Boise Cascade Company
Annual Report 2022

Plain-text annual report

30 August 2022 The Manager Market Announcements Platform Australian Securities Exchange Annual Report for Year Ending 30 June 2022 The Company has great pleasure in releasing its Annual Report for the Year Ending 30 June 2022 including the Chairman’s Report, the Directors’ Report and the audited FY2022 Financial Statements and Notes to the Accounts. Yours faithfully Dennis Payne Company Secretary Beam Communications Holdings Limited ABN: 39 010 568 804 Beam Communications Pty Ltd ABN: 97 103 107 919 Beam Communications USA Inc. Delaware Corporation No. 5228652 5/8 Anzed Court, Mulgrave, Victoria Australia 3170 5/8 Anzed Court, Mulgrave, Victoria Australia 3170 C/- Martensen Wright PC One Capitol Mall, Suite 670 Sacramento, CA 95814 USA Phone: +61 3 8561 4200 Email: investor@beamcommunications.com Website: beamcommunications.com Phone: +61 3 8588 4500 Email: info@beamcommunications.com Website: beamcommunications.com Phone: +1 800 250 5819 (USA only) Email: info@beamcommunications.com Website: beamcommunications.com SatPhone Shop Pty Ltd ABN: 40 099 121 276 SatPhonerental Pty Ltd ABN: 18 114 959 992 5/8 Anzed Court, Mulgrave, Victoria Australia 3170 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 NON EXECUTIVE CHAIRMAN Mr Simon Lister Wallace MANAGING DIRECTOR Mr Michael Ian Capocchi NON EXECUTIVE DIRECTORS Mr David Paul James Stewart Mr Mark Allan Chartres 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 CORPORATE GOVERNANCE STATEMENT The Corporate Governance statement can be found on the investors page at https://www.beamcommunications.com/document/435- beam-corporate-governance-statement 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 CONTENTS Directorate Chairman’s Report Directors’ Report 1 2 4 Auditor’s Independence Declaration 19 Consolidated Financial Statements Statement of Profit or Loss and Other Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Auditor’s Report Shareholders Information 20 21 22 23 24 49 50 53 1 CHAIRMAN’S REPORT Dear Shareholders The past financial year has been a particularly pleasing time for our company. This might sound like a contradiction given we are still living with the fallout from the global pandemic, geopolitical conflict and the volatile economic environment, but despite the many challenges the world is facing, the Group succeeded in breaking its FY21 record revenue with top line growth of 28% in FY22, to hit a new all-time high of $23.7 million. That growth was expected by your board; driven by your company’s senior management; and influenced by every one of our staff and commercial partners. Yours is a company that promotes and relies upon revenues from devices and services of most value to remote end users, so given travel and even domestic movement was so restricted for much of Australia’s population during the last financial year, to record such revenue growth is a tribute to the quality of what we offer, and of the people who do so. Importantly, for the reasons I will outline in the sections below, the Group has never been in a better position to deliver a stronger result in the current financial year. You should not only hope that we do so – you should expect it. 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 2022 as the Group continues its important pivot to becoming a significant recurring revenue Company that is leveraged to the growing global utility and popularity of personal satellite communications devices. 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. PROFIT PERFORMANCE AND MAJOR IMPACTS The Group’s FY22 result was delivered against a challenging backdrop with economic, market and supply issues challenging the business, in ways that were at times neither predictable nor directly controllable. Yes, we all operate in the same economy, but a review of some of the issues experienced by our peers, and the extent to which their performance and valuation was buffeted, is both revealing and reflective of our achievements in this climate. These headwinds resulted in the Group’s earnings declining on a YoY basis, but reassuringly, the result was still ahead of our annual EBITDA guidance of around $1 million, which was issued in early June. Notwithstanding the lower net profitability in FY22, all of the Group’s key business units contributed to its record revenue, particularly ZOLEO as the Group shipped and invoiced over 50,000 units of this multi-award winning seamless global satellite communicator in the last financial year, or 52% more than what we delivered in FY21. Perhaps more importantly, royalty payments from ZOLEO to the Group are set to comprise a material proportion of the Group’s EBITDA from FY23 onwards, especially as growth in Australian and New Zealand (ANZ) subscribers accelerates. As pleasing as it is to witness ZOLEO’s sales performance, it isn’t the only part of our business that’s delivering for shareholders. The Group’s Sat- Phone Shop saw its sales expanding 23% YoY as it benefitted from increased demand for satellite equipment from business