entity 2018 2017 Carrying amOunt $000's fair value $000's Carrying amOunt $000's fair value $000's 1,835 1,835 155 155 1,699 1,699 143 143 6,825 6,825 2,362 2,362 6,319 6,319 2,187 2,187 The fair values of the trade and other recievables and other non-current liablities above are included in the level 2 category and have been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis, with the most significant input being a discount of 8% to determine fair value. Due to their short-term nature, the carrying amounts of cash and cash equivalents, current trade and other receivables, current trade and other payables are assumed to approximate their fair value. Derivative Financial Instruments The Consolidated Entity enters into forward foreign exchange agreements and foreign currency options on production contracts in order to manage its exposure to foreign exchange rate risks. Exchange contracts are brought to account as explained in note 3. Refer to note 29 for further information on financial instruments. During the 2017 financial period, the Consolidated Entity had nil value of Level 3 financial assets and financial liabilities (2016: nil). Included within Level 1 of the hierarchy are listed investments. The fair values of these financial assets have been based on the closing quoted bid prices at reporting date, excluding transaction costs. There has been no change in the valuation technique used in the current or previous reporting period. Included within Level 2 of the hierarchy are derivatives not traded in an active market (foreign currency forward contracts). The fair values of these derivatives are determined using valuation techniques which uses only observable market data relevant to the hedged position. 56 NOTEs TO ThE fINANcIAL sTATEmENTs 2018 57 Beyond InternatIonal AnnuAl RepoRt 201813. prOperty, plant anD equipment 14. intangiBle assets year ended 30 June 2018 Balance at 01 July 2017 Additions Disposal Depreciation charge for the year Carrying amount at 30 June 2018 As at 01 July 2017 Cost Accumulated depreciation and impairment Net carrying amount As at 30 June 2018 Cost Accumulated depreciation and impairment Net carrying amount year ended 30 June 2017 Balance at 01 July 2016 Additions Disposal Depreciation charge for the year Carrying amount at 30 June 2017 Recognition and measurement COnsOliDateD entity plant & equipment $000's leaseD mv & equipment $000's 2,414 851 (10) (1,207) 2,048 10,340 (7,926) 2,414 11,112 (9,064) 2,048 2,590 1,133 (47) (1,262) 2,414 - - - - - 385 (385) - 385 (385) - - - - - - tOtal $000's 2,414 851 (10) (1,207) 2,048 10,725 (8,311) 2,414 11,497 (9,449) 2,048 2,590 1,133 (47) (1,262) 2,414 Property, plant and equipment are measured at historical cost less accumulated depreciation and impairment loss. The expected useful lives are as follows: Plant equipment and leasehold improvements: 3 to 10 years. Plant equipment & leasehold improvements The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the Statement of Profit or Loss and Other Comprehensive Income. Depreciation and Amortisation Depreciation on property, plant and equipment is calculated on a straight line basis to write off the net cost over its expected useful life to the Consolidated Entity. Estimates of the remaining useful lives are made on a regular basis for all assets, with annual reassessment for major items. Patents and Licenses - at cost Websites and Databases - at cost Less: Accumulated amortisation and impairment Goodwill - at cost Accumulated amortisation and impairment COnsOliDateD entity 2017 $000's 150 2018 $000's 150 150 3,686 150 3,686 (3,686) (3,566) - 5,250 (650) 4,600 4,750 119 5,250 (650) 4,600 4,870 Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: COnsOliDateD entity gOODwill $'000 4,600 weBsites anD DataBases $'000 931 patents anD liCenses $'000 150 - - - 4,600 - 4,600 128 (497) (444) 119 (119) - - - - 150 - 150 tOtal $'000 5,681 128 (497) (444) 4,870 (119) 4,750 Balance at 01 July 2016 Additions Amortisation expense Impairment loss Balance at 30 June 2017 Amortisation expense Balance at 30 June 2018 Recognition and measurement Intangible assets, other than goodwill, have finite useful lives. The current amortisation charges for intangible assets are included under depreciation and amortisation expense per the Statement of Profit or Loss and Other Comprehensive Income. If an impairment indication arises, the recoverable amount is estimated and an impairment loss is recognised to the extent that the recoverable amount is lower than the carrying amount. Goodwill Goodwill acquired and goodwill on consolidation are initially recorded at the amount by which the purchase price for a business or for an ownership interest in a controlled entity exceeds the fair value attributed to its net assets at date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates. Goodwill as an infinite life asset, is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Patents and licenses Patents and trademarks are recognised at cost of acquisition. Patents and trademarks have a finite life and are carried at cost less any accumulated amortisation and any impairment losses. Patents and trademarks are amortised over their useful life, which is 20 years. Websites and Databases Websites and Databases are recognised at cost. Websites and Databases are amortised over their useful life, which is 3 years, on a straight line basis. 58 NOTEs TO ThE fINANcIAL sTATEmENTs 2018 59 Beyond InternatIonal AnnuAl RepoRt 201814. intangiBle assets (continued) Impairment Disclosure There were impairment losses recognised by the consolidated entity in respect of the website and database assets in the current financial year of Nil (2017: $444,000). The following assumptions were used in the value-in-use calculations: Beyond D business Beyond Home Entertainment business All other businesses grOwth rate DisCOunt rate 2018 3% 0% 5% 2017 3% 0% 5% 2018 15% 15% 10% 2017 15% 15% 10% Historical performance of the relevant businesses show the above growth rates to be reasonable. Sensitivity - Digital Marketing Division As disclosed in Note 3 the directors have made judgements and estimates in respect of impairment testing of goodwill. Should these judgements and estimates not occur the resulting goodwill may vary in carrying amount. The sensitivities are as follows based on a discounted cash flow over 5 years: a. If the growth rate decreasd by up to 7% (i.e. from 3% to -4% or lower), with all other assumptions remaining constant, impairment of goodwill would still not be required. b. If the discount rate increased by more than 5% (i.e. from 15% to 20%) , with all other assumptions remaining constant, impairment of goodwill would still not be required. Management believes that other reasonable changes in the key assumptions on which the recoverable amount of the digital marketing division goodwill is based would not cause the cash-generating unit’s carrying amount to exceed its recoverable amount. If there are negative changes in the key assumptions on which the recoverable amount of goodwill is based, this would result in a further impairment of the digital marketing division goodwill. Sensitivity - Home Entertainment Division As disclosed in Note 3 the directors have made judgements and estimates in respect of impairment testing of goodwill. Should these judgements and estimates not occur the resulting goodwill may vary in carrying amount. The sensitivities are as follows based on a discounted cash flow over 5 years: a. If the growth rate decreasd by up to 7% (i.e. from 0% to -7% or lower), with all other assumptions remaining constant, impairment of goodwill would still not be required. b. If the discount rate increased by more than 5% (i.e. from 15% to 20%) , with all other assumptions remaining constant, impairment of goodwill would still not be required. Management believes that other reasonable changes in the key assumptions on which the recoverable amount of the home entertainment division goodwill is based would not cause the cash-generating unit’s carrying amount to exceed its recoverable amount. If there are negative changes in the key assumptions on which the recoverable amount of goodwill is based, this would result in a further impairment of the home entertainment division goodwill. 60 NOTEs TO ThE fINANcIAL sTATEmENTs 2018 15. traDe anD Other payaBles Current (unsecured) Trade payables Other creditors and accruals Recognition and measurement COnsOliDateD entity 2017 2018 $000's $000's 2,365 4,049 6,414 5,662 2,662 8,324 These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to the end of the financial year and which are unpaid. These amounts are unsecured and are usually paid within 30 days of recognition. Credit terms on trade payables vary between business units and range from 7 days to 90 days. Contractual maturities of trade and other payables have been disclosed in Note 29. 16. investments aCCOunteD fOr using the equity methOD Interests in joint ventures are accounted for using the equity method of accounting. Information relating to the consolidated entity’s joint venture is set out below: prinCipal plaCe Of Business / COuntry Of inCOrpOratiOn United States of America / Ireland Ownership interest 2017 2018 % 50% % 50% name 7Beyond Media Rights Ltd Summarised financial information Summarised statement of financial position Cash and cash equivalents Other current assets Non-current assets Total assets Other current liabilities Non-current liabilities Total liabilities Net assets Summarised statement of profit or loss and other comprehensive income Revenue Other revenue Production costs Administration costs Net foreign exchange gain /(loss) Loss before income tax Income tax benefit/(expense) Profit/(loss) after income tax Total comprehensive income 7BeyOnD meDia rights ltD 2016 $000's 2017 $000's 401 465 505 1,371 540 3 543 828 454 628 395 1,477 850 1 851 626 8,419 1,252 6,260 499 (9,595) (6,428) (193) 115 (2) 22 20 20 (186) (234) (89) (21) (110) (110) 61 Beyond InternatIonal AnnuAl RepoRt 201816. investments aCCOunteD fOr using the equity methOD (continued) 17. emplOyee Benefits (continued) Reconciliation of the consolidated entity's carrying amount Opening carrying amount Funds advanced to joint venture Share of profit/(loss) after income tax Closing carrying amount Contingent liabilities There are no contingent liabilities provided for. Commitments There are no outstanding commitments at reporting date. Recognition and measurement COnsOliDateD entity 2017 $000's 2018 $000's 313 91 10 414 136 233 (55) 314 A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Investments in joint ventures are accounted for using the equity method. Under the equity method, the share of the profits or losses of the joint venture is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in joint ventures are carried in the statement of financial position at cost plus post-acquisition changes in the consolidated entity’s share of net assets of the joint venture. Goodwill relating to the joint venture is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Income earned from joint venture entities reduces the carrying amount of the investment. A liability is recognised in other creditors and accruals when the losses generated by the joint venture exceed the amount invested into it. Recognition and measurement Short-term employee benefits Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled within 12 months of the reporting date are recognised in current liabilities in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. The current provision for employee benefits includes accrued annual leave and long service leave. For long service leave it covers all unconditional entitlements where employees have completed the required period of service. The entire amount of the annual leave provision is presented as current, since the consolidated entity does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the consolidated entity does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. Other long-term employee benefits The liability for long service leave not expected to be settled within 12 months of the reporting date are recognised in non-current liabilities, provided there is an unconditional right to defer settlement of the liability. The liability is measured as 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 national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Defined contribution superannuation expense Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred. 17. emplOyee Benefits 18. Other finanCial liaBilities Current Provision for annual leave and long service leave non-current Provision for long service leave Total employee benefits Annual leave obligations accounted for as current and expected to be settled after 12 months COnsOliDateD entity 2017 $000's 2018 $000's 3,691 3,691 218 218 3,419 3,419 287 287 3,909 3,706 660 660 612 612 Current non-current Total other financial liabilities COnsOliDateD entity 2017 $000's 2,373 2018 $000's 2,399 600 2,999 2,340 4,713 In 2016 a 100% owned special purpose entity, HL Beyond Limited, took out a limited recourse facility to fund production on The White Rabbit Project. The facility is secured by the intellectual property created by the production and there is no recourse or obligation to repay the facility against any other company in the Group. The liability and the corresponding receivable will be extinguished on either payment by the commissioning broadcaster to the facility provider, or if the commissioning broadcaster defaults on payment. Recognition and measurement Amounts were originally recognised at the fair value of the consideration received. They are subsequently measured at amortised cost using the effective interest method with the liability reduced when amounts are received from the debtor. 62 NOTEs TO ThE fINANcIAL sTATEmENTs 2018 63 Beyond InternatIonal AnnuAl RepoRt 201819. Other liaBilities 21. issueD Capital Current unsecured liabilities Deferred revenue GST payable Producer share payable Other non-current unsecured liabilities Producer share payable Other COnsOliDateD entity 2017 $000's 2018 $000's 6,830 90 6,213 225 13,132 9,039 119 130 20,171 15,607 155 - 155 2,362 - 2,362 Recognition and measurement The Producers Share Payable balance represents liabilities for the amounts due to producers contracted under licensing and distribution sales, which are paid on collection of the revenue receivable. 