Beyond International Annual Report 2021

Plain-text annual report

Beyond International ANNUAL REPORT 2O21 2214 CHAIRMAN’S REPORT 6 MANAGING DIRECTOR’S REPORT 14 CORPORATE GOVERNANCE REPORT 22 BOARD OF DIRECTORS 24 DIRECTORS’ REPORT 35 AUDITOR’S INDEPENDENCE DECLARATION 36 FINANCIAL STATEMENTS 84 DIRECTORS’ DECLARATION 85 INDEPENDENT AUDITOR’S REPORT 89 SHAREHOLDER INFORMATION 91 CORPORATE DIRECTORY Heavy Rescue 401 2 3 BEYOND INTERNATIONAL ANNUAL REPORT 2021CHAIRMAN’S REPORT The 2020-21 Financial Year that ended on 30th June 2021 was a very unusual and volatile period in each of Beyond’s four major business offices, London, Dublin, Los Angeles, and Sydney. In each country the respective government responses to the COVID-19 epidemic generated different lockdowns, office closures, work rules and travel restrictions that significantly affected both of Beyond’s core content production and distribution/rights licensing businesses as well as BeyondD. These restrictions imposed major demands and challenges on everyone in the Company and the Directors and Senior Management are very aware of and appreciate the efforts that were made over this protracted period. When Beyond’s Annual Report was prepared at this time last year it was only beginning to become apparent that we would have to learn to live with COVID-19 for an indefinite period that would probably be different in different countries but very few expected that we would still be facing lockdowns in September 2021. Even if the epidemic had not occurred the 2020-21 Financial Year would have been a critical year for Beyond as three major acquisitions in the UK and US had to be integrated and effectively reorganised. The 100% acquisition of TCB Media Rights Limited (TCB) on 15th April 2020 was the first step in the merger of Beyond Distribution and TCB and the complete reorganisation of the combined operations management team and the establishment of Beyond Rights as Beyond’s rights licensing business with offices in Dublin, London, and Sydney. In July 2020 Beyond also acquired 100% of the London based Seven Studio’s UK Limited and the 50.2% of the 7Beyond joint venture based in Los Angeles that Beyond did not already own. These two content production businesses have extended and increased Beyond’s content production capacity in each of the three main English speaking regions of North America, UK/Ireland and Australia. The Directors are pleased to report the significantly improved financial results for the year particularly the improved results for the UK, Irish and US operations and note that Beyond was not entitled to any UK or Irish Government support although it did receive $US.393,000 in US Government support. The Directors believe this year’s results reflect the strength of the UK, Irish and US operations in generally very difficult circumstances and expect conditions to remain difficult until the epidemic is brought under control and lockdowns and travel restrictions are eased. The Sydney based content production and Head Office administration continue to be in lockdown and this seems likely to restrict all Sydney Office use for some time. However, Beyond’s administrative staff are working from home and the Company’s access to Job Keeper support in Australia from July 2020 to March 2021 has made a major contribution to maintaining staff and morale. This was supported by a voluntary waiver of 100% of their fees by all the Non-Executive Directors from 1st April 2020, a 20% reduction in the C.E.O’s salary and agreed reductions by all staff of between 5% and 20%. During 2020-21 Financial Year 75% of this reduction was reinstated and the final 25% followed from 1st August, 2021, except for the Non-Executive Directors, the C.E.O and three senior executives. Looking forward the Directors intend to grow the two core businesses of production and licensing of media content both internally and by acquisition as suitable assets become available in North America or in UK/EU and to complete the sale of BeyondD in Australia as it is now unrelated to Beyond’s focus and it’s core businesses. Finally, despite all the continuing uncertainty regarding the future impact of COVID-19 in all the four countries where Beyond has staff located and offices, the Directors are confident that Beyond’s improved operational and financial performance in 2020-21, particularly its strong Total Revenue growth and positive Cash Flow from Operations (EBITDA) have positioned Beyond well for 2021-22 Financial Year and expect it’s recovery to continue. Ian Ingram Chairman 7th September, 2021 4 MANAGING DIRECTOR’S REPORT 2021 Halifax Retribution 5 BEYOND INTERNATIONAL ANNUAL REPORT 2021MANAGING DIRECTOR’S REPORT FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 This final report is provided to the Australian Securities Exchange (ASX) under ASX Listing Rule 4.3A This announcement has been authorised for release to the ASX by the Board of Beyond International Limited. Current Reporting Period: Previous Corresponding Period: Financial year ended 30 June 2021 Financial year ended 30 June 2020 APPENDIX 4E Name of Entity ABN Financial Year Ended Previous Corresponding Reporting Period BEYOND INTERNATIONAL LIMITED 65 003 174 409 30 JUNE 2021 30 JUNE 2020 RESULTS FOR ANNOUNCEMENT TO THE MARKET $’000 PERCENTAGE INCREASE / (DECREASE) OVER PREVIOUS CORRESPONDING PERIOD Revenue and other income from ordinary activities 116,661 Up 46.2% Profit from ordinary activities after tax attributable to members 555 Net profit for the period attributable to members 555 NMF* NMF* Dividends (distributions) Amount per security Franked amount per security Interim Dividend Final Dividend PREVIOUS CORRESPONDING PERIOD Interim Dividend Final Dividend 0.00 cents per share 0.00 cents per share 0.00 cents per share 0.00 cents per share Record date for determining entitlements to the dividends (if any) NIL NIL NIL NIL N/A Brief explanation of any of the figures reported above necessary to enable the figures to be understood: Refer to release *NMF – Not a meaningful figure DIVIDENDS Date the dividend is payable Record date to determine entitlement to the dividend Amount per security Total dividend Amount per security of foreign sourced dividend or distribution Details of any dividend reinvestment plans in operation The last date for receipt of an election notice for participation in any dividend reinvestment plans $’000 N/A N/A N/A N/A N/A N/A N/A NTA BACKING CURRENT PERIOD PREVIOUS CORRESPONDING PERIOD Net tangible asset backing per ordinary security 30.8 cents 28.4 cents ASSOCIATES OR JOINT VENTURES PREVIOUS CORRESPONDING PERIOD Troppo Productions Pty Ltd 50% joint venture with EQ Media Production Pty Ltd Melodia Limited Melodia (Australia) Pty Ltd GB Media, Inc 33.33% 33.33% 10% BEYOND INTERNATIONAL LIMITED PROFIT AND LOSS FOR THE TWELVE MONTHS TO JUNE 30 2021 Operating Revenue Other Income Total Revenue Expenses - Cost of Sales Expenses - Overheads Total Expenses EBITDA Depreciation and Amortisation Discount on Acquisition Impairment of Assets EBIT Net Interest Expense Profit/(Loss) Before Tax Tax Expense Profit/(Loss) After Tax Discontinued Operations Held For Sale Profit/(Loss) After Tax and before minority interests Minority Interests Profit/(Loss) After Tax attributable to members Additional Information EPS (cents per share) Dividends per Share (cents) NTA (cents per share) KEY POINTS 2021 $ 000’S 114,497 2,165 116,661 (88,508) (18,793) (107,301) 9,361 (5,935) - - 3,426 (425) 3,001 (981) 2,020 (1,466) 555 245 800 1.30 - 30.8 2020 $ 000’S VARIANCE $ $ 000’S VARIANCE – FAV/(UNFAV) % 78,432 1,348 79,780 (59,432) (18,196) (77,628) 2,152 (7,232) 9,036 (8,054) (4,097) (492) (4,589) 36,064 817 36,881 (29,076) (597) (29,672) 7,209 1,297 (9,036) 8,054 7,523 68 7,590 509 (1,490) (4,080) (1,986) (6,066) (328) (6,394) (7.19) - 28.4 6,100 520 6,621 573 7,194 8.49 - 2.4 46.0% 60.6% 46.2% (48.9%) (3.3%) (38.2%) 335.0% 17.9% (100.0%) (100.0%) NMF 13.8% NMF NMF NMF 26.2% NMF NMF NMF NMF - 8.4% • Total Operating revenue up by $36,880,000 to $116,661,000 from $79,780,000 • Digital marketing business unit reclassified as a discontinued operation held for sale – loss net of income tax of $1,466,000 • EBITDA increased by $7,209,000 to $9,361,000 from $2,152,000 • Positive EBIT of $3,426,000 against a prior year loss of $4,097,000 • Net profit after tax and before outside equity interests of $555,000, an improvement over the prior year loss of $6,066,000 • Cash flows from operating activities of $2,708,000 (2020: $2,446,000) • Debt repayments of $5,835,000 were made in the 2021 financial year, mainly to repay loans relating to production and amounts owing to Seven Network on acquisition of 7Beyond • Cash at bank as at 30 June 2021 was $6,442,000 (2020: $10,504,000) 6 MANAGING DIRECTOR’S REPORT 2021 7 BEYOND INTERNATIONAL ANNUAL REPORT 2021 MANAGING DIRECTOR’S REPORT OVERVIEW OF RESULTS OVERVIEW OF RESULTS (continued) EBITDA for the 2021 financial year was $9,361,000, up $7,209,000 on the prior corresponding period, while EBIT was $3,426,000 compared to a negative EBIT in the 2020 financial year of $4,097,000. Revenues were up by $36,881,000 or 46% compared to the 2020 financial year. As a result of reclassifying the digital marketing business unit as a discontinued operation held for sale, operating results for the business unit have been eliminated from operating revenues and costs for both the 2021 and 2020 financial years. The improvement in EBITDA/EBIT was driven by the acquisition of TCB Media Limited (TCB) in April 2020, the acquisition of the 50.8% of 7Beyond Media Rights Limited owned by Seven West Media Limited, and the acquisition of Seven West Studios (Seven Studios UK) from Seven West Media Limited. The EBITDA/EBIT result was achieved despite the negative impact the ongoing COVID-19 pandemic on program production and distribution throughout the world. Profit after income tax but before minority interests is $555,000 on total revenue of $116,661,000. This compares to the loss after income tax but before minority interests of $6,066,000 for the prior corresponding period. Beyond received a total of $2,147,000 Job Keeper support in the 2021 financial year compared to $775,000 in the prior corresponding period. This includes $468,000 received by the digital marketing business (2020: $130,000). The Paycheck Protection Program (PPP) non-recourse loan received from the US Government of $393,000 in the 2020 financial year was forgiven in the current period and booked to other income. From 1 April 2020 the Non-Executive Directors forfeited 100% of their Director’s fees, the CEO forfeited 20% of his salary package and all staff employed at 1 April 2020 agreed to reductions in their remuneration ranging between 5% and 20%. During the 2021 financial year 75% of the reduction was reinstated, with the final 25% reinstated on 1 August 2021 except for Directors, the CEO and three senior executives. While COVID-19 presented challenges and delays in production schedules, cost reductions of $1,121,000 across travel, entertainment, and marketing costs resulted, with many of the trade conventions and markets around the world held virtually by video conference facilities. It is likely that most of these cost reductions will continue into the 2022 financial year. Negotiations are being concluded for a management buyout of 100% of the Company’s shares in the digital marketing business, Beyond D. Non-binding terms of the share sale agreement have been negotiated and closure of the transaction is expected by mid-September 2021. Tabled on the opposite page are the results for each operating division. REVENUE Productions & Copyright Distribution Home Entertainment Other Revenue Total Revenue Operating EBITDA before adjustments: Productions & Copyright 7Beyond Joint Venture Distribution Home Entertainment Corporate Foreign Exchange (Loss) / Gain Total Operating EBITDA before adjustments Operating EBIT before adjustments: Productions & Copyright 7Beyond Joint Venture Distribution Home Entertainment Corporate Foreign Exchange (Loss) / Gain Total Operating EBIT before adjustments: Non Operating or Non Recurring Items: Productions & Copyright Distribution Home Entertainment Discount on Acquisition Intangible Impairment EBIT 2021 $ 000’S 2020 $ 000’S VARIANCE $ $ 000’S VARIANCE % 71,986 43,799 388 489 116,661 8,801 - 6,285 28 (3,978) (1,131) 10,005 6,309 - 6,281 28 (5,367) (1,131) 6,121 (877) (1,818) - - - 3,426 45,232 28,056 5,696 796 79,780 5,797 83 1,929 (567) (4,398) 308 3,153 3,974 83 1,624 (1,478) (5,629) 308 (1,117) (1,452) (1,698) (5,396) 26,754 15,744 (5,309) (308) 36,881 3,004 (83) 4,356 595 419 (1,439) 6,852 2,336 (83) 4,657 1,506 262 (1,439) 7,239 575 (121) 5,396 9,036 (9,036) (3,470) (4,097) 3,470 7,523 59.1% 56.1% (93.2%) (38.6%) 46.2% 51.8% (100.0%) NMF NMF 9.5% NMF 217.3% 58.8% (100.0%) NMF NMF 4.7% NMF NMF 39.6% (7.1%) (100.0%) (100.0%) (100.0%) NMF Curse Of Akakor 8 MANAGING DIRECTOR’S REPORT 2021 9 BEYOND INTERNATIONAL ANNUAL REPORT 20211. TELEVISION PRODUCTIONS AND COPYRIGHT SEGMENT (BEYOND PRODUCTION) Segment revenue increased by $27,213,000 or 60.8% to $71,986,000 compared to the prior year. The increase in revenue has been driven by the acquisition of the balance of 7Beyond not previously owned (renamed Beyond Media Rights – BMR), allowing the company to be consolidated into the Beyond Group’s financial statements (revenues of $25,348,000) and Seven Studios UK (renamed Beyond Screen Production – BSPUK) (revenues of $7,209,000). Projects produced through a joint venture company, Beyond TNC, grew revenues by $1,528,000 The segment EBIT prior to one-off items was $6,309,000 being 59% ($2,336,000) higher than the corresponding period in 2020 of $3,974,000 (prior to one-off adjustments). Impairments to investments in the television series Beat Bugs, Motown Magic and Halifax Retribution of $877,000 reduced EBIT to $5,433,000, $2,927,000 better than the $2,506,000 reported in the prior corresponding period. Key programs produced by BMR for the US market in the year were: • My Lottery Dream Home series 11 and 12 as well as a number of My Lottery Dream Home specials for HGTV • 50K Three Ways for HGTV • Chocolate Meltdown at Hersheys and Tiny Food Fight for the Food Network • Mystery Basket and Chef’s Choice for EKO • How To Spot A Killer for Discovery ID; and • Motor Mythbusters for Motor Trend Other US productions included a US version of Pooch Perfect for ABC Network and Deadly Women series 14 for Discovery ID. UK productions included a UK version of Pooch Perfect for the BBC and My Lottery Dream Home International for HGTV. Television programs commissioned for the Australian market in the 2021 financial year include season 4 of Love It Or List It Australia for Foxtel, Pacific Sports for the ABC, Memory Lane for Nine and Facing Monsters, 10 a feature documentary being released in Australian cinemas from November 2021. Programming produced by Beyond TNC include They All Came Down to Montreux for worldwide distribution and Blitzed for Sky Arts in the UK. Copyright revenues declined year on year by $1,927,000 to $1,924,000. The 2020 financial year included $800,000 in music publishing royalties and strong sales of the Deadly Women catalogue. Licensing of Mythbusters and Deadly Women contributed the majority of revenues of $1,927,000 in the 2021 financial year. The 2021 financial year included Job Keeper of $1,094,000 compared to receipts of $381,000 in the 2020 financial year. In addition, the PPP loan from the US Federal Government of $393,000 was forgiven and booked to Other income. During the 2021 financial year, 125 hours of television commenced production (2020:135 hours). This included 63 hours commissioned by US broadcasters (2020: 54 hours). While overall, hours of production declined from 135 hours in the 2020 financial year, the number of hours produced for the US increased by 17% year on year. All of Beyond’s production entities have a substantial forward order book and a deep slate of projects in development and are actively working with US, UK, Australian and international broadcasters and digital platforms to develop and produce new programs for the world market. Production on a new drama series, Troppo, for AGC internationally and the ABC locally, commenced production on the Gold Coast in July 2021. The series is a 50/50 co-production with EQ Media. 