Boise Cascade Company
Annual Report 2021

Plain-text annual report

14 September 2021 The Manager Market Announcements Platform Australian Securities Exchange Annual Report for Year Ending 30 June 2021 The Company has great pleasure in releasing its Annual Report for the Year Ending 30 June 2021 including the Chairman’s Report and the Corporate Governance Statement, as well as the Directors’ Report and the audited FY2021 Financial Statements and Notes to the Accounts. Yours faithfully Dennis Payne Company Secretary Beam Communications Holdings Limited ABN 39 010 568 804 5/8 Anzed Court, Mulgrave, Victoria Australia 3170 Phone: +61 3 8561 4200 Email: investor@beamcommuncations.com Website: beamcommunications.com Beam Communications Pty Ltd Beam Communications USA Inc. ABN 97 103 107 919 Delaware Corporation No. 5228652 5/8 Anzed Court, Mulgrave, Victoria Australia 3170 C/- Martensen Wright PC One Capitol Mall, Suite 670 Sacramento, CA 95814 USA Phone: +61 3 8588 4500 Email: info@beamcommuncations.com Website: beamcommunications.com Phone: +1 800 250 5819 (USA only) Email: info@beamcommuncations.com Website: beamcommunications.com SatPhone Shop Pty Ltd ABN 40 099 121 276 5/8 Anzed Court, Mulgrave, Victoria Australia 3170 SatPhonerental Pty Ltd ABN 18 114 959 992 5/8 Anzed Court, Mulgrave, Victoria Australia 3170 Phone: 1300 368 611 Email: info@satphoneshop.com Website: satphoneshop.com Phone: 1300 368 611 Email: rentals@satphoneshop.com Website: satphonerentals.com DIRECTORATE CONTENTS NON EXECUTIVE CHAIRMAN Mr Simon Lister Wallace Directorate MANAGING DIRECTOR Mr Michael Ian Capocchi NON EXECUTIVE DIRECTOR Mr David Paul James Stewart COMPANY SECRETARY Mr Dennis Frank Payne REGISTERED OFFICE Beam Communications Holdings Limited Unit 5/8 Anzed Court Mulgrave, VIC, 3170 Ph: (03) 8561 4200 Email: investor@beamcommunications.com SHARE REGISTER Link Market Services Ltd Locked Bag A14 Sydney South, NSW, 1235 Ph: 1300 554 474 SOLICITORS TO THE COMPANY GrilloHiggins Lawyers Level 4, 114 William Street Melbourne, VIC, 3000 Ph: (03) 8621 8888 AUDITOR RSM Australia Partners Level 21, 55 Collins Street Melbourne, VIC, 3000 Ph: (03) 9286 8000 ASX OFFICE Based in Melbourne ASX CODE BCC Chairman’s Report Directors’ Report Auditor’s Independence Declaration Corporate Governance Statement Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Directors’ Declaration Auditor’s Report Australian Securities Exchange Information 1 2 4 19 20 28 29 30 31 32 59 61 64 Ann ua l Repo rt 2021 1 CHAIRMAN’S REPORT Chairman: Simon Wallace Reflections There are years in our personal and professional lives of which our memories, a long time from now, may merge into each other, with no 12 months particularly discernible from another in our reflections. FY2021 was not one of those. Profit Performance and Major Impacts The last financial year marks the beginning of Beam’s transformation into a business that will generate very significant recurring subscription revenues to supplement its legacy business, which has a track record of strong hardware sales. We are starting the next phase of this journey in a very robust financial position, as Beam reported both record sales and profit before tax (PBT) for FY2021. Group revenue advanced 24% to $18.5 million, while PBT increased by $2.3 million over the previous financial year to $780,477. Most areas of Beam’s business contributed to these good results, but our growth in revenue was, pleasingly, largely driven by the success of the Beam-designed and developed ZOLEO global seamless messaging solution, which during FY2021 was available for sale through some of the largest retailers in the United States, Canada and Australia. Importantly, these strong results do not include any meaningful recurring revenue from ZOLEO subscriptions. These revenues will only become material from FY2022 onwards. As we have previously highlighted, Beam sells the ZOLEO device on a slim margin to encourage consumer adoption, as subscriptions are both the key profit driver for the product, but also most appreciated by existing and prospective investors when making valuation assessments. For many years, Beam has been looking for an opportunity to develop a solution that will deliver the Group passive, recurring revenues, rather than merely product sales. And now we have one – not by accident, or acquisition, but by design. The success of ZOLEO is reflected both in the almost 100,000 devices ordered from Beam since launch and the sharp increase in Australia- only subscribers to around 1,300 – most of whom were acquired in FY2021. The subscriber base in North America is many times higher, as the region was not impacted as much by COVID-19 lockdowns, and the traction ZOLEO has achieved in those markets point to a bright future for Australian subscriptions, given the similarities between these markets and shared knowledge with our JV partner. As Beam adds new subscribers from its territories, which includes Australia, New Zealand, Japan and China, its profit margins are expected to expand thanks to our enhanced leverage in sourcing raw materials and broader economies of scale. Beam collects 70% of the gross margin from subscriptions in its territories with the balance remaining in its 50% owned joint venture, ZOLEO Inc, that it co-owns with Canadian company Roadpost Inc. With the world facing seismic supply and demand disruptions, geopolitical uncertainties and economic plight, I am sincerely delighted that the Company of which I am proud to be the Chairman, and of which our investors are primary stakeholders, has not only navigated these treacherous waters, but emerged stronger and bolder than ever before. The six-fold increase in ZOLEO Inc.’s FY2021 revenue to $13.5 million underscores the success of the messaging solution across the two continents, with sales from new markets to follow in the current financial year. I can certainly understand why some may wish to forget the 12 months to 30 June 2021, but this most recent financial year is one I will, when it comes to Beam, be pleased to remember. They were times of commitment, adaptation and sacrifice, but at a corporate level we are now well capitalised, served by a loyal and highly engaged management team and staff. Beam has strong winds in our sails leading into crucial, and exciting, times for your company. I am therefore pleased to provide the following Chairman’s Report on the Beam Communications Holdings Group of companies for the year ended 30 June 2021, reflecting a snapshot of Beam’s important pivot to becoming a significant recurring revenue Company. The full Directors’ Report contains more extensive information on the Group’s performance in the financial year, but I would like to present the following highlights. It wasn’t only ZOLEO device sales that drove our numbers. Beam’s wholly-owned subsidiary and Telstra’s largest satellite equipment provider, SatPhone Shop, also contributed to the Group’s financial performance with sales jumping 27.5% over the previous year. There were a few reasons for the improved sales. SatPhone Shop received additional orders from medium-sized business customers and semi-government entities, and the business benefited from sales of ZOLEO devices where, like other retail partners, it pockets a reasonable margin on the hardware sale. The ongoing success of Iridium GO! was another positive for the Group. Beam received an order for 5,000 Iridium GO! devices from its long-standing partner and leading satellite services company Iridium Communications Inc (NASDAQ: IRDM) during FY2021. 2 BEAM COMMUN ICATIONS HO L DIN GS L IM I T ED The momentum is carrying through to the current financial year as Beam has received its ninth - and largest to date - Iridium GO! order in July 2021. This order for 7,500 units of the enduringly popular portable satellite hotspot comes as Iridium expects demand for the highly reliable smartphone-to-satellite connectivity device to remain healthy for years to come. While unit sales of ZOLEO have proved one of our largest sources of revenue for this period, it is the profitability and expertise behind our organic business sales that has underwritten our profitable performance. The expenditure on major development projects in the financial year amounted to $2.5 million. That is a significant figure, committed cautiously and with rigorous oversight. We do not do so lightly, or without firm and justified beliefs that this investment will be rewarded. The Board also believes that Beam presently has sufficient available resources to fund its current growth program. We were already mindful of the challenges cashflows present, well before COVID, but you can be assured that your Board adopts a granular and very forward-looking approach to all its financial needs. Outlook The ongoing and ever evolving COVID-19 situation makes it unwise to provide a precise outlook, but the Board and I are confident that Beam can sustain the momentum it has built and deliver a stronger result in the current financial year. Our performance horizon extends well beyond the next 12 months and we are determined for that trajectory to continue well beyond FY2022. There are several reasons for this optimism, not least of which is ZOLEO. While the harsh COVID lockdowns in New South Wales and Victoria could weigh on net subscriber growth in the very short-term, the selling proposition remains appealing, support from our partners is only growing and a return to a semblance of normality will provide the atmosphere for ZOLEO subscription revenues to grow – a lot. This is true in the countries where ZOLEO was initially launched, namely the United States, Canada and Australia, but also in new markets. Beam has only recently launched ZOLEO into New Zealand and the JV is on track to start selling the device in the United Kingdom and select European markets early in calendar 2022. Meanwhile, Beam is expecting demand for Iridium GO! to remain enthusiastic as feedback from Iridium indicates that demand for the device is exceeding expectations, due to strong organic growth in the personal communication devices market, which Iridium is forecasting to grow at a 29% compound annual growth rate (CAGR) to 2025, and the reopening of several countries from COVID restrictions. Supplementing this growth is the new range of Iridium satellite devices that Beam is developing. These next-generation devices, called Iridium Certus®, are capable of faster data speeds. If sales of Beam’s Certus devices were even to imitate, let alone exceed, the success of the Iridium GO!, the upside to Beam from executing the opportunity will be significant for many years to come. This is particularly important because Beam is exploring the possibility of introducing value added services, together with the hardware. These potential services will provide the Group with an additional recurring revenue stream in addition to the hardware sales to Iridium. We know, and have been not infrequently told, that a business model that targets and generates such revenue streams will attract stronger interest from the investment community than a mere unit designer and deliverer. So that’s what we’re delivering. Cash and Funding Directors and Investors All directors of your Company hold shares in Beam Communications Holdings Limited. Like all shareholders, we have a personal interest in the future performance of the Group. You can read more about all members of the board in the Directors’ Report. Beam issued 21.27 million new shares and 8.59 million options with an exercisable price of $0.50 and expiring on 31 December 2022 as part of the share placement. Staff and Board In the last financial year, your company has successfully traversed a global pandemic and transitioned into a faster growing technology group, with a significant recurring revenue business. Not only has Beam’s staff and Board helped put the Group on the right path to growth, but they have each made temporary personal remuneration sacrifices, when the swell of the pandemic threatened to overwhelm many. Now, they have also produced a record revenue and PBT for Beam. Words alone cannot express my gratitude and admiration for the tireless dedication shown by the many who work for Beam, each of whom have played a critical role in no small way in steering the Group through such a critical juncture. While there are many more challenges ahead, the foundations have been laid that will allow Beam, over the medium-term, to transform into a coveted business that is many times larger and more profitable than it is today. Indeed, I think our story is compelling. Some shareholders are veterans, and I thank each of you for your support and fervour. Some investors have only recently joined our register, and to you, I welcome you and look forward to rewarding your confidence. I thank you for your ongoing support and belief in the future direction of our Company as we progress to becoming a major player in the global PCD industry. Anchors away. Beam’s cash holdings at 30 June 2021 were $3.7 million following its successful share placement in the December quarter, which saw demand heavily exceed expectations. This brings the Group’s total available cash balance to $5.4 million, if undrawn debt facilities were included. Additionally, in Q4 of FY2021, Beam recorded its seventh consecutive quarter of positive operating cash flow, despite the disruption caused by COVID-19 and the investment made to support the launch and uptake of ZOLEO here in Australia. Mr Simon Wallace Chairman Date: 14/09/21 Ann ua l Repo rt 2021 3 DIRECTORS’ REPORT Directors present their report on the Company and its controlled entities for the financial year ended 30 June 2021. DIRECTORS The persons who have been a Director of the Company since the start of the financial year to the date of this report are: Simon Lister Wallace Michael Ian Capocchi Carl Cheung Hung (retired 30 November 2020) David Paul James Stewart The qualifications, experience and special responsibilities of each of the directors who held office during the year are: Simon Lister Wallace Chairman Age: 47 Simon Wallace is a corporate lawyer and, based in Melbourne, having previously been an equity partner of the largest law firm in the world, he is now the founder & Managing Partner of his own boutique legal practice. With extensive legal and commercial proficiency, and particular expertise in the areas of project finance, fundraising and corporate governance, Simon has substantial professional experience in the areas of investment banking, structured and direct equity investments, product formulation and sales. Simon is admitted to practice as a barrister and solicitor of the Supreme Court of Victoria, the Federal Court of Australia and the High Court of Australia, and he holds degrees from the Australian National University in both Law and Commerce. Since its inception in August 2018, Simon has been a Director of Zoleo Inc. the joint venture entity of which Beam is a 50% partner with Roadpost Inc of Canada. Simon Wallace has been a Director of Beam Communications Holdings Limited since 5 February 2015 and was elected Chairman on 22 December 2016. Michael Ian Capocchi Managing Director David Paul James Stewart Carl Cheung Hung Non Executive Director Non Executive Director (retired on 30 November, 2020) Age: 37 Age: 50 Age: 67 Michael Capocchi has over 25 years’ experience David Stewart is an experienced CEO and Carl Hung has a Bachelor of Commerce degree in the ICT industry and has held several senior successful entrepreneur with more than 30 from the University of British Columbia and management positions. Michael is based in years in management and business leadership an Executive MBA from University of Western Chicago, USA, which places him closer to the roles. David founded Banksia Technology Pty Ontario’s Richard Ivey School of Business. He important centres for satellite communications Limited in 1988 and successfully managed the is a Six Sigma Black Belt certified by SGS. He is in the USA and UK/Europe. company as a fast growing and highly profitable also a Certified Management Accountant. business. In 1996 to 1997 he instigated the Michael joined Beam Communications successful takeovers of several competitors, Carl is President and CEO of Season Group Holdings Limited as the General Manager of the including NetComm Limited. David assumed International Inc, a global Electronic subsidiary, Beam Communications Pty Ltd, in the role of CEO and Managing Director Manufacturing Services provider with footprint 2003 and was appointed as Managing Director until retiring in 2016. A year later David was in Hong Kong, China, Malaysia, Mexico and of Beam Communications Holdings Limited in appointed as a Non-Executive Director of the UK. Season Group has been the preferred March 2008. NetComm Wireless Limited, a position he held contract manufacturer for Beam for several until June 2019 when NetComm was acquired years and has been instrumental in rationalising Prior to joining Beam, Michael was the Regional by US-based Casa Systems. Beam’s manufacturing and supply processes. Sales Director for Iridium Satellite LLC, directly managing the sales, distribution and channel In 2016 David was recognised for his significant Carl was a Director of Beam from 21 February management strategies for the Asia-Pacific and valuable contribution to the Australian 2013 until retiring on 30 November 2020. region. Michael has held senior management communications industry with the presentation positions as the Sales and Marketing Director of the Communications Ambassador 2016 of Pacific Internet responsible for establishing award. The Australian Communications the Australian operations of the company and Ambassador award is the highest honour with Optus Communications. presented by ACOMMS Communications Alliance and CommsDay each year. Since its inception in August 2018, Michael has been a Director of Zoleo Inc. the joint venture Since retiring, David has worked with several entity of which Beam is a 50% partner with tech startups in an advising and investing Roadpost Inc of Canada. Michael Capocchi is capacity. He was Chairman of Pycom from 2017 an integral part of the Beam business, including until retiring from the board in July 2021. managing the day to day operations of the David joined the board of Lockbox Technologies group which occasions extensive domestic and in 2018 until the company was taken over international travel when possible. in May 2020 and in August 2019 he was announced as a board member for MyNetFone Group Limited. David Stewart has been a Director of Beam Communications Holdings Limited since November 2017 following a substantial investment. Ann ua l Repo rt 2021 5 DIRECTORS’ REPORT INDEMINIFCATION OF DIRECTORS AND OFFICERS During the year, the economic entity has paid premiums in respect of an insurance contract to indemnify its directors and officers against liabilities that may arise from their positions. Directors and officers indemnified include the Company Secretary, all directors and all executive officers participating in the management of the economic entity. Further disclosure required under section 300(9) of the Corporations Law is prohibited under the terms of the insurance contract. DIRECTORSHIPS OF OTHER LISTED COMPANIES David Stewart was a non-executive director of NetComm Wireless Limited until June 30, 2019 and has been a non-executive director of MyNetFone Group Limited (ASX:MNF) since August 14, 2019. No other director of Beam Communications Holdings Limited has been a director of a listed company in the three years immediately before the end of the financial year. COMPANY SECRETARY Dennis Frank Payne has held the position of Company Secretary since 2010. Dennis joined the Company in 2005 and has also served since that date as Chief Financial Officer. Prior to joining Beam Communications Holdings Limited Dennis held senior financial and commercial roles at Cadbury, Schweppes and Optus Communications. He has a Bachelor of Economics and is a qualified CPA. PRINCIPAL ACTIVITIES The activities of the company and its controlled entities during the year were the development and marketing of a range of communication products and services, mainly satellite based. 