20. BOrrOwings Current Secured liabilities Loan - St George Recognition and measurement COnsOliDateD entity 2017 $000's 2018 $000's 1,837 5,744 Borrowings are initially valued at fair value of the consideration received net of transaction costs. They are subsequently measured at amortised cost using the effective interest method The Company was in breach of covenants associated with the interest cover ratio. Note that the bank has subsequently waived the breaches. Borrowing Costs Borrowing costs are recognised as an expense when incurred. Borrowing costs include: – Interest on bank overdraft and short-term and long-term borrowings; and – Finance lease charges. 64 NOTEs TO ThE fINANcIAL sTATEmENTs 2018 COnsOliDateD entity 2017 $000's 2018 $000's (a) Share Capital 61,336,968 ordinary shares - fully paid (2017: 61,336,968) 34,018 34,018 The company has authorised capital amounting to 100,000,000 ordinary shares of no par value. Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. (b) Share Options On 1 May 1998 at an extraordinary general meeting shareholders approved the establishment of the Beyond Employee Share Option Plan. Under the plan any options on issue are cancellable at the Directors discretion upon an option holder ceasing to be an employee. (c) employee Share Plan On 21 April 2006, a total of 962,500 shares were issued under the employee plan to eligible employees and directors, and the company has entered into limited non-recourse loan agreements with participants to provide the funds necessary to subscribe for those shares. Shares were issued in accordance with the Employee Plan rules (refer note 27). On 7 December 2009 and 11 March 2010, a total of 1,625,000 shares were issued under the employee plan to eligible employees and directors, and the company has entered into limited non-recourse loan agreements with participants to provide the funds necessary to subscribe for those shares. Shares were issued in accordance with the Employee Plan rules (refer note 27). 22. reserves employee Share Plan Benefit Reserve The employee share plan benefit reserve records items recognised as expenses on valuation of employee share options. Investment Revaluation Reserve The investment revaluation reserve records unrealised share price and foreign exchange gains and losses on the available-for-sale financial instruments in Note 12. Foreign Currency Translation Reserve The foreign currency translation reserve records the variance between converting the Statement of Financial Position at closing spot rate and the Statement of Profit or Loss and Other Comprehensive Income at average rate for Magna Home Entertainment NZ Limited and Beyond D (NZ) Limited which have a functional currency of New Zealand Dollars (NZD). 23. nOn-COntrOlling interest Interest in: Accumulated (losses)/profits COnsOliDateD entity 2017 $000's 2018 $000's (466) (466) 132 132 65 Beyond InternatIonal AnnuAl RepoRt 201824. DiviDenDs 26. COmmitments Distributions paid No dividend was declared (2017: two cents) Net franking credits available based on a tax rate of 30% (2017: 30%) COnsOliDateD entity 2017 $000's 2018 $000's - 446 1,227 446 The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for: (a) franking credits that will arise from the payment of the current tax liability (b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date (c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date (d) franking credits that may be prevented from being distributed in subsequent financial years 25. COntingent assets anD liaBilities The consolidated entity had no contingent assets as at 30 June 2018 (2017: nil). The consolidated entity has given bank guarantees as at 30 June 2018 of $579,416 (2017: $579,416) to various landlords. (i) OPeRATInG LeASe PAyABLe COMMITMenTS Total lease expenditure contracted at reporting date but not recognised in the financial statements: Payable no later than one year Payable later than one, not later than five years Payable later than five years COnsOliDateD entity 2017 $000's 2018 $000's 1,819 3,555 - 5,374 1,514 3,829 817 6,160 Operating lease commitments includes contracted amounts for various offices and plant and equipment under non-cancellable operating leases expiring within one to five years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated. (ii) DISTRIBuTIOn GuARAnTee COMMITMenTS In the course of the Consolidated Entity's feature film, television and Home Entertainment businesses, commitments to pay distribution guarantees and advances of minimum proceeds from sales have been made to producers at reporting date but not recognised in the financial statements: Not later than one year Distribution Guarantee Home Entertainment Advances Later than one year but not later than five years Distribution Guarantee Home Entertainment Advances 551 757 2,628 1,626 138 290 1,736 132 975 5,361 The above commitments to pay distribution guarantees have been entered into in the normal course of business. Recognition and measurement A distinction is made between finance leases which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased non current assets, and operating leases under which the lessor effectively retains substantially all such risks and benefits. Where property, plant and equipment is acquired by means of finance leases, the present value of the minimum lease payments is recognised as an asset at the beginning of the lease term and amortised on a straight line basis over the expected useful life of the leased asset. A corresponding liability is also established and each lease payment is allocated between the liability and finance charge. Operating lease payments are charged to the Statement of Profit or Loss and Other Comprehensive Income on a straight line basis. 66 NOTEs TO ThE fINANcIAL sTATEmENTs 2018 67 Beyond InternatIonal AnnuAl RepoRt 2018 27. share BaseD payments General employee Share Loan Plan The Board has adopted an employee share plan under which employees and Directors of the Consolidated Entity may subscribe for shares in the Company using funds loaned to them by the Consolidated Entity. The Board has also adopted a share plan on substantially the same terms for consultants of the Consolidated Entity (Consultant Plan). The purpose of the Employee Plan is to: (a) assist in the retention and motivation of employees and Directors of the Consolidated Entity by providing them with a greater opportunity to participate as shareholders in the success of the Consolidated Entity; and (b) create a culture of share ownership amongst the employees of the Consolidated Entity. There have been three issues of shares under the Employee Share plan as follows: - On 21 April 2006, 962,500 shares were issued under the Employee Plan to eligible employees and Directors of Beyond International Limited and its controlled entities. 600,000 of these shares remain redeemable at 30 June 2018. - On 7 December 2009, 300,000 shares were issued under the Employee Plan to eligible employees and Directors of Beyond International Limited and it’s controlled entities. 