2. DISTRIBUTION TV SEGMENT (BEYOND RIGHTS) Revenue increased by $15,744,000 or 56.1% to $43,799,000 compared to $28,056,000 in the corresponding 2020 period. The increase in revenues reflects a full year contribution of the combined Irish/UK rights distribution company after the acquisition of TCB Media Rights Limited in April 2020. EBIT before one-off items is $6,281,000, an improvement of $4,657,000 over the prior corresponding period. Impairment of advances paid to producers of $1,151,000 was recognised in the current financial year compared to impairments of $698,000 in the 2020 financial year. Restructuring costs, including redundancies, of $667,000 were incurred in the period compared to $1,000,000 in restructuring costs from the acquisition of TCB in 2020. EBIT for the 2021 financial year after the one-off items was $4,463,000, a material improvement from the loss recorded in the 2020 financial year of $74,000. During the year significant licenses for productions were achieved for existing program franchises including Abandoned Engineering, Highway Thru Hell, Love It or List It, Massive Engineering Mistakes, Extreme Ice Machines, Giant Lobster Hunters and Heavy Rescue 401. Mythbusters and Deadly Women produced by Beyond Productions continue to perform well. Third party programs are primarily sourced from independent producers in the US, UK, Australia, 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 significantly during the past two years with the digital platforms (SVOD and AVOD) such as Discovery + and YouTube rapidly becoming key revenue drivers for the Company’s programs. 3. HOME ENTERTAINMENT SEGMENT (BHE) The BHE business was restructured in July 2020, with key licensing contracts novated to Regency Media. The business no longer has any direct employees or overheads. Beyond earns a commission on sales of product made by Regency and booked revenues of $388,000 in the 2021 financial year. The net contribution of BHE after royalty payments and stock movements in the 2021 financial year was $28,000. 4. DIGITAL MARKETING SEGMENT (BEYONDD) Beyond D has been classified as a discontinued operation held for sale in the 2021 annual accounts. The result of the business is still disclosed within the segment note. MANAGING DIRECTOR’S REPORT 2021 The loss from the business unit net of tax was $1,466,000. Operating EBIT was negative $2,057,000, including an impairment of net assets of $915,000 related to long term receivables. Excluding the impairment, EBIT loss was $1,142,000 which compares to the EBIT loss before impairments of $1,070,000 reported in the 2020 financial year. The business received $468,000 in Job Keeper and other Government initiatives relating to COVID-19 in 2021 compared to $130,000 received in the 2020 financial year. 5. CORPORATE Corporate overheads reduced by $262,000 in the 2021 financial year against the prior corresponding period. This was due to $401,000 in Job Keeper compared to $171,000 in 2020. Cost reductions of $473,000 in wages, travel and entertainment were offset by increases in computer and software related costs and higher audit and legal fees from the acquisition activity undertaken across the last two years. 6. INCOME TAX The underlying income tax for the 2021 financial year was $249,000. After reclassifying an income tax expense benefit of $610,000 relating to the Digital Marketing business unit to Discontinued operations held for sale and including non-recoupable withholding taxes ($113,000) from licensing receipts and US State tax of $16,000, tax expense for the year is $981,000. My Lottery Dream Home 11 BEYOND INTERNATIONAL ANNUAL REPORT 2021FOREIGN EXCHANGE – IMPACT ON RESULTS The Group has significant exposure to foreign exchange fluctuations in the television production and distribution operating segments with approximately 86% (2020: 52%) of Group revenues derived from outside Australia. In the normal course, the company only hedges production costs denominated in US$ that are to be received for services provided by the Australian production business. Foreign currency sales contracts entered into by the distribution segment are not hedged. The Australian dollar increased significantly against the US dollar and Euro in 2021. The exchange rate with the US dollar rose from $0.686 at 30 June 2020 to peak at $0.80 in February 2021 before falling back to $0.752 at 30 June 2021. The total foreign exchange loss for FY2021 is $1,131,000 (2020: gain of $297,000). This loss is allocated to the operating segments as follows: ITEM SEGMENT JUNE 2021 JUNE 2020 MOVEMENT $ MOVEMENT % Realised Gain/(Loss) Distribution/TV (466,143) 347,357 (813,500) Unrealised Gain/(Loss) Distribution/TV 99,383 (145,183) 244,567 234% 168% Realised (Loss)/Gain Unrealised Gain/(Loss) Realised Loss/(Gain) Unrealised Loss/(Gain) TOTAL FX GAIN / (LOSS) Production Production Other Other (135,687) (5,837) (129,850) (2225%) 101,510 (37,718) 139,228 (47,493) 30,092 (77,584) (682,871) 108,504 (791,375) 369% 258% 729% (1,131,301) 297,213 (1,428,514) (481%) DIVIDEND The Directors have determined that there will be no final dividend for the 2021 financial year. CONCLUSION AND OUTLOOK During the past year management focus was to restructure the international program sales business following the acquisition of TCB in April 2020, acquiring Seven Studios UK, assuming 100% control of the 7Beyond joint venture, restructuring the Home Entertainment business and exiting the digital marketing business (Beyond D). The management structure of the international sales business has been changed substantially with the appointment of a new CEO, Head of Sales, and Head of Acquisitions all based at the Company’s London office. The sales executive team has been overhauled with three new sales executives brought into the business. A new position of Financial Director was created to manage and control the financial and cash management of the expanded business. The business was rebranded as Beyond Rights during the year. As noted above, the Beyond Rights business delivered substantial improvements in terms of financial performance compared to prior periods with sales increasing by $15,744,000 and EBIT increasing by $4,657,000. The acquisition of the Seven Productions business in the UK coupled with Beyond assuming 100% control of the Seven Beyond Joint Venture has boosted program production revenue by $26,754,000 and increasing segment EBIT by 59% to $6,309,000. The Home Entertainment business was rationalised during the year and all activities outsourced. Management also concluded a non-binding agreement to sell 100% of the Company’s shares in the Beyond D business. Exiting the home entertainment and digital marketing segments underscores the Company’s forward strategy of focusing on two core activities: Program development and production for English speaking markets and the acquisition and licensing of programs to markets throughout the world. The COVID-19 pandemic first impacted Beyond’s financial results from April 2020 as the production business experienced significant delays and the international sales business moved to a state of uncertainty. Production has resumed during the 2021 financial year under strict COVID-19 related production protocols. This has caused significant delays in commencing productions and increased COVID-19 related costs to comply with COVID-19 production protocols. The only office to remain open during the period was the Artarmon post- production and corporate facility. Post-production continued under strict COVID-19 protocols which included non-essential staff not being allowed to enter the premises. As noted above the Beyond Rights delivered significantly improved results in the financial year. This is despite all employees working from home at each of the Company’s offices in Dublin, London, Los Angeles and Sydney. Further the traditional media sales markets and conferences were all cancelled and pivoted to “virtual” events using video conferencing technology. Despite these challenges our employees have quickly adapted to new and unique work practices including continuing to engage with the Company’s customers and suppliers in a positive and effective way. The Board acknowledges the significant financial and personal sacrifices made by our employees and is thankful for the continued support of our shareholders during these unprecedented times. Given the experience over the past 18 months we are confident that the Company will continue to deliver improved financial outcomes despite the continued uncertainty created by the ongoing COVID-19 pandemic. Mikael Borglund CEO & Managing Director 31 August 2021 My Lottery Dream Home International 12 MANAGING DIRECTOR’S REPORT 2021 13 BEYOND INTERNATIONAL ANNUAL REPORT 2021CORPORATE GOVERNANCE STATEMENT Perfect Pooch UK BEYOND INTERNATIONAL LIMITED Corporate Governance Statement, 30 June 2021 This Corporate Governance Statement of Beyond International Limited (the ‘company’) has been prepared in accordance with the 4th 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 31 August 2021. The ASX Principles and Recommendations and the company’s response as to how and whether it follows those recommendations are set out below. 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 the Board’s 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 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. As at the date of this report, 47% of the organisation were women (53% men); and 44% of senior executive positions were occupied by women (56% 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 CORPORATE GOVERNANCE STATEMENT 2021 15 Pacific Sports 14 BEYOND INTERNATIONAL ANNUAL REPORT 2021or 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. Beyond also discloses its performance against gender equality indicators in its Annual Report to the Workplace Gender Equality Agency. 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. PRINCIPLE 2: STRUCTURE THE BOARD TO BE EFFECTIVE AND ADD VALUE 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: 16 (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 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: INDEPENDENCE STATUS PRINCIPLE 3: INSTIL A CULTURE OF ACTING LAWFULLY, ETHICALLY AND RESPONSIBLY DIRECTOR’S NAME DATE APPOINTED Ian Robertson 27 September 2005 LENGTH OF SERVICE AT REPORTING DATE 15 years 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. RECOMMENDATION 3.1 - A LISTED ENTITY SHOULD ARTICULATE AND DISCLOSE ITS VALUES. Beyond recognises the importance of honesty, integrity, and fairness in conducting its business, and is committed to increasing shareholder value in conjunction with fulfilling its responsibilities as a good corporate citizen. All Directors, managers and staff are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the Company. RECOMMENDATION 3.2: (A) HAVE AND DISCLOSE A CODE OF CONDUCT FOR ITS DIRECTORS, SENIOR EXECUTIVES AND EMPLOYEES; AND (B) ENSURE THAT THE BOARD OR ANY COMMITTEE OF THE BOARD IS INFORMED OF ANY MATERIAL BREACHES OF THIS POLICY. 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 not undertake any action that may jeopardise the reputation of company. The board is informed immediately in the event of any material breaches of the code of conduct. That code is available on the company’s website. RECOMMENDATION 3.3: (A) HAVE AND DISCLOSE A WHISTLE-BLOWER POLICY AND (B) ENSURE THAT THE BOARD OR ANY COMMITTEE OF THE BOARD IS INFORMED OF ANY MATERIAL BREACHES OF THIS POLICY. The Whistle-blower Policy emphasises that Beyond will not tolerate anyone being discouraged from speaking up or being adversely impacted because they have reported misconduct in accordance with the policy. The board is informed immediately in the event of any material breaches of the Whistle-blower Policy. The code is available on the Company’s website. RECOMMENDATION 3.4: (A) HAVE AND DISCLOSE AN ANTI-BRIBERY AND CORRUPTION POLICY AND (B) ENSURE THAT THE BOARD OR ANY COMMITTEE OF THE BOARD IS INFORMED OF ANY MATERIAL BREACHES OF THIS POLICY. Beyond has a policy that emphasises a strong culture of integrity and ethical conduct. The policy cover expectations on issues such as community engagement, political donations and participation, use of information and its security, , market disclosure, fraud, bribery, corruption and the avoidance of conflicts of interest. The board is informed immediately in the event of any breaches of the Anti-bribery and Corruption Policy. The code is available on the Company’s website. CORPORATE GOVERNANCE STATEMENT 2021 17 BEYOND INTERNATIONAL ANNUAL REPORT 2021PRINCIPLE 4: SAFEGUARD THE INTEGRITY OF CORPORATE REPORTS 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. 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. 