and government clients, while the eventual easing of lockdowns in New South Wales and Victoria also helped. Meanwhile, the sale of Beam Equipment (excluding ZOLEO) increased by 15% YoY, along with the overall appreciation and hence demand for mobile satellite devices globally. That the growth rate for both the SPS and Beam Equipment businesses would have been even stronger if not for component shortages, supply chain disruptions, rising cost pressures and delayed deliveries of devices is both frustrating and reassuring. The demand for some of the Group’s products has exceeded the Group’s ability to supply the market in the short-term, which is an infinitely preferable problem to one of oversupply and lack of demand. The challenges faced by these two businesses and the robust growth of low-margin ZOLEO device deliveries in FY22 changed the Group’s sales mix. This explains why the Group’s margins are lower than its historical average, although management believes the Group margins have troughed and will rebound in the current financial year, as detailed below. CASH AND FUNDING The Group’s total available funds on 30 June 2022 were $7.2 million, which is made up of $5.8 million in cash and $1.4 million in available, but un- drawn debt. Additionally, the Group recorded a positive operating cash flow in the June 2022 quarter. The cash position of $5.8 million was ahead of the $3.7 million it held at the end of FY21, with the Group successfully undertaking a circa $5 million new share placement to high net worth and institutional investors in November last year. Their support is something we value greatly, and further impresses upon us the importance of delivering for a larger suite of stakeholders than the Group has ever had. The expenditure on major development projects in the financial year increased by 20%, to just over $3 million. We do not take investment decisions lightly and we do not spend on speculative endeavours that are not expected to yield an adequate return on investment. This has been our track record and the spend on projects in FY22 largely relate to the new Iridium Certus® device, which is backed by a binding minimum US$12 million order from Iridium (I invite existing and prospective shareholders to compare to our current market capitalisation to the magnitude of these assured revenues; of a single product; from an industry leading customer), and ZOLEO. In this rising interest rate environment, we are also mindful of the importance of cashflows to a small and growing organisation like the Group. To be presenting to you such a robust, insulated, nimble and powerful balance sheet, after two financial years that have presented incredible challenges for almost every sector, is a privilege we do not take for granted. 2 OUTLOOK AND PROJECTS Our prudence with cash needs to be viewed in the context of the many growth avenues that lie ahead of the Group in FY23. We believe Group EBIT- DA and margins in FY23 will come in materially above the last financial year, due to several factors. These include the much-anticipated ZOLEO royalty payments, which are forecast to become material to our earnings from FY23. The Group’s subsidiary Beam Communications Pty Ltd and its joint venture partner, Roadpost Inc., should also benefit from the launch of our innova- tive solution into the United Kingdom and Europe, which began only three months ago. Apart from ZOLEO, the Group is extremely excited about the upcoming launch of our first Iridium Certus® device, which is backed by a US$12 million minimum order commitment from Iridium Communications Inc. The Group will not only profit from the supply of this device to Iridium, but we have an opportunity to sell recurring revenue services to users of our Iridium Certus® solution that is separate to ZOLEO. Yes, we are very mindful of the impact such passive revenues have on professional assessments of a company’s value and you can be assured we do not intend to hide our light under a bushel, when those revenues are evidenced. Further, in its latest earnings update, our long-standing partner Iridium expressed great enthusiasm about the growing demand and awareness of its satellite services, which in my view serves as a bullish bellwether for the Group. This expected growth in demand for personal SatComms may well coincide with the easing in the supply side challenges that I spoke about earlier. Fellow shareholders should be just as excited as we are about what lies ahead and, further, you should expect us to deliver. DIRECTORS AND INVESTORS 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. The Group issued 11.4 million new shares and 3.3 million options with an exercisable price of $1 and expiring on 1 December 2023 as part of the share placement undertaken in November last year. STAFF AND BOARD I have written many times about the admiration and gratitude I have towards the dedicated team that have chosen to work with the Group, many of whom have been part of the family for years. I feel their contribution cannot be overstated even as we have supposedly emerged