6 BEAM COMMUN ICATIONS HO L DIN GS L IM I T ED  Ann ua l Repo rt 2021 7 DIRECTORS’ REPORT OPERATING RESULTS AND REVIEW OF ACTIVITIES The Consolidated Group reports a total comprehensive income of $509,178 for the FY2021 year on total revenue and other income of $19,525,078 (2020: net loss of $1,629,234 on total revenue and other income Revenue Other income Deduct: 2021 ($000) 2020 ($000) $18,497 $1,028 $14,923 $1,918 of $16,841,164). Cost of goods sold, research & development, administrative marketing and corporate $(17,535) $(13,565)* $1,990 $3,276 $(810) $(200) $(200) $780 $(271) $509 $(4,311) $(211)* $(272)* $(1,518) $(112) $(1,629) Performance and Profit expenses Beam Communications Holdings achieved record revenue for the year ended 30 June 2021 which has been driven by hardware sales of ZOLEO devices to its joint venture entity and Operating profit before amortisation, depreciation, interest and tax ongoing organic growth across other key areas Deduct: of its business. Amortisation and impairment Group revenue including other income increased by 16% to an all-time high of $19.5 million, with trading revenue increasing by 24% to $18.5 million. Net profit after tax (NPAT) Depreciation Interest improved to $509,178 from a loss of $1.6 Operating profit/(loss) Net tax benefit/(expense) Net profit/(loss) for year million in FY2020 and profit before tax (PBT) increased by $2.3 million to $780,447 over the period. A significant increase in sales of the Beam designed and developed ZOLEO device to its joint venture (JV) is the primary driver for the strong revenue performance. A superior depreciation and amortisation profile in FY2021 and the one-off write-down that impacted on FY2020 profits were the biggest factors behind the large swing to profit. In FY2020 Beam took the prudent measure of writing down $1.97m in capitalised development expenses relating to Thuraya WE, Total comprehensive income/(loss) for year $509 $(1,629) * In FY2020 in this table the Group reported Depreciation as $53,000 which was depreciation without notional depreciation on right of use assets, and Interest as $163,000 which was interest before notional interest on an interest free loan, giving EBITDA of $3,009,000, in order to coincide with the figures reported in FY2019. which is the principal reason for Beam’s final As highlighted in previous announcements, Importantly, EBITDA margins are expected to net loss in that year. Beam sells the ZOLEO device on a slim improve materially as subscription revenues margin to encourage consumer adoption as start to be reflected in Beam’s accounts from Negligible amounts of recurring subscription subscriptions are the key profit driver for FY2022 onwards. Subscription revenues revenue were reflected in the Group’s FY2021 this innovative offering. The Group reported are high margin and tend to be sticky, while accounts, but that will change from the current earnings before interest, tax, depreciation and there is substantial operating leverage in the financial year onwards. amortisation (EBITDA) of $2 million in FY2021 ZOLEO business where margins will increase versus over $3 million the year before. exponentially in line with significant increases Beam invoiced 33,919 ZOLEO devices in in subscriber numbers. FY2021, which represented a more than five- However, Beam’s FY2021 EBITDA would be fold increase over FY2020, as demand for the ahead of the previous year if not for the fact At the end of FY2021, the number of Australian seamless global messaging solution in North that Beam received a substantially larger ZOLEO subscribers grew, during very strict America and Australia accelerated and as Research and Development (R&D) grant COVID-19 lockdowns, to around 1,300, while more major retailers in these markets started stocking ZOLEO. payment from the government in FY2020 and if the Australian average revenue per user the Group did not invest additional resources in (ARPU) continued to hover at around $45 FY2021 to support the sharp ramp-up in sales a month. in ZOLEO. 8 BEAM COMMUN ICATIONS HO L DIN GS L IM I T ED DIRECTORS’ REPORT The growth in its Australian subscriber base Cash and Funding Outlook and Projects in FY2021 coincided with Beam’s partnership with two major Australian retailers – Anaconda Group and Australia Post Group. Anaconda is a leading outdoor equipment retailer with around 68 stores across the country, while Australia Post has started selling ZOLEO at approximately 100 of its regional outlets Beam’s cash holdings at 30 June, 2021, were Notwithstanding the ongoing impact of the $3.7 million (FY2020: $874,000) and the COVID-19 pandemic on Beam’s operations Company had a further $1.7 million and the global economy, Beam believes it can in available, but undrawn, debt facilities. continue to build on the momentum it achieved The increase in cash follows a successful result for FY2022. There are a few reasons for in the previous year and deliver an improved under the first phase of the rollout. There are circa $5 million share placement to high net the positive outlook. over 4,000 Australia Post shops in the network worth and institutional investors in December and more than half of these are in regional communities that could find the ZOLEO service quarter 2020. Beam also recorded an increase Chief among them is the ongoing growth of in customer cash receipts from its ordinary ZOLEO with the unique solution launching particularly useful. activities with the Company posting seven into new markets in the current financial year. consecutive quarters of positive operating ZOLEO is on track to enter the United Kingdom Meanwhile, Beam’s wholly-owned subsidiary cash flow. and select European markets early in the new year, while ZOLEO has been available in the and the largest Telstra satellite equipment provider, SatPhone Shop, also contributed to the positive results with sales jumping 27.5% over the previous year. The growth was particularly pronounced in the last quarter of FY2021 due to orders from medium-sized business customers and semi-government entities. Sales of ZOLEO through SatPhone Shop provided another tailwind for the division. SatPhone Shop, like other retailers, collect a good profit margin on sales of the ZOLEO device. Additionally, sales of Beam’s other equipment (apart from ZOLEO) were consistently strong compared to the previous financial year. The Company received its eighth order for 5,000 Iridium GO! devices in September 2020 from its longstanding partner and leading satellite services company Iridium Communications Inc (NASDAQ: IRDM). Beam continued to receive orders for the portable satellite hotspot post June 30, 2021, and this takes the total number of Iridium GO! units ordered from Beam to 57,500 since its launch in 2014. While sales of Beam-branded equipment (such as fixed terminals, docking units, handsets and accessories) fell 10% in FY2021, this was still better than expected given the global impacts of COVID-19 on the enterprise and government sectors, specifically in maritime applications. During the financial year, Beam was given two New Zealand market since early August. three-year $500,000 loans from the National Australia Bank as part of the Australian Beam and its JV partner Roadpost Inc. will government’s COVID-19 business support share the gross margins from subscriptions in program. Beam has repaid these loans and the UK and Europe equally, while Beam gets converted them into a $1 million re-drawable 70% of gross margins from its territories, which five-year partially secured loan facility. include Australia, New Zealand, China and Beam capitalised $2.5 million in development Japan. costs relating to ZOLEO and Iridium Certus® Further, Beam is developing the next- and received the federal government’s R&D tax generation of Iridium satellite devices called credit of $689,703 in FY2021. Iridium Certus®, which are capable of faster data speeds. The development and launch of these new devices are significant given the persistent popularity of its Iridium GO! device over the past seven years, and the fact that Beam may have the opportunity to introduce value added services to such offerings to generate a new stream of recurring income. SatPhone Shop is also positioned to contribute positively to Beam’s growth in FY2022. The growth momentum it experienced in the previous financial year, particularly in the fourth quarter, has persisted into the current financial year. Meanwhile, Beam continues to receive orders for the Iridium GO! device. The Company was given its largest order to date for 7,500 units from Iridium in July and Beam is anticipating ongoing orders for Iridium GO! even after the launch of new Certus® devices. Ann ua l Repo rt 2021 9 DIRECTORS’ REPORT Directors and Investors SIGNIFICANT CHANGES IN STATE OF AFFAIRS Beam issued 21,272,000 new shares and 8,590,667 unquoted options exercisable at $0.50 and expiring on 31 December 2022 as part of its share placement to sophisticated and institutional shareholders during the course of the 2021 financial year. In addition, Mr Capocchi exercised 907,500 options on 30 November 2020. Mr Simon Wallace, a shareholder in the Company, has been a Director for six years and is currently the Non-Executive Chairman of the Board. Simon has lengthy and detailed expertise in legal and commercial matters and leads the Board and the Group in fund raising activities, strategic and corporate governance advice. Mr David Stewart joined our board as a Non- Executive Director in November 2017. David Other than those noted above there were no significant changes in the state of affairs of the Consolidated Group during the financial year. EVENTS AFTER REPORTING DATE There have been no significant events since 30 June 2021. DIVIDENDS PROPOSED OR RECOMMENDED No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made. ENVIRONMENTAL ISSUES The Consolidated Group’s operations are not regulated by any significant environmental regulation under any Commonwealth, State or Territory laws. FUTURE DEVELOPMENTS The company will continue the development of the Satellite Communications Services and related businesses. has been a keen advisor to senior management SHARES ISSUED ON THE EXERCISE OF OPTIONS in the rationalisation of development expenditure, providing experienced insight into the communications industry both in Australia and overseas. David remains Beam’s major shareholder, holding 14.53% of the shares and assists the Group to expand in the satellite and non-satellite space. Mr Michael Capocchi is an Executive Director and holds the positions of Managing Director and Chief Executive Officer for all companies in the Group. His base in the USA enables him to easily visit the Middle East and UK/Europe, where many core clients are based, as well as domestically within the US. Michael who travelled to Australia every four to six weeks prior to Australia’s travel restrictions, has seen little interruption to his utility and client access as a result of COVID19 and retains direct and daily contact with management. Michael is also a significant shareholder in the Company. 907,500 ordinary shares of the Company were issued during the year ended 30 June 2021 following the exercise of options. Further details in Note 16 (b). DIRECTORS’ INTERESTS The relevant interests of the Directors in the securities of the Company are detailed in the Remuneration Report as part of the Directors’ Report. SHARES UNDER OPTION At the date of this report, the unissued ordinary shares of the Company under option are as follows: Issue Date Date of expiry Exercise Price Number Under Option 9.12.20 9.12.20 31.12.22 31.12.22 $0.50 $0.50 7,090,667 1,500,000 8,590,667 DIRECTORS’ MEETINGS Mr Carl Hung retired from Beam’s board as a Committee meetings). Attendances by each Director during the year were: During the year ended 30 June 2021 the Company held 16 meetings of Directors (including Audit Non-Executive Director on 30 November 2020 but remains a key shareholder with 7.21% of the Company’s shares. The Directors believe the Group is well placed to continue to build on the underlying profit growth achieved over the past few years, particularly with its new range of products and services that have either just been launched or will be commercialised in the short- to medium- term. Director M Capocchi D Stewart C Hung S Wallace Directors Meetings Committees Attended Maximum Possible Attended Attended Maximum Possible Attended 13 13 7 13 13 13 7 13 0 1 2 3 0 1 2 3 Each Director attended every scheduled meeting of the Board and of each Committee of which he is a member while in office. 10 BEAM COMMUN ICATIONS H O LD IN GS LI M I T E D REMUNERATION REPORT (Audited) Performance Bonus This report details the nature and amount of remuneration for each director of Beam Communications Holdings Limited, and for the executives receiving the highest remuneration. The purpose of a performance bonus is to reward an individual’s actual achievement of performance objectives and for materially improved Company performance. Consequently, performance-based remuneration is paid where a clear contribution to successful outcomes for the Company is demonstrated and the individual attains and excels against pre-agreed key performance indicators during a performance cycle. DIRECTORS’ REPORT For FY2021 the Managing Director had a performance bonus potential of 10% of the Group operating profit before interest, tax, depreciation, and amortisation (EBITDA) above $1,000,000 for the financial year, plus $20,000 and a 1% increase in fixed salary for FY2022, upon the achievement of each of 5 KPIs set by the Board at the beginning of the financial year. The Group achieved an EBITDA of $1,990,880 and therefore the performance bonus becomes payable. In addition, the Managing Director achieved 4 of the KPIs. From May 2020 until October 2020 employees contributed 20% of their salary payments to COVID-19 relief savings and the Managing Director agreed to reduce his FY2020 bonus payment, which became payable during FY2021, by 50%. Two senior sales executives, who have contractual performance-based bonus entitlements and who achieved above their minimum sales-related target levels in FY2020 also agreed to reduce their bonus payments by approximately 50%. These executives achieved above their minimum sales-related target levels in FY2021. No other key management executive has a contractual performance bonus entitlement. In assessing the relative performance of the senior executives and the Group as a whole measured against the primary objective of enhancing shareholder value over time, the Board has regard to key financial indicators. In accordance with Section 300A of the Corporations Act 2001 the following table summarises the Group’s performance over the last 5 years. 2021 2020 2019 2018 2017 Net profit/(loss) before 780 (1,518) 722 (1,432) (423) tax ($’000) EBITDA ($’000) 1,990 3,276 2,104 (607) 129 Basic earnings per share 0.76 (0.31) Share price at 30 June ($) 0.235 Market Capitalisation at 17.64 30 June 0.17 8.99 0.64 0.27 14.28 (3.07) (1.29) 0.16 8.46 0.13 5.61 Dividends per share Nil Nil Nil Nil Nil Remuneration Policy The Company is committed to remunerating its executive directors and senior executives in a manner that is market-competitive, consistent with best practice and which supports the interests of shareholders. The Company aims to align the interests of executive directors and senior executives with those of shareholders by remunerating through performance and long-term incentive plans in addition to fixed remuneration. The remuneration of Non-executive Directors is determined by the Board having regard to the level of fees paid to non-executive directors by other companies of similar size and stature and in aggregate must not exceed the maximum annual amount approved by the Company’s shareholders, currently $500,000, as determined at the General Meeting held on 3 August 2007. Senior executives’ remuneration consists of the following elements: - fixed salary; - short-term incentive bonus where applicable based on performance; - long-term incentive share option scheme; and: - other benefits including superannuation. Fixed Salary The salary of senior executives is determined from a review of the market and reflects core performance requirements and expectations. In addition, the Company considers the following: - The scope of the individual’s role; - The individual’s level of skill and experience; - Legal and industrial obligations; - Labour market conditions; and - The complexity of the Company’s business. Ann ua l Repo rt 2021 11 DIRECTORS’ REPORT REMUNERATION REPORT Employment Contracts (continued) Employment Contracts of Senior Executives The Board believes the above table illustrates the positive direction the Group has taken over the past five years and is reflective of the performance of senior executives during that period. Due to the nature of the Group’s business, there are often major influences on a particular financial year’s profit result. In FY2020, to focus development efforts on ZOLEO improvements and Iridium Certus, the Company terminated three development projects and also wrote-off the remainder of the Thuraya WE project’s capitalised value at an allup cost of $1,925,000. In FY2021 the Company continued that underlying positive NPBT and NPAT trend achieving a record NPBT and a very significant market capitalisation The employment contract for the Managing Director/CEO was renewed and executed by the Company and Michael Capocchi on 30 September 2020 with operative effect from 1 July 2020. The contract has a minimum term of two years. The contract can be terminated by either the Company or Mr Capocchi, with a minimum of 9 months’ notice, subject to completion of the minimum term. The terms of Mr Capocchi’s contract include a fixed base salaryand a significant portion of his total remuneration was set at risk based on achievement of EBITDA and five annual KPIs. All other key management personnel are permanent employees. (a) Names and positions held of consolidated group and parent entity Key Management Personnel in office at any time during the financial year are: value at 30 June. This accommodated the major Directors capital raising and share issue completed in December 2020 and provides recognition of the fundamental strength in performance. Mr S Wallace Non-Executive Chairman Mr M Capocchi Executive Managing Director Long-term Incentives Mr D Stewart Non-Executive Director The Company’s Share Options Incentive Plan, in Mr C Hung Non-Executive Director (retired on 30 November 2020) which executive directors and senior executives may participate, was approved by shareholders on 27 October 2017 and authorises the Directors to issue options in respect to up to Other key management personnel 10% of the shares on issue at a given time. Mr D Payne Chief Financial Officer and Company Secretary Mr W Christie Chief Technical Officer The Company ensures that the payment of equity-based executive remuneration is made in accordance with thresholds set in plans approved by shareholders. No options were issued to key management personnel or Directors during FY2018 – FY2021 while the Company evaluates the effectiveness of share options as incentives. Other Benefits Senior executives are entitled to statutory superannuation and other bonus payments subject to the discretion of the Managing Director and the Board. 