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 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 2021 and the half-year ended 31 December 2020, the company’s CEO and CFO provided the Board with the required declarations. RECOMMENDATION 4.3 - A LISTED ENTITY SHOULD DISCLOSE ITS PROCESS TO VERIFY THE INTEGRITY OF ANY PERIODIC CORPORATE REPORT IT RELEASES TO THE MARKET THAT IS NOT AUDITED OR REVIEWED BY AN EXTERNAL AUDITOR. Any periodic corporate report the Company releases to the market that is not audited is reviewed by the Finance Committee before being presented to the Board for approval to release. The Finance Committee consists of the Chairman, CEO and CFO and meet on a fortnightly basis. PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE RECOMMENDATION 5.1 - A LISTED ENTITY SHOULD HAVE AND DISCLOSE A WRITTEN POLICY FOR COMPLYING WITH ITS CONTINUOUS DISCLOSURE OBLIGATIONS UNDER LISTING RULE 3.1. The company maintains a written policy that outlines the responsibilities relating to the directors, officers and employees in complying with the company’s disclosure 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. RECOMMENDATION 5.2 - A LISTED ENTITY SHOULD ENSURE THAT ITS BOARD RECEIVES COPIES OF ALL MATERIAL MARKET ANNOUNCEMENTS PROMPTLY AFTER THEY HAVE BEEN MADE. All material market announcements are required to be approved by the Board prior to their release. RECOMMENDATION 5.3 - A LISTED ENTITY THAT GIVES A NEW AND SUBSTANTIVE INVESTOR OR ANALYST PRESENTATION SHOULD RELEASE A COPY OF THE PRESENTATION MATERIALS ON THE ASX MARKET ANNOUNCEMENTS PLATFORM AHEAD OF THE PRESENTATION. The Company has not made presentations to any analysts nor to a new and substantive investor in the 2021 financial year. PRINCIPLE 6: RESPECT THE RIGHTS OF SECURITY HOLDERS PRINCIPLE 7: RECOGNISE AND MANAGE RISK 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 ENSURE THAT ALL SUBSTANTIVE RESOLUTIONS AT A MEETING OF SECURITY HOLDERS ARE DECIDED BY A POLL RATHER THAN BY A SHOW OF HANDS. As a result of the COVID-19 pandemic, and restrictions on travel and large gatherings, the Company conducted a “virtual” AGM in 2020, using technology to allow shareholders to ask questions in advance of the meeting, attend the meeting and to participate despite the restrictions. This meeting was held in accordance with Corporations Act 2001 guidelines for such events. A virtual AGM will be held in 2021. All resolutions at shareholder meetings are determined by poll. RECOMMENDATION 6.5 – 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 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 4.1 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 18 CORPORATE GOVERNANCE STATEMENT 2021 19 BEYOND INTERNATIONAL ANNUAL REPORT 2021to ensure operational efficiencies, mitigation of risks, and safeguard of company assets. 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. 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 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. CORPORATE GOVERNANCE STATEMENT 2021 21 Deadly Women 20 BEYOND INTERNATIONAL ANNUAL REPORT 2021 BOARD OF DIRECTORS 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. IAN ROBERTSON NON-EXECUTIVE DIRECTOR AO BCOM, LLB, FAICD A corporate, media and regulatory lawyer who is the National Managing Partner of national commercial law firm Holding Redlich. He is the former President of the Board of the Victorian Government screen agency Film Victoria, the former Deputy Chair of the Australian Government screen agency Screen Australia, and a Fellow of the Australian Institute of Company Directors. He has been a non-executive director since 2006. 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, James Cameron’s 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. 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. 22 BOARD OF DIRECTORS 2021 23 BEYOND INTERNATIONAL ANNUAL REPORT 2021DIRECTORS’ REPORT YOUR DIRECTORS PRESENT THEIR REPORT ON THE COMPANY AND ITS CONTROLLED ENTITIES (“CONSOLIDATED ENTITY” OR “GROUP”) FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021. 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, and digital marketing. There was no significant change in the nature of those activities during the financial year. 4. OPERATING RESULTS The consolidated profit attributable to members of the Company for the financial year was $800,000 (2020: $6,394,000 loss). 5. DIVIDENDS No dividends have been declared in relation to the 2021 financial year. 6. REVIEW OF OPERATIONS Revenue from continuing operations for the year was 46% higher than revenues for 2020 at $114,497,000 compared to $78,432,000 with operating expenses increasing by $29,672,000 or 38% year on year. Revenues and operating expenditure include trading results for the full year for TCB Media Rights and for 7Beyond Media Rights and Seven Studios UK for the period 9 July 2020 to 30 June 2021. The result excludes the digital marketing business unit as this is disclosed separately as a discontinued operation held for sale. The result for the digital marketing division was a net loss after tax of $1,466,000. Net profit after tax before minority interests is $555,000 for the 2021 financial year – this compares favourably to the loss after tax before minority interests of $6,066,000 reported for the 2020 financial year. Net cash flow from operating activities was $2,708,000 (2020: $2,446,000). Net cash decreased by $4,241,000 in the 2021 financial year. This included loan repayments of $5,835,000 in relation to loans secured for specific productions including Halifax Retribution and the repayment of loans advanced by the Seven Network in relation to the acquisition of 7Beyond Media Rights not previously owned. The funding of the acquisition cost of Seven Studios of $904,000 was completed using free cash flow from operations. The Group received $2,147,000 in Job Keeper support in the 2021 financial year. TELEVISION PRODUCTIONS AND COPYRIGHT SEGMENT Television production revenue increased by $26,754,000 or 59% to $71,986,000. The segment received $1,094,000 in Job Keeper support to 30 June 2021. In 2021 the net “copyright income” from the further exploitation of the programs by Beyond Distribution was $1,924,000 compared to $3,851,000 in 2020. Segment operating EBIT for the 12-month period more than doubled to $5,433,000 (2020: $2,522,000). The growth in revenues and earnings was mainly due to the acquisition of the 50.08% of 7Beyond not owned, and the acquisition of Seven Studios UK. The television series produced for the US market during the year includes returning titles Pooch Perfect US, Deadly Women series 14 and My Lottery Dream Home series 11. New commissions in the year include Motor Mythbusters, 50k Three Ways, How To Spot A Killer, Tiny Food Fight, Mystery Basket, Chef’s Choice and Chocolate Meltdown at Hersheys. UK commissioned productions were Pooch Perfect UK, My Lottery Dream Home International and Blitzed!. Australian program commissions during the period include Love It Or List It Australia 4, Memory Lane and Pacific Sports. TV AND FILM DISTRIBUTION SEGMENT (BEYOND RIGHTS) Segment revenue has increased by $15,744,000 or 56% increase to $43,799,000 compared to the corresponding 12-month period (2020: $28,056,000). The improvement in revenue is due to the full year contribution from the catalogue of programmes acquired in the purchase of TCB Media Rights in April 2020. The segment EBIT for the twelve months was $4,463,000 compared to a loss of $74,000 in 2020. Profitability was impacted by restructuring costs incurred as a consequence of combining the two Rights businesses of $667,000 and the write-off of advances paid to third party producers that are not expected to be recouped ($1,151,000). The segment received $107,000 in Job Keeper support in 2021. During the year successful sales were achieved for in house produced series’, which include Deadly Women, Mythbusters and The Invisibles. 8. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR No matter or circumstance has arisen since 30 June 2021 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. 9. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS The Company is now set up to focus on two core activities: • The development and creation of media content in the English language from its production operations in the USA, UK and Australia; and • The distribution and licensing of completed media content to international markets. The most successful third-party products sold were Abandoned Engineering, Highway Thru Hell, the Love It Or List It franchise, Chasing Monsters, Heavy Rescue 401 and Massive Engineering Mistakes. HOME ENTERTAINMENT SEGMENT (BHE) The BHE business was effectively closed in July 2020, with key licensing contracts novated to Regency Media. Beyond continues to earn a commission on sales of product sold by Regency and booked revenues of $388,000 in the 2021 financial year. The net contribution of BHE in the 2021 financial year was $28,000. DIGITAL MARKETING SEGMENT (BEYOND D) Beyond D has been reclassified as a discontinued business held for sale. Trading for Beyond D net of tax was a loss of $1,466,000. 7. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS On 9 July 2020 The Group acquired 100% of the share capital of Seven West Studios Limited (incorporated in the United Kingdom) from Seven West Media Limited. The Group also acquired the remaining 50.98% ownership in 7Beyond Media Rights Limited (incorporated in the Republic of Ireland) that it didn’t already own from Seven Network (Operations) Limited on the same date. Pooch Perfect 24 DIRECTORS’ REPORT 2021 25 BEYOND INTERNATIONAL ANNUAL REPORT 202110. 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. 19,521,777 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 Managing Director, CEO and member of the Nomination Committee. 3,223,076 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 IAN ROBERTSON LL.B. BComm, FAICD A media and corporate lawyer who is the National Managing Partner of national law firm Holding Redlich and is the Managing Partner of the firm’s Sydney office. He is a former 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 PAUL WYLIE BA Acctg, CPA 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 Non-Executive Director, Chairman of the Remuneration Committee and member of the Nomination Committee. 110,000 direct/indirect General Manager, Finance Company Secretary. 22,000 indirect The particulars of Directors’ interests in shares are as at the date of this report. No changes in Directors’ interests in shares has occurred from the year ended 30 June 2021. 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 2021, and the number of meetings attended by each Director was: Director I Ingram M Borglund A Lee I Robertson BOARD OF DIRECTORS MEETINGS AUDIT COMMITTEE MEETINGS REMUNERATION COMMITTEE MEETINGS 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 - 1 - 1 1 1 - 1 1 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 $54,690 (2020: $37,070) 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. Motor Mythbusters 26 DIRECTORS’ REPORT 2021 27 BEYOND INTERNATIONAL ANNUAL REPORT 202113. 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 $188,025 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 J Luscombe General Manager - Productions & Senior Vice President No Fixed term Either party may terminate on twelve months’ notice Either party may terminate on twelve months’ notice P Tehan General Manager - Legal & Business Affairs M Murphy1 Executive Director - Ireland K Llewellyn- Jones2 Chief Executive Officer – Beyond Rights P Wylie J Ward General Manager - Finance & Company Secretary General Manager - Digital Marketing No Fixed term One-month notice given by either party No Fixed term Twelve weeks’ notice given by either party No Fixed term Six months’ notice given by either party No Fixed term Three months’ 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. 1. Mr. Michael Murphy’s role changed on 24 July 2020 from General Manager – Distribution to Executive Director – Ireland. 2. Ms. Katy Llewellyn-Jones was appointed Chief Executive Officer – Beyond Rights on 24 July 2020. 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 six 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 2021 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 $712,887 I Ingram A Lee $70,509 $20,548 I Robertson $20,548 TOTAL $824,492 - - - - - - - - - - $21,694 $80,137 - $1,952 $1,952 - - - $25,598 $80,137 - - - - - $814,719 $70,519 $22,500 $22,500 $930,228 0% 0% 0% 0% 0% Mikael Borglund’s bonus as a percentage of his salary and fees is 0% (2020: 0%). * Reflects reduction in remuneration due to COVID-19 and 75% reinstatement to 30 June 2021. 2020 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 $756,420 I Ingram A Lee $94,013 $41,096 I Robertson $41,096 TOTAL $932,625 - - - - - - - - - - $21,003 $53,731 - $3,904 $3,904 - - - - - - - $831,154 $94,013 $45,000 $45,000 $28,811 $53,731 - $1,015,167 0% 0% 0% 0% 0% * Reflects reduction in remuneration due to COVID-19 Mikael Borglund is the only Executive Director employed by Beyond International Limited. For the 2021 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 2020 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. 28 DIRECTORS’ REPORT 2021 29 BEYOND INTERNATIONAL ANNUAL REPORT 2021EXECUTIVE OFFICERS’ REMUNERATION EXECUTIVE OFFICERS’ SHAREHOLDINGS 2021 NAME SALARY & FEES BONUS NON- MONE- TARY BENE- FITS POST- EMPLOYMENT BENEFITS (SUPER- ANNUATION) OTHER LONG TERM BENEFITS (LEAVE) TERMIN- ATION BENEFITS SHARE BASED PAY- MENTS TOTAL SHARE BASED PAYMENTS % OF TOTAL J Luscombe $552,477 $482,600 K Llewellyn- Jones $339,372 M Murphy * $305,057 P Wylie * P Tehan * J Ward * TOTAL $260,373 $237,523 $220,392 $1,915,195 $482,600 - - - - - - - $21,694 $25,455 $10,827 $16,832 $17,859 $11,649 $21,694 $24,580 $21,632 $267 $20,860 ($3,063) $114,566 $75,718 - - - - - - - - $1,082,226 - - - - - $367,030 $334,565 $306,647 $259,422 $238,189 - $2,588,079 0% 0% 0% 0% 0% 0% 0% * Reflects reduction in remuneration due to COVID-19 and 75% reinstatement to 30 June 2021. 2020 NAME SALARY & FEES BONUS NON- MONE- TARY BENE- FITS POST- EMPLOYMENT BENEFITS (SUPER- ANNUATION) OTHER LONG TERM BENEFITS (LEAVE) TERMIN- ATION BENEFITS SHARE BASED PAY- MENTS TOTAL SHARE BASED PAYMENTS % OF TOTAL J Luscombe $580,135 $158,025 P Wylie M Murphy P Tehan $263,153 $341,078 $240,060 P Maddison** $501,335 J Ward TOTAL $230,257 $2,156,018 $158,025 - - - - - - - $21,003 $47,640 $21,003 $14,191 $18,206 $3,023 $20,940 $9,937 - - - - $21,003 ($131,555) 83,734 $20,720 $8,185 - - - - - - - $806,803 $298,347 $362,307 $270,874 $474,517 $259,162 $122,875 ($48,578) 83,734 - $2,472,074 0% 0% 0% 0% 0% 0% 0% - - - - - - - - - - 2021 ENTITY J Luscombe P Tehan P Wylie K Llewellyn- Jones M Murphy J Ward TOTAL 2020 ENTITY J Luscombe P Tehan P Maddison P Wylie M Murphy J Ward TOTAL OPENING BALANCE 1.07.20 NO. ACQUIRED (ON MKT) NO. ACQUIRED (OFF MKT) NO. ACQUIRED (ESS) NO. DISPOSED BALANCE 30.06.21 273,478 75,000 2,000 - - 20,000 - - - - - - 350,478 20,000 - - - - - - - - - - - - - - - - - - - - - 273,478 75,000 22,000 - - - 370,478 OPENING BALANCE 1.07.19 NO. ACQUIRED (ON MKT) NO. ACQUIRED (OFF MKT) NO. ACQUIRED (ESS) NO. DISPOSED BALANCE 30.06.20 273,478 75,000 50,000 2,000 - - 400,478 - - - - - - - - - - - - - - - - - - - - - - - - - - - - 273,478 75,000 50,000 2,000 - - 400,478 * Reflects reduction in remuneration due to COVID-19 ** Resigned in June 2020 John Luscombe’s bonus as a percentage of his salary and fees is 87% (2020: 27%). 