from the worst pandemic in recent times. The Group has been successful in traversing the volatile and rapidly changing environment, and that is totally to the credit of the Group’s staff who have helped the Group break new record revenue targets and position the Group at a critical inflection point in FY23. While there are many tailwinds that will trigger a step change in the Group’s earnings this financial year, it is the devotion, talent and commitment of staff that gives me the greatest confidence about our future. Mr Simon Wallace Chairman 30 August 2022 3 DIRECTORS’ REPORT The Directors present their report, COMPANY SECRETARY together with the financial statements, Mr Dennis Frank Payne on the consolidated entity (referred to hereafter as the ‘Group’) consisting of Beam The qualifications, experience and special Communications Holdings Limited (referred responsibilities of each of the directors who to hereafter as the ‘Company’ or ‘Parent held office during the year are: Entity’) and the entities it controlled at the end of, or during, the year ended 30 June 2022. DIRECTORS The following persons were directors of Beam Communications Holdings Limited during the whole of the financial year and up to the date of this report, unless otherwise stated: Mr Simon Lister Wallace Mr Michael Ian Capocchi Mr David Paul James Stewart (resigning 30th September 2022) Mr Mark Allan Chartres (appointed 1st February 2022) Simon Lister Wallace Non Executive Chairman Age: 48 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 the Group 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 Non Executive Director (resigning 30th Mark Allan Chartres Non Executive Director (appointed 1st Age: 51 Michael Capocchi has over 25 years’ experience in the ICT industry and has held several senior management positions. Michael is based in Chicago, USA, which places him closer to the important centres for satellite communications in the USA and UK/Europe. Michael joined Beam Communications Holdings Limited as the General Manager of the subsidiary, Beam Communications Pty Ltd, in 2003 and was appointed as Managing Director of Beam Communications Holdings Limited in March 2008. Prior to joining the Group, Michael was the Regional Sales Director for Iridium Satellite LLC, directly managing the sales, distribution and channel management strategies for the Asia-Pacific region. Michael has held senior management positions as the Sales and Marketing Director of Pacific Internet responsible for establishing the Australian operations of the company and with Optus Communications. Since its inception in August 2018, Michael has been a Director of Zoleo Inc., the joint venture entity of which the Group is a 50% partner with Roadpost Inc of Canada. Michael Capocchi is an integral part of the Group’s business, including managing the day to day operations of the group which occasions extensive domestic and international travel when possible. September 2022) February 2022) Age: 68 Age: 43 Mark Chartres was appointed to the Board of Directors as an Independent Non-Executive Director, commencing on 1 February 2022. Mark has spent nearly two decades professionally engaged in financial markets, including with Macquarie Group and presently Shaw and Partners. Mark’s knowledge of our business, financial acumen and investment experience will materially augment the Board’s skills matrix. David Stewart is an experienced CEO and successful entrepreneur with more than 30 years in management and business leadership roles. David founded Banksia Technology Pty Limited in 1988 and successfully managed the company as a fast growing and highly profitable business. In 1996 to 1997 he instigated the successful takeovers of several competitors, including NetComm Limited. David assumed the role of CEO and Managing Director until retiring in 2016. A year later David was appointed as a Non-Executive Director of NetComm Wireless Limited, a position he held until June 2019 when NetComm was acquired by US-based Casa Systems. In 2016 David was recognised for his significant and valuable contribution to the Australian communications industry with the presentation of the Communications Ambassador 2016 award. The Australian Communications Ambassador award is the highest honour presented by ACOMMS Communications Alliance and CommsDay each year. Since retiring, David has worked with several tech startups in an advising and investing capacity. He was Chairman of Pycom from 2017 until retiring from the board in July 2021. David joined the board of Lockbox Technologies in 2018 until the company was taken over 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 in the Group. 