12 BEAM COMMUN ICATIONS H O LD IN GS LI M I T E D (b) Details of remuneration for the year The remuneration for each director and each of the other key management personnel of the consolidated group receiving the highest remuneration during the year was as follows: Short-term employee benefits Cash salary & fees Cash Motor Employee bonus & vehicle & other benefits Commissions allowances payable [b] employment benefits Superannu- ation Post- Other long- term benefits Employee Termination benefits Eligible benefits termination payable benefits Share- based payments Options [a] Total Performance related Remuneration consisting of options 2021 Directors $ $ - Mr S Wallace 61,111 Mr M Capocchi [c] 441,236 179,088 Mr C Hung - Mr D Stewart 27,777 - - Other Mr D Payne 179,113 20,000 Mr W Christie 205,332 - Total 914,9569 199,088 $ - - - - - - - $ - $ - $ - 9,460 41,917 6,818 - - - - - - (1,727) 17,013 (9,198) (1,952) 19,322 4,229 5,781 78,254 1,849 $ $ $ % % - - - - - - - - - - 61,111 0.00% 0.00% 678,519 26.39% 0.00% - 0.00% 0.00% 27,777 0.00% 0.00% 205,203 9.75% 0.00% 226,931 0.00% 0.00% 1,199,541 Post- Other long- Short-term employee benefits employment benefits Cash salary & Cash bonus & fees Commissions Motor vehicle & other allowances Employee benefits Superannuation payable [b] term benefits Employee benefits payable $ $ - $ - $ - $ - $ - Mr S Wallace 40,277 Mr M Capocchi [c] 448,645 160,684 4,906 34,220 43,087 9,778 Mr C Hung 31,250 Mr D Stewart 31,250 Other Mr D Payne 187,420 Mr W Christie 185,386 - - - - - - - - - - - - - - (2,876) 17,767 (13,155) 12,187 17,574 16,742 Termination Share-based benefits payments Eligible termination Options [a] Total benefits Performance related Remuneration consisting of options $ $ $ % % - - - - - - - - - - - - - 40,277 0.00% 0.00% 701,320 22.91% 0.00% 31,250 0.00% 0.00% 31,250 0.00% 0.00% 189,156 0.00% 0.00% 231,889 0.00% 0.00% - 1,225,142 924,228 160,684 4,906 43,531 78,428 13,365 Option based compensation relates to the value of options issued to date and brought to account pro-rata to the time period from the date of granting to the date of vesting, except where Accounting Standard AASB 2 required expensing to begin from the commencement of service related to those options, notwithstanding that the issue of those options, in the case of Directors was subject to shareholder approval, and in the case of key management employees, subject to performance review. Employee benefits payable represents net increase in benefits payable charged to the consolidated statement of profit or loss and other comprehensive income in the current year. The majority of Mr Capocchi’s remuneration is in US dollars. For 2021 his remuneration has been converted into AU dollars at the exchange rate on 30 June 2021 of 0.7518. Ann ua l Repo rt 2021 13 2020 Directors Total [a] [b] [c] DIRECTORS’ REPORT REMUNERATION REPORT (continued) (c) (i) Options granted as part of remuneration for the year 2021 Grant date Granted number Value per option at grant date $ Value of options granted during the year $ Value of options exercised during year $ Value of options lapsed during year $ Directors Mr S Wallace Mr M Capocchi Mr C Hung Mr D Stewart Other Mr D Payne Mr W Christie - - - - - - - - - - - - - - - - - - - - - - - - - (229,598) - - - - 2020 Grant date Granted number Value per option at grant date $ Value of options granted during the year $ Value of options exercised during year $ Value of options lapsed during year $ Directors Mr S Wallace Mr M Capocchi Mr C Hung Mr D Stewart Other Mr D Payne Mr W Christie - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 14 BEAM COMMUN ICATIONS H O LD IN GS LI M I T E D (21,916) (21,916) (31,309) (31,309) Total $ - (229,598) - - Total $ - - - - - - - - - - - - (21,916) (21,916) (31,309) (31,309) DIRECTORS’ REPORT REMUNERATION REPORT (continued) (c) (ii) Options granted and/or vested during the year Terms & conditions for each grant 2021 Vested No. Granted No. Grant date Value per option at grant date $ Exercise price $ Expiry date First exercise date Last exercise date Directors Mr S Wallace Mr M Capocchi Mr C Hung Mr D Stewart Other Mr D Payne Mr W Christie Total - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2020 Vested No. Granted No. Grant date Value per option at grant date $ Exercise price $ Expiry date First exercise date Last exercise date Terms & conditions for each grant Directors Mr S Wallace Mr M Capocchi Mr C Hung Mr D Stewart Other Mr D Payne Mr W Christie Total - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Ann ua l Repo rt 2021 15 DIRECTORS’ REPORT REMUNERATION REPORT (continued) (d) Option holdings The number of options over ordinary shares in the Company held during the financial year by each key management person including their personally related parties is set out below. Balance 1.07.20 Granted as Remuneration Issued as Equity Investment Options Exercised Options Lapsed Balance 30.06.21 Total Vested 30.06.21 Exercisable 30.06.21 Unexer- cisable 30.06.21 2021 Directors Mr S Wallace - Mr M Capocchi 907,500 Mr C Hung Mr D Stewart - - Other Mr D Payne 190,575 Mr W Christie 272,250 Total 1,370,325 - - - - - - - - - - - - - - - (907,500) - - - - - - - - (190,575) (272,250) - - - - - - (907,500) (462,825) - - - - - - - - - - - - - - - - - - - - - - Balance 1.07.19 Granted as Remuneration Issued as Equity Investment Options Exercised Options Lapsed Balance 30.06.20 Total Vested 30.06.20 Exercisable 30.06.20 Unexer- cisable 30.06.20 2020 Directors Mr S Wallace - Mr M Capocchi 907,500 Mr C Hung Mr D Stewart - - Other Mr D Payne 381,150 Mr W Christie 544,500 Total 1,833,150 - - - - - - - - - - - - - - - - - - - - - - - - - - - 907,500 907,500 907,500 - - - - - - (190,575) 190,575 190,575 190,575 (272,250) 272,250 272,250 272,250 - (462,825) 1,370,325 1,370,325 1,370,325 - - - - - - - 16 BEAM COMMUN ICATIONS H O LD IN GS LI M I T E D REMUNERATION REPORT (continued) (e) Share holdings The number of shares in the Company held during the financial year by each key management person including their personally related parties DIRECTORS’ REPORT Mr D Stewart 10,905,000 are set out below. 2021 Directors Mr S Wallace Mr M Capocchi Mr C Hung (b) Other Mr D Payne Mr W Christie 2020 Directors Balance 1.07.20 Received as Remuneration Options Exercised Placement Issue Net Change Other [a] Balance 30.06.21 200,000 1,603,899 5,409,874 328,570 62,778 18,510,121 - - - - - - - - 907,500 - - - - 907,500 - - - - - - - - 160,498 - - - - 200,000 2,671,897 5,409,874 10,905,000 328,570 62,778 160,498 19,578,119 Balance 1.07.19 Received as Remuneration Options Exercised Placement Issue Net Change Other [a] Balance 30.06.20 Mr S Wallace 178,600 Mr M Capocchi 1,603,899 Mr C Hung 9,243,207 Mr D Stewart 10,540,000 Other Mr D Payne Mr W Christie 328,570 62,778 21,957,054 - - - - - - - - - - - - - - - - - - 21,400 200,000 - 1,603,899 (3,833,333) 5,409,874 365,000 10,905,000 - - 328,570 62,778 3,446,933 18,510,121 [a] [b] Net Change Other refers to shares purchased or sold on-market or off-market at current market prices during the financial year. Carl Hung retired on 30/11/2020 and was no longer a director at the end of the 2021 financial year. (f) Shares issued on exercise of remuneration options Mr Capocchi exercised options on 30 November 2020 at an exercise price of 19.5 cents. The options were issued in 2015. (g) Voting and comments made at the Company’s 2020 Annual General Meeting (AGM) At the Company’s most recent AGM, a resolution to adopt the prior year remuneration report was put to the vote and at least 75% of ‘yes’ votes were cast for adoption of that report. No comments were made on the remuneration report at the AGM Ann ua l Repo rt 2021 17 DIRECTORS’ REPORT AUDITOR RSM Australia Partners continues in office in accordance with section 327 of the Corporations Act 2001. NON AUDIT SERVICES No non audit services were undertaken by the external auditors during the year ended 30 June 2021. AUDITOR’S INDEPENDENCE DECLARATION A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors’ report. Signed in accordance with a resolution of the Board of Directors dated 30 August 2021. Mr Simon Wallace Chairman Date: 30 August 2021 18 BEAM COMMUN ICATIONS H O LD IN GS LI M I T E D RSM Australia Partners Level 21, 55 Collins Street Melbourne VIC 3000 PO Box 248 Collins Street West VIC 8007 T +61 (0) 3 9286 8000 F +61 (0) 3 9286 8199 www.rsm.com.au AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of Beam Communications Holdings Limited for the year ended 30 June 2021, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. RSM AUSTRALIA PARTNERS M PARAMESWARAN Partner Dated: 30 August 2021 Melbourne, Victoria THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING 16 RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036 Liability limited by a scheme approved under Professional Standards Legislation CORPORATE GOVERNANCE STATEMENT The Directors of Beam Communications Holdings Limited (BCC or the Company) are committed to protecting and enhancing • Directors are entitled to seek independent professional advice. • reviewing and ratifying systems of risk management and internal compliance shareholder value and conducting the To assist in the execution of its responsibilities company’s business ethically and in the Board has established an Audit accordance with the highest standards of Committee with a formalised charter and and control, codes of conduct and legal compliance; • monitoring senior management’s performance and implementation of corporate governance. operating principles. Activities which may be strategy, and ensuring appropriate conducted by separate committees in a larger In accordance with the ASX Corporate company such as Directors Nomination, Risk Governance Council’s Corporate Governance Management and Remuneration are dealt Principles and Recommendations: 4th Edition (the Principles), this corporate governance statement reports on the Company’s adoption with by the full Board as separate and specific agenda items in accordance with the principles and policies set down in the Company’s resources are available; • dealing with approaches to take over the company; and • approving and monitoring financial and other reporting. of the Principles on an exception basis. This corporate governance programme. Chairman’s Appointment and Responsibilities statement provides specific information whereby disclosure is required of any The Company has adopted a Board Charter The Chairman is appointed by the Board from recommendations that have not been adopted which details the functions and responsibilities by the Company, together with the reasons why of the Board of Directors. A copy of the Board they have not been adopted. The Company’s Charter is on the Company’s website. The corporate governance principles and policies employment contract between the Company are therefore structured with reference to the and the Chief Executive Officer and the Principles, which are as follows: letter of engagement for the Chief Financial Officer and senior executives details the 1. Lay solid foundations for management terms of employment, job specifications and and oversight. responsibilities. 2. Structure the Board to be effective and add value. The Role of the Board of Directors 3. Instil a culture of acting lawfully, ethically and responsibly. The BCC Board is responsible to its 4. Safeguard the integrity of corporate shareholders for the protection and reports. enhancement of long-term shareholder value. 5. Make timely and balanced disclosure. 6. Respect the rights of security holders. 7. Recognise and manage risk. 8. Remunerate fairly and responsibly. To fulfil this role the Board is responsible for: • oversight of the Group, including its controls, risk management, financial 1. Lay Solid Foundations for Management and Oversight Recommendation 1.1: The Board and Senior Management – Roles and Responsibilities Board Processes The Board recognises that its responsibilities should accord with the following general principles: • the Board should be made up of a majority of Independent Directors; • the Chairman of the Board should be an Independent Director; • the roles of Chairman and Chief Executive Officer should not be exercised by the same person; • the Board should meet on a monthly basis; • all available information in connection with items to be discussed at a meeting of the Board shall be provided to each Director prior to that meeting; and structures and accountability systems; • setting strategic direction for management with a view to maximising shareholder value; • input into and final approval of strategic plans and goal and performance objectives and key operational and financial matters; • determining dividend payments; • selecting, appointing and reviewing the performance of the Chief Executive Officer (CEO); • ratifying the appointment and, where appropriate, the removal of the Chief Financial Officer (CFO) and Company Secretary; • approval of annual and half yearly financial reports and related Australian Securities Exchange reports; • selecting and appointing new non- executive directors; • approving major capital expenditure and acquisitions; • evaluating the Board’s performance and that of individual directors; the non-executive directors. The Chairman: • provides appropriate leadership to the Board and the Company; • ensures membership of the Board is balanced and appropriate for the Company’s needs; • facilitates Board discussions to ensure the core issues facing the organisation are addressed; • maintains a regular dialogue and mentor relationship with the Chief Executive Officer; • monitors Board performance; and • guides and promotes the on-going effectiveness and development of the Board and individual directors. Conduct of Board Business The Board normally holds monthly formal Board meetings and will also meet whenever necessary to carry out its responsibilities. In the year ended 30 June 2021, the Board and/or its committees met 16 times. When conducting Board business, Directors have a duty to question, request information, raise any issue of concern, and fully canvas all aspects of any issue confronting the Company and vote on any resolution according to their own judgment. Directors keep confidential, board discussions, deliberations and decisions that are not publicly known. Access to Information Directors are encouraged to access members of the senior management team at any time to request relevant information in accordance with protocols adopted by the Board. Where Directors perceive an irregularity in a Company related matter, they are entitled to seek independent advice at the Company’s expense. Directors must ensure that the costs 20 BEAM COMMUN ICATIONS H O LD IN GS LI M I T E D CORPORATE GOVERNANCE STATEMENT are reasonable and must inform the Chairman A CEO, if also a Managing Director, is not the notice of the meeting at which the election before the advice is sought. The advice must be subject to retirement by rotation and is not of the Director is to be held, or by including made available to the rest of the Board. to be taken into account in determining the in the notice a clear reference to the location Independent Professional Advice other document lodged with ASX where the rotation of retirement of Directors. on the Company’s website, Annual Report or Functions of Senior Executives information can be found. Directors appointed Each Director has the right to seek independent by the Board must stand for re-election at the legal and other professional advice at the The Chief Executive Officer reports to the next meeting of shareholders. Company’s expense concerning any aspect of Board and is responsible for the operation and the Company’s operations or undertakings in administration of the Company including the Further information regarding Director order to fulfil their duties and responsibilities implementation of the Company’s strategies, nominations can be found in the Company’s as directors. plans, policies and control programmes. He Election of Directors Policy as posted on the Conflicts of Interest is supported by a management team whose Company’s website. responsibilities are delineated by formal authority delegations. The team meets Recommendation 1.3: Terms of Appointment – Directors are required to continually monitor regularly to co-ordinate activities and to Directors and Senior Executives and disclose any potential conflicts of interest review and monitor performance. that may arise. Directors must: • disclose to the Board any actual or potential conflicts of interest that may exist as soon as the situation arises; • take necessary and reasonable steps to resolve any conflict of interest within an Recommendation 1.2: Board Nominations receive a letter formalising their appointment Each new Non-Executive Director will Appointment of Directors and outlining the material terms of their appointment. Non-Executive Directors of the Company have not been appointed for fixed The Company has not established a nomination terms. Senior Executives will generally have appropriate period, if required by the committee for recommending the appointment written employment agreements with the Board or deemed appropriate by that of Directors. Company setting out their duties, obligations director; and • comply with the Corporations Act requirements about disclosing interests Given the nature and size of the Company, the Board considers that as a three-member Board The above-mentioned appointment letter and remuneration. and restrictions on voting. of a small public company the selection and and employment agreements are with the appointment of Directors is such an important Non-Executive Director or Senior Executive Directors should discuss with the Chairman task that it should be the responsibility of personally. any other proposed Board or executive the entire Board to consider the nominations appointments they are considering undertaking process. The structure of the Board is reviewed The remuneration paid/payable to the and advise the Company of their appointments annually as to qualifications, skills, experience Company’s ‘key management personnel’ is to other companies as soon as possible after the and diversity to ensure the Board has an outlined within the Remuneration Report in the appointment is made. appropriate mix. In a three-member Board the Company’s latest Annual Report. highest requirement is for appropriate skill. The same requirement exists for related party Where a vacancy exists or there is a need for Recommendation 1.4: The Company Secretary transactions including financial transactions particular skills, the Board will determine the with the Company. Related party transactions selection criteria and identify and appoint a The Company Secretary is appointed by the are reported in writing to the Company suitable candidate. In this regard, the Company Board and is responsible for developing and Secretary and where appropriate, raised for consideration at the next board meeting. also notes that the Company operated with a four-member Board for part of this financial maintaining the systems and processes that are appropriate for the Board to fulfil its role. The year. Mr Carl Cheung Hung retired from the Company Secretary is responsible to the Board Retirement of Directors Board on 30 November 2020 after having for ensuring compliance with Board procedures served as a Non-Executive Director on the and governance matters. The Company One-third of the Directors are required to Board for nearly eight years. Secretary is accountable directly to the Board, retire by rotation at each Annual General through the Chair, on all matters to do with the Meeting (AGM). The Directors to retire at The Company will undertake appropriate proper functioning of the Board. The Company each AGM are those who have been longest in checks before appointing a person, or putting Secretary is also responsible for overseeing and office since their last election. Where Directors forward a candidate for election as a Director, co-ordinating disclosure of information to the have served for equal periods, they may agree and provide shareholders with this information. ASX as well as communicating with the ASX. amongst themselves or determine by lot who will retire. A Director must retire at the Candidates will be assessed through interviews, meetings and background reference checks as third AGM since last elected or re-elected. A appropriate. External advisors may be used Recommendation 1.5: Diversity Policy Director appointed as an additional or casual in this process. The Company will provide The Company has taken measures to establish director by the Board will hold office until shareholders with all material information in its a corporate culture in which the principles of the next AGM when the Director may be re- possession relevant to the decision on whether diversity are embedded. By promoting and elected. This re-election will be in addition to or not to elect (or re-elect) a Director, either in supporting transparent recruiting processes, any rotational retirements. Ann ua l Repo rt 2021 21 CORPORATE GOVERNANCE STATEMENT flexible work practices, an enlightened code undertaken during the reporting period. the skills, experience and expertise that the of conduct, equal employment opportunity If the contribution of a Non-Executive Director Board would look to maintain and build on: policies and clear reporting of outcomes, the appears to a majority of Directors to be less • capital markets; Board feels that the objectives of diversity will than adequate, they may direct the Chairman • corporate finance; be achieved. The results of recruiting and the to inform that Director accordingly and ask • regulatory and compliance; composition of staff are reported by the Chief that person to consider his or her position • operations; Executive Officer and reviewed at monthly on the Board. If the Director takes no action Board meetings. in response, a circulated minute signed by • legal; • sales; a majority of Directors will authorise the • marketing; The Board, at this time, has not established Company Secretary to inform the shareholders • corporate governance; and an explicit policy on diversity or measurable that the Board will not support the re-election • financial and business acumen. objectives for achieving gender diversity. of the Director at the general meeting where Because of the size of the Company (40 staff they are next due to offer for re-election. Recommendations 2.3 and 2.4: Independent including Board members, as at the date of this Directors report), the Board is of the view that the scale Evaluating the Performance of Senior and nature of the Company’s operations does Executives not currently lend itself to an effective and Directors Independence At the date on which the Directors’ report meaningful application of a targeted diversity Arrangements put in place by the Board to is made out, the Company’s Board has three policy. monitor the performance of the Group’s key Directors. The Board currently consists of two Rather, the Board recognises the positive benefits for the organisation of increased • regular monthly reporting submitted to the Board and attendance at all Board executives include: Non-Executive Directors. At this time only one (Mr Simon Wallace) of the three Non- Executive Directors is considered by the Board diversity, especially gender, and has sought Meetings by the Chief Executive Officer to be independent, and as such the Company to integrate diversity objectives within the existing policies and procedures of the Company. The Board intends to reconsider and Chief Financial Officer; • a review by the Board of the Group’s financial performance and revised forecast does not comply with Recommendation 2.4 of the Corporate Governance Council, which recommends that a majority of Board the adoption of a formal diversity policy results on a monthly and annual basis members should be independent. However, periodically. at Board meetings at which reports are the Board considers that both its structure At the date of this report the Company has a total staff excluding Board members of 38 presented by the key executives; and • an evaluation of the detailed presentations made by the Chief Executive Officer and composition are appropriate given the size of the Group and that the interests of shareholders are well met. employees (including Chief Executive Officer and his direct reports during business and Managing Director) of which 26% (10 planning/ strategy meetings which are at The Board regularly assesses its composition, employees) are women. The Senior Executive least bi-annual. team is made up of 7 managers including Chief having regard to the nature and size of the Company’s operations and the relevant skills, Executive Officer and Managing Director and A performance evaluation was undertaken knowledge, and experience of each Board 2 female managers. At this time there are no during the reporting period. member. women on the Board which comprises three positions. 