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 2021 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 2020 financial year the budget criteria were not met and consequently those executives other than John Luscombe were not entitled to this bonus. 30 DIRECTORS’ REPORT 2021 Pooch Perfect US 31 BEYOND INTERNATIONAL ANNUAL REPORT 2021TRANSACTIONS 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 34 and the Director’s Report. VOTING AND COMMENTS MADE AT THE COMPANY’S 2020 ANNUAL GENERAL MEETING (AGM) The company received 98.3% of “for” votes in relation to its remuneration report for the year ended 30 June 2020. 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 31) 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. EBIT 000s NET PROFIT/(LOSS) 000s EPS (CENTS PER SHARE) NTA (CENTS PER SHARE) TOTAL EQUITY 000s DIVIDENDS (CENTS PER SHARE) 2017 2018 2019 2020 2021 (8,195) 354 (1,577) (6,332) 3,426 (7,469) (707) (2,774) (6,394) 800 (12.18) (1.15) (4.52) (10.42) 1.30 44.37 42.67 38.00 28.40 30.79 32,085 30,919 27,993 21,048 21,086 2.00 0.00 0.00 0.00 0.00 This concludes the remuneration report that has been audited. 22. AUDITORS’ INDEPENDENCE DECLARATION A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is included on page 28 of the Directors’ Report. AUDITOR DETAILS BDO Audit Pty Ltd 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 2021 Sydney 14. TOTAL NUMBER OF EMPLOYEES 20. PROCEEDINGS ON BEHALF OF COMPANY 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. 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 2021: Tax compliance services $89,148 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. The total number of fulltime equivalent employees employed by the Group at 30 June 2021 was 119 as compared with 112 at 30 June 2020. 15. SHARES UNDER OPTION At the date of this report, there are no un-issued ordinary shares of Beyond International Limited under option. 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. 32 DIRECTORS’ REPORT 2021 33 BEYOND INTERNATIONAL ANNUAL REPORT 2021AUDITOR’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 2021, 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 Director BDO Audit Pty Ltd Sydney, 31 August 2021 Massive Engineering Mistakes 34 DIRECTORS’ REPORT 2021 35 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. BEYOND INTERNATIONAL ANNUAL REPORT 2021 FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2021 NOTES CONSOLIDATED ENTITY 2020 $000'S 78,432 2021 $000’S 114,497 Revenue from continuing operations Other income Share of profits of joint ventures and investments in associates accounted for using the equity method Royalty expense Production costs Home entertainment direct costs Administration costs Employee benefits expense Finance costs Provisions Depreciation, amortisation, impairment and write-down of content assets expense Net foreign exchange loss Loss on disposal of property, plant and equipment Profit/(loss) before income tax from continuing operations Income tax (expense)/benefit Profit/(loss) after income tax for the year from continuing operations Loss from discontinued operations, net of tax Profit/(loss) after income tax for the year from continuing operations Other comprehensive income Items that may be reclassified subsequently to profit or loss: Foreign currency translation Other comprehensive income/(loss) for the year, net of tax Total comprehensive income/(loss) for the year Profit/(loss) is attributable to: Owners of Beyond International Limited Non-controlling interest Total comprehensive income/(loss) for the year is attributable to: Owners of Beyond International Limited - continuing operations Owners of Beyond International Limited - discontinued operations, net of tax Non-controlling interest Earnings per share attributable to the owners of Beyond International Limited Basic and diluted earnings/(loss) per share from continuing operations Basic and diluted earnings/(loss) per share Loss per share from discontinued operations Dividends per share 5 (a) 5 (a) 5 (b) 5 (b) 5 (b) 5 (b) 5 (b) 6 (a) 7 7 26 2,165 10,301 - 83 29,519 16,304 58,963 39,434 25 3,695 3,878 3,196 13,207 14,578 425 576 492 396 5,935 15,285 1,131 - - 26 3,001 (4,589) (981) 509 2,020 (4,080) (1,466) (1,986) 555 (6,066) (517) (517) (880) (880) 38 (6,946) 800 (6,394) (245) 328 555 (6,066) 1,749 (5,288) (1,466) (1,986) (245) 328 38 (6,946) Cents 3.70 Cents (7.19) 1.30 (10.42) (2.40) (3.20) - - The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2021 NOTES CONSOLIDATED ENTITY 2020 $000'S 2021 $000’S ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Current tax receivables Inventories Other current assets Assets of disposal group classified as held for sale TOTAL CURRENT ASSETS NON-CURRENT ASSETS Trade and other receivables Investments accounted for using the equity method Property plant and equipment Right-of-use assets Intangible assets Deferred tax assets Other non-current assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables Employee benefits Current tax liabilities Other financial liabilities Lease liabilities Other current liabilities Borrowings Liabilities directly associated with assets classified as held for sale TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Deferred tax liabilities Employee benefits Lease liabilities Other non-current liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS * refer note 3 for details regarding the reclassification. The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. 9 10 11 12 28 10 14 15 16 6(c) 12 17 18 6(d) 19 21 20 22 28 6(c) 18 21 20 6,442 10,504 30,545 29,268 511 410 493 689 20,381 17,580 58,289 58,534 1,679 59,968 58,534 1,975 - 697 927 914 820 1,534 3,424 664 194 3,259 3,468 8,280 10,803 16,410 20,550 76,379 79,085 8,911 10,297 3,790 3,861 404 255 1,010 105 6,252 1,795 30,547 25,389 6,966 6,831 51,884 54,530 1,178 - 53,062 54,530 1,234 158 772 67 1,186 186 2,011 124 2,231 3,507 55,292 58,037 21,086 21,048 36 FINANCIAL STATEMENTS 2021 37 BEYOND INTERNATIONAL ANNUAL REPORT 2021CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2021 (continued) CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2021 NOTES CONSOLIDATED ENTITY 2020 $000'S 2021 $000’S ASSETS EQUITY Issued capital Reserves Accumulated losses Non-controlling interests TOTAL EQUITY 23 24 25 34,018 34,018 (1,153) (623) (12,194) (12,647) 415 300 21,086 21,048 * refer note 3 for details regarding the reclassification. The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2021 CONSOLIDATED ENTITY ISSUED CAPITAL RESERVES $000’S $000'S ACCUMULATED LOSSES $000'S NON- CONTROLLING INTERESTS $000'S TOTAL $000'S TOTAL EQUITY $000'S Balance at 01 July 2020 34,018 (623) (12,647) 20,748 300 21,048 Profit for the year Other comprehensive income/(loss) for the year, net of tax Other movements in reserves Total comprehensive income/(loss) for the year - - - - - (517) 800 800 (245) 555 - (517) - (517) (13) 13 - (530) 813 283 (245) - 38 Transactions with owners in their capacity as owners: CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Receipts from government grants Interest received Finance costs paid Income tax paid (net of refunds) CONSOLIDATED ENTITY NOTES 2021 2020 $000’S $000'S 107,816 97,515 (106,284) (94,962) 2,158 23 (435) (571) 775 8 (518) (372) 5(a) Net cash provided by operating activities 8(a) 2,708 2,446 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Investment in websites and databases Prepaid royalties Prepaid royalties recouped Payments for investments and joint venture 14 16 (309) (103) - - (116) (226) (372) 707 (462) (3,643) Payments for purchase of business, net of cash acquired 27 2,455 (1,488) Investments in development projects Net cash flows provided by/(used in) in investing activities CASH FLOWS FROM FINANCING ACTIVITIES (Repayment)/Drawdowns of borrowings (net) Lease principal repayments (1,032) (1,121) 549 (6,260) (5,835) 8,636 (1,663) (1,812) (7,498) 6,824 (4,241) 8,183 3,011 5,172 Minority interest losses transferred on cessation of operations. - - (360) (360) 360 - Net cash flows (used in)/provided by financing activities Balance at 30 June 2021 34,018 (1,153) (12,194) 20,670 Balance at 01 July 2019 34,018 (6,316) 27,959 415 34 21,086 27,993 Net (decrease)/increase in cash held Cash and cash equivalents at the beginning of the financial year 257 - (880) - - Loss for the year Other comprehensive income/(loss) for the year, net of tax Total comprehensive income/(loss) for the year - (880) (6,394) (7,274) 328 (6,946) (6,394) (6,394) 328 (6,066) Cash and cash equivalents at the end of the financial year 9 3,942 8,183 - (880) - (880) The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. Transactions with owners in their capacity as owners: Minority interest losses transferred on cessation of operations. - - 62 62 (62) - Balance at 30 June 2020 34,018 (623) (12,647) 20,748 300 21,048 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. 38 FINANCIAL STATEMENTS 2021 39 BEYOND INTERNATIONAL ANNUAL REPORT 2021NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021 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 2021. The financial report of Beyond International Limited for the year ended 30 June 2021 was authorised for issue in accordance with a resolution of the Board of Directors on 31 August 2021. 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 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 Group’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 2021 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 non-controlling interest in full, even if that results in a deficit balance until the point at which the operations of the minority interest ceases. Any residual balance is then subsequently reclassified to the retained earnings. 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 32 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. 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. Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the consolidated entity based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing and geographic regions in which the consolidated entity operates. Sections within this financial report whereby estimates and judgments have a material impact are as follows: • Expected credit losses detailed in Note 10. • Net realisable value of inventory detailed in Note 11. • The recoverability of distribution advances detailed in Note 12. • The recoverability of capitalised development costs detailed in Note 12. • The recoverability of capitalised production costs detailed in Note 12. • The recoverability of investments in productions and 3rd party copyrights detailed in Note 12. • The valuation of goodwill detailed in Note 16. • The recoverability of deferred tax assets as detailed in Note 6. • The valuation of right-of-use-assets and the lease liability values as detailed in Note 15 and 21. • The valuation of employee benefits in Note 18. • Uncertain tax positions in Note 6. NEW STANDARDS AND INTERPRETATIONS The Consolidated Entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”) that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The following Accounting Standards and Interpretations are most relevant to the Consolidated Entity: Conceptual Framework for Financial Reporting (Conceptual Framework) The Consolidated Entity has adopted the revised Conceptual Framework from 1 July 2020. The Conceptual Framework contains new definition and recognition criteria as well as new guidance on measurement that affects several Accounting Standards, but it has not had a material impact on the Consolidated Entity’s financial statements. GOING CONCERN The financial report has been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and the discharge of liabilities in the normal course of business. The Directors believe that there are reasonable grounds to conclude that the Group will continue as a going concern, after consideration of the following factors: • As at 30 June 2021, the Group reported net current assets of $6,906,000 (2020: $4,005,000) and cash and cash equivalents of $6,442,000 (2020: $10,504,000); • Management have prepared forecasts for the year ending 30 June 2022 which indicate that the Group can continue to pay its debts as and when they become due and payable for at least the twelve months from the date of authorisation of this report. Accordingly, the directors believe the Group will be able to continue as a going concern and that it is appropriate to adopt the going concern basis of preparation of the consolidated financial report. RECLASSIFICATION OF COMPARATIVES Comparative figures have been adjusted to conform to changes in presentation for the current financial year. 40 NOTES TO THE FINANCIAL STATEMENTS 2021 41 BEYOND INTERNATIONAL ANNUAL REPORT 2021CORRECTION OF ERROR IN CALCULATING PROVISION ‘During the preparation of the financial statements for the current year, a reclassification between categories of current assets and current liabilities were preformed in order to more accurately reflect those transactions in terms of AASB 101. The details of reclassification have been noted in the table below: BALANCE SHEET (EXTRACT) Cash and cash equivalents Distribution advances Other current assets Producer share payable Other current liabilities Borrowings REPORTED 2020 $000'S MOVEMENT $000’S RECLASSIFIED 2020 $000'S 8,183 9,757 15,916 15,408 23,725 4,510 2,321 1,664 1,664 1,664 1,664 2,321 10,504 11,421 17,580 17,072 25,389 6,831 This reclassification had no impact on the reported results or the financial performance of the Group. 4. OPERATING SEGMENTS GEOGRAPHICAL 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. 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. This segment has been discontinued (Note 28). 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. 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. 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. 