5 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. PRINCIPAL ACTIVITIES The activities of the Group and its controlled entities during year were the development and marketing of a range of communication products and services, mainly satellite based. DIVIDENDS There were no dividends paid, recommended or declared during the current or previous financial year. REVIEW OF OPERATIONS The loss for the Group after providing for income tax amounted to $176,805 (30 June 2021: profit of $509,179). A summary of the result for the year is as follows: Revenue Other income Deduct: Cost of goods sold, research & development, administrative marketing and corporate expenses Operating profit before amortisation, depreciation, interest and tax Deduct: Amortisation and impairment Depreciation Interest Operating profit Net tax benefit/expense Net profit/(loss) for year Total comprehensive income/(loss) for year PERFORMANCE AND PROFIT 2022 ($000) 23,663 665 (22,851) 1,477 (1,006) (199) (151) 121 (297) (176) (176) 2021 ($000) 18,497 1,028 (17,534) 1,991 (810) (200) (200) 781 (271) 509 509 The Group broke last year’s record revenue as FY22 revenue increased 27.9% to a new all-time high of $23.7 million. While earnings before interest, tax, depreciation and amortisation (EBITDA) fell by around a quarter year-on-year (YoY) to $1.5 million, the result was still ahead of the Group’s guidance of around $1 million, which was issued in early June. The Group’s FY22 results are pleasing given some of the headwinds buffeting the business over the past year that are outside of management’s control. The results would have been materially stronger if not for rising input prices, components shortages from global supply chain issues and the delay in the delivery of a shipments of devices late in Q4. The Group posted a profit before tax of $120,631 (FY21: $780,447) and a net loss of $176,804 compared to a net profit after tax of $509,178 in FY21. 6 Notwithstanding the lower profitability in FY22, all of the Group’s key business units contributed to its record revenue, particularly ZOLEO as the Group shipped and invoiced over 50,000 units of this multi-award winning seamless global satellite communicator in the last financial year, or 52% more than what it delivered in FY21. Further, the royalty payments from ZOLEO to the Group is steadily building, especially in more recent months as growth in Australian and New Zealand (ANZ) subscribers accelerated. The Group receives 70% of the gross margin from subscriptions coming from its territories. While the royalty payment is relatively modest in FY22, the annualised run rate of these payments (as of 30 June 2022) stands around $700,000 to $800,000 and growing. Royalty payments are high margin, and in the context of the Group’s current and historical EBITDA, the payments are set to become material to the Group from FY23 onwards from both an earnings and margin perspective. Meanwhile, the Group’s wholly owned subsidiary and Telstra’s largest satellite dealer, SatPhone Shop, also recorded growth in FY22 with sales expanding 23% year-on-year (YoY). The business benefitted from increased demand for satellite equipment from small to medium sized business and government clients, while the easing of lockdowns in New South Wales and Victoria also helped. The sale of Beam Equipment (excluding ZOLEO) increased by 15% YoY along with the overall demand for mobile satellite devices globally. Having said that, the growth rate for both the SPS and Beam Equipment businesses have been negatively impacted by high inflationary pressure, supply chain disruptions and the delayed shipments mentioned above. Further, the demand for some of the Group’s products has exceeded the Group’s ability to supply the market in the short-term. The headwinds faced by these two businesses and the robust growth of low-margin ZOLEO device deliveries in FY22 changed the Group’s sales mix. This explains why the Group’s margins are lower than its historical average, although management believes Group margins have troughed and will rebound in the current financial year, as detailed below. CASH AND FUNDING The Group’s total available funds at 30 June 2022, were $7.2 million, which is made up of $5.8 million in cash and $1.4 million in available but undrawn debt. The cash position of $5.8 million was ahead of the $3.7 million it held at the end of FY21 with the Group successfully undertaking a circa $5 million new share placement to high net worth and institutional investors in November last year. Proceeds from the capital raising were earmarked to launch ZOLEO into Europe, research and development (R&D) for the next-gen ZOLEO device, developing APIs/SDKs for third-party integration with the ZOLEO platform, support the manufacture of Iridium Certus® devices and for other growth opportunities. The Group has capitalised $4.9 million of development costs for the new Iridium Certus® device (which is backed by a binding US$12 million order from Iridium) and ZOLEO. It received $712,663 in R&D funding from the government. 