2. Structure Board to Be effective and Add Value In the interest of clear disclosure: Recommendations 1.6 and 1.7 – Performance Review and Evaluation Recommendation 2.1: Nomination Committee Due to the small size of the Board and the • Mr Carl Hung, who served as a Non- Executive Director until his retirement on 30 November 2020, is also the President Evaluating the Performance of Directors Company does not have a separate nomination has subcontracted manufacturing on an committee. Nominations for positions on the arms-length basis to Season Group and The Board has adopted a self-evaluation Board are considered by the entire Board. Mr Hung, through SGV1 Holdings Limited, Company’s current level of operations, the and CEO of Season Group. The Company process to measure its own performance and the performance of its Committees. On an annual basis, the Chairman facilitates Recommendation 2.2: Skills, Knowledge and Experience Directors are appointed based on the specific a discussion and evaluation of the Board’s business, industry and governance skills and holds a relevant interest in 5,409,874 shares in the Company, representing 7.21% of the Company’s issued shares and is thereby a substantial holder. performance in accordance with this process. experience as required by the Company. The • Mr David Stewart, a Non-Executive This includes discussions about the Board’s Board recognises the need for Directors Director, is not regarded as being role, processes, performance and other to have a relevant and applicable range of independent, as two companies relevant issues. Each Director’s performance skills and personal experience in a range associated with and/ or controlled by Mr is reviewed by the Chairman and Board prior of disciplines as required for the proper Stewart in total hold a relevant interest to the Director standing for re-election. management and oversight of the Company’s in 10,905,000 shares in the Company, Performance evaluations will take place during operations, as having regard to the scale and representing 14.53% of the issued capital September at the same time as those for all nature of its activities. of the Company and Mr Stewart is thereby staff members. A performance evaluation was The Board skills matrix set out below describes a substantial holder. 22 BEAM COMMUN ICATIONS H O LD IN GS LI M I T E D CORPORATE GOVERNANCE STATEMENT The names, qualifications and experience of the environment and ensure a safe, equal and Company to inform the Board of any behaviour each Director of the Company are detailed in support workplace. or situation which they believe breaches or the Directors’ Report in the Annual Report. potentially breaches the Policy. The values were developed collaboratively Recommendation 2.5: Independent Chairman by management and endorsed by the Board. The Corporate Ethics Policy is also available at Management is responsible for instilling these the website. The Chairman, Mr Simon Wallace, is the values across the Company. only independent Non-Executive Director The Company’s objective is to maintain and of the Company at this time. Mr Wallace was Recommendation 3.2: Code of Conduct further develop its business to increase appointed as Chairman of the Company on shareholder value while also adding value for 22 December 2016, based on his extensive As part of the Board’s commitment to the customers, employees and other stakeholders. experience in legal and commercial matters, highest standard of personal and corporate To ensure this occurs, the Group conducts its project finance and fundraising background and behaviour, the Company adopts a Code of business within the ethical responsibilities his experience as a Director including of Conduct to guide executives, management documented and outlined in the Company’s an ASX-listed entity. and employees in carrying out their duties and Code of Conduct and Corporate Ethics Policy. The Chief Executive Officer of the Company is such matters as: 4. Safeguard Integrity in Corporate Reporting responsibilities. The code of conduct covers Mr Michael Capocchi. Recommendation 2.6: Induction of New Directors and Regular Review for Existing Directors The Company has a program for inducting new Directors. This includes giving new Directors a full briefing about the nature of the business, current issues, the corporate strategy and the expectations of the Board concerning the performance of the Directors and access to • responsibilities to shareholders; • compliance with laws and regulations; • relations with customers and suppliers; • ethical responsibilities including responsibility for reporting and investigating unethical practices; • employment practices including a fair and open approach to all forms of diversity; and • responsibilities to the environment and the community. Recommendation 4.1: Audit Committee The Board has established an Audit Committee to consider certain issues and functions in further detail. The chairman of the Audit Committee reports to the Board on any matters of substance at the next full board meeting. The Audit Committee has its own terms of reference, approved by the Board and reviewed annually, with additional review when appropriate. all employees to gain full background to the The Code of Conduct is available at the Company’s operations. The Company does not Company’s website. have a formal program to periodically review The members of the Committee at the date of this report are Mr David Stewart and Mr whether there is a need for existing directors Recommendation 3.3: Whistleblower policy Simon Wallace. David Stewart is the current to undertake professional development to Chairman of the Audit Committee. Details of maintain their skills and knowledge. However, The Board has established and adopted a the qualifications, experience and attendance existing Directors are generally encouraged Whistleblower Policy. The Whistleblower at Committee meetings by each Committee to attend director training and professional Policy will be reviewed regularly by the Board. Member is included in the Directors’ Report in development courses, as may be required to The Policy sets out the steps and process the Annual Report. enable them to develop and maintain the skills to ensure that the Board is informed of any and knowledge needed to effectively perform material breaches of the Whistleblower Policy. The ASX Corporate Governance Council has their roles as Directors, at the Company’s made recommendations for the composition of expense (as approved by the Chairman and or A copy of the Company’s Whistleblower Policy the Audit Committee: the Board, as appropriate and applicable). is available on the Company’s website. 3. Act Lawfully, Ethically and Responsibly Recommendation 3.4: Corporate Ethics and Recommendation 3.1: Articulate and disclose its cultures Anti-Bribery and Corruption Policy In addition to the Code of Conduct, the Company has established a specific Corporate BCC values are behaviours that guide the Ethics Policy setting out the Company’s actions and decision-making of staff, and reflect behavioural expectations of its employees the Company’s brand and culture. The values when conducting business in Australia and • the Committee should consist only of Non- Executive Directors; • it should have a majority of Independent Directors; • it should be chaired by an Independent Director who is not Chairman of the Board; • the Committee should have at least 3 members. are conducting its business activities openly, internationally and specifically aims to While recognising these recommendations, with honesty, integrity and responsibility and maintain the good standing and reputation the Board is restricted by having currently maintaining a strong sense of corporate social of the Company along with highlighting the only three Board positions. The Board’s small responsibility. In maintaining its corporate importance of anti-bribery and anti-corruption size is a function of the relatively small scale of social responsibility, BCC will conduct its practices to its employees and directors. The the Company’s operations. The Company may business ethically and accordingly its values, Corporate Ethics Policy also sets out the assess the composition of the Board from time encourage community initiatives, consider process for employees and officers of the to time, with a view to considering compliance Ann ua l Repo rt 2021 23 CORPORATE GOVERNANCE STATEMENT with the recommendation that the Audit in connection with the performance of their Committee have a majority of Independent respective roles, including the adequacy of Directors. internal controls. • half yearly reporting on the levels of audit and non-audit fees; and • specific exclusion of the audit firm from work which may give rise to a conflict. The one Independent Director on the Board The Company’s Audit Committee met 3 times is a member of the Audit Committee. Mr during the course of the financial year ended 30 Recommendation 4.3: Verification process for David Stewart, although not an Independent June 2021. Director was appointed Chairman of the Audit periodic corporate report Committee due to his financial and commercial The Company’s Audit Committee has a formal Before the financial statements for the half- experience. charter setting out the Committee’s role and year and full-year are approved, the Board responsibilities. The charter is posted on the receives a statement from the CEO and CFO Audit Committee assists the Board to discharge Company’s website. its corporate governance responsibilities, in consistent with the requirements of the Corporations Act 2001 (Cth). The Company regard to the business’ relationship with, and Recommendation 4.2: Approval of Financial has also appointed RSM Australia Partners as the independence of, the external auditors. It Statements especially: its external auditor, who reviews the above statements and provides an opinion on whether • recommends appointment of external auditors and fees; • ensures reliability and integrity of disclosure in the financial statements and The Board receives regular reports about the the Company’s financial report gives a true and financial condition and operational results of fair view of the Company’s financial position the Company and its controlled entities. The and financial performance, and whether it CEO and CFO periodically provide formal complies with Australian Accounting Standards external related financial communications, statements to the Board that, in all material and the Corporations Regulations 2001. although ultimate responsibility rests with aspects, the Company’s financial statements the full Board; • reviews compliance with statutory responsibilities; • reviews budgets and accounting policy; • ensures maintenance of an effective framework of business risk management present a true and fair view of the Company’s The Company’s external Auditor attends the financial condition and operational results. Company’s AGMs and is available to answer The CEO and the CFO each provide audit and the preparation and content of the shareholder questions about the conduct of the declarations to the Board in accordance with Auditor’s Report. Section 295A of the Corporations Act 2001 including compliance and internal controls confirming that in their opinion, with regard to As to periodic corporate reports which are and monitoring of the internal audit risk management and internal compliance and not subject to audit or review by an external function; • reviews adequacy of the Company’s insurance program, including directors’ control systems: • the statements made with respect to the integrity of financial statements and notes auditor, the Company has not established a Disclosure Committee. However, due to the small size of the Board, all Directors and and officers’ professional indemnity and thereto are founded on a sound system Company Secretary are required to comment other liability insurance cover; • promotes and ensures an ethical financial culture is embedded throughout the Company; and • undertakes any special investigations required by the Board. of risk management and internal control on and approve an announcement before it is systems which, in all material respects, published. implement the policies adopted by the Board of Directors; and • the risk management and internal control systems are operating effectively and 5. Make Timely and Balanced Disclosure Recommendation 5.1: Continuous Disclosure The Audit Committee provides a forum for the relation to financial reporting risks. efficiently in all material respects in Policy effective communication between the Board and external auditors. The Committee reviews: • the annual and half-year financial report prior to their approval by the Board; • the effectiveness of management information systems and systems of internal control; and • the efficiency and effectiveness of external audit functions, including reviewing the Auditor independence The Board and senior management are aware of the continuous disclosure requirements of the ASX and have written policies and Best practice in financial and audit governance procedures in place, including a Continuous is rapidly evolving and the independence of the Disclosure Policy. external auditor is particularly important to shareholders and the Board. The Company’s The guiding principle of this policy is that practices in this area are reviewed regularly the Company must immediately notify the by the Board to ensure they are in line with market via an announcement to the ASX of respective audit plans. emerging practices both domestically and any information concerning the Company that internationally. The Company’s current a reasonable person would expect to have a The Committee invites the CEO, the CFO, the approach in relation to independence of its ‘material’ effect on the price or value of the Company’s remaining Director and the external auditor encompasses the following: Company’s securities. auditors to attend Committee meetings where appropriate. The Committee also meets with and receives regular reports from the external auditors concerning any matters which arise • rotation of the senior audit partner every five years; • annual confirmation by the auditor that it has satisfied all professional regulations relating to auditor independence; The Board must ensure that Company announcements: • are made in a timely manner; 24 BEAM COMMUN ICATIONS H O LD IN GS LI M I T E D CORPORATE GOVERNANCE STATEMENT • are factual; • do not omit material information; and • are expressed in a clear and objective manner that allows investors to assess the impact of the information when making 6. Respect the Rights of Security Holders Recommendation 6.1: Communication to Shareholders and Investors investment decisions. The Company is committed to increasing the Where that information, however, is incomplete and to be regarded by our shareholders as an or confidential, or its disclosure is illegal, no outstanding corporate citizen. Our approach transparency and quality of its communication • Election of Directors Policy; • Disclosure Policy; • Shareholder Communication Policy; • Health and Safety Policy; • Environmental and Community Relations Policy; • Corporate Ethics Policy; and • Related Parties and Conflicts Policy. disclosure is required. The Directors and senior to communication with shareholders and Recommendation 6.2: Investor Relations management of the Company ensure that the financial markets is set out in the Company’s Program Company Secretary is aware of all information Shareholder Communication Policy document. to be presented at briefings with analysts, Two-way communication between the stockbrokers, shareholders, the media and the Information is communicated to shareholders Company and its shareholders is facilitated public. Prior to being presented, information through the distribution of the Company’s primarily via the Company’s AGM. The Board that has not already been the subject of Annual Report and other communications. encourages shareholder participation at disclosure to the market and is not generally All significant information is posted on the the AGM and other general meetings of the available to the market is the subject of Company’s website as soon as it is disclosed shareholders. The Chairman encourages disclosure to the ASX. Only when confirmation to the ASX. All investors will have equal and questions and comments from shareholders of receipt of the disclosure and release to timely access to information on the Company’s and seeks to ensure that shareholders are given the market by the ASX is received may the financial position, performance, ownership and ample opportunity to participate. Shareholders information be presented. governance. Shareholders who wish to send who are unable to attend the AGM or a general If the Company becomes aware of market- electronically should contact the Company before the meeting to the Company and/or to sensitive information which ought to be Secretary, Mr Dennis Payne. the Auditor (in the case of the AGM). and receive communications with the Company meeting may submit questions and comments disclosed, but the Company is not in a position to issue an announcement promptly and The Company ensures that shareholders are without delay, the Company may request informed of all major developments affecting that the ASX grant a trading halt or suspend the Group promptly through the issue of ASX Recommendation 6.3: Shareholders’ Participation at General Meetings the Company’s securities from quotation. announcements and commentary on operations All shareholders are encouraged to attend Management of the Company may consult in quarterly reports. All ASX announcements and participate in shareholder meetings. All external professional advisers and the ASX in and quarterly reports are posted on the ASX Directors, senior managers, Auditors and the relation to whether a trading halt or suspension website for the Company and on the Company’s Company Secretary attend