42 NOTES TO THE FINANCIAL STATEMENTS 2021 4. OPERATING SEGMENTS (continued) OPERATING SEGMENT REVENUE TV PRODUCTION & COPYRIGHT FILM & TELEVISION DISTRIBUTION HOME ENTERTAINMENT DIGITAL MARKETING OTHER & INTER SEGMENT ELIMINATIONS CONSOLIDATION 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 $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 70,500 44,772 43,692 28,011 305 5,648 4,486 Other income Other segments Total revenue 1,486 5,226 460 7,154 107 - 45 - 77,212 52,386 43,799 28,056 Result before fx, interest and D&A 8,801 5,781 5,618 929 Depreciation, amortisation and write-down of content assets (3,368) (3,275) (1,155) (1,003) Gain on bargain purchase Impairment of assets - - - - - - - - 83 - 388 28 - - - 48 - 468 - 6,716 143 - 465 1 118,982 85,148 184 2,610 - (5,226) (7,154) - 880 - 5,696 4,954 6,859 (4,761) (6,969) 121,592 86,028 (567) (1,964) (1,723) (94) - (6,283) - - (807) (263) - (1,130) (3,978) (4,322) 8,505 1,014 (1,412) (1,231) (6,029) (7,495) - - 9,036 (1,771) - - 9,036 (9,184) Result before interest, fx & other unallocated expenses 5,433 2,506 4,463 (74) 28 (8,573) (2,057) (2,200) (5,390) 1,712 2,476 (6,629) Net interest expense Foreign exchange (loss)/gain Profit/(loss) before income tax Income tax (expense)/benefit Profit/(loss) after income tax Non-controlling interest portion of the profit/(loss) Profit/(loss) for the year (411) (1,131) (510) 297 934 (6,842) (379) 776 555 245 (6,066) (328) 800 (6,394) Tiny Food Fight 43 BEYOND INTERNATIONAL ANNUAL REPORT 20214. OPERATING SEGMENTS (continued) 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 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S 38,436 19,755 34,061 50,691 451 1,313 1,198 2,219 (37,832) (34,121) 36,314 39,855 3,259 36,806 3,468 35,761 76,379 79,084 20,190 16,232 23,866 28,396 993 1,737 1,178 1,177 (1,571) (1,328) 44,656 46,213 1,234 1,186 9,403 10,638 55,293 58,036 226 1,728 - 80 - - - 680 - 3 - - 2 116 - 120 - 6,283 - - - 7 - 81 (653) 241 - 309 1,871 452 - 1,130 - 1,771 - 9,184 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 2021 $000'S 18,159 64,268 27,695 8,860 118,982 2020 $000'S 40,794 25,569 14,561 4,224 85,148 2021 $000'S 41,332 2,910 31,661 476 76,379 2020 $000'S 24,554 723 29,017 24,790 79,084 2021 $000'S 302 3 0 4 309 2020 $000'S 278 34 8 132 452 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 each segment revenue total is revenue from customers in excess of 10% of total segment revenue. Total revenues relating to these customers are $64m (2020: $49m) within the TV Production & Copyright and Film & Television distribution segments, $0.3m (2020: $4.7m) within the Home Entertainment segment and $1.3m (2020: $1.4m) within the Digital Marketing segment. 44 NOTES TO THE FINANCIAL STATEMENTS 2021 Pooch Perfect UK 45 BEYOND INTERNATIONAL ANNUAL REPORT 20215. REVENUES AND EXPENSES (continued) Disaggregation of revenue from contracts with customers The group derives revenue from the transfer of goods and services over time and at a point in time in the following major product lines and geographical regions: TV PRODUCTION & COPYRIGHT FILM & TELEVISION DISTRIBUTION HOME ENTERTAINMENT DIGITAL MARKETING OTHER & INTER SEGMENT ELIMINATIONS CONSOLIDATION 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 GEOGRAPHICAL REGIONS $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S $000'S Australia North America Europe Rest of World 12,337 28,172 5,190 52,290 13,762 11,978 2,927 11,767 5,873 2,838 21,822 12,060 - - 4,702 1,257 305 5,536 - - - - - 112 70,500 44,772 43,692 28,011 305 5,648 Timing of Revenue Recognition Goods transferred at a point in time - - 43,692 28,011 305 5,648 Services transferred over time 70,500 44,772 - - - - 70,500 44,772 43,692 28,011 305 5,648 - - - - - - - - - - - - - - - - - - - - - - - - 1 - - - 1 - 1 1 17,832 36,636 64,268 25,529 27,695 14,898 4,702 1,369 114,497 78,432 43,997 33,659 70,500 44,773 114,497 78,432 5. REVENUES AND EXPENSES (a) Revenue and other income Sales revenue Royalty revenue Other income Net realised/unrealised foreign currency translation gains Management service fees External interest Gain on the sale of property, plant and equipment Gain on bargain purchase Other Items Total revenue and other income Recognition and measurement CONSOLIDATED ENTITY 2020 $000'S 2021 $000'S 113,201 1,296 114,497 - 28 23 2 - 2,112 300 86 18 7 - - 116,662 83,425 Revenue from operating activities represents revenue earned from TV Productions & Copyright sales, Film & Television distribution, Home Entertainment sales, digital marketing sales and royalty revenue. Revenue is recognised when the Group transfers control over a good or a service to a customer either at a point in time or over time. The following specific recognition criteria must also be met before revenue is recognised: Revenue for TV Production and Copyright services are recognised over time as the production services are provided to the customer. Each customer contract for TV Production and Copyright services are unique to the customer and it has been determined that there is no alternative use of the production services to the Group. Under the TV Production and Copyright contracts with customers, the Group have an enforceable right to payment for the work completed to date. The input method for determining the amount of revenue to be recognised is assessed based on the costs incurred, which depicts the Group’s transferring of the control of the production to the customer. Revenue for Film & Television Distribution services are recognised at a point in time when the Broadcaster is able to exploit the distribution rights and when the IP rights have been delivered. Both internal and external title IP rights are delivered to the customer by episode. Royalty revenue is recognised at a point in time, being once the revenue can be accurately estimated. Revenue for Home Entertainment is recognised at the point in time when the goods have been accepted as delivered to the customer. For the consignment arrangements, revenue is recognised when the goods have been sold by the retailer to the end-customer. Revenue for Digital Marketing services are recognised over time as the services are provided to the customer. The stage of completion for determining the amount of revenue to recognise is assessed based on either the costs incurred or the time elapsed, depending on which method best depicts the Group’s transferring of the control to the customer. Where amounts are invoiced before revenue is earned, a deferred revenue liability is brought to account. These contract liabilities reflect the consideration received in respect of unsatisfied performance obligations. Other income includes jobkeeper government grant of $1,679,000 (2020: $645,000) which was received in the 2021 financial year. There are no unfulfilled conditions or other contingencies attached to these grants. Digital Marketing received $468,000 in jobkeeper government grants in the 2021 financial year (2020: 130,000) and is included in discontinued operations. 46 NOTES TO THE FINANCIAL STATEMENTS 2021 Chocolate Meltdown At Hershey’s 47 BEYOND INTERNATIONAL ANNUAL REPORT 20215. REVENUES AND EXPENSES (continued) 5. REVENUES AND EXPENSES (continued) (b) Profit / (loss) from continuing operations before tax includes the following: Bad and doubtful debts - Trade receivables written off / (recovered) during the period - Trade receivables movement in provision (Note 10) Rental expense on operating leases - Variable payments not included in the measurement of lease liabilities - Expenses relating to leases of low-value assets, excluding short term leases of low-value assets Finance costs - Interest expense on borrowings - Interest expense on lease liabilities Loss on disposal of asset Depreciation, amortisation and write-down of content assets - Property, plant and equipment assets (Note 14) - Right-of-use assets (Note 15) - Distribution advances (Note 12) - Capitalised production costs (Note 12) - Intangible assets (Note 16) - Investment in productions (Note 12) - Other assets (Note 12) Impairment - Goodwill (Note 16) - Inventory (Note 11) - Prepaid Royalties - Other assets (Note 12) CONSOLIDATED ENTITY 2020 $000'S 2021 $000'S 148 10 158 240 52 291 253 171 425 - 422 1,370 1,151 787 485 877 843 5,935 - - - - - (13) 203 190 130 68 199 166 352 492 26 883 1,553 681 2,366 81 - 1,667 7,232 3,470 1,618 2,652 314 8,054 Total Depreciation, amortisation, impairment expense and write-down of content assets expense 5,935 15,285 Foreign exchange loss / (gain) Other realised/unrealised foreign currency translation losses Superannuation guarantee expense 1,131 1,131 - - 678 861 48 NOTES TO THE FINANCIAL STATEMENTS 2021 CONSOLIDATED ENTITY 2020 $000'S 2021 $000'S (c) Auditors' Remuneration Remuneration of the auditor and their related network firms of the parent entity and its controlled entities for: - Audit or review of the financial report - 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 363,925 75,258 339,386 64,024 13,890 18,644 40,750 51,313 12,646 59,025 51,632 15,352 6. INCOME TAX EXPENSE (a) (b) The components of tax expense comprise: Current income tax Deferred income tax Withholding tax Adjustments in respect of current income tax of previous years Tax losses not brought to account Other Income tax benefit/(expense) reported in the Statement of Profit or Loss and Other Comprehensive Income Continuing and discontinuing operations: Income tax expense/(benefit) from continuing operations Income tax benefit from discontinuing operations 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 from continuing operations Loss before income tax from discontinued operations Profit/(loss) before income tax Prima facie tax payable on loss from ordinary activities before income tax at 30% (2020: 30%) Less: Tax effect of : - Other non-assesable/deductible items Less: Tax effect of : - Adjustments in respect of current income tax of previous years - Withholding tax losses written off from prior years - Tax losses not brought to account - Effect of lower tax rate on overseas income - Other Income tax (benefit)/expense CONSOLIDATED ENTITY 2020 $000'S 2021 $000'S (742) 675 114 155 161 16 379 981 (602) 379 (4,767) (1,005) - 251 4,745 - (776) (509) (267) (776) 3,001 (2,068) 933 (4,605) (2,237) (6,842) 280 (2,053) (929) (649) (3,581) (5,634) 155 114 161 619 (22) 378 250 - 4,745 (138) - (777) 49 BEYOND INTERNATIONAL ANNUAL REPORT 20216. INCOME TAX EXPENSE (continued) (c) 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 Provisions and accruals Tax losses Offset deferred tax liabilities against deferred tax assets Net deferred tax assets/(liabilities) Movements: Opening balance Additions from business combinations (note 27) Assets held for sale (note 28) Credited to profit or loss Closing Balance Liabilities Current Income tax (d) CONSOLIDATED ENTITY 2020 $000'S 2021 $000'S (2,171) (2,740) 3,677 (1,234) 2,922 4,014 (3,677) 3,259 2,025 2,282 (63) 481 (675) 2,025 (587) (1,664) 1,065 (1,186) 2,174 2,359 (1,065) 3,468 2,282 (1,162) 2,439 - 1,005 2,282 (404) (105) 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 recoupment is considered probable at the reporting date or where these losses offset deferred tax liabilities. The Australian tax group has unrecognised tax losses available totalling $27,099,947 (2020: $26,265,124). The benefits of these unrecognised tax losses will only be realised if certain conditions are met, including: • The group derives future assessable income of a nature and amount sufficient to enable the benefits from the deductions for the losses to be realised; • The group continues to comply with the conditions for deductibility imposed by the law; • The losses are available under the continuity of ownership or same business tests; • No changes in tax legislation adversely affect the company in realising the benefit from the deductions for the losses. 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. 6. INCOME TAX EXPENSE (continued) Recognition and measurement (continued) 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. Uncertain Tax position The Group has applied Interpretation AASB 23 Uncertainty over income tax treatment. Interpretation 23 sets out how to determine the accounting tax position when there is uncertainty over income tax treatments. The Interpretation requires an entity to: • Determine whether uncertain tax positions are assessed separately or as a group, and • Assess whether it is probable that a tax authority will accept an uncertain tax treatment used, or proposed to be used, by an entity in its income tax filings. - If yes, the Group should determine its accounting tax position consistently with the tax treatment used or planned to be used in its income tax filings. - If no, the Group should reflect the effect of uncertainty in determining its accounting tax position using either the most likely amount or the expected value method. Management regularly review the transactions with other Beyond related entities and engage tax specialists where required to assess the appropriate tax treatment. Whilst some judgement is required, management are not currently aware of any uncertain tax treatment that would result in a material liability at the reporting date. Additionally, the Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of interpretations of tax law and prior experience. 50 NOTES TO THE FINANCIAL STATEMENTS 2021 51 BEYOND INTERNATIONAL ANNUAL REPORT 20217. EARNINGS PER SHARE 8. CASH FLOW INFORMATION (continued) Basic and diluted earnings/(losses) per share from continuing operation Basic and diluted earnings/(losses) per share Loss per share from discontinued operations CONSOLIDATED ENTITY 2020 CENTS PER SHARE 2021 CENTS PER SHARE 3.7 1.3 (2.4) (7.2) (10.4) (3.2) The following reflects the income and share data used in the basic and diluted earnings per share computations Net profit/(loss) attributable to ordinary equity holders (used in calculating basic earning and diluted per share) from continuing operations Net loss attributable to ordinary equity holders (used in calculating basic earning and diluted per share) from discontinued operation Net profit/(loss) attributable to ordinary equity holders (used in calculating basic earning and diluted per share) Weighted average number of ordinary shares in calculating basic earnings and diluted per share Recognition and measurement CONSOLIDATED ENTITY 2020 2021 $000'S 2,266 $000'S (4,408) (1,466) (1,986) 800 (6,394) Number Number 61,336,968 61,336,968 Basic earnings per share is calculated as net 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; • the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and • other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. 