7 OUTLOOK AND PROJECTS The growth momentum the Group experienced in FY22 is expected to accelerate in the current financial year and the Group believes that Group EBITDA in FY23 will rebound strongly to be materially in excess of the $2.1 million it delivered in FY21, or more than 40% above FY22’s figure. The earnings drivers for this growth are anticipated to come from all key business units across the Group. These drivers include: ● ● ● ● ● ● ● ZOLEO Royalty Payments: The pick-up in the growth rate of ZOLEO ANZ subscribers in 4QFY22 is carrying through into FY23 and that bodes well for the Group’s royalty payments, which are expected to make a material contribution to Group EBITDA this financial year. The royalty is high margin due to the relatively few expenses attached to this income stream. Successful Launch of ZOLEO into Europe: The Group and its joint-venture partner, Roadpost Inc, launched ZOLEO in the UK, Norway, Finland, Sweden and Denmark in May this year with more countries in Europe targeted for later this calendar year. The Group and Roadpost will share all profits from these markets equally. Iridium Certus®: The Group secured a minimum US$12 million (~$17 million) five-year binding contract to develop and supply a new generation mobile device to Iridium, which will be launched this calendar year. Looking at the past experience with the Iridium GO! (with a contracted minimum commitment for 5,000 units, the Group has sold 62,500 units to date and growing), the Group believes this contract will be worth materially more than its minimum value. The Group makes a good margin on this device, which is in line with the equipment it has developed in the past before ZOLEO. Ongoing Orders for Iridium GO!: The Group is expecting further orders from Iridium for the Iridium GO! hotspot as the Iridium Certus® device is not a replacement for Iridium GO!. In fact, the Group believes there is a few more years of life left in the hotspot device as it is not unusual for the lifecycle of satellite equipment to last >10 years. New Value-Added Services (VAS): The Group is in an advanced stage of negotiations with Iridium that will allow the Group to develop and offer VAS on the Iridium Certus® device in FY23. These services will generate an additional source of recurring revenue for the Group that is separate from ZOLEO. The Group will provide further updates if and when the negotiations reach a sufficiently advanced stage. Easing Inflation and Bottlenecks: There are early signs that pricing pressures and supply chain disruptions are easing. If these positive trends continue, they will provide an additional tailwind to Group sales and margins in the current financial year. Outlook for Personal SatCom Devices: The latest quarterly earnings results from NASDAQ-listed Iridium Communications Inc highlighted the robust demand outlook for personal satellite communication devices. Iridium’s Chief Executive Officer, Matt Desch, said that Iridium “continued to ride on a wave of demand” for such devices in the June 2022 quarter and the Group is well placed to capitalise on this global trend. DIRECTORS AND INVESTORS The Group issued 11,363,636 ordinary shares and 3,340,905 options with an exercisable price of $1 and expiring on 1 December 2023 as part of the share placement undertaken in November last year. Mr Simon Wallace, a shareholder in the Group, has been a Director for seven 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 announced his retirement effective 30 September 2022, after spending nearly five years on the Group’s board. David has been a keen advisor to senior management in the rationalisation of development expenditure, providing experienced insight into the communications industry both in Australia and overseas. David remains the Group’s major shareholder, holding 12.62% 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 travels frequently to Australia and retains direct and daily contact with management. Michael is also a significant shareholder in the Group. Mr Mark Chartres was appointed to the Group’s board on 1 February, 2022. He has spent nearly two decades professionally engaged in financial markets, including with Macquarie Group and Shaw and Partners (presently). He is very familiar with the Group’s operations, aspirations and investment profile, and has in the past assisted in furthering the Group’s funding requirements as well as providing counsel on key investor expectations and priorities. The Directors believe the Group is well placed to deliver a significantly stronger result in FY23 due to the Group’s strong balance sheet and many growth options, including the launch of the new Iridium Certus® device, ongoing geographical expansion of ZOLEO and the strong build in ZOLEO royalty payments. 8 SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS Other than those noted above there were no significant changes in the state of affairs of the Group during the financial year. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR No matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS The company will continue the development and marketing of a range of communications devices, mainly satellite based. Further information on likely developments in the operations of the Group and the expected results of operations have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the Group. ENVIRONMENTAL REGULATION The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law. MEETINGS OF DIRECTORS The number of meetings of the company’s Board of Directors (‘the Board’) held during the year ended 30 June 2022, and the number of meetings attended by each director were: Directors meetings Directors meetings Committees Committees Attended Held Attended Held M Capocchi D Stewart S Wallace M Chartres (Appointed 1 February 2022) 13 13 13 5 13 13 13 5 - 3 3 - - 3 3 - Held: represents the number of meetings held during the time the director held office. Each Director attended every scheduled meeting of the Board and of each Committee of which he is a member while in office. 