these meetings is required. website. and respond to shareholder questions in relation to specific agenda items and general The Company’s Continuous Disclosure Policy is All shareholders receive copies of shareholders business. In light of the Covid-19 pandemic available on the Company’s website. notices by email or post and a copy of the and restrictions on in-person gatherings and annual report is distributed to all shareholders travel which may be in place at the time of the Recommendation 5.2: Board’s visibility of who elect to receive one (hardcopy in the Company’s 2021 Annual General Meeting, the information disclosed mail or electronically). The Company’s most Company will consider available methods of recent annual report is also available on the facilitating virtual attendance by shareholders Material market announcements are approved Company’s website. at the Annual General Meeting. Further details by the Board at regular board meetings scheduled to coincide with ASX filing timetable Website Information requirements. Other material market announcements are always circulated to the Board via e-mail. regarding the nature of the Annual General Meeting and how shareholders may ask questions about agenda items will be contained The Company has established a website at www.beamcommunications.com, where shareholders can access information about the in the notice of meeting. The Annual General Meeting features an address by the Chairman and an extensive presentation by the CEO Recommendation 5.3: Release of investor or Company’s corporate governance policies and which is also released as an ASX announcement analyst presentations practices. Information lodged on this website for shareholders who cannot attend the in a specific corporate governance section meeting. Presentations and transcripts of the Managing includes: Director’s address at annual general meetings will be released on the ASX Market Announcements Platform before the start of the meetings. Other presentations to new or substantive shareholders or investor analysts are released on the ASX Market Announcements Platform prior to the relevant presentation. • Board Charter; • Audit Committee Charter; • Risk Management Policy; • Remuneration Policy; • Securities Trading Policy; • CEO and CFO Declarations; • Whistle Blower Policy; • Code of Conduct; A description of the arrangements the Company has to promote communications with shareholders is detailed in the Shareholder Communication Policy, available at the Company’s website. Ann ua l Repo rt 2021 25 CORPORATE GOVERNANCE STATEMENT Recommendation 6.4: Substantive Resolutions Recommendation 7.2: Risk Management Recommendation 7.3: Internal Audit Function decided by Polls Framework The Audit Committee assists the Board in The Company is committed to the principle The Company has implemented a risk fulfilling its responsibilities in this regard by of “one share one vote” and substantive management program that enables the reviewing the financial and reporting aspects resolutions at shareholder meetings are business to identify and assess risks, respond of the Group’s risk management and control decided by a poll instead of by a show of hands appropriately and monitor risks and controls. framework. which does not take into account the number of shares held. The Company is exposed to risk from The Audit Committee meets regularly to operations (employee health and safety, ensure, amongst other things, that the risk Recommendation 6.5: Electronic Communication environmental, insurance, litigation, disaster, management internal control structures business continuity), compliance issues and and compliance with laws and regulations Shareholders may elect to send communication financial risks (interest rate, foreign currency, are operating effectively. Details of the to and receive communications from the credit and liquidity). To mitigate these risks, the Audit Committee are also set out in the Risk Company and its Share Registry electronically. Company has established risk and assurance Management Policy, available at the Company’s The contact email address for the Company is info@beamcommunications.com and shareholders may submit electronic queries to the Company’s Share Registry via its website www.linkmarketservices.com.au. 7. Recognise and Manage Risk policies and procedures, which aim to: website. • assist management to discharge its corporate and legal responsibilities; and • assure management and the Board that the framework is effective. Recommendation 7.4: Exposure to Environmental or Social Risks The Company recognises, in particular, the environmental and social risks to which it Responsibility for control and risk management may be exposed. The Company considers Recommendation 7.1: Risk Committee is delegated to the appropriate levels of environmental risk to be the ability to continue management within the Company and the CEO its undertakings without compromising the Due to the size of the Company and the nature has ultimate responsibility to the Board for risk health of the ecosystems in which it operates. of the Company’s operations, a formal Risk management and control. Areas of significant The Company views social sustainability as the Committee has not been established. The business risk to the Company are detailed in ability to continue operations in a manner that Board is responsible for ensuring appropriate the Business Plan presented to the Board by is acceptable to social norms. measures are in place in order to manage risk the CEO at the start of each financial year. The in line with the Company’s risk strategy. An Board reviews and approves the parameters The Board does not consider that the Company external consultant has assisted the Board in under which significant business risks will be currently has any material exposure to this process. managed before adopting the Business Plan. environmental or social sustainability risk. Risk parameters and compliance information Since the beginning of the ongoing Covid-19 The Board has required management to are reported monthly to the Board by the CEO pandemic, the Board has continued to implement internal control systems to manage and CFO. the Company’s material business risks and to monitor the impact of the pandemic on the Company’s operations, compliance obligations report on whether risks are being effectively The Board has adopted reporting procedures and finances, and risks to the Company managed. which allow it to: resulting from the pandemic associated with Arrangements put in place by the Board to monitor risk include: • review of risk areas at monthly Board meetings; • regular monthly reporting to the Board in respect of operations, the financial • monitor the Company’s compliance with the continuous disclosure requirements of macroeconomic factors. The Company has provided and intends to continue to provide the ASX; and • assess the effectiveness of its risk management and control framework. updates to the market on the impact of Covid-19 on the Company periodically. The Company reviews its risk management Covid-19 and other social and environmental The Board intends to manage risks related to position of the Company and new framework on at least an annual basis. The risks in accordance with the Company’s Risk contracts; • reports by the Chairman of the Audit Committee; • attendance and reports by the Managing Director, CFO and the Company’s management team at Board Meetings; and • any Director may request that operational and project audits be undertaken either internally or be external consultants. review examines the processes and procedures Management Policy, if such risks should be that the Company must initiate to control and/ identified in the future. or mitigate these risks from impacting upon the performance of the Company. The key risk 8. Remunerate Fairly and Responsibly categories to which the Company is exposed, and how it manages or intends to manage those Recommendation 8.1: Remuneration Committee risks, are set out in the Risk Management Policy on the Company’s website. The Board considers that, due to its small size, and the current level of the Company’s The abovementioned review took place in operations, all members of the Board should the 2020-2021 financial year with input from be involved in determining remuneration external consultants. levels. Accordingly it has not established a separate remuneration committee. Instead time is set aside at two Board meetings each 26 BEAM COMMUN ICATIONS H O LD IN GS LI M I T E D CORPORATE GOVERNANCE STATEMENT year specifically to address the matters usually Fixed Salary considered by a remuneration committee. Recommendation 8.3: Equity Based Remuneration Executive Directors absent themselves during The salary of Executive Directors and senior discussion of their remuneration. executives is determined from a review of the market and reflects core performance Long-Term Incentives The Company has a share option scheme in At these two meetings the Board reviews the requirements and expectations. In addition, the which senior executives may be invited to following: Company considers the following: participate. The Share Option Incentive Plan • the Company’s remuneration, recruitment, retention and termination policies and procedures for senior executives; • senior executive remuneration and incentives; • superannuation arrangements; • remuneration framework for Directors; and • whether there is any gender or other inappropriate bias in remuneration for directors, senior executives or other • the scope of the individual’s role; • the individual’s level of skill and experience; • the Company’s legal and industrial obligations; • labour market conditions; and • the size and complexity of the Company’s business. Performance Bonus was approved by shareholders on 27 October 2017 and authorises the Directors to issue options up to 10% of the shares issued by the Company. The number of shares and options issued under the scheme is reasonable in relation to the existing capitalisation of the Company and all payments under the scheme are made in accordance with thresholds set in plans approved by shareholders. Any issue of options to Executive and Non-Executive Directors must be approved by Shareholders. employees. The purpose of the performance bonus is to reward actual achievement by the individual The Company has a Securities Trading Policy Recommendation 8.2: Remuneration of of performance objectives and for materially which aims to: Executive and Non-Executive Directors improved Company performance. Consequently, performance-based • protect stakeholders’ interests at all times; • ensure that directors and employees do The remuneration structure of Non-Executive remuneration is paid where a clear contribution not use any information they possess Directors and executives is disclosed in the to successful outcomes for the Company is for their personal advantage or the Remuneration Report within the Directors’ demonstrated and the individual attains and Company’s detriment; and Report in the Annual Report. The remuneration excels against pre-agreed key performance • ensure that Directors and employees of Non-Executive Directors is determined by indicators during a performance cycle. comply with insider trading legislation the Board having regard to the level of fees paid to Non-Executive Directors by other companies Other Benefits of similar size and stature. of the various jurisdictions in which transactions may take place. The aggregate amount payable to the superannuation and may also receive other and/or options over such shares by Directors, Company’s Non-Executive Directors must not bonus payments subject to the discretion of the executives and staff of the Company should Senior executives are entitled to statutory Purchase or sale of the Company’s shares exceed the maximum annual amount approved Board. by the Company’s shareholders, currently $500,000 as determined at the General Long-Term Incentives Meeting held on 3 August 2007. only occur in circumstances where the market is considered to be fully informed of the Company’s activities. This policy requires that the relevant person notify the Company The Company is committed to remunerating which is discussed further below which is Company’s shares and/or options over such its Executive Directors and senior executives designed to provide long-term incentives to shares prior to the transaction and that the The Company has a share options scheme Secretary of their intention to trade in the in a manner that motivates them to pursue senior executives. the long-term growth and success of the Company and is consistent with best practice. Termination Payments The Company aims to align the interests of Company Secretary be required to discuss the proposed trading intentions with the Chairman. The Board recognises that it is the individual responsibility of each Director to comply with Executive Directors and senior executives with Senior executives may be entitled to a payment this policy. Breaches of this policy may lead those of shareholders through short-term and upon termination of employment from the to disciplinary action being taken, including long-term incentive plans which demonstrate Company. Where so entitled, the termination dismissal in serious cases. The Company’s a clear relationship between performance and payment has been agreed in the senior Securities Trading Policy is available on the remuneration. executive’s contract of employment and it is not Company’s website. Consequently, Executive Directors and senior for misconduct. payable where termination of employment is executives’ remuneration consists of the following elements: • fixed salary; • short-term incentive bonus based on performance; • long-term incentive share/option scheme; and • other benefits including superannuation The Corporations Act prohibits the key management personnel of an ASX listed Further details in relation to the Company’s company established in Australia, or a closely remuneration policies are contained in the related party of such personnel, from entering Remuneration Report within the Directors’ into an arrangement that would have the effect Report in the Annual Report. The Company’s of limiting their exposure to risk relating to an Remuneration Policy is available on the element of their remuneration that either has Company’s website. not vested or has vested but remains subject to a holding lock. Ann ua l Repo rt 2021 27 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2021 Revenue Other income Year ended 30 June 2021 $ 30 June 2020 $ 18,497,060 14,923,300 1,028,018 1,917,865 Note 2(a) 2(b) Changes in inventories of raw materials, finished goods and work in progress (504,109) 839,059 Raw materials, consumables and other costs of sale 2(c) (12,276,211) (9,192,850) Employee benefits expense Depreciation expense Amortisation expense Impairment expense Finance costs expense Auditor remuneration expense Accounting, share registry and secretarial expense Consultancy and contractor expense Legal, insurance and patent expense Marketing and ICT expense Share of loss from interest in Joint Venture Other expenses Profit (loss) before income tax Tax expense Profit (loss) for the year Other comprehensive income Total comprehensive income (loss) for the year Net Profit (loss) and total comprehensive loss are both fully attributable to owners of the Company (2,818,700) (2,665,464) 8(a), 9 (199,926) (211,015) 11(a) 11(a) 2(d) 22 7 2(e) (810,451) (1,520,080) - (2,791,218) (200,057) (271,516) (69,400) (75,800) (97,013) (103,423) (403,943) (486,783) (203,970) (182,413) (605,555) (405,785) (137,080) (389,617) (418,217) (901,782) 780,446 (1,517,523) 3(a) (271,268) (111,711) 509,178 (1,629,234) - - 509,178 (1,629,234) Earnings per share (cents) Diluted earnings per share (cents) 24 24 0.76 0.76 (0.31) (0.31) The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 28 BEAM COMMUN ICATIONS H O LD IN GS LI M I T E D CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2021 AS AT 30 JUNE 2021 Year ended Note 30 June 2021 $ 30 June 2020 $ 4 5 6 7 8 9 10 11 12 13 14 15 13 14 15 3,707,484 873,906 3,071,973 3,576,082 3,156,473 2,337,993 9,935,930 6,788,035 232,560 404,918 71,530 93,811 360,308 519,068 596,169 1,015,413 5,500,055 3,803,161 6,760,622 5,836,371 16,696,552 12,624,406 2,633,268 2,785,037 - 207,437 971,392 182,930 1,101,924 1,294,111 3,942,629 5,233,471 735,112 309,129 48,112 818,737 514,606 47,120 1,092,353 1,380,463 5,034,982 6,613,934 11,661,570 6,010,472 16 12,703,060 7,646,641 85,500 320,394 (1,126,990) (1,956,563) 11,661,570 6,010,472 Current assets Cash and cash equivalents Inventories Trade and other receivables Total current assets Non-current assets Interest in joint venture Plant and equipment Right-of-use assets Deferred tax assets Intangible assets Total non-current assets Total assets Current liabilities Trade and other payables Other financial liabilities Lease liabilties Provisions Total current liabilities Non-current liabilities Other financial liabilities Lease liabilties Provisions Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. Ann ua l Repo rt 2021 29 Balance at 30 June 2020 7,646,641 320,394 (1,956,563) 6,010,472 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2021 Balance at 1 July 2019 Loss for the year Other comprehensive income for the year, net of income tax - Adjustment for employee share option lapsed Balance at 1 July 2020 Profit for the year Other comprehensive income for the year, net of income tax Transactions with owners in their capacity as owners: Issued capital $ Reserves $ Retained earnings $ Total equity $ 7,646,641 411,189 (418,125) 7,639,705 (1,629,234) (1,629,234) (90,795) 90,795 - - 7,646,641 320,394 (1,956,563) 6,010,472 509,178 509,178 - - - - - - - - - - 4,964,957 - - - - - - - - Shares issued, net of transaction costs 4,964,957 - Adjustment for broker options issued (85,500) 85,500 - Adjustment for employee share options lapsed - (320,394) 320,394 - Adjustment for employee share options exercised 176,963 - - 176,963 Balance at 30 June 2021 12,703,060 85,500 (1,126,990) 11,661,570 The above Statement of Changes in Equity should be read in conjunction with the accompanying notes. 30 BEAM COMMUN ICATIONS H O LD IN GS LI M I T E D Cash flow from operating activities Receipts from customers Payments to suppliers and employees Interest received Interest and finance charges paid Income tax credit (expense) COVID-19 relief CONSOLIDATED STATEMENT OF CASH FLOWS CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2021 FOR THE YEAR ENDED 30 JUNE 2021 Year ended 30 June 2021 $ 30 June 2020 $ Note 19,191,491 15,393,052 (18,496,129) (13,614,662) 561 717 (158,066) (220,743) 28,645 (233,977) 366,500 230,000 Net cash provided by operating activities 19(a) 933,002 1,554,387 Cash flow from investing activities Purchases of plant and equipment Development costs capitalised Research and development grant Interest in joint venture Net cash used in investing activities Cash flow from financing activities Net loan payments Lease liability repayments Net cash proceeds on share placement Net cash provided by financing activities 8(a) 12 (22,037) (56,595) (2,507,345) (2,534,199) 689,703 - - (689,997) (1,839,679) (3,280,791) (1,046,593) 220,978 (178,164) (152,900) 4,964,957 - 3,740,200 68,078 Net increase (decrease) in cash and cash equivalents 2,833,524 (1,658,326) Cash and cash equivalents at beginning of year 873,960 2,532,285 Cash and cash equivalents at end of financial year 19(b) 3,707,484 873,960 The above Statement of Cash Flows should be read in conjunction with the accompanying notes. Ann ua l Repo rt 2021 31 1. Summary of significant accounting policies (i) Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001 and comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless stated otherwise. Reporting Basis and Conventions Except for cash flow information, the financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. (ii) New or amended Accounting Standards and Interpretations adopted The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by AASB that are mandatory for the current reporting period. New and revised Standards and amendments and Interpretations effective for the current year that are relevant to the Group are: - AASB 2018-6 Amendments to AASs Definition of a Business - AASB 2018-7 Amendments to AASs Definition of Material - AASB 2019-1 Reference to conceptual framework - AASB 2019-3 Amendments to AASs Interest Rate Benchmark Reform Business - AASB 2019-5 Amendments to AASs Disclosure of the Effect of New IFRS Standards Not Yet Issued in Australia Business - AASB 2020-4 Amendments to Australia Accounting Standards - COVID-19 Related Rent Concessions 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. The adoption of other new or amended Accounting Standards or Interpretations has not had any material impact on the disclosures or on the amounts reported in the financial statements. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. (iii) Accounting policies The following is a summary of the material accounting policies adopted by the consolidated group in the preparation of the financial report. The accounting policies have been consistently applied to all years presented, unless otherwise stated. When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. (a) Principles of consolidation The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (Beam Communications Holdings Limited) and all of the subsidiaries which are entities the parent controls. A list of the subsidiaries is provided in Note 27. (b) Income tax Income tax expense (benefit) for the year comprises current income tax expense (credit) and deferred income tax expense (benefit). A net deferred tax expense has been recognised in the current year reflecting the movements in deferred tax assets and liabilities for the period. 32 BEAM COMMUN ICATIONS H O LD IN GS L I MI T E D NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 20211. Summary of significant accounting policies (continued) (iii) Accounting policies (continued) (b) Income tax (continued) Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. 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 is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the statement of profit or loss and other comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised. At each reporting date, the consolidated group re-assesses unrecognised deferred tax assets as to the extent that it has become probable that future tax profit will enable recognition. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. Beam Communications Holdings Limited and its wholly owned Australian subsidiaries have formed a tax consolidated group under the tax consolidation regime. Each entity in the group recognises its own tax expense and deferred tax. The current tax liability of each group entity and deferred tax assets arising from tax losses are immediately assumed by the parent entity. (c) Plant & equipment Plant and equipment is carried at cost less any accumulated depreciation and impairment losses, where applicable. The carrying amount of plant and equipment is reviewed at each reporting date by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. Repairs and maintenance to plant and equipment is charged to the statement of profit or loss and other comprehensive income during the financial period in which it is incurred. The depreciable amount of plant and equipment is depreciated on a straight line basis over their useful lives to the consolidated group commencing from the time the asset is held ready for use. The straight line depreciation rates for plant and equipment were: Office furniture and equipment 10% - 20% Computer and test equipment 33% Rental equipment 20% - 33% The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. 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. ANN UAL REP ORT 2021 33 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 20211. Summary of significant accounting policies (continued) (iii) Accounting policies (continued) (d) Inventories Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct materials and direct labour. (e) Intangible assets – development costs Development costs are capitalised only when it is probable that the expected future economic benefits would flow to the company and can be measured reliably. Development costs have a finite life and are amortised on a systematic basis matched to future production. Expenditure not related to the creation of a new product is recognised as an expense when incurred. The amortisation rate for capitalised development costs is dependent on an assessment of the minimum useful life of each project. Recent projects/products have been assessed at 4 years giving a 25% amortisation rate during 2021. (f) Employee benefits Short-term employee benefits Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service, including wages, salaries and sick leave. Short-term employee benefits are measured at the undiscounted amounts expected to be paid when the obligation is settled. The Group’s obligations for short-term employee benefits such as wages, salaries and sick leave are recognised as a part of current trade and other payables in the statement of financial position. The Group’s obligations for employees’ annual leave and long service leave entitlements are recognised as provisions in the statement of financial position. Other long-term employee benefits Provision is made for employees’ long service leave and annual leave entitlements not expected to be settled wholly within 12 months after the end of the annual reporting period in which the employees render the related service. Other long-term employee benefits are measured at the present value of the expected future payments to be made to employees. Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee departures and are discounted at rates determined by reference to market yields at the end of the reporting period on government bonds that have maturity dates that approximate the terms of the obligations. Any remeasurements for changes in assumptions of obligations for other long-term employee benefits are recognised in profitor loss in the periods in which the changes occur. Option based compensation relates to the value of options issued to date and brought to account pro-rata to the time period from the date of issue to the date of vesting, except in the case of Director’s where Accounting Standard AASB 2 requires expensing to begin from the commencement of service related to those options, notwithstanding that the issue of those options is subject to shareholder approval. The Group’s obligations for long-term employee benefits are presented as non-current provisions in its statement of financial position, except where the Group does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period, in which case the obligations are presented as current provisions. (g) Financial instruments Financial instruments in the form of trade receivables, trade payables and other financial assets and liabilities are initially measured at fair value adjusted by transactions costs on trade date when the related contractual rights or obligations arise. Realised and unrealised gains or losses arising from changes in the fair value of these assets or liabilities are included in the statement of profit or loss and other comprehensive income in the period in which they arise. At each reporting date, the group assesses whether there is objective evidence that a financial instrument has been impaired. Impairment losses are recognised in the statement of profit or loss and other comprehensive income. Refer Note 17 for a detailed review of the group’s financial instruments. 34 BEAM COMMUN ICATIONS H O LD IN GS L I MI T E D NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 20211. Summary of significant accounting policies (continued) (iii) Accounting policies (continued) (g) Financial instruments (continued) The Group does not designate any interests in subsidiaries as being subject to the requirements of Financial Instruments accounting standards. (h) Impairment of assets At each reporting date, the group reviews the carrying values of its assets to determine whether there is an indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the assets carrying value over its recoverable amount is expensed to the statement of profit or loss and other comprehensive income. Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs. The group uses an Expected Credit Loss model in assessing impairment of trade and other receivables or loans and other instruments that fall within the scope AASB 9 impairment requirements. The model includes a simplified approach in accounting for trade and other receivables as well as contract assets, and records the loss allowance at the amount equal to the expected lifetime credit losses. Under this simplified approach, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses. (i) Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Where applicable, bank overdrafts are disclosed within other financial liabilities in current liabilities on the statement of financial position. (j) Leases The Group assesses whether a contract is or contains a lease, at inception of the contract. The entity 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. When measuring lease liabilities for lease that were classified as operating leases, the Group discounted lease payments using its incremental borrowing rate at 1 July 2019. The weighted average rate applied is 7.3% to 8%. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the entity uses its incremental borrowing rate. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received, any initial direct costs and an estimate of any costs to dismantle and remove the asset at the end of the lease. They are subsequently measured at cost less accumulated depreciation and impairment losses. Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. They are subject to impairment or adjusted for remeasurement. (k) Revenue recognition Revenue from the sale of goods or services is brought to account upon fulfilment of the relevant performance obligations of the contract with the customer. Performance obligations are fulfilled upon delivery of the goods or services to the customer at which point the transaction price is brought to account as revenue. The transaction price is the amount of consideration to which the group expects to be entitled in exchange for transferring promised goods or services to a customer. Interest revenue and rental income are recognised when they become receivable. Other revenue is recognised when the right to receive the revenue has been established. ANN UAL REP ORT 2021 35 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 20211. Summary of significant accounting policies (continued) (iii) Accounting policies (continued) (l) Government grants Government grants in the form of refundable Research and Development Tax Offsets received in respect of capitalised Development Costs are initially recognised as deferred income upon receipt, and brought to account as income on a systematic basis over the useful life of the related Development Cost assets. Export market development grants are brought to account in the statement of profit or loss and other comprehensive income in the period received. There are no unfulfilled conditions or other contingencies attaching to government grants recognised in the financial statements. (m) Interest in joint venture A joint venture represents the contractual sharing of control between parties in a business venture where unanimous decisions about relevant activities are required. Where the Group is a party to a joint venture, the Group recognises its interests in the joint venture using the equity method whereby the investment in the joint venture is carried in the statement of financial position at cost plus post acquisition changes in the Group’s share of net assets of the joint venture. The statement of profit or loss and other comprehensive income reflects the Group’s share of the results of operations of the joint venture. Unrealised gains and losses resulting from transactions between the Group and the joint venture are eliminated to the extent of the interest in the joint venture. (n) Foreign currency transactions and balances Functional and presentation currency The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency. The functional currency of each of the group’s entities is measured using the currency of the primary economic environment in which that entity operates. Transactions and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recognised in the statement of profit or loss and other comprehensive income. (o) Goods and Services Tax (GST) Revenue, expenses and assets are recognised net of the amount of GST, except where the amount of GST is not recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as part of the asset or expense cost. Receivables and Payables are shown in the statement of financial position as inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities which are disclosed as operating cash flows. 36 BEAM COMMUN ICATIONS H O LD IN GS L I MI T E D NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 20211. Summary of significant accounting policies (continued) (iii) Accounting policies (continued) (p) Critical accounting estimates, judgments and assumptions The preparation of the Group’s consolidated financial statement requires management to make judgements, estimates and assumptions. Uncertainty about these assumptions and estimate could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future period. Information about areas of estimation uncertainty and critical assumptions are described in the following notes: • Note 3 Deferred tax asset – tax losses • Note 11 Impairment of intangible assets • Note 14 Lease liabilities – Estimating the incremental borrowing rate • Note 21 Share-based payment – Determination of valuation model and assumptions about incentive plan (q) New accounting standards for application in future periods The below are Accounting Standards and Interpretations issued by the AASB that are not yet mandatorily applicable to the Group, with an assessment of the potential impact of such pronouncements on the Group when adopted in future periods: Accounting Standards and Interpretations AASB 2020-1 Amendments to AASs - Classification of Liabilities as Current or Noncurrent liabilities as Current or Non-current AASB 2020 -3 Amendments to AASs - Annual Improvements 2018-2020 and OtherAmendments ASB 2020-6 Amendments to AASs - Classification of Liabilities as Current or Noncurrent liabilities as Current or Non-current – Deferral of Effective Date AASB 2021-2 Amendments to AASs - Disclosure of Accounting Policies and Definition of Accounting Estimates AASB 2021-5 Amendments to AASs - Deferred Tax related to Assets and Liabilities arising from a Single Transaction Applicable to annual reporting periods beginning on or after 1 July 2023 1 July 2022 1 July 2022 1 July 2023 1 July 2023 The Group is in the process of reviewing these amended standards and interpretations however it is not expected that this will have a significant impact on the Group’s consolidated financial statements. ANN UAL REP ORT 2021 37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021 2 Profit (loss) before income tax (a) Disaggregation of revenue: Type of goods or services - Equipment sales - Airtime - Other Geographical markets - Australia - United States of America - United Arab Emirates - United Kingdom - China - Canada - Japan - Other foreign countries Timing of revenue recognition - Goods and services transferred at a point in time - Goods and services transferred over time (b) Other income - Research and Development grant (i) - Interest - COVID-19 relief (ii) -Gain on reversal of joint venture loss accrual (iii) - Other (i) The Research and Development grant $363,258 includes $73,055 brought to account upon full amortisation of the capitalised Thuraya WE terminal and $290,203 recognised as income over the portion of useful life of the ZOLEO R&D project to 30 June 2021, in accordance with the accounting policy detailed in Note 1 (iii) (l). See also Note 12. (ii) The Group was eligible to receive a JobKeeper allowance of $309,000 and a Cash Flow Boost payment of $37,500 from the Australian government and a VIC state government grant of $20,000. See also Note 28. (iii) The $294,893 reversal was for the previous year’s accrual for joint venture losses reflecting the improved sales forecast and cashflow of the joint venture business. (c) Cost of sales Opening inventories Add: Purchases and other stock adjustments Closing inventories (Note 5) (d) Finance costs expense Interest expense on financial liabilities Interest expense on lease liabilities (e) Other expenses include: - Product development costs expensed - Operating lease payments Year ended 30 June 2021 $ 30 June 2020 $ 17,353,524 13,023,662 969,627 173,909 1,514,365 385,273 18,497,060 14,923,300 4,166,871 3,115,480 3,454,692 4,045,000 760,875 1,048,492 1,279,838 1,321,229 227,169 284,976 6,053,935 2,168,610 343,460 450,198 2,210,220 2,489,314 18,497,060 14,923,299 17,423,393 13,023,662 1,073,667 1,899,638 18,497,060 14,923,300 363,258 1,414,549 561 366,500 294,893 2,806 164,187 332,500 - 6,629 1,028,018 1,917,865 3,576,082 2,737,022 12,276,211 9,192,850 15,852,293 11,929,872 (3,071,973) (3,576,082) 12,780,320 8,353,790 154,625 45,432 200,057 241,071 34,409 213,864 57,652 271,516 273,796 47,005 3 Income tax (a) The components of tax expense comprise: - US tax expense (credit) (d) - Current movement of temporary difference in net deferred tax assets - Movement in deferred tax asset associated with carry forward tax losses - Deferred tax effect of initial application of AASB 16 Income tax expense transferred to statement of profit or loss and other comprehensive income (b) Reconciliation of income tax expense and tax at statutory rate: Year ended 30 June 2021 $ 30 June 2020 $ (147,976) 310,941 108,303 - 271,268 233,977 (368,234) 216,565 29,403 111,711 Profit (loss) from ordinary activities 780,446 (1,517,523) Income tax expense (benefit) at statutory rate of 25% (2020: 27.5%) 195,112 (417,319) Add / (Less): Tax effect of: - Tax reconciling items - US tax expense (credit) (d) - Deferred tax assets (gain) / loss - Deferred tax effect of initial application of AASB 16 Income tax expense attributable to the Consolidated Group (195,112) (147,976) 446,721 233,977 419,244 (122,266) - 271,268 (29,403) 111,711 (c) The deferred tax expense reflects the movements in the deferred assets and liabilities. The directors have maintained a conservative approach and have recognised 60% (2020: 60%) of the deferred tax assets and liabilities inclusive of carried forward tax losses. Although the Directors expect sufficient future profitability to enable the full value of all deferred tax assets to be utilized, the decision has been taken not to increase the proportion taken up at this time, with continuing demonstration of the Group’s return to profitability required before the Board would consider doing so. The amount of unused net deferred tax assets relating to tax losses which have not been brought to account (being the 40% portion) is $765,430 (2020: $837,632) and capital tax losses of $1,681,896 (2020: $1,850,085). The amount of net deferred tax assets which may be realised in the future is dependent on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Consolidated Group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. (d) Income tax expense includes a credit for overpayment $150,623 in previous years and a tax expense of $2,647. As both amounts were incurred by the Group’s USA subsidiary, they are unable to be combined with Australian tax losses. (e) There are no franking credits available to equity holders. ANN UAL REP ORT 2021 39 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 20214 Cash and cash equivalents Cash at bank and on hand 5 Inventories Raw materials Finished goods Less: Provision for stock obsolescence 6 Trade and other receivables (a) Current Trade receivables Less: Provision for expected credit losses Other receivables and prepayments Rental & other security deposits Year ended 30 June 2021 $ 30 June 2020 $ 3,707,484 873,960 364,113 795,681 2,987,860 3,025,401 (280,000) (245,000) 3,071,973 3,576,082 1,793,387 1,342,615 - - 1,249,621 881,854 113,465 113,523 3,156,473 2,337,993 (b) Ageing reconciliation Gross amount Within trade Past due but not impaired (days overdue) Past due & terms 31 - 60 61 - 90 90+ impaired 2021 Current Trade receivables 1,793,387 1,521,905 248,880 17,296 5,306 Other receivables 1,249,621 1,249,621 Rental and other security deposits 113,465 113,465 - - - - - - - - - Expected credit loss rate 0% 0% 0% 0% 0% 0% 2020 Current Trade receivables 1,342,615 1,135,181 202,932 66 4,436 Other receivables 881,854 881,854 Rental & other security deposits 113,523 113,523 - - - - - - - - - Expected credit loss rate 0% 0% 0% 0% 0% 0% All trade receivables past due terms but not impaired are expected to be received in the normal course of business. 