8. CASH FLOW INFORMATION (a) Reconciliation of cash flows from operations with net profit after income tax Profit/(loss) after income tax Adjustment for non-cash flow in loss: CONSOLIDATED ENTITY 2020 2021 $000'S $000'S 555 (6,066) Depreciation, amortisation, impairment and write-down of content assets expense 6,029 16,678 Net (loss)/gain on sale of property, plant and equipment Share of profits of joint ventures and investments in associates accounted for using the equity method Unrealised foreign exchange loss/(gain) Make good provision Gain on bargain purchase (2) - 482 14 - - (83) (87) 7 (9,036) 52 NOTES TO THE FINANCIAL STATEMENTS 2021 Changes in assets and liabilities (net of effects from business combinations): (Increase)/decrease in trade and other receivables Decrease in inventory (Increase) in other assets (Increase) in net deferred tax assets and liabilities Increase in trade and other creditors Increase/(Decrease) in other liabilities Increase in provisions Cash flow from operations (b) Financing facilities available At reporting date, the following financing facilities had been negotiated and were available Secured multi option facility Used at reporting date * Unused at reporting date Total facility CONSOLIDATED ENTITY 2020 2021 $000'S $000'S 547 280 (4,693) (192) 474 4,330 652 (544) (1,148) 581 (1,276) (2,911) 492 71 2,708 2,446 3,589 522 4,111 3,216 680 3,896 * 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 5.56% at 30 June 2021 (5.56% at 30 June 2020). Bill acceptance/discount facility Used at reporting date* Unused at reporting date Total facility 4,000 4,000 - - 4,000 4,000 * 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 1.91% at 30 June 2021 (1.96% at 30 June 2020). The facilities are secured by certain covenants on the Consolidated Entity that these financial conditions are met - a) Gross debt less cash and cash equivalents divided by EBITDA cannot exceed 2 times. b) Minimum operating NPBT cannot be lower than Budget by 20% variance c) Interest Cover Ratio is to be greater than or equal to 5x Secured credit card facilities Used at reporting date Unused at reporting date Total facility Secured equipment loan facility Unused at reporting date Total facility 102 98 200 500 500 157 108 265 500 500 53 BEYOND INTERNATIONAL ANNUAL REPORT 2021 8. CASH FLOW INFORMATION (continued) 10. TRADE AND OTHER RECEIVABLES (continued) 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 2020 2021 $000'S $000'S 76,379 79,085 76,379 79,085 Ageing of debtors Not past due Past due 0-90 days Past due 91-180 days Past due 180+ days 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 $67,000 (2020: $2,121,000). 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. CASH AND CASH EQUIVALENTS Cash on hand Cash at bank Reconciliation to cash and cash equivalents at the end of the financial year The above figures are reconciled to the cash and cash equivalents at the end of the financial year as shown in the statement of cash flows as follows: Balances as above Cash and cash equivalents - classified as held for sale (note 28) Balance as per statement of cashflows * refer note 3 for details regarding the reclassification. 10. TRADE AND OTHER RECEIVABLES Current Trade receivables Other receivables Provision for expected credit losses Non-current Trade receivables CONSOLIDATED ENTITY 2020 2021 $000'S $000'S 9 8 6,433 10,496 6,442 10,504 6,442 10,504 194 - 3,942 10,504 CONSOLIDATED ENTITY 2020 2021 $000'S $000'S 30,244 29,477 520 (219) - (209) 30,545 29,268 1,975 1,975 927 927 2021 $000'S CONSOLIDATED ENTITY 2020 $000’S Gross Provision Gross Provision 28,231 2,330 224 1,434 32,219 - - - (219) (219) 20,342 5,751 3,208 1,103 30,404 - - - (209) (209) CONSOLIDATED ENTITY 2020 2021 $000'S $000'S (209) (6) (1,069) (206) 1,031 28 (219) - 3 (209) Reconciliation of provision for expected credit loss Opening balance Additional provision recognised Re-classified to non-current assets held for sale (note 28) Utilised Closing balance Recognition and measurement Trade receivables are recognised and carried at original invoice amount less an allowance for any uncollectable amounts or expected credit losses. 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. The group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets. Bad debts are written off when they are identified. “To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based on the payment profiles of sales over a period of 36 month before the beginning of the reporting period and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The group has identified the GDP annual growth rate and the unemployment rate of the regions in which it sells its goods and services to be the most relevant factors, and accordingly adjusts the historical loss rates based on expected changes in these factors. The consolidated entity has increased its monitoring of debt recovery as there is an increased probability of customers delaying payment or being unable to pay, due to the Coronavirus (COVID-19) pandemic. As a result, the amount of expected credit losses has increased since the previous corresponding period. A default event is defined when a debtor becomes past due. On becoming past due 0-30 days a reminder email is sent and followed up with a phone call. If the default moves into the next bracket of 31-60 days past due the sales executive makes contact with the customer. If the default moves into the 61-90 days a final email is sent and the details are passed onto the lawyers. Once it moves into the 91+ bracket the account is placed on hold and management will discuss if the amount should be written-off. 54 NOTES TO THE FINANCIAL STATEMENTS 2021 55 BEYOND INTERNATIONAL ANNUAL REPORT 2021 11. INVENTORIES Current DVD Stock - finished goods at net realisable value Stock footage - at cost Recognition and measurement CONSOLIDATED ENTITY 2020 2021 $000'S $000'S 398 12 410 683 6 689 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 completion and 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. During the year, the Group recognised an impairment charge to inventory $nil (2020: $1,618,000). 12. OTHER ASSETS Current Capitalised development costs Less: deferred revenue Distribution advances Capitalised production costs Prepayments Non-current Capitalised production costs Investment in productions and 3rd party copyright CONSOLIDATED ENTITY 2020 2021 $000'S $000'S 4,080 3,913 (1,553) (1,565) 2,527 14,569 2,348 11,421 2,845 2,888 440 3,285 923 3,811 20,381 17,580 4,329 3,951 8,280 5,877 4,926 10,803 12. 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. The 2021 accounts includes an amount of $853,000 (2020: $350,000) that was expensed during the year. Capitalised production costs Television production costs are capitalised and written down to their net realisable value on a title-by-title basis. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs to make the sale. Forecast sales revenues are reviewed regularly and the write-off of the asset is recognised as a write-down of content assets as disclosed in note 5(b). Where doubt exists as to the ability to recover the expenditure from future sales, the amounts in doubt is provided for in the year in which the assessment is made. The 2021 accounts includes an amount of $787,000 (2020: $915,000) that was expensed during the year. Assessing future net sales pertaining to Mythbusters titles, an write-down of $nil (2020: $1,452,000) was recognised against capitalised production costs to reflect their net realisable value at reporting date. The estimates relating to future licencing revenues of each production are re-assessed each financial year and amounts that are not expected to be recouped within 12 months have been reclassified as non-current. 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 Distribution advances for television and feature film distribution rights, are capitalised at cost as paid. Distribution advances are written down to their net realisable values on a title-by-title basis. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs to make the sale. Distribution advances for various titles were written down to their net realisable value resulting in a write-down for the year of $1,151,000 (2020: $681,000). Prepayments Amounts paid in advance are recorded at cost and are subsequently expensed based on the actual month of expenditure. Investment in productions and 3rd party copyright The Group has invested in the rights to receive future revenue streams from 3rd party produced programs, and will be recouped from future sales. Investment in productions for various titles were written down to their net realisable value resulting in a write-down for the year of $877,000 (2020: $nil). In the prior year a number of other assets relating to the wind down of the Home Entertainment division were impaired, with a write-down of $1,668,000 and an impairment charge of $314,000. The amounts impaired included prepaid marketing and pick, pack and ship charges. 56 NOTES TO THE FINANCIAL STATEMENTS 2021 57 BEYOND INTERNATIONAL ANNUAL REPORT 2021 13. FINANCIAL ASSETS AND LIABILITIES 14. PROPERTY, PLANT AND EQUIPMENT Fair value of financial instruments not measured at fair value on a recurring basis The following financial instruments are not measured at fair value in the statement of financial position. These had the following fair values: NON-CURRENT ASSETS Trade and other receivables NON-CURRENT LIABILITIES Other non-current liabilities Recognition and measurement 2021 CONSOLIDATED ENTITY 2020 CARRYING AMOUNT $000'S FAIR VALUE $000'S CARRYING AMOUNT $000'S FAIR VALUE $000'S 1,975 1,975 1,829 1,829 67 67 62 62 927 927 124 124 858 858 115 115 The fair values of the trade and other receivables and other non-current liabilities 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 and borrowings 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 33 for further information on financial instruments. Year ended 30 June 2021 Balance at 01 July 2020 Additions Additions from business combinations (note 27) Disposal Re-classified to non-current assets held for sale (note 28) Depreciation charge for the year Carrying amount at 30 June 2021 As at 01 July 2020 Cost Accumulated depreciation and impairment Net carrying amount As at 30 June 2021 Cost Accumulated depreciation and impairment Net carrying amount Year ended 30 June 2020 Balance at 01 July 2019 Additions Additions from business combinations Disposal Depreciation charge for the year Carrying amount at 30 June 2020 Recognition and measurement CONSOLIDATED ENTITY PLANT & EQUIPMENT $000'S TOTAL $000'S 820 309 13 (8) (15) (422) 697 820 309 13 (8) (15) (422) 697 11,926 11,926 (10,249) (10,249) 1,677 1,677 11,539 11,539 (10,719) (10,719) 820 820 1,677 1,677 115 25 (104) (893) 820 115 25 (104) (893) 820 Property, plant and equipment are measured at historical cost less accumulated depreciation and impairment loss. The expected useful lives are 3 to 10 years. 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. The World According To Grandpa 58 NOTES TO THE FINANCIAL STATEMENTS 2021 59 BEYOND INTERNATIONAL ANNUAL REPORT 202115. RIGHT-OF-USE ASSETS 16. INTANGIBLE ASSETS PROPERTY EQUIPMENT $000'S $000'S CONSOLIDATED ENTITY TOTAL $000'S Year ended 30 June 2021 Balance at 01 July 2020 Modification Re-classified to non-current assets held for sale (note 28) Depreciation charge for the year Exchange adjustment Carrying amount at 30 June 2021 As at 01 July 2020 Cost Accumulated depreciation Net carrying amount As at 30 June 2021 Cost Accumulated depreciation Net carrying amount Recognition and measurement 3,375 (239) (78) (1,361) (187) 1,510 7,771 (4,396) 3,375 4,840 (3,329) 1,511 49 (16) - (9) - 24 89 (40) 49 50 (26) 24 3,424 (255) (78) (1,370) (187) 1,534 7,860 (4,436) 3,424 4,890 (3,356) 1,534 The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability (resulting in lease modifications). Patents and Licenses - at cost Less: Amortisation and impairment Websites and Databases - at cost Less: Accumulated amortisation and impairment Goodwill - at cost Accumulated amortisation and impairment CONSOLIDATED ENTITY 2020 $000'S 150 2021 $000'S 862 (281) 581 408 (325) 83 3,470 (150) - 4,000 (3,807) 194 5,250 (3,470) (5,250) - 664 - 194 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 - PATENTS AND LICENSES $'000 - - - (4,600) - - - - - 275 (81) - 194 - 93 (204) 83 - - - - 862 - (281) 581 TOTAL $'000 4,600 275 (81) (4,600) 194 862 93 (485) 664 Balance at 01 July 2019 Additions Amortisation charge Impairment charge Balance at 30 June 2020 Additions from business combinations (Note 27) Additions Amortisation charge Balance at 30 June 2021 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 indefinite 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. (continued next page) 60 NOTES TO THE FINANCIAL STATEMENTS 2021 61 BEYOND INTERNATIONAL ANNUAL REPORT 202116. INTANGIBLE ASSETS (continued) Recognition and measurement (continued) Patents and licenses Patents and licenses are recognised at cost of acquisition. Patents and licenses 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 between 2 and 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. 17. TRADE AND OTHER PAYABLES Current (unsecured) Trade payables Other creditors and accruals Recognition and measurement CONSOLIDATED ENTITY 2020 2021 $000'S $000'S 1,690 7,221 8,911 2,519 7,778 10,297 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 33. 18. EMPLOYEE BENEFITS 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 2020 $000'S 2021 $000'S 3,790 3,790 3,861 3,861 158 158 186 186 4,047 3,976 875 875 787 787 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. 18. EMPLOYEE BENEFITS (continued) Recognition and measurement (continued) 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. 19. OTHER FINANCIAL LIABILITIES Current Total other financial liabilities CONSOLIDATED ENTITY 2020 $000'S 6,252 2021 $000'S 255 255 6,252 In 2019 a 51% owned special purpose entity, Beyond Lonehand Pty Ltd and its 100% owned subsidiary Halifax Retribution Production 1 Pty Ltd, took out a limited recourse facility to fund production on Halifax Retribution. As at 30 June 2021, the facility drawn down was $255,000 (2020: $5,456,000). The facility is secured by the intellectual property created by the production. To the extent that there are insufficient sales of the finished program in territories excluding Australia and New Zealand (Rest of World Sales), Beyond Entertainment Limited (BEL) has provided a guarantee for 50% of the loan advanced and secured against Rest of World Sales. In 2018 a 51% owned special purpose entity, Dumbots S01 Pty Ltd, took out a limited recourse facility to fund production on Dumbots. The facility is secured by the Post Digital and Visual Effects offset receivable. As at 30 June 2021, the facility drawn down was $nil (2020 : $795,000). 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 2021 63 BEYOND INTERNATIONAL ANNUAL REPORT 202120. OTHER LIABILITIES 22. BORROWINGS Current Unsecured liabilities Deferred revenue GST payable Producer share payable Other Non-current Unsecured liabilities Producer share payable * refer note 3 for details regarding the reclassification. Recognition and measurement CONSOLIDATED ENTITY 2020 $000'S 2021 $000'S 5,619 96 8,218 18 24,736 17,072 96 82 30,547 25,389 67 67 124 124 Current Secured liabilities Bank overdraft Loan - St George, Macquarie Bank Recognition and measurement CONSOLIDATED ENTITY 2020 $000'S 2021 $000'S 2,694 4,272 6,966 2,321 4,510 6,831 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. 