200,000 of these shares remain redeemable at 30 June 2018. - On 11 March 2010, 1,325,000 shares were issued under the Employee Plan to eligible employees and Directors of Beyond International Limited and it’s controlled entities. 725,000 of these shares remain redeemable at 30 June 2018. In all cases the company entered into limited non-recourse loan agreements to provide participants the funds necessary to subscribe for those shares. Shares were issued in accordance with the Employee Plan rules. The loans were made based on the greater of market value of the shares on allotment date and $0.645 (Dec 09 - 2010 plan), $0.75 (Mar 10 - 2010 plan) & $0.60 (2006 plan). As the loans are non-recourse, the value of the loans are not recognised as an asset, and the corresponding share value is not recorded in equity. The total of the Plan Shares are included in Issued Capital at note 21(a). Notwithstanding any other provision of the Plan, each Participant has a legal and beneficial interest in the Shares issued to him or her and is at all times absolutely entitled to those Plan Shares, except that any dealings with those Shares by the Participant may be restricted in accordance with the plan rules. Plan Shares rank equally with all existing Shares from the date of issue in respect of all rights issues, bonus issues, dividends and other distributions to, or entitlements of, holders of existing Shares where the record date for such corporate actions is after the relevant Plan Shares are issued. On termination, the Participant may elect to pay the loan or transfer all of their Plan Shares back to the Company, subject to requirements of the Corporations Act. If the Participant transfers the shares back to the Company, the Company may: i) transfer the Plan Shares for the issue price to a person nominated by the Company; or ii) procure a broker to sell all or any of the Plan Shares on-market. Share movements in the plan as follows: Outstanding at the beginning of year Redemption of shares under the employee share plan Exercisable at year end numBer Of shares 1,525,000 - 1,525,000 Change in equity value $000's - - The Plan Shares issued as part of the 2010 Plan required that Participants could only deal with the shares on a pro-rata basis for a 3 year period. During this period, the Company accounted for the Plan Shares as if they were options. The grant fair value of the shares was amortised across the vesting period as follows: vesting periOD 11 March 2010 to 30 June 2010 Financial year ending 30 June 2011 Financial year ending 30 June 2012 Financial year ending 30 June 2013 amOrtisatiOn $ 15,587 66,718 66,718 47,602 68 NOTEs TO ThE fINANcIAL sTATEmENTs 2018 27. share BaseD payments (continued) The grant fair value of the 2010 plan was calculated by using the Black Scholes option pricing model applying the following inputs: Weighted average exercise price Weighted average life of the option Underlying share price Expected share price volatility (i) Risk free interest rate Expected dividend rate Weighted average fair value price $0.75 3 $0.75 30% 5.00% 6.00% $0.10 (i) Expected share price volatility has been estimated based on the historical volatility of the Company’s share price. 28. grOup struCture name Of entity (a) Controlled entities consolidated ultimate parent entity Beyond International Limited Controlled entities of Beyond International Limited: Beyond Films Limited Beyond Television Group Pty Ltd Beyond Television Pty Ltd Beyond Entertainment Pty Ltd Beyond Simpson le Mesurier Pty Ltd Liberty & Beyond Pty Ltd Beyond Imagination Pty Ltd Beyond Miall Kershaw Pty Ltd Pacific & Beyond Pty Ltd Beyond Screen Productions Pty Ltd Beyond Home Entertainment Pty Ltd Beyond Entertainment Holdings Limited Beyond D Pty Ltd Beyond West Pty Ltd Controlled entities of Beyond entertainment Pty Ltd: Mullion Creek and Beyond (partnership) Equus Film Productions Pty Ltd BTVUS Pty Ltd Clandestine Beyond Pty Ltd Blue Rocket Beyond Pty Ltd COuntry Of fOrmatiOn Or inCOrpOratiOn BeyOnD internatiOnal limiteD DireCt interest in OrDinary shares 2018 % 2017 % Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Ireland Australia Australia Australia Australia Australia Australia Australia 100 100 26 100 51 51 51 51 51 100 100 100 100 100 51 51 100 51 51 100 100 26 100 51 51 51 51 51 100 100 100 100 100 51 51 100 51 - 69 Beyond InternatIonal AnnuAl RepoRt 201828. grOup struCture (continued) 28. grOup struCture (continued) name Of entity Controlled entities of Liberty & Beyond Pty Ltd: COuntry Of fOrmatiOn Or inCOrpOratiOn BeyOnD internatiOnal limiteD DireCt interest in OrDinary shares 2018 % 2017 % name Of entity Controlled entities of Beyond Films Limited COuntry Of fOrmatiOn Or inCOrpOratiOn BeyOnD internatiOnal limiteD DireCt interest in OrDinary shares 2018 % 2017 % Liberty & Beyond Productions Pty Ltd Australia 100 100 Beyond Film Properties Bermuda Bermuda 100 100 Australia 74 74 Magna Home Entertainment Pty Ltd Australia 100 100 Controlled entities of Beyond home entertainment Pty Limited Controlled entities of Beyond Television Group Pty Ltd: Beyond Television Pty Ltd Controlled entities of Beyond Television Pty Ltd: Beyond Properties Pty Ltd Beyond Productions Pty Ltd Beyond Distribution Pty Ltd Controlled entities of Beyond Properties Pty Ltd: Beyond Pty Ltd Beyond International Group Inc The Two Thousand Unit Trust * Australia Australia Australia Australia USA Australia 100 100 100 100 100 100 100 100 100 100 100 100 * The corporate trustee of the trust is Beyond Properties Pty Ltd. Controlled entities of Beyond International Group Inc: Beyond Productions Inc Controlled entities of Beyond Simpson le Mesurier Pty Ltd: Beyond Simpson le Mesurier Productions Pty Ltd BSLM Productions Pty Ltd Something in the Air Pty Ltd Something in the Air 2 Pty Ltd Beagle Productions Pty Ltd Stingers 3 Pty Ltd Stingers 4 Pty Ltd Stingers 5 Pty Ltd Halifax 5 Pty Ltd Halifax 6 Pty Ltd Controlled entities of Beyond entertainment holdings Limited Beyond Entertainment Limited Beyond Rights Distribution Limited (formerly Beyond Films Limited) Controlled entity of Beyond Rights Distribution Limited HL Beyond Limited Controlled entities of Beyond Distribution Pty Limited Beyond TV Properties Bermuda USA 100 100 Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Ireland Ireland 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Ireland 100 100 Bermuda 100 100 70 NOTEs TO ThE fINANcIAL sTATEmENTs 2018 Controlled entities of Magna home entertainment Pty Limited Magna Home Entertainment (NZ) Limited New Zealand 100 100 Controlled entities of Beyond D Pty Ltd Beyond D (NZ) Ltd entity controlled jointly by Beyond Tv Properties Bermuda and Beyond Films Properties Bermuda New Zealand 100 100 Beyond International Services Limited United Kingdom 100 100 Controlled entities of BTvuS Pty Ltd B U.S.A. Holdings, Inc. Controlled entities of B u.S.A. holdings, Inc Move It or List It, LLC 11:11 US, LLC Controlled entities of Clandestine Beyond Pty Ltd Pulse Productions S01 Pty Ltd Controlled entities of Blue Rocket Beyond Pty Ltd Dumbots S01 Pty Ltd (b) equity accounted investees 7Beyond Media Rights