40 BEAM COMMUN ICATIONS H O LD IN GS L I MI T E D NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 20217 Interest in joint venture Investment in joint venture Group’s accumulated share of loss from ZOLEO Inc joint venture The Group has a 50% share in a joint venture company, ZOLEO Inc , which was incorporated in Canada in August, 2018. ZOLEO Inc had no contingent liabilities or capital commitments as at 30 June 2020. The Group contributed U$475,000 to the joint venture during the year, which was recognised as an increase in investment as per the equity accounting method. Summarised financial information: Summarised statement of financial position: Current Assets Total Assets Current Liabilities Non -current Liabilities Total Liabilities Net Asset Deficiency Share Capital Accumulated Losses Net Equity Summarised statement of profit or loss and other comprehensive income: Revenue Cost of goods sold Expenses: Operating staff costs Marketing Professional services Billing & support services Other expenses Total expenses Gain on FX Loss for the year Group’s share of loss for the year ended Year ended 30 June 2021 $ 30 June 2020 $ 1,082,439 1,117,717 (849,879) (712,799) 232,560 404,918 ZOLEO Inc 30 June 2021 30 June 2020 3,484,866 1,430,190 3,484,866 1,430,190 3,021,515 620,365 2,061,719 2,258,488 5,083,234 2,878,853 (1,598,368) (1,448,663) 266 291 (1,598,634) (1,448,954) (1,598,368) ( 1,448,663) 13,477,482 2,174,203 (12,766,594) 2,196,968 (604,867) (572,107) (28,100) (46,135) (183,389) (124,020) (21,626) (59,190) (10,419) (93,126) (986,511) (756,468) 1,463 - (274,160) (779,233) (137,080) (389,617) ANN UAL REP ORT 2021 41 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 20218 Plant and equipment Office furniture and equipment - at cost Less: Accumulated depreciation and impairment Computer and test equipment - at cost Less: Accumulated depreciation and impairment Rental equipment - at cost Less: Accumulated depreciation and impairment Year ended 30 June 2021 $ 30 June 2020 $ 491,431 491,431 (462,463) (448,980) 28,968 42,451 410,808 390,971 (378,864) (356,412) 31,944 34,559 43,493 44,458 (32,875) (27,657) 10,618 16,801 Total plant and equipment 71,530 93,811 Office Furniture & Equipment Computer & Test Equipment Rental Equipment Total (a) Movements in carying amounts Movements in the carrying amounts of each class of plant and equipment between the beginning and the end of the current financial year: Balance at 1 July 2019 Additions Disposals 53,398 9,839 - 38,922 20,861 10,637 102,957 25,895 56,595 - (13,486) (13,486) Depreciation expense (20,785) (25,225) (6,245) (52,255) Balance at 30 June 2020 42,451 34,559 16,801 93,811 Additions Disposals - - 22,037 (2,200) - (952) 22,037 (3,152) Depreciation expense (13,483) (22,452) (5,231) (41,166) Balance at 30 June 2021 28,968 31,944 10,618 71,530 42 BEAM COMMUN ICATIONS H O LD IN GS L I MI T E D NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 20219 Right-of-use assets Cost Balance recognised at the beginning of the year 677,829 677,829 Year ended 30 June 2021 $ 30 June 2020 $ Additions Disposals Balance at the end of year Accumulated depreciation Balance recognised at the beginning of the year Charge for the year Disposals Balance at the end of year Carrying amount The Group leases several assets, which includes building, forklift and printers with original lease terms of 9, 3 and 5 years respectively. The remaining lease terms at the end of the current reporting period are all less than 3 years. There are no variable lease payment terms in any lease contracts. There are no extension or termination options on the leases. The Group received rental relief for the office buildings in light of COVID-19 in the previous financial year and the current financial year. 15% of June 2020 rents were initially deferred for 24 months and another 15% waived, but the adjustment was reversed in financial year 2021. The Group was granted a 15% rent deferral for 24 months and a further 15% rent reduction for August 2021, and the deferred amount of $4,770 will be paid in July 2022. Amount recognised in profit or loss Depreciation expense on right-of-use assets Interest expense on lease liabilities Expense relating to short-term leases Expense relating to leases of low value assets - - - - 677,829 677,829 (158,761) - (158,760) (158,761) - - (317,521) (158,761) 360,308 519,068 158,760 158,761 45,432 57,652 11,892 23,758 - - ANN UAL REP ORT 2021 43 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 202110 Tax Non-current Deferred tax assets Deferred tax assets: Carrying amount of patents and capital raising costs Accruals Provisions Lease Liabilities Tax losses Deferred tax liability: Product development costs Right-of-use-assets Other financial liabilities 11 Intangible assets Development costs capitalised - at cost Accumulated amortisation and impairment (a) Movement in carrying amounts Balance at the beginning of the year Additional costs capitalised Amortisation expense Impairment expense Balance at the end of the year Balance at July 1 2020 Charged to Income Balance at 30 June 2021 144 91,806 265,090 115,093 1,256,447 1,728,580 (627,521) (85,646) - 1,015,413 (96) (50,379) (46,365) (37,608) (108,303) (242,751) (197,487) 31,600 (10,606) (419,244) 48 41,427 218,725 77,485 1,148,144 1,485,829 (825,008) (54,046) (10,606) 596,169 Year ended 30 June 2021 $ 30 June 2020 $ 6,310,506 16,623,642 (810,451) (12,820,481) 5,500,055 3,803,161 3,803,161 5,580,260 2,507,345 2,534,199 (810,451) (1,520,080) - (2,791,218) 5,500,055 3,803,161 The Group has assessed the minimum useful life of products from recent development projects at 4 years giving a 25% amortisation rate on completed projects during 2021 financial year. In line with the accounting policy detailed in Note 1 (iii) (h), the carrying value of assets is reviewed to determine whether there is an indication that those assets have been impaired. None of the intangible assets was written off during the financial year. 44 BEAM COMMUN ICATIONS H O LD IN GS L I MI T E D NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2021Year ended 30 June 2021 $ 30 June 2020 $ 1,795,657 2,258,898 583,753 253,858 257,307 268,832 2,633,268 2,785,037 - 971,392 735,112 - 735,112 758,703 60,034 818,737 12 Trade and other payables Current Trade payables and accruals Deferred R&D income Deferred income other The Group initially recognises R&D grants as deferred income upon receipt and brings to account the income over the same period as the amortisation of the related completed project cost. $363,258 of R&D grant income was recognised in the statement of profit & loss for the year as shown in Note 2 (b). 13 Other financial liabilities Current Secured loan (a) Non Current Secured loan (b) Unsecured loan (c) Secured loans (a) The Group previously had a secured loan finance facility with SGV1 Holdings Limited for US$2,000,000, of which US$666,666 had been drawn down. The loan was fully repaid on 28 October 2020 and the facility has been terminated. (b) The Group has a secured loan facility with Roadpost Inc. of up to US$600,000. Roadpost is a Canadian company and a joint venture partner with Beam Communications Pty Ltd to develop, market and distribute the ZOLEO product, a satellite based messaging device, including associated airtime contracts. The interest-free Assistance Loan is to assist Beam to establish the business and is repayable at Beam’s sole discretion. As at 30 June 2021, US$600,000 has been drawn down. The total loan balance of A$735,112 represents the fair value of the loan at 30 June 2021. The loan is secured by Beam’s pledge of shares in ZOLEO Inc, an entity established with Roadpost to manage the ZOLEO business. Unsecured loans (c) The Group had an unsecured loan facility with supplier DEK Technologies Pty. Ltd. for A$400,000 to fund the Iridium SFX development costs and $113,987 had been drawn down. Beam repaid the loan in full in October 2020 and the facility has been terminated. ANN UAL REP ORT 2021 45 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 202114 Lease liabilities (a) Carry amounts and movements: At the beginning of the year Additional Decrease in liability At the end of the year Disclosed as: Current Non-current Year ended 30 June 2021 $ 30 June 2020 $ 697,536 856,019 - - (180,970) (158,483) 516,566 697,536 207,437 309,129 516,566 182,930 514,606 697,536 The entity does not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are monitored within the Group’s treasury function. The incremental borrowing rate applied to various lease liabilities recognised under AASB 16 ranges between 7.30% - 8% The maturity analysis of lease liabilities are disclosed in Note 17(d). 15 Provisions Current Employee benefits Warranty costs Non-current Employee benefits (a) Movements in provisions Balance at the beginning of the year Additional provisions Amounts used Balance at the end of the year 1,001,500 1,082,979 100,424 211,132 1,101,924 1,294,111 48,112 47,120 Employee Benefits Warranty Costs Total 1,130,099 211,132 1,341,231 730,004 23,220 753,224 (810,491) (133,928) (944,419) 1,049,612 100,424 1,150,036 46 BEAM COMMUN ICATIONS H O LD IN GS L I MI T E D NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 202116 Issued capital Issued and paid up capital: Ordinary fully paid shares Year ended 30 June 2021 $ 30 June 2020 $ 12,703,060 7,646,641 The Company has 75,052,952 ordinary shares on issue at 30 June 2021 (2020: 52,873,452). No. of shares $ per share Total $ Balance at 30 June 2020 Shares Issued, net of transaction costs (a) Shares issued on the exercise of options (b) Balance at 30 June 2021 52,873,452 21,272,000 907,500 75,052,952 - 0.2500 0.1950 7,646,641 4,879,457 176,963 12,703,060 (a) Shares issued The Group issued two placement tranches for 13,218,362 and 8,053,638 ordinary shares on 19 October 2020 and 8 December 2020 respectively for $0.25 per share. Proceeds from the capital raise were used to close high-interest loan facilities during the financial year and will be used to fund sales and device development activities. The total transaction costs for issuance of the shares was $438,543 including an option expense of $85,500, charged to Reserves, for the Group’s corporate advisor, Peak Asset Management. Investors participating under the placement were issued with one option for every three new shares allocated (1:3 attaching options), totalling 7,090,667 options, and the Group’s corporate advisor, Peak Asset Management, also received 1,500,000 share options as payment for corporate advisory services provided. (See also Note 21.) Shareholder approval for the options issued to the investors and Peak Asset Management was obtained at the Company’s Annual General Meeting on 30 November 2020. These options have an expiry date of 31 December 2022 on the terms and conditions set out in the placement agreement and were exercisable from 30 November 2020 at $0.50 per share (Issue BCC60 & BCC61). (b) Exercise of options On 30 November 2020, 907,500 options, which had been granted on 24 December 2015 to a director with an expiry date of 30 November 2020 on the terms and conditions set out in the Company’s Share Option Incentive Plan, were exercised by the holder. These options had been exercisable since 30 June 2016 at $0.195 per share (Issue WRR57). The shares were issued on 3 December 2020. (See also Note 21.) (c) Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. (d) Capital management When managing capital, management’s objective is to ensure the Consolidated Group continues as a going concern as well as to maintain optimal returns toshareholders and benefits for other stakeholders. No dividends have been paid or declared in respect of ordinary shares for the 2021 financial year or prior years. The Consolidated Group effectively manages its capital by assessing the financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders, share issues, or convertible note issues. ANN UAL REP ORT 2021 47 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 17 Financial instruments The Consolidated Group undertakes transactions in a range of financial instruments including: - cash assets; - receivables; - payables; - deposits Activities undertaken by entities within the Consolidated Group result in exposure to a number of financial risks, including market risk interest rate risk, foreign currency risk, credit risk and liquidity risk. Due to the size of operation conducted by the Consolidated Group, risk management is monitored directly by the Board of Directors of the parent company with the aim of mitigation of the above risks and reduction of the volatility on the financial performance of the Group. The risks associated with material financial instruments and the Consolidated Group’s policies for minimising these risks are detailed below: (a) Interest rate risk management Interest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to changes in market interest rates. Interest rate risk for the Consolidated Group primarily arises from: - Bank Funding - Facilities are provided by the Consolidated Group’s bankers and if drawn upon are at variable interest rates based upon Business Overdraft Prime Indicator rates plus a risk margin. The group diligently manages the facilities and its accompanying rate risk in its daily operations by keeping the net debt portfolio at a minimum level or in an in-funds position. These risk exposures related to the financial instruments are not considered material and therefore no sensitivity analysis has been provided. Financial Instrument Composition and Maturity: The Consolidated Group’s exposure to interest rate risk, and the effective weighted average interest rates on classes of financial assets and financial liabilities, is as follows: Floating Interest Fixed Interest Weighted Average Interest Rate Non-Interest bearing TOTAL 2021 Financial asset Cash assets Receivables TOTAL Financial liability Payables (excluding deferred income) Lease liabilities TOTAL 2020 Financial asset Cash assets Receivables TOTAL Financial liability Payables (excluding deferred income) Lease liabilities TOTAL 3,707,484 - 3,707,484 - - 873,960 - 873,960 - - - - 516,566 516,566 - - - 0.00% 0.00% 0.00% 7.36% 0.00% 0.00% - 3,156,473 3,156,473 3,707,484 3,156,473 6,863,957 2,530,769 2,530,769 - 516,566 2,530,769 3,047,335 - 2,337,993 2,337,993 873,960 2,337,993 3,211,953 - - - 1,031,426 697,536 1,728,962 10.00% 7.36% 3,017,601 4,049,027 - 697,536 3,017,601 4,746,563 17 Financial instruments (continued) (b) Foreign currency risk management Foreign currency risk refers to the risk that the value of a financial commitment, recognised asset or liability will fluctuate due to changes in foreign currency rates. The Consolidated Group conducts the majority of its receivable and payable transactions in foreign currency, primarily in US Dollars. The Group’s foreign currency exchange risk arises from the holding of foreign currency deposits and transactions in normal trading operations resulting in trade receivables and payables being held at balance date. Foreign currency risk sensitivity: If foreign exchange rates were to increase/decrease by 10% from rates used to determine values as at reporting date then the impacts on profit and equity due to unrealised foreign currency exchange gains or losses on foreign currency deposits and trade receivables and payables are as follows: Impact on profit after tax Impact on equity Foreign currency movement Year ended 30 June 2021 $ 30 June 2020 $ +/- 10% +/- 157,692 +/-68,382 +/- 10% +/- 157,692 +/-68,382 The above sensitivity reflects the low net holding of foreign currency financial instruments at balance date. Whilst foreign currency payables and receivables are largely offsetting during the year, the Group monitors and manages the associated currency risks in order to reduce the impact of market risk volatility, therefore no further sensitivity analysis has been provided. (c) Credit risk management Credit risk is the risk that a contracting entity will not complete its obligations under a financial instrument and cause a financial loss to the Consolidated Group. The credit risk on financial assets of the Consolidated Group that have been recognised in the statement of financial position is the carrying amount, net of any provision for doubtful debts. The Consolidated Group minimises credit risk by performing credit assessments on all new customers, continuing major customers, and where necessary, obtaining advance payments. Ongoing credit evaluation is performed on the financial condition of customers and, where appropriate, an allowance for doubtful debts is raised. The Consolidated Group does not have any credit risk arising from money market instruments, foreign currency contracts, cross currency and interest rate swaps. ANN UAL REP ORT 2021 49 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 202117 Financial instruments (continued) (d) Liquidity risk management Liquidity risk includes the risk that, as a result of the Consolidated Group’s operational liquidity requirements, the Group: - will not have sufficient funds to settle a transaction on the due date; - will be forced to sell financial assets at a value which is less than what they are worth; - may be unable to settle or recover a financial asset at all. To help reduce these risks the Consolidated Group: - has a liquidity policy which targets a minimum and average level of cash and cash equivalents to be maintained; and - monitors forecast cash flows and endeavours to ensure that adequate borrowing facilities are maintained and/or maturity dates are managed appropriately. The Consolidated Group’s exposure to liquidity risk on classes of financial assets and financial liabilities, is as follows: < 1 Year 1 - 5 Years Total contractual cash flows Carrying amount 2021 Asset/Liability class Cash and cash equivalents 3, ,707,484 - 3,707,484 3,707,484 Receivables 3,043,008 113,465 3,156,473 3,156,473 Payables (excluding deferred income) (1,795,657) (735,112) (2,530,769) (2,530,769) Lease liabilities Net maturities 2020 Asset/Liability class (207,437) (309,129) (516,566) (516,566) 4,747,398 (930,776) 3,816,622 3,816,622 Cash and cash equivalents 873,960 - 873,960 873,960 Receivables 2,224,471 113,522 2,337,993 2,337,993 Payables (excluding deferred income) (3,230,290) (818,737) (4,049,027) (4,049,027) Lease liabilities Net maturities (182,930) (514,606) (697,536) (697,536) (314,789) (1,219,821) (1,534,610) (1,534,610) (e) Net fair values of financial assets and liabilities Secured loan with Roadpost lnc. was measured at fair value under AASB 13 and classified as Level 3 in the fair value hierarchy. The Group received a financing benefit, being non-cash consideration, in the form of an interest free loan. The Group used a discount rate of 6% to calculate its interest free benefit when it was recorded in the previous financial year. This assumption is not directly observable. Any increase in the discount rate would decrease the fair value of the loan. 50 BEAM COMMUN ICATIONS H O LD IN GS L I MI T E D NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2021Year ended 30 June 2021 30 June 2020 $ $ 2,294,233 2,707,924 - - 295,754 - 2,294,233 3,003,678 18 Commitments and contingencies Capital expenditure projects Not longer than one year Longer than one year and not longer than five years Longer than five years Capital commitments relate to product development projects being undertaken by the subsidiary, Beam Communications Pty Ltd. Superannuation commitments Beam Communications Holdings Limited makes superannuation contributions to prescribed superannuation funds on behalf of employees and executive directors, as required by the Superannuation Guarantee legislation. The principal types of benefits are death, permanent disability and superannuation benefits upon retirement ANN UAL REP ORT 2021 51 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 202119 Notes to the statement of cash flows (a) Reconciliation of Profit / (loss) after income tax benefit to net cash flow from operating activities Profit / (loss) after tax Adjustments for Depreciation Amortisation Impairment Net loss on disposal of plant and equipment Share of loss in joint venture Unrealised foreign currency net losses Interest free benefit Notional interest expense Changes in assets and liabilities: Increase in trade and other receivables (Increase) / Decrease in inventory (Increase) / Decrease in deferred tax assets Decrease in trade and other payables Increase / (Decrease) in employee provisions Increase / (Decrease) in provision for warranty costs Increase in provision for stock obsolescence Net cash provided by operating activities (b) Reconciliation of cash Year ended 30 June 2021 30 June 2020 $ $ 509,178 (1,629,234) 199,926 211,015 810,451 1,520,080 - 2,791,218 3,152 137,080 (27,234) 13,486 389,617 158,113 - (163,470) 41,992 50,773 (832,809) (281,326) 469,109 (889,059) 419,244 (122,266) (640,891) (662,993) (80,488) (110,708) 35,000 98,461 19,972 50,000 933,002 1,554,387 Cash at the end of the financial year as shown in the consolidated statement of cash flows is reconciled to items in the consolidated statement of financial position as follows: 3,707,484 873,960 Cash and cash equivalents (Note 4) (c) Non cash financing and investing activities Non cash financing and investing activities undertaken by the Consolidated Group during the year are disclosed in Note 21. 