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. 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. 23. ISSUED CAPITAL 21. LEASE LIABILITIES Current Non-current Total lease liabilities Lease payments Finance charges Net present values 2021 Lease payments Finance charges Net present values 2020 Recognition and measurement CONSOLIDATED ENTITY 2020 $000'S 1,795 2021 $000'S 1,010 772 1,782 5+ YEARS $000’S - - - - - - 2,011 3,806 TOTAL $000’S 1,901 (119) 1,782 4,132 (326) 3,806 LESS THAN 6 MONTHS $000’S 6 MONTHS TO 1 YEAR $000’S 538 (55) 483 1,030 (110) 920 564 (38) 527 958 (83) 875 1 TO 5 YEARS $000’S 799 (26) 772 2,144 (133) 2,011 The lease liability is initially measured at the present value of fixed lease payments that are not yet paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Variable lease payments are only included in measuring the lease liability if they depend on a rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Subsequently, the lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in the market rate. CONSOLIDATED ENTITY 2020 $000'S 2021 $000'S (a) Share Capital 61,336,968 ordinary shares - fully paid (2020: 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 31). 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 29). 64 NOTES TO THE FINANCIAL STATEMENTS 2021 65 BEYOND INTERNATIONAL ANNUAL REPORT 2021 24. RESERVES Employee Share Plan Benefit Reserve The employee share plan benefit reserve records items recognised as expenses on valuation of employee share options. 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 Beyond Rights Limited which has a functional currency of Great British Pounds (GBP) and for Magna Home Entertainment NZ Limited and Beyond D (NZ) Limited which have a functional currency of New Zealand Dollars (NZD). 25. NON-CONTROLLING INTEREST Interest in: Accumulated profits 26. DIVIDENDS No dividend was paid or declared during the year ended 30 June 2021 (2020: $nil) CONSOLIDATED ENTITY 2020 $000'S 2021 $000'S 415 415 300 300 CONSOLIDATED ENTITY 2020 $000'S - 2021 $000'S - 27. BUSINESS COMBINATION (continued) Cash and cash equivalents Trade and other receivables Capitalised production costs Intangible assets Deferred tax assets Trade and other payables Deferred revenue Deferred tax liabilities Net identifiable assets acquired Deduct - acquisition-date fair value of the equity interest in the acquiree immediately before the acquisition date Purchase consideration (i) Acquired receivables FAIR VALUE $000'S 605 1,625 1,972 63 240 (70) (2,113) (303) 2,019 (1,064) 955 The fair value of acquired trade receivables is $1,625,000. The gross contractual amount for trade receivables due is $1,625,000 with a loss allowance of $nil recognised on acquisition. (ii) Revenue and profit contribution The acquired business contributed revenues of $25,348,000 and net loss of $135,000 to the group for the period from 9 July to 30 June 2021. If the acquisition had occurred on the 1 July 2020, consolidated pro- forma revenue and loss for the full year end 30 June 2021 would have been $25,592,000 and $143,000 respectively. These amounts have been calculated using the subsidiary’s results. Net franking credits available based on a tax rate of 30% (2020: 30%) 446 446 (b) Purchase consideration - cash outflow 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. 27. BUSINESS COMBINATION (a) Summary of acquisition 7Beyond Media Rights Limited On 9 July 2020 Beyond International Limited acquired the remaining 50.98% issued share capital of 7Beyond Media Rights Limited, a Production company incorporated in Ireland. The acquisition further strengthens the group’s existing Production division. Details of the purchase consideration, the net assets acquired and goodwill/(gain on bargain purchase) are as follows: Purchase consideration (refer to (b) below): Total purchase consideration The assets and liabilities recognised as a result of the acquisition are as follows: 2021 $000'S 955 Outflow of cash to acquire subsidiary, net of cash acquired Cash consideration Less: Balances acquired Cash Net outflow of cash - investing activities Acquisition - related costs 2021 $000'S 955 605 605 (350) No acquisition related costs are included in the administrative expenses in the statement of profit and loss and in the operating cash flows in the statement of cash flows. 66 NOTES TO THE FINANCIAL STATEMENTS 2021 67 BEYOND INTERNATIONAL ANNUAL REPORT 2021 27. BUSINESS COMBINATION (continued) (c) Summary of acquisition Seven West Studios Limited On 9 July 2020 Beyond International Limited acquired 100% of the issued share capital of Seven West Studios Limited, a Production company incorporated in the United Kingdom. The acquisition further strengthens the group’s existing Production division. Details of the purchase consideration, the net assets acquired and goodwill/(gain on bargain purchase) are as follows: Purchase consideration (refer to (d) below): Total purchase consideration The assets and liabilities recognised as a result of the acquisition are as follows: Cash and cash equivalents Trade and other receivables Capitalised production costs Other assets Property plant and equipment Intangible assets Trade and other payables Deferred revenue Net identifiable assets acquired Goodwill Purchase consideration (i) Acquired receivables 2021 $000'S 904 FAIR VALUE $000'S 3,709 39 428 26 13 799 (749) (3,361) 904 - (904) The fair value of acquired trade receivables is $39,000. The gross contractual amount for trade receivables due is $39,000 with a loss allowance of $nil recognised on acquisition. (ii) Revenue and profit contribution The acquired business contributed revenues of $7,209,000 and net loss of $425,000 to the group for the period from 9 July to 30 June 2021. If the acquisition had occurred on the 1 July 2020, consolidated pro-forma revenue and loss for the full year 30 June 2021 would have been $7,209,000 and $420,000 respectively. These amounts have been calculated using the subsidiary’s results. (d) Purchase consideration – cash Inflow of cash to acquire subsidiary, net of cash acquired Cash consideration Less: Balances acquired Cash Net inflow of cash - investing activities Acquisition - related costs 2021 $000'S 904 3,709 3,709 2,805 Acquisition related costs of $118,000 are included in the administration expenses in the statement of profit and loss and in the operating cash flows in the statement of cash flows. 28. ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE (i) General Description Beyond D Pty Ltd is a wholly owned subsidiary of the Group, with the principal activity of digital marketing. Following a strategic review carried out during the year, management concluded that the segment no longer fitted into the long term goals of the Group as it was a business segment that no longer complemented the two core strategies of television production and distribution. The associated assets and liabilities were consequently presented as held for sale at fair value. The disposal group is available for immediate sale and is expected to qualify for recognition as a completed sale within one year. (ii) Assets and liabilities held for sale The following major classes of assets and liabilities relating to these operations have been classified as held for sale in the consolidated statement of financial position on 30 June 2021: Cash and cash equivalents Trade and other receivables Other assets Property plant and equipment Right-of-use assets Deferred tax assets Assets held for sale Trade and other payables Employee benefits Liabilities held for sale (iii) Financial performance information Revenue Other income Digital marketing direct costs Administration costs Employee benefits expense Finance costs Provisions Depreciation, amortisation, impairment and write-down of content assets expense Loss before income tax Income tax benefit Loss after income tax for the year (iv) Cash flow information Net cash used in operating activities Net cash provided by financing activities Net (decrease)/increase in cash and cash equivalent from discontinued operations Recognition and measurement CONSOLIDATED ENTITY DIGITAL MARKETING $000'S 194 869 43 15 78 481 1,679 (503) (578) (1,178) 2020 $000'S 6,716 143 5,608 474 1,540 26 54 1,394 2021 $000'S 4,486 468 4,032 1,386 1,430 10 69 94 (2,067) (2,237) 602 251 (1,466) (1,986) (989) (673) 949 (40) 744 71 A discontinued operation is a component of the consolidated entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the statement of profit or loss and other comprehensive income. 68 NOTES TO THE FINANCIAL STATEMENTS 2021 69 BEYOND INTERNATIONAL ANNUAL REPORT 2021 29. CONTINGENT ASSETS AND LIABILITIES 31. SHARE BASED PAYMENTS (continued) The consolidated entity had no contingent assets as at 30 June 2021 (2020: $nil). General Employee Share Loan Plan (continued) The consolidated entity has given bank guarantees as at 30 June 2021 of $895,000 (2020: $895,000) to its landlord. 30. COMMITMENTS (i) 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 CONSOLIDATED ENTITY 2020 $000'S 2021 $000'S 3,714 128 9,049 26 198 - - 182 4,040 9,257 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 23(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 above commitments to pay distribution guarantees have been entered into in the normal course of business. 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: 31. 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 2021. - 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 2021. - 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 2021. 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. 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 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. 70 NOTES TO THE FINANCIAL STATEMENTS 2021 71 BEYOND INTERNATIONAL ANNUAL REPORT 2021 32. GROUP STRUCTURE NAME OF ENTITY (a) Controlled entities consolidated Ultimate parent entity Beyond International Limited Controlled entities of Beyond International Limited: Beyond Films Ltd 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 Ltd 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 Beyond Lone Hand Pty Ltd Controlled entities of Liberty & Beyond Pty Ltd COUNTRY OF FORMATION OR INCORPORATION BEYOND INTERNATIONAL LIMITED DIRECT INTEREST IN ORDINARY SHARES 2021 % 2020 % Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Ireland Australia 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 51 100 100 26 100 51 51 51 51 51 100 100 100 100 100 51 51 100 51 51 51 Liberty & Beyond Productions Pty Ltd Australia 100 100 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 Australia 74 74 Australia Australia Australia 100 100 100 100 100 100 72 NOTES TO THE FINANCIAL STATEMENTS 2021 32. GROUP STRUCTURE (continued) NAME OF ENTITY Controlled entities of Beyond Properties Pty Ltd Beyond Pty Ltd Beyond International Group Inc The Two Thousand Unit Trust * COUNTRY OF FORMATION OR INCORPORATION BEYOND INTERNATIONAL LIMITED DIRECT INTEREST IN ORDINARY SHARES 2021 % 2020 % Australia USA Australia 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 USA 100 100 Beyond Simpson le Mesurier Productions Pty Ltd Australia - 100 Controlled entities of Beyond Entertainment Holdings Ltd Beyond Rights Ltd (formerly Beyond Entertainment Ltd) Beyond Rights Distribution Ltd Controlled entity of Beyond Rights Distribution Ltd HL Beyond Ltd Wild Weather Pty Ltd Controlled entities of Beyond Rights Ltd (formerly Beyond Entertainment Ltd) Ireland Ireland Ireland Australia Beyond Distribution (UK) Limited (formerly Beyond International Services Ltd) United Kingdom Beyond Rights Ltd (formerly TCB Media Rights Ltd) United Kingdom Beyond TNC Ltd Controlled entities of Beyond Media Rights Ltd Beyond Screen Productions Ltd Controlled entities of Beyond Screen Productions Ltd Beyond Screen North Ltd Controlled entities of Beyond OZ Pty Ltd Days Like these S1 Pty Ltd Ireland United Kingdom United Kingdom Australia 100 100 100 100 100 100 51 100 100 100 100 100 100 100 100 100 51 - - - 73 BEYOND INTERNATIONAL ANNUAL REPORT 202132. GROUP STRUCTURE (continued) NAME OF ENTITY Controlled entities of Beyond Home Entertainment Pty Ltd COUNTRY OF FORMATION OR INCORPORATION BEYOND INTERNATIONAL LIMITED DIRECT INTEREST IN ORDINARY SHARES 2021 % 2020 % Magna Home Entertainment Pty Ltd Australia 100 100 Controlled entities of Magna Home Entertainment Pty Ltd Magna Home Entertainment (NZ) Ltd New Zealand 100 100 33. 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 2020. 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 covenants and meeting these are given priority in all capital risk management decisions. For further details on these financing arrangements, refer to Note 22. Operating cash flows are used to make the routine outflows of tax and dividends. (ii) Market Risk New Zealand 100 100 The Consolidated Entity’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates (refer Note 33 (iii)). Controlled entities of Beyond D Pty Ltd Beyond D (NZ) Ltd Controlled entities of Beyond TNC Ltd Beyond TNC (UK) Ltd Beyond TNC (Australia) Pty Ltd Controlled entities of Beyond TNC (Australia) Pty Ltd Memory Lane 1 Pty Ltd Memory Lane 2 Pty Ltd 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 Controlled entities of Beyond Lone Hand Pty Ltd United Kingdom Australia Australia Australia USA USA USA Australia Australia Halifax Retribution Production 1 Pty Ltd Australia Controlled entities of Beyond Hogg Pty Ltd On the Record Pty Ltd (b) Joint venture/associates 7Beyond Media Rights Ltd Troppo Productions Pty Ltd (c) Associates Melodia Ltd Melodia (Australia) Pty Ltd GB Media Development, Inc Australia Ireland Australia Ireland Australia USA 100 100 100 100 - - 100 100 (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 100 100 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 2021 2020 FINANCIAL ASSETS $000'S 8,173 FINANCIAL LIABILITIES $000'S (1,602) FINANCIAL ASSETS $000'S 8,953 FINANCIAL LIABILITIES $000'S (1,259) 3,083 11,261 6 464 (523) (989) 27 - 2,218 12,749 58 10 (233) (2,632) 108 - 22,987 (3,085) 23,989 (4,017) 100 100 100 100 100 100 - 50 33.3 33.3 10 100 100 100 100 100 - 49.02 50 33.3 33.3 10 74 NOTES TO THE FINANCIAL STATEMENTS 2021 75 BEYOND INTERNATIONAL ANNUAL REPORT 202133. 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 2021 2020 Profit/(loss) 10% INCREASE $000'S (2,120) (2,120) 10% DECREASE $000'S 2,591 10% INCREASE $000'S (2,546) 10% DECREASE $000'S 3,112 2,591 (2,546) 3,112 (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 0.01% (2020: 2.31%) The average effective interest rate on borrowings was 3.45% (2020: 2.41%). 