Limited (c) Associates Melodia Limited Melodia (Australia) Pty Ltd GB Media Development, Inc USA USA USA Australia Australia Ireland Ireland Australia USA 100 100 100 100 100 100 50 33.3 33.3 10 100 100 100 - 50 33.3 33.3 10 71 Beyond InternatIonal AnnuAl RepoRt 201829. finanCial risk management (i) Capital Risk Management The Consolidated Entity manages its capital to ensure that entities in the group will be able to continue as a going concern while maximising the return to stakeholders. The Consolidated Entity’s strategy remains unchanged from 2017. The capital structure of the group consists of cash and equity attributable to the equity holders of the parent entity, comprising issued capital, reserves and retained earnings. The Consolidated Entity operates globally, primarily through subsidiary companies established in the markets in which the group trades. The consolidated entity is subject to certain financing arrangements convenants and meeting these are given priority in all capital risk management decisions. For further details on events of default on these financing arrangements, refer to note 8(b). Operating cash flows are used to make the routine outflows of tax and dividends. (ii) Market Risk The Consolidated Entity’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates (refer note 29 (iii)). (iii) Foreign Currency Risk Management The Consolidated Entity undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. Derivative financial instruments are used by the Consolidated Entity to hedge exposure to exchange rate risk associated with foreign currency trade receivables. Mark-to-market gains on derivative financial instruments used by the economic entity are recognised in the financial statements. Transactions for hedging purposes are undertaken without the use of collateral as only reputable institutions with sound financial positions are dealt with. Foreign currency sensitivity analysis The Consolidated Entity is mainly exposed to US dollars (USD), Euro (EUR), Great British Pound (GBP) and New Zealand Dollars (NZD). The carrying amount of the foreign currency denominated financial assets and liabilities at the reporting date is as follows: COnsOliDateD entity US Dollars Euro Great British Pound New Zealand Dollars Other 2018 2017 finanCial assets $000's 32,054 finanCial liaBilities $000's (1,381) finanCial assets $000's 22,482 finanCial liaBilities $000's 236 4,464 2,151 (129) (138) (366) (8) (41) (15) 2,922 279 (33) (177) 38,402 (1,812) 25,473 486 (108) (257) (15) 342 29. finanCial risk management (continued) The following table details the Consolidated Entity's sensitivity to a 10% increase and decrease in the Australian dollar against the relevant foreign currencies. A sensitivity rate of 10% is considered reasonable based on exchange rate fluctuations over the past 12 months. The sensitivity analysis includes only outstanding foreign currency financial assets and liabilities and adjusts their translation at the period end for a 10% change in foreign currency rates. COnsOliDateD entity 2018 2017 Profit/(loss) Forward foreign exchange contracts 10% inCrease $000's (3,984) (3,984) 10% DeCrease $000's 4,824 10% inCrease $000's (2,884) 10% DeCrease $000's 3,525 4,824 (2,884) 3,525 It is the policy of the Consolidated Entity to enter into forward foreign exchange contracts to cover specific production foreign currency receipts. The Consolidated Entity does not enter into derivative financial instruments for speculative purposes. The following table details the forward foreign currency contracts outstanding as at the reporting date. COnsOliDateD entity Outstanding Contracts Sell USD Less than 3 months 3 to 6 months Longer than 6 months Gains or Losses from forward exchange contracts Unrealised gains Unrealised losses average exChange rate 2018 prinCipal amOunt 2018 $000's average exChange rate 2017 prinCipal amOunt 2017 $000's 0.7767 0.7936 0.0000 0.7577 0.7631 0.7564 2,550 414 - 2,964 - 161 161 1,219 3,984 1,639 6,843 62 - 62 (iv) Interest Rate Risk Management The Consolidated Entity's exposure to interest rate risk is minimal. The Consolidated Entity's exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note, per below. The average effective interest rate on cash at bank was 5.35% (2017: 2.73%) The average effective interest rate on borrowings was 2.51% (2017: 3.32%) Interest rate sensitivity analysis The sensitivity analysis below have been determined based on the exposure to interest rates at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period. A sensitivity analysis of 50 basis points is considered reasonable based on interest rate fluctuations over the past 12 months. At reporting date, if interest rates had been 50 points higher or lower and all other variables were held constant, net interest received from cash held by the Consolidated Entity would move by $21,580 (2017: $24,208). At reporting date, if interest rates on borrowings had been 50 points higher or lower and all other variables were held constant, net interest payable from borrowings held by the Consolidated Entity would move by $23,260 (2017: $10,856). 72 NOTEs TO ThE fINANcIAL sTATEmENTs 2018 73 Beyond InternatIonal AnnuAl RepoRt 201829. finanCial risk management (continued) (v) Liquidity Risk Management Ultimate responsibility for liquidity risk management rests with the Board of Directors, who have built an appropriate liquidity risk management framework for the management of the Consolidated Entity’s short, medium and long-term funding and liquidity management requirements. This framework is not formally documented. The Consolidated Entity manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows. Included in note 8(b) is a listing of additional undrawn facilities that the Consolidated Entity has at its disposal to further reduce liquidity risk. Liquidity and interest risk tables The following tables detail the Consolidated Entity's remaining contractual maturity for it's financial liabilities. 29. finanCial risk management (continued) (vii) net Fair value of Financial Instruments The net fair value of cash and cash equivalents and non-interest bearing monetary financial assets and liabilities approximates their carrying values. A discount rate of 8% (2017: 8%) has been applied to all non-current receivables & payables to determine fair value. The net fair value of other monetary financial assets and liabilities is based upon market prices where a market exists or by discounting the expected future cash flows by the current interest rates for assets and liabilities with similar risk profiles. For forward exchange contracts the net fair value is taken to be the unrealised gain or loss as at the date of the report calculated by reference to the current forward rates for similar contracts. Financial assets Cash and cash equivalents Loans and receivables Financial liabilities, at amortised cost Trade and other payables Other payables Financial derivatives Producer share payable Carrying amOunt net fair value 2018 $000's 7,256 29,614 36,871 6,414 209 161 13,287 20,071 2017 $000's 7,645 32,529 40,174 8,324 355 (62) 11,401 20,017 2018 $000's 7,256 29,479 36,735 6,414 209 