52 BEAM COMMUN ICATIONS H O LD IN GS L I MI T E D NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2021(d) Banking facilities All bank facilities are secured by first ranking Registered Mortgage Debenture over the Consolidated Group’s assets including uncalled capital and called but unpaid capital. At 30 June 2021, the company had the following unused bank facilities: - an Australian dollar overdraft with a limit of $300,000. The overdraft was not utilised at 30 June 2021. - a US dollar overdraft with a limit of US$320,000. The US dollar overdraft was not utilised at 30 June 2021. Bank guarantee facilities of the Consolidated Group total $150,000 of which $100,000 has been allocated to a subsidiary company and $50,000 to the parent. Both were fully utilised at 30 June 2021. The Consolidated Group’s banking facilities are no longer subject to the Group satisfying quarterly covenants set by the bank. The bank reconfirmed the banking facilities as continuing on 25 August 2021. On 1 July 2020 the Group received a 3-year-term loan from the National Australia Bank of $500,000, a business support loan designed to help mitigate the impact of COVID-19 and partially secured by the Australian government. The Group started making monthly loan repayments for the loan in February 2021. On 10 May 2021, the Group received funds of $500,000 from a further 3-year-term loan for COVID-19 business support from the same bank under the same conditions. On 19 May 2021 the outstanding principal of both loans totalling $972,970 was repaid in full and converted into a new redrawable partially secured five-year loan facility for the same amount. As at 30 June 2021, the combined 5-year facility was undrawn. 20 Key management personnel disclosures Compensation by category 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-employee benefits Other long-term benefits Termination benefits Share-based payments Year ended 30 June 2021 30 June 2020 $ $ 1,119,438 1,133,349 78,254 78,428 1,849 13,365 - - - - 1,199,541 1,225,142 ANN UAL REP ORT 2021 53 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 202121 Share based payments (a) Share Option Incentive Plan Share options under the Share Option Incentive Plan are granted at the discretion of the directors based on terms and conditions set out in theCompany’s Share Option Incentive Plan. The directors may at any time and from time to time determine eligible persons for the purposes of the option plan and select amongst those eligible persons participants who will be invited to participate in the option plan. Options issued to directors pursuant to the option plan will be subject to approval of shareholders in general meeting, in compliance with the Listing Rules. No share options issued under the Share Option Incentive Plan remained on issue at 30 June 2021. (i) 789,525 options were granted on 24 December 2015 to key employees with an expiry date of 31 August 2020 on the terms and conditions set out in the Company’s Share Option Incentive Plan. These options were exercisable from 30 June 2016 at $0.195 per share (Issue WRR56) 789,525 options lapsed on 31 August 2020. (ii) 907,500 options were granted on 24 December 2015 to a director with an expiry date of 30 November 2020 on the terms and conditions set out in the Company’s Share Option Incentive Plan. These options were exercisable from 30 June 2016 at $0.195 per share (Issue WRR57). These options were exercised on 30 November 2020 and 907,500 shares were issued on 3 December 2020. The following table illustrates the number (No.) and weighted average exercise prices (WAEP) and movements in share options issued under the Share Option Incentive Plan during the year for the Company: Outstanding at the beginning of the financial year Lapsed during the financial year Exercised during the financial year Outstanding at the end of the financial year Exercisable at the end of the financial year (b) Other share based payments 30 June 2021 30 June 2020 No. WAEP $ No. WAEP $ 1,697,025 0.1950 2,486,550 0.1950 (789,525) - (789,525) (907,500) 0.1950 - - - - - - - 1,697,025 0.1950 1,697,025 0.1950 During the financial year, the Group issued 1,500,000 share options to the Group’s corporate advisor, Peak Asset Management, as payment for corporate advisory services provided. (See also Note 16.) The fair value of the options was determined using the Black-Scholes option valuation model as detailed below. Grant date Expiry date Share price at valuation date Exercise price per option Expected volatility Dividend yield Risk-free interest rate Fair value per option at grant date 30 November 2020 31 December 2022 0.2850 0.5000 65% - 0.085% 0.0570 54 BEAM COMMUN ICATIONS H O LD IN GS L I MI T E D NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 202122 Remuneration of auditors Remuneration of the Auditor for auditing or reviewing financial reports of the Consolidated Group 69,400 75,800 Year ended 30 June 2021 30 June 2020 $ $ Year ended 30 June 2021 30 June 2020 $ $ 2,357,459 2,450,879 (40,603) (87,978) - - - 16,854 (45,893) 971,392 23 Related party transactions Related party transactions with the Season Group and SGV1 Holdings Limited, which were related to Mr Carl Hung, a former Director of Beam Communications Holdings Limited: Transactions with Season Group - Purchases - Sales Amounts outstanding with the Season Group - Receivables - Payables Transactions with SGV1 Holdings Limited - Secured Loan Payable Mr Carl Hung was a director of the Company until his retirement on 30 November 2020 and remained a related party until 31 May 2021. He is the president and a director of the Season Group. Transactions between the Company and the Season Group during the time he was a related party to the Company were on normal commercial terms and conditions no more favourable than those available to other parties. There was no finance facility with a related party as at 30 June 2021. The Group’s secured finance facility with a major shareholder SGV1 Holdings Limited, a company associated with Mr Carl Hung, a former Director of the Company, was fully settled on 28 October 2020. ANN UAL REP ORT 2021 55 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 202124 Earnings per share Overall operations Basic earnings (loss) per share Diluted earnings (loss) per share Year ended 30 June 2021 30 June 2020 ¢ 0.76 0.76 ¢ (0.31) (0.31) No. No. Weighted average number of ordinary shares used in the calculation of Basic Earnings Per Share 67,139,375 52,873,452 Weighted average number of dilutive options on issue Weighted average number of ordinary shares and potential ordinary shares used in the calculation of Dilutive Earnings Per Share - - 67,139,375 52,873,452 Anti-dilutive options on issue not used in dilutive EPS calculation 8,590,667 1,697,025 Anti-dilutive options have not been considered in the dilutive earnings per share calculation due to the average market price being equal to or very close to the exercisable price. Earnings: Earnings (loss) used in the calculation of Basic Earnings Per Share Earnings (loss) used in the calculation of Dilutive Earnings Per Share $ $ 509,178 (1,629,234) 509,178 (1,629,234) 25 Segment Reporting (a) Sole operating segment The Consolidated Group has identified operating segments based upon internal reports that are reviewed and used by the Directors in assessing performance and determining the allocation of resources in respect of its satellite communications products services and online sales. As the online sales segment operated by SatPhone Shop Pty Ltd, a wholly owned subsidiary company, does not meet the quantitative threshold for separate disclosure, the company considers its aggregate segment as it sole segment. Accordingly, revenue and results are fully disclosed in the consolidated statement of profit or loss and other comprehensive income for this aggregated sole operating segment. The consolidated statement of financial position discloses the sole operating segment assets and liabilities which are held within Australia (b) Major customers The Consolidated Group has a number of customers to whom it provides products and services. The Consolidated Group supplied a single customer in Canada accounting for 29% of external revenue (2020: the largest customer was in the United States, 19%) and the second largest customer, located in the United States, accounted for 13% of external revenue (2020: the second largest customer was in Canada, 7%). Thenext most significant customer also accounts for 10% of external revenue (2020: 6%). 56 BEAM COMMUN ICATIONS H O LD IN GS L I MI T E D NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2021Year ended 30 June 2021 30 June 2020 $ $ (564,814) (694,156) (419,244) 122,266 (984,058) (571,890) - - (984,058) (571,890) 1,855,443 412,459 1,017,389 1,611,491 2,872,832 2,023,950 1,646,051 4,750,545 357,241 561,726 2,003,292 5,312,271 869,540 (3,288,321) 12,703,060 7,646,641 85,500 320,394 (11,919,020) (11,255,356) 869,540 (3,288,321) 26 Parent company disclosures Set out below is the supplementary information about the parent entity. (a) Statement of profit or loss and other comprehensive income Loss from continuing operations Tax expense Loss for the year attributable to owners of the Company Other comprehensive income Total loss and other comprehensive income for the year attributable to owners of the Company (b) Statement of financial position Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Net assets (deficiency) Equity Issued capital Reserves Accumulated losses Total equity (c) Guarantees The parent company has no contractual guarantees in place. (d) Contractual commitments The parent entity has no capital expenditure commitments. (e) Significant accounting policies of the parent are the same as those for the consolidated entity. ANN UAL REP ORT 2021 57 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 202127 Controlled entities Investments in unquoted corporations being controlled entities: 2021 2020 Beam Communications Pty Ltd Australia Ordinary 100% 100% Incorporated Share class Holding SatPhonerental Pty Ltd SatPhone Shop Pty Ltd Beam Communications USA Inc Pacarc (PNG) Limited (Dormant) 28 Impacts of COVID-19 Australia Ordinary 100% 100% Australia Ordinary 100% 100% USA Ordinary 100% 100% Papua New Guinea Ordinary 100% 100% Despite the ongoing challenges created by the COVID-19 pandemic, the Group did not experience a profound impact on its sales and operations and recovered strongly to return to a profitable position during the financial year. The Group qualified for government grants for businesses in the wake of the pandemic. Following the $270,000 received from April to June in 2020, the Group continued to receive the first round of JobKeeper payments and the total amount received during the financial year was $309,000. The Group became ineligible for the second phase of the grant, which commenced on 28 September 2020, due to its solid recovery in sales. Additionally, the Group was qualified for a Cash Flow Boost of $38,000 from the Australian Taxation Office and a Business Support Fund of $20,000 from the Victoria State Government during the year. 29 Events after the reporting period The Directors are not aware of any significant events since the end of the year. 30 Company details and principal place of business Beam Communications Holdings Limited is a limited company incorporated in Australia. The principal activities of the Company and subsidiaries are outlined in the Director’s Report. The address of its registered office and principal place of business is: 5 / 8 Anzed Court Mulgrave Victoria 3170 Australia 58 BEAM COMMUN ICATIONS H O LD IN GS L I MI T E D NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2021DIRECTORS ‘ DECLARATION DIRECTORS’ DECLARATION The directors of Beam Communications Holdings Limited declare that: 1. The financial statements and notes as set out in pages 30 to 60 are in accordance with the Corporations Act 2001 and: (a) comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements, constitutes compliance with International Financial Reporting Standards; (b) give a true and fair view of the financial position as at 30 June 2021 and of the performance for the year ended on that date of the company and consolidated group; and (c) any other matters that are prescribed by the regulations for the purposes of this declaration in relation to the financial statements and the notes for the financial year are also satisfied. 2. In the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. This declaration has been made after receiving the declarations required to be made by the Chief Executive Officer and Chief Financial Officer to the directors in accordance with sections 295A of the Corporations Act 2001 for the financial year ending 30 June 2021. This declaration is made in accordance with a resolution of the Board of Directors on 30 August 2021. Mr Simon Wallace Chairman Date: 14/09/21 Ann ua l Repo rt 2021 59 The demand for the highly reliable smartphone-to-satellite connectivity device Iridium GO! remains strong. Beam have manufactured over 50,000 units since the product launch in 2014. RSM Australia Partners Level 21, 55 Collins Street Melbourne VIC 3000 PO Box 248 Collins Street West VIC 8007 T +61 (0) 3 9286 8000 F +61 (0) 3 9286 8199 www.rsm.com.au INDEPENDENT AUDITOR’S REPORT To the Members of Beam Communications Holdings Limited Opinion We have audited the financial report of Beam Communications Holdings Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and 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 2021 and of its financial performance for the year then ended; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report 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. THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING 41 RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036 Liability limited by a scheme approved under Professional Standards Legislation Key Audit Matters (continued) Key Audit Matter How our audit addressed this matter Impairment of Intangible Assets Refer to Note 11 in the financial statements The Group has intangible assets of $5.5m, being capitalised development costs relating to the Marconi, GO! SFX and Zoleo Post Launch projects. The Marconi asset was available for use from January 2020, and therefore amortisation commenced during FY20. The GO! SFX project and Zoleo Post Launch were not available for use as at 30 June 2021. Management have performed an impairment assessment for material project assets based on a value in use calculation, which determined that no impairment had occurred. We identified this area as a Key Audit Matter due to the size of the intangible assets balance, the management judgement required to assess whether any indicators of impairment exist, and where any indicators of impairment existed, management judgement involved in determining the value in use of the relevant assets based on the estimated future cash flows generated. Fair Value of Interest Free Loan Refer to Note 13 in the financial statements The group has a $0.74m loan that bears no interest. Given the nature of the loan, the determination of the fair value of the loan can be complex and requires significant management estimate and judgement. Further, the correct accounting treatment between the fair value of the loans and the face value of the loans can be complex. For the reasons noted above, accounting for the above loan was considered a key audit matter.        Our audit procedures in relation to intangible assets included:  Assessing management’s review for any indicators of impairment; Where indicators existed, assessing management’s impairment assessment by checking the mathematical accuracy of the cash flow model, and reconciling input data to supporting evidence, such as approved budgets and considering the reasonableness of these budgets; Challenging the reasonableness of key assumptions, including the cash flow and revenue projections, revenue growth rate, exchange rates, discount rates, and any sensitivities used; and Confirming our understanding of the nature of the intangible assets, the strategic purpose of the projects and its ability to generate future revenues through discussions with management. Reviewing the adequacy of disclosures against the requirements of AASB 136. Our audit procedures in relation to the accounting for interest free loans included:  Reviewing the loan agreement to verify loan amount, interest rate and maturity date; Obtaining confirmation from the lender verifying he loan balance at balance date; Assessing management’s assumptions in determining the fair value of the loan, including the discount rate/market interest rate used; and Reviewing the accounting treatment for the difference between fair value of the loan and the face value of the loan. Other Information The directors are responsible for the other information. The other information comprises the information included in the Group's annual report for the year ended 30 June 2021, but does not include the financial report and the auditor's report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 42 Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor's Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar2.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 for the year ended 30 June 2021. In our opinion, the Remuneration Report of Beam Communications Holdings 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. RSM AUSTRALIA PARTNERS M PARAMESWARAN Partner Dated: 30 August 2021 Melbourne, Victoria 43 AUSTRALIAN SECURITIES EXCHANGE INFORMATION AUSTRALIAN SECURITIES EXCHANGE INFORMATION VOTING RIGHTS As at 31 August 2021. This section includes information required by ASX Listing Rules which is not disclosed elsewhere in this Annual Report. TWENTY LARGEST SHAREHOLDERS DAVID STEWART FF OKRAM PTY LTD SGV1 HOLDINGS LIMITED MICHAEL CAPOCCHI BOLIVIANOS GROUP TRENT MILLAR Number 10,905,000 8,634,258 5,409,874 2,671,897 2,482,117 2,000,000 % of Class 14.53% 11.50% 7.21% 3.59% 3.31% There are 75,052,952 ordinary fully paid shares held by 1,374 members and these are the only class of share currently issued. The Company's Constitution provides that every member present in person, by proxy or by corporate representative or by appointed attorney shall on the show of hands have one vote and shall on a poll have one vote for each fully paid share held. The Constitution also authorises the Chairman to adopt any procedure which is in the Chairman's opinion necessary or desirable for the proper and orderly casting or recording of votes at any general meeting of the Company, whether on a show of hands or on a poll. SUBSTANTIAL SHAREHOLDERS DAVID STEWART 2.66% FF OKRAM PTY LTD Number of Shares % of Class 10,905,000 14.53% 8,634,258 11.50% ARTPRECIATION PTY LTD 1,798,632 2.40% HSBC CUSTODY NOMINEES VINCENT GALANTE HOTTON FAMILY BNP PARIBAS NOMINEES P/L RAPAKI PTY LTD CATCH 88 PTY LTD TOM BEKIARIS CITICORP NOMINEES PTY LTD ANNA VOCALE NHAN PHAM PAUL RIETHMAIER DAVSAM PTY LTD 1,653,157 1,354,146 2.20% 1.80% 1,115,500 1.49% 1,100,537 1,076,473 897,485 881,835 843,227 800,000 785,000 600,277 590,000 1.47% 1.43% 1.20% 1.17% 1.12% 1.07% 1.05% 0.80% 0.79% ROBERT MANSFIELD NIALL 527,200 0.70% - These shareholders do not hold any options to subscribe for ordinary shares. DISTRIBUTION OF SHARES Size of Holdings 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and over Number of Number of Holders Shares % 265 75,854 392 1,145,596 220 1,747,543 0.10% 1.53% 2.33% 417 14,095,128 18.78% 80 57,988,831 77.26% TOTAL 1,347 75,052,952 100.00% TOTAL TOP 20: 46,126,615 61.46% HOLDERS OF LESS THAN A MARKETABLE PARCEL OF QUOTED TOTAL ISSUED 75,052,952 100.00% HOLDERS OF EACH CLASS OF EQUITY SECURITY The company has issued: -75,052,952 ordinary fully paid shares to 1,374 shareholders. -8,590,667 options to subscribe for ordinary shares to 291 option holders. ORDINARY SHARES Number of % of Total Number of % of Total Holders Holders Shares Quoted Shares 356 25.91% 221,904 0.30% 64 BEAM COMMUN ICATIONS H O LD IN GS LI M I T E D 

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