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 $50,224 (2020: $26,380). 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 $16,217 (2020: $8,589). (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. 33. FINANCIAL RISK MANAGEMENT (continued) Liquidity and interest risk tables The following tables detail the Consolidated Entity’s remaining contractual maturity for it’s financial liabilities. CONSOLIDATED ENTITY 2021 Financial liabilities Trade & other payables Other financial liabilities Lease liabilities Producer share payable Other payables Borrowings Total financial liabilities 2020 Financial liabilities Trade & other payables Other financial liabilities Lease 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 16 19 21 20 20 22 16 19 21 20 20 22 - 6.48% 7.14% - - 3.29% - 6.48% 6.78% - - 3.47% 8,911 255 538 12,368 191 6,966 29,230 10,215 6,252 1,030 8,536 100 6,831 32,964 - - 564 12,368 - - 12,933 82 - 958 8,536 - - - - 799 67 - - 866 - - 2,144 124 - - 9,576 2,268 - - - - - - - - - - - - - - 8,911 255 1,901 24,803 191 6,966 43,028 10,297 6,252 4,132 17,195 100 6,831 44,807 8,911 255 1,901 24,803 191 6,966 43,028 10,297 6,252 4,132 17,195 100 6,831 44,807 (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. 76 NOTES TO THE FINANCIAL STATEMENTS 2021 77 BEYOND INTERNATIONAL ANNUAL REPORT 202133. FINANCIAL RISK MANAGEMENT (continued) (vii) Fair Value of Financial Instruments The 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% (2020: 8%) has been applied to all non-current receivables & payables to determine fair value. The 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 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 Producer share payable Borrowings CARRYING AMOUNT NET FAIR VALUE 2021 $000'S 6,442 32,520 38,962 8,911 191 24,803 6,966 40,872 2020 $000'S 10,504 30,195 40,699 10,297 100 17,195 6,831 34,423 2021 $000'S 6,442 32,374 38,816 8,911 191 24,798 6,744 40,646 2020 $000'S 10,504 30,126 40,630 10,297 100 17,186 6,602 34,184 34. KEY MANAGEMENT PERSONNEL COMPENSATION 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 K Llewellyn-Jones CEO, Beyond Distribution Business Division J Luscombe M Murphy P Tehan P Wylie J Ward General Manager – Productions & Executive Vice President Beyond Television Group Pty Ltd General Manager – Distribution General Manager – Legal & Business Affairs General Manager – Finance & Company Secretary General Manager – Beyond D Beyond Entertainment Ltd Beyond Television Group Pty Ltd Beyond Television Group Pty Ltd Beyond D Pty Ltd Employer Beyond Rights Ltd 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 Termination benefits CONSOLIDATED ENTITY 2020 $ 3,246,668 2021 $ 3,222,288 140,164 151,685 155,855 5,154 - 83,734 3,518,308 3,487,240 Facing Monsters 78 NOTES TO THE FINANCIAL STATEMENTS 2021 79 BEYOND INTERNATIONAL ANNUAL REPORT 2021 34. KEY MANAGEMENT PERSONNEL COMPENSATION (continued) (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 1.07.20 3,150,949 19,487,059 5,474,997 110,000 28,223,005 2021 RECEIVED AS REMUNERATION - OPTIONS EXERCISED - NET CHANGE OTHER * 72,127 BALANCE 30.6.21 3,223,076 - - - - - - - - 34,718 19,521,777 - - 5,474,997 110,000 106,845 28,329,850 SPECIFIED EXECUTIVES BALANCE 1.07.20 273,478 J Luscombe RECEIVED AS REMUNERATION - OPTIONS EXERCISED - NET CHANGE OTHER * - P Tehan P Wylie K Llewellyn-Jones ** M Murphy J Ward Total 75,000 2,000 - - - 350,478 - - - - - - - - - - - - - 20,000 - - - BALANCE 30.6.21 273,478 75,000 22,000 - - - 20,000 370,478 PARENT ENTITY DIRECTORS M Borglund I Ingram A Lee I Robertson Total BALANCE 1.07.19 3,150,949 19,487,059 5,474,997 110,000 28,223,005 2020 RECEIVED AS REMUNERATION - OPTIONS EXERCISED - NET CHANGE OTHER * - - - - - - - - - - - - - SPECIFIED EXECUTIVES BALANCE 1.07.19 273,478 J Luscombe RECEIVED AS REMUNERATION - OPTIONS EXERCISED - NET CHANGE OTHER * - P Tehan P Wylie P Maddison*** M Murphy J Ward Total 75,000 2,000 50,000 - - 400,478 - - - - - - - - - - - - - - - - - - * Net Change Other refers to shares purchased or sold during the financial year ** Ms. K Llewellyn-Jones started on 24 July 2020 *** Mr. P Maddison resigned on 22 June 2020 BALANCE 30.6.20 3,150,949 19,487,059 5,474,997 110,000 28,223,005 BALANCE 30.6.20 273,478 75,000 2,000 50,000 - - 400,478 35. 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 32. (ii) KEY MANAGEMENT PERSONNEL Disclosures relating to key management personnel are set out in note 34 and the remuneration report in the directors’ report. Loans to key management personnel There were no outstanding loans as at 30 June 2021 or at any point during the year (2020: $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 2021 NUMBER 92,694 - 2020 NUMBER - - 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 28,315,699 - 28,223,005 - 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. 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 34 and the Directors Report. (iv) 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. 80 NOTES TO THE FINANCIAL STATEMENTS 2021 81 BEYOND INTERNATIONAL ANNUAL REPORT 2021 36. PARENT ENTITY The following information relates to the parent entity Beyond International Ltd. 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 PARENT ENTITY 2021 $000'S 2020 $000'S 473 33,121 33,594 7,906 1,882 9,789 34,018 341 (10,552) 23,806 - 15,088 15,088 5,169 2,935 8,104 34,018 341 (27,375) 6,984 Total comprehensive income/(loss) for the year 16,823 (4,726) The Deadly Type The parent entity has given a bank guarantee as at 30 June 2021 of $895,000 (2020: $895,000) to its landlord. 37. SUBSEQUENT EVENTS No matter or circumstance has arisen since 30 June 2021 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. 38. COMPANY DETAILS The registered office & principal place of business of the company is : Beyond International Limited 109 Reserve Rd Artarmon, NSW 2064 Australia 82 NOTES TO THE FINANCIAL STATEMENTS 2021 83 Saved And Remade BEYOND INTERNATIONAL ANNUAL REPORT 2021DIRECTORS’ DECLARATION INDEPENDENT AUDITOR’S REPORT 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 2020, 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 2020 and of its financial performance for the year ended on that date; and (ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 84 DIRECTORS’ DECLARATION 2021 85 BEYOND INTERNATIONAL ANNUAL REPORT 2021BEYOND INTERNATIONAL LIMITED AND ITS CONTROLLED ENTITIESABN 65 003 174 409DIRECTORS' DECLARATIONIn the directors' opinion:On behalf of the directors Mikael BorglundManaging Director31 August 2021Sydney• 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.• 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 2021 and of its performance for the financial year ended on that date;Signed in accordance with a resolution of the directors made pursuant to section 295(5) of the Corporations Act 2001.71 INDEPENDENT AUDITOR’S REPORT Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Revenue recognition Key audit matter How the matter was addressed in our audit Australian Accounting Standard AASB 15: Revenue from Our audit procedures to address this key audit matter Contracts with Customers (‘AASB 15’) users a five step included, but were not limited to, the following: model to recognise revenue. A number of estimates and judgements are made by management in order to determine the point at which performance obligations are met and revenue can be recognised.  Critically evaluating the revenue recognition policies for all material sources of revenue and from our detailed testing performed, ensured that revenue was being recognised Due to the nature of these key estimates and appropriately, in line with Australian judgements, and given the financial significance of Accounting Standards and policies disclosed revenue to the users of the financial report, revenue within the financial statements. This recognition was considered a key audit matter. included ensuring that revenue was The disclosure in connection with the Group’s recognition of revenue can be found in Note 5. Valuation of other assets recognised in accordance with the requirements of AASB 15.  Reviewing a sample of deferred revenue balances at year end to ensure that revenue was appropriately deferred in accordance with production and licensing milestones.  Selecting a sample of revenue transactions 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. of these assets along with the significance of the  Assessing the recoverability of these assets balance in the Consolidated Statement of Financial through a review of management’s forecast Position, we considered this area to be a key audit sales projections in comparison to the matter. historical sales performance of specific titles and current licensing terms in place with third party distributors.  Performing detailed testing in respect to licensing and production contracts to validate actual sales incurred to date.  Assessing whether the recognition, recoupment and write-down of these assets was in accordance with Australian Accounting Standards. Other information The directors are responsible for the other information. The other information comprises the information contained in the Directors’ Report (excluding the audited Remuneration Report section) for the year ended 30 June 2021, but does not include the financial report and our auditor’s report thereon, which we obtained prior to the date of this auditor’s report, and the Annual Report to Shareholders, which is expected to be made available to us after that date. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the Annual Report to Shareholders, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and will request that it is corrected. If it is not corrected, we will seek to have the matter appropriately brought to the attention of users for whom our report is prepared. Key audit matter How the matter was addressed in our audit Responsibilities of the directors for the Financial Report As at 30 June 2021, the Group recognised other assets Our audit procedures for assessing the carrying value of $28,661,000 which included capitalised production of the Group’s other assets included, but were not costs of $7,174,000, capitalised development costs of limited to, the following: $2,527,000, distribution advances of $14,569,000 and investments in productions and 3rd party copyright of $3,951,000 as disclosed in Note 12.  Performing a detailed analysis of the costs capitalised during the period in relation to specific titles, including an assessment of the Due to the judgements applied by management in inputs and estimates applied. forecasting future sales to support the carrying value 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. 86 INDEPENDENT AUDITOR’S REPORT 2021 87 BEYOND INTERNATIONAL ANNUAL REPORT 2021 INDEPENDENT AUDITOR’S REPORT SHAREHOLDER INFORMATION Auditor’s responsibilities for the audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the directors’ report under the heading ‘Remuneration Report’ for the year ended 30 June 2021. In our opinion, the Remuneration Report of Beyond International Limited, for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO Audit Pty Ltd Martin Coyle Director Sydney, 31 August 2021 UNITS % OF UNITS 2020 19,521,777 31.83% 13,416,781 MOVEMENT 6,104,996 19.48% 11,948,422 5,350,592 - - RANK HOLDER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 WINCHESTER INVESTMENTS GROUP PTY LIMITED FREMANTLEMEDIA OVERSEAS LIMITED MUTUAL TRUST PTY LTD MS IRENE YUN LIEN LEE WILVESTOR LIMITED WILGRIST NOMINEES LIMITED AXPHON PTY LIMITED ALLAN DALE HOLDINGS PTY LTD MR RAYMOND DAVID DRESDNER & MRS ANN SIMONE DRESDNER NOMITOR LIMITED MR MIKAEL BORGLUND A & C GAL INVESTMENTS PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED SOURCE INCORPORATED DIXSON TRUST PTY LIMITED DEBOURS PTY LIMITED BNP PARIBAS NOMINEES PTY LTD G CHAN PENSION PTY LTD CITICORP NOMINEES PTY LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 11,948,422 5,350,592 2,654,034 2,531,111 2,416,224 2,257,559 1,803,197 1,615,050 1,581,751 1,011,770 928,000 914,910 559,016 546,820 529,031 198,829 8.72% 4.33% 4.13% 3.94% 3.68% 2.94% 2.63% 2.58% 1.65% 1.51% 1.49% 0.91% 0.89% 0.86% 0.32% 31.83% 19.48% 8.89% 5.33% 425,990 2,228,044 2,531,111 2,416,224 2,121,083 1,688,330 1,615,050 1,581,751 1,011,770 928,000 914,910 559,016 546,820 529,031 198,819 - - 136,476 114,867 - - - - - - - - 10 180 - 78.75% 21.25% 1000 5000 10000 100000 1 1001 5001 10001 100001 9999999999 19,521,777 11,948,422 5,450,592 3,269,329 89 179,538 0.29% 180,598 (1,060) 179,382 156,984 0.29% 0.26% 179,202 156,984 Totals: Top 20 holders of ISSUED CAPITAL 56,883,997 92.74% 48,300,484 Total Remaining Holders Balance 4,452,971 7.26% 13,036,484 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 There were 189 holders of less than a marketable parcel of shares TOTAL HOLDERS 227 125 52 97 27 528 SUBSTANTIAL SHAREHOLDERS Winchester Investments Group Pty Limited Fremantlemedia Overseas Limited Mr Anthony Lee, Mutual Trust Pty Ltd Mr Mikael Borglund, Axphon Pty Ltd SUBSTANTIAL HOLDING* NUMBER OF ORDINARY SHARES IN SUBSTANTIAL HOLDING** 88 SHAREHOLDER INFORMATION 2021 There were 189 holders of less than a marketable parcel of shares * based on the number of ordinary shares on issue at 28 September 2021 ** based on the number of shares disclosed in the relevant Notice of Change of Interests of Substantial Holders BEYOND INTERNATIONAL ANNUAL REPORT 2021 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 Office 409 C/- Level 6, The Hub Anzac Square 200 Adelaide 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 Los Angeles 10555 Jefferson Boulevard, Suite A Culver City, CA 90232 USA Telephone: +1 (310) 237 6279 Auckland Level 5, 55 Anzac Ave Auckland 1010 New Zealand Telephone: +64 (9) 920 1740 Facsimile: +64 (9) 920 1741 AUDITOR / ACCOUNTANT / ADVISORS BDO Audit Pty Ltd Chartered Accountants Level 11, 1 Margaret Street Sydney NSW 2000 Australia St George Bank Level 12, 55 Market Street Sydney NSW 2000 Australia Bank of Ireland Colvill House Talbot Street Dublin 1 Ireland Coutts 440 Strand London, WC2R 0QS United Kingdom Comerica Bank 2000 Avenue of the Stars, Suite 210 | Los Angeles, CA 90067 USA SOLICITORS Addisons Level 12, 60 Carrington Street Sydney NSW 2000 Australia Holding Redlich Level 65, MLC Centre 19 Martin Place Sydney NSW 2000 Australia Gaines, Solomon Law Group LLP 1901 Avenue of the Stars Suite 1100 Los Angeles, CA 90067 USA SHARE REGISTRY Computershare Investor Services Pty Ltd Level 3, 60 Carrington Street Sydney NSW 2000 Australia Telephone: 1300 855 080 Shortcut Chef 90 CORPORATE DIRECTORY 2021 91 BEYOND INTERNATIONAL ANNUAL REPORT 2021BEYOND INTERNATIONAL ANNUAL REPORT www.beyond.com.au

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