161 13,275 20,060 2017 $000's 7,645 32,024 39,669 8,324 355 (62) 11,227 19,842 cOnSOlidated entity 2018 Financial liabilities Trade & other payables Financial derivatives Other financial liabilities Producer share payable Other payables Borrowings Total financial liabilities 2017 Financial liabilities Trade & other payables Financial derivatives Other financial liabilities Producer share payable Other payables Borrowings Total financial liabilities aVerage intereSt rate % leSS than 6 mOnthS $000'S nOteS 6 mOnthS tO 1 year $000'S 1 tO 5 yearS $000'S 5+ yearS $000'S tOtal OutFlOwS $000'S carrying amOunt $000'S 15 12 18 19 19 20 15 12 18 19 19 20 - - - - - 2.51% - - - - - 3.32% 6,414 161 1,200 6,566 209 - 14,550 8,324 (62) 1,187 4,520 355 - 14,322 - - 1,199 6,566 - 1,837 9,602 - - 1,187 4,520 - 5,744 11,450 - - 600 155 - - 754 - - 2,340 2,362 - - 4,702 - - - - - - - - - - - - 6,414 161 2,999 13,287 209 1,837 24,907 8,324 (62) 4,713 11,401 355 5,744 6,414 161 2,999 13,287 209 1,837 24,907 8,324 (62) 4,713 11,401 355 5,744 30,475 30,475 (vi) Credit Risk exposures Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Consolidated Entity. The consolidated entity has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. This information is supplied by credit rating agencies and, if not available, the Consolidated Entity uses publicly available financial information to assess the credit-worthiness. Trade receivables consist of a large number of customers, spread across diverse geographical areas. Ongoing reviews are conducted of accounts receivable balances. The Consolidated Entity does not have significant credit risk exposure to any single counterparty. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The credit risk on financial assets of the Consolidated Entity which are recognised on the Statement of Financial Position is generally the carrying amount, net of any provisions for doubtful debts. 74 NOTEs TO ThE fINANcIAL sTATEmENTs 2018 75 Beyond InternatIonal AnnuAl RepoRt 201830. key management persOnnel COmpensatiOn 30. key management persOnnel COmpensatiOn (continued) Directors The following persons were directors of Beyond International Limited during the financial year: Chairman Ian Ingram executive directors Mikael Borglund - Managing Director non-executive directors Anthony Lee Ian Robertson executives (other than directors) with the greatest authority for strategic direction and management The following persons were the seven executives with the greatest authority for the strategic directions and management of the Consolidated Entity (“specified executives”) during the financial year. Position name J Luscombe General Manager - Productions & Executive Vice President Beyond Television Group Pty Limited Beyond Television Group Pty Limited T McGee Beyond Entertainment Limited M Murphy Beyond Television Group Pty Limited P Wylie Beyond Television Group Pty Limited P Tehan Beyond Home Entertainment Pty Limited P Maddison General Manager - Home Entertainment Beyond D Pty Limited J Ward General Manager - Business Development General Manager - Distribution General Manager - Finance & Company Secretary General Manager - Legal & Business Affairs General Manager - Beyond D employer Information on key management personnel compensation is disclosed below and in the Directors’ Report. (i) ReMuneRATIOn The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below: Short-term employee benefits Post-employment benefits Long-term benefits COnsOliDateD entity 2017 3,863,161 2018 3,648,264 167,582 163,521 99,241 121,723 3,915,088 4,148,405 76 NOTEs TO ThE fINANcIAL sTATEmENTs 2018 (ii) ShARehOLDInGS Number of Shares held by Directors and Specified Executives, including their personally related parties parent entity DireCtOrs M Borglund I Ingram A Lee I Robertson Total BALANcE 1.07.17 3,150,949 19,310,278 5,474,997 110,000 28,046,224 2018 REcEIvED As remuneratiOn - OPTIONs exerCiseD - NET chANgE OThER * - BalanCe 30.6.18 3,150,949 - - - - - - - - 176,781 19,487,059 - - 5,474,997 110,000 176,781 28,223,005 speCifieD exeCutives BalanCe 1.07.17 273,478 J Luscombe REcEIvED As remuneratiOn - OPTIONs exerCiseD - NET chANgE OThER * - T McGee P Wylie P Tehan P Maddison M Murphy J Ward Total 75,000 2,000 75,000 50,000 - - 475,478 - - - - - - - - - - - - - - - - - - - - - BalanCe 30.6.18 273,478 75,000 2,000 75,000 50,000 - - 475,478 parent entity DireCtOrs M Borglund I Ingram A Lee I Robertson Total BalanCe 1.07.16 3,150,949 19,288,888 5,474,997 110,000 28,024,834 2017 REcEIvED As remuneratiOn - OPTIONs exerCiseD - NET chANgE OThER * - BalanCe 30.6.17 3,150,949 - - - - - - - - 21,390 19,310,278 - - 5,474,997 110,000 21,390 28,046,224 speCifieD exeCutives BalanCe 1.07.16 273,478 J Luscombe REcEIvED As remuneratiOn - OPTIONs exerCiseD - NET chANgE OThER * - T McGee P Wylie P Tehan P Maddison M Murphy J Ward Total 75,000 2,000 75,000 50,000 - - 475,478 - - - - - - - - - - - - - - - - - - - - - * Net Change Other refers to shares purchased or sold during the financial year. BalanCe 30.6.17 273,478 75,000 2,000 75,000 50,000 - - 475,478 77 Beyond InternatIonal AnnuAl RepoRt 2018 31. relateD parties (i) COnTROLLInG enTITIeS Beyond International Limited is the ultimate parent entity in the wholly-owned group comprising the Company and its wholly-owned controlled entities which are disclosed in note 28. (ii) key MAnAGeMenT PeRSOnneL Disclosures relating to key management personnel are set out in note 30 and the remuneration report in the directors’ report. Loans to key management personnel There were no outstanding loans as at 30 June 2018 or at any point during the year (2017: nil). equity transactions with directors and their director-related entities The aggregate number of equity instruments acquired or disposed of by directors of the Consolidated Entity and their director-related entities during the year were: Acquisitions Disposals Ordinary shares Ordinary shares 2018 numBer 176,781 - 2017 numBer 21,390 - The aggregate number of equity instruments held by directors of the Consolidated Entity and their director- related entities at balance date were: Issuing entity Beyond International Limited Class of equity instruments Ordinary shares Options over ordinary shares (iii) TRAnSACTIOnS WITh enTITIeS In The WhOLLy-OWneD GROuP numBer 28,223,005 28,046,224 - - Beyond International Limited is the ultimate parent entity in the wholly-owned group comprising the Company and its wholly-owned controlled entities. The Company advanced and repaid loans, received loans, provided management services, received dividends and charged rent to other entities in the wholly-owned group during the current and previous financial years. With the exception of loans advanced free of interest to wholly-owned subsidiaries, these transactions were on commercial terms and conditions. Such loans are repayable on demand. (iv) TRAnSACTIOnS WITh OTheR ReLATeD PARTIeS The aggregate amounts recognised in respect of the following types of transactions and each class of related party involved were: COnsOliDateD entity 2017 $ 2018 $ Transaction type Legal services (Holding Redlich) Associates Class of other related party - 9,502 The above transactions were made on commercial terms and conditions, at market rates. J Luscombe is a director of Ryzara Pty Ltd. The company has received payments for services rendered by J Luscombe during the year. These fees are included as part of the Executive Remuneration disclosed in Note 30 and the Directors Report. Beyond Entertainment Limited, a subsidiary of the parent company, holds 50% of the shares in 7Beyond Media Rights Limited (refer to note 16). At 30 June 2018 Beyond Entertainment Limited had an asset of $414,651 (2017: $308,000) owed by 7Beyond Media Rights Limited. This asset relates to funding provided for operating costs in 7Beyond Media Rights Limited and has been disclosed in Note 16. Beyond Productions Inc, another subsidiary of the parent company, had an amount payable of $130,390 compared to (2017: $330,162) owing from 7Beyond Media Rights Limited at 30 June 2018. This amount relates to production services provided by Beyond Productions Inc on behalf of 7Beyond Media Rights Limited and has been included in Receivables (Note 9). Beyond Entertainment Limited charged 7Beyond Media Rights Limited a management fee of $129,363 (2017: $128,321) for the provision of accounting and administration services. The management fee has been disclosed within Other income in Note 5(a). (v) TRAnSACTIOnS WIThIn The WhOLLy OWneD GROuP Due to the nature of the operations of the Consolidated Entity, normal operating transactions take place between subsidiaries within the group. These are all at arms length and are eliminated on consolidation. 32. parent entity The following information relates to the parent entity Beyond International Limited. The information presented has been prepared using accounting policies that are consistent with those of the Consolidated Entity. Statement of financial position Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Contributed equity Reserves Accumulated losses Total equity Profit for the year Total comprehensive income for the year Contingent Assets and Liabilities The parent entity has given a bank guarantee as at 30 June 2018 of $579,416 (2017: $579,416) to its landlord. Capital Commitments - Operating Lease Commitments Total lease expenditure contracted at reporting date but not recognised in the financial statements: Payable no later than one year Payable later than one, not later than five years Payable later than five years parent entity 2018 $000's 2017 $000's 1,640 51,698 53,338 2,270 29,834 32,104 34,018 341 (13,125) 21,233 296 296 3,508 54,075 57,583 570 36,075 36,645 34,018 341 (13,421) 20,938 4,417 4,417 718 3,132 - 3,850 718 3,001 817 4,536 78 NOTEs TO ThE fINANcIAL sTATEmENTs 2018 79 Beyond InternatIonal AnnuAl RepoRt 2018 33. suBsequent events There was no final dividend declared as detailed in Note 24. The Group received a waiver from St George waiving the breach in covenants as at 30 June 2018. 34. COmpany Details The registered office & principal place of business of the company is : Beyond International Limited 109 Reserve Rd Artarmon, NSW 2064 Australia Heavy Rescue: 401 80 81 Beyond InternatIonal AnnuAl RepoRt 2018notes to the financial statements 2018Directors’ DecLaration inDepenDent aUDitor’s report BEYOND INTERNATIONAL LIMITED AND ITS CONTROLLED ENTITIES ABN 65 003 174 409 DIReCTORS’ DeCLARATIOn In the directors’ opinion: • the attached financial statements and notes thereto comply with the Corporations Act 2001, the Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; • the attached financial statements and notes thereto comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in the financial statements; • the attached financial statements and notes thereto give a true and fair view of the consolidated entity’s financial position as at 30 June 2018 and of its performance for the financial year ended on that date; • there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and The directors have been given the declarations required by Section 295A of the Corporations Act 2001. Signed in accordance with a resolution of the directors made pursuant to section 295(5) of the Corporations Act 2001. On behalf of the directors Mikael Borglund Managing Director 31 August 2018 Sydney Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret St Sydney NSW 2000 Australia INDEPENDENT AUDITOR'S REPORT To the members of Beyond International Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Beyond International Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ declaration. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial performance for the year ended on that date; and (ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved 68 under Professional Standards Legislation, other than for the acts or omissions of financial services licensees. 82 DIREcTORs’ DEcLARATION 2018 83 Beyond InternatIonal AnnuAl RepoRt 2018 Revenue recognition Key audit matter How the matter was addressed in our audit As disclosed in note 5, timing differences often arise Our procedures for ensuring appropriate recognition due to the difference between the date of invoicing of revenue included, but were not limited to, the and the date on which revenue is considered to be following: earned. This results in either accrued or deferred revenue being recognised on the balance sheet at each reporting date as disclosed in notes 9 and 19. • Evaluated the revenue recognition policies for all material sources of revenue and from our detailed testing performed below, Our audit approach was focused around the evaluation ensured that revenue was being recognised of whether the Group’s revenue had been recorded in appropriately, in line with Australian the appropriate period and whether the accounting Accounting Standards and policies disclosed policies had been consistently and appropriately within the financial statements. applied particularly in response to the extended terms available on production and licensing contracts. • Performed detailed analytical procedures covering revenue, direct costs and margins Due to these factors and the overall significance of achieved for all key revenue streams against revenue to the Group, we considered this matter to be our expectations and investigated any significant to our audit. significant variances. • Selected a sample of revenue items from all significant revenue streams, agreeing revenue recognised to supporting documentation to confirm the existence and accuracy of the revenue recognised and to consider whether the transactions were recorded in the correct period. Valuation of other assets Key audit matter How the matter was addressed in our audit As at 30 June 2018, the Group recognised other assets In assessing the carrying value of other assets, the of $20,940,000 which includes capitalised production procedures performed included, but were not limited costs of $8,488,000, prepaid royalties of $4,696,000, to, the following: capitalised development costs of $1,410,000, distribution advances of $4,201,000 and investments in 3rd party copyright of $1,234,000 as disclosed in note 11. Given the judgement applied by the Group in estimating the future sales for the specific titles held within this asset category, and the subsequent anticipated recoverability of these assets, this matter was considered to be significant to our audit. • Performed a detailed analysis of costs capitalised during the period in relation to specific titles, including assessing the inputs and estimates applied to the calculations. • • Inspected a sample of licensing and production contracts to validate actual sales incurred to date. Performed a detailed review of gross profit percentages compared to the prior period and management’s budgets. • Assessed the recoverability of these assets, including challenging management’s forecasted sales projections by comparing against the historical sales performance of specific titles and current licensing terms in place with third party distributors. • Evaluated the Group’s amortisation and impairment processes in respect of the other assets in accordance with the Group’s amortisation policy and performed a detailed review of the amortisation calculations and rates applied. Valuation of intangibles assets Key audit matter How the matter was addressed in our audit As disclosed in note 14, the Group held intangible In assessing the carrying value of the Beyond Home assets of $4,750,000 which included goodwill of Entertainment CGU we undertook, amongst others, $1,922,000 as at 30 June 2018 in respect to the Beyond the following audit procedures: Home Entertainment CGU. • Evaluated the discounted cash flow model This matter was considered significant to our audit prepared by the Group and challenged the given the recent performance of this CGU and the assumptions and judgements made. This critical accounting estimates and judgements which included considering the reliability of the are applied in performing an assessment of impairment CGU’s cash flow forecasts with reference to for intangible assets, which are affected by future our understanding of the business and the market and economic conditions. CGU’s historical performance and assessing the assumptions regarding maintaining current revenues and reductions in operating costs. This included consideration of external market information and current intentions to reduce costs in the CGUs supply chain. • Performed sensitivity analysis on the key inputs applied to the discounted cash flow model to assess the impact minor changes in the assumptions would make to the carrying value of the CGU. 69 70 84 INDEpENDENT AuDITOR’s REpORT 2018 85 Beyond InternatIonal AnnuAl RepoRt 2018 Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the directors’ report under the heading ‘Remuneration Report’ for the year ended 30 June 2018. In our opinion, the Remuneration Report of Beyond International Limited, for the year ended 30 June 2018, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO East Coast Partnership Martin Coyle Partner Sydney, 31 August 2018 Other information The directors are responsible for the other information. The other information comprises the information in the Directors’ Report (excluding the audited Remuneration Report section) for the year ended 30 June 2018, but does not include the financial report and the auditor’s report thereon, which we obtained prior to the date of this auditor’s report, and the Annual Report to Shareholders (including the Chairman’s Report, Managing Director’s Report and Corporate Governance Statement), 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, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the Annual Report to Shareholders (including the Chairman’s Report, Managing Director’s Report and Corporate Governance Statement), if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and will request that it is corrected. If it is not corrected, we will seek to have the matter appropriately brought to the attention of users for whom our report is prepared. Responsibilities of the directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf This description forms part of our auditor’s report. 71 72 86 INDEpENDENT AuDITOR’s REpORT 2018 87 Beyond InternatIonal AnnuAl RepoRt 2018 sharehoLDer information rank hOlDer units % Of issueD Capital 11,948,422 10,716,781 6,070,278 5,350,592 2,700,000 2,531,111 2,416,224 2,228,044 1,977,937 1,615,050 1,581,751 1,354,300 921,910 807,066 672,000 559,016 546,820 529,031 425,990 263,455 55,215,778 6,121,190 19.48% 17.47% 9.90% 8.72% 4.40% 4.13% 3.94% 3.63% 3.22% 2.63% 2.58% 2.21% 1.50% 1.32% 1.10% 0.91% 0.89% 0.86% 0.69% 0.43% 90.02% 9.98% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 FREMANTLEMEDIA OVERSEAS LIMITED WINCHESTER INVESTMENTS GROUP PTY LIMITED SEALION MEDIA LIMITED NATIONAL NOMINEES LIMITED MR IAN INGRAM WILVESTOR LIMITED WILGRIST NOMINEES LIMITED MS YUN CHUN MARIE CHRISTINE LEE AXPHON PTY LIMITED MR RAYMOND DAVID DRESDNER & MRS ANN SIMONE DRESDNER NOMITOR LIMITED ALLAN DALE HOLDINGS PTY LTD PEARL FINANCE LIMITED MR MIKAEL JOHN BORGLUND A & C GAL INVESTMENTS PTY LTD SOURCE INCORPORATED DIXSON TRUST PTY LIMITED DEBOURS PTY LIMITED MS IRENE YUN LIEN LEE 20 BNP PARIBAS NOMINEES PTY LTD Totals: Top 20 holders of ISSueD CAPITAL Total Remaining holders Balance DISTRIBuTIOn OF eQuITy SeCuRITIeS range 1 - 1,000 1,001 TO 5,000 5,001 TO 10,000 10,001 - 100,000 100,001 - 9,999,999,999 Total tOtal hOlDers 226 169 72 118 29 614 There were 190 holders of less than a marketable parcel of shares shAREhOLDER INfORmATION 2018 89 Storm of Suspicion Merchants of the Wild 88 Beyond InternatIonal AnnuAl RepoRt 2018corporate Directory DireCtOrs Ian Ingram Chairman of Directors 109 Reserve Road Artarmon NSW 2064 Mikael Borglund Managing Director 109 Reserve Road Artarmon NSW 2064 Anthony Lee Non-Executive Director 109 Reserve Road Artarmon NSW 2064 Ian Robertson Non-Executive Director 109 Reserve Road Artarmon NSW 2064 OffiCers Mikael Borglund Chief Executive Officer Paul Wylie Company Secretary OffiCes Bankers Sydney 109 Reserve Road Artarmon NSW 2064 Australia Telephone: +61 (0) 2 9437 2000 Facsimile: +61 (0) 2 9437 2181 www.beyond.com.au Brisbane Level 2 - 338 Turbot Street Brisbane QLD 4000 Australia Telephone: +61 (0) 7 3267 9888 Facsimile: +61 (0) 7 3267 1116 Dublin 78 Merrion Square South Dublin 2 Ireland Telephone: +353 (0) 1 614 6270 Facsimile: +353 (0) 1 639 4944 London 3rd Floor, 167 Wardour Street London, W1F 8WP, United Kingdom Telephone: +44 (0) 20 7323 3444 Facsimile: +44 (0) 20 7580 6479 auDitOr / aCCOuntant / aDvisOrs BDO east Coast Partnership Chartered Accountants Level 11, 1 Margaret Street Sydney NSW 2000 St George Bank Level 12, 55 Market Street Sydney NSW 2000 Bank of Ireland Colvill House Talbot Street Dublin 1 Ireland sOliCitOrs Addisons Level 12, 60 Carrington Street Sydney NSW 2000 holding Redlich Level 65, MLC Centre 19 Martin Place Sydney NSW 2000 Gaines, Solomon Law Group LLP 1901 Avenue of the Stars Suite 1100 Los Angeles, California 90067 United States of America share registry Computershare Investor Services Pty Ltd Level 3, 60 Carrington Street Sydney NSW 2000 Telephone: 1300 855 080 Gfinity Esports 90 cORpORATE DIREcTORY 2018 91 Beyond InternatIonal AnnuAl RepoRt 2018 Beyond International Annual Report www.beyond.com.au 

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