9 REMUNERATION REPORT (AUDITED) The remuneration report details the key management personnel remuneration arrangements for the Group, in accordance with the requirements of the Corporations Act 2001 and its Regulations. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all Directors. The remuneration report is set out under the following main headings: ● ● ● Principles used to determine the nature and amount of remuneration Details of remuneration Share-based compensation PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION This report details the nature and amount of remuneration for each Director and KMP of Beam Communications Holdings Limited. REMUNERATION POLICY The Group 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 Group 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 Group’s shareholders, currently $500,000, as determined at the General Meeting held on 3 August 2007. Senior executives’ remuneration consists of the following elements: fixed salary; short-term incentive bonus where applicable based on performance long-term incentive share option scheme; and; other benefits including superannuation. ● ● ● ● Fixed salary The salary of senior executives is determined from a review of the market and reflects core performance requirements and expectations. In addition, the Company considers the following: ● ● ● ● ● The scope of the individual’s role; The individual’s level of skill and experience Legal and industrial obligations Labour market conditions; and The complexity of the Company’s business. The purpose of a performance bonus is to reward an individual’s actual achievement of performance objectives and for materially improved Group performance. Consequently, performance-based remuneration is paid where a clear contribution to successful outcomes for the Group is demonstrated and the individual attains and excels against pre-agreed key performance indicators during a performance cycle. In assessing the relative performance of the senior executives and the Group as a whole measured against the primary objective of enhancing shareholder value over time, the Board has regard to key financial indicators. In accordance with Section 300A of the Corporations Act 2001 the following table summarises the Group’s performance over the last 5 years. 10 2022 2021 2020 2019 2018 Net profit/(loss) before tax ($’000) EBITDA ($’000) Basic earnings per share (cents) Share price at 30 June ($) Market Capitalisation at 30 June ($m) Dividends per share 121 1,477 (0.22) 0.20 17.28 Nil 780 1,991 0.76 0.24 17.64 Nil (1,518) 3,276 (0.31) 0.17 8.99 Nil 722 2,104 0.64 0.27 14.28 Nil (1,432) (607) (3.07) 0.16 8.46 Nil The Board believes the above table goes some way to illustrate the positive direction the Group has taken over the past 5 years and is reflective of much, but not all, of the performance of senior executives during that period. Due to the nature of the Groups business, there are often major influences on a particular financial year’s profit result. The FY22 result was in part influenced by delays in being able to complete (high margin) Certus device sales notwithstanding record revenue overall was able to be achieved. Confidence in the strategy and growth agenda was clearly illustrated by the well subscribed capital raising undertaken during year providing recognition of the fundamental strength of the Group. Long-term Incentives The Group’s Share Options Incentive Plan, in 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 10% of the shares on issue at a given time. The Group ensures that the payment of equity-based executive remuneration is made in accordance with thresholds set in plans approved by shareholders. As noted in this report, options were issued to key management personnel or Directors during the 2022 financial year, reflecting sign on obligations and achieved 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. EMPLOYMENT CONTRACTS The employment contract for the Managing Director/CEO was renewed and executed by the Company and Michael Capocchi on 30 June 2022 with operative effect from 1 July 2022. The contract has a minimum term of 27 months. 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 salary and 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. DETAILS OF REMUNERATION Details of remuneration Amounts of remuneration Details of the remuneration of key management personnel of the Group are set out in the following tables. The key management personnel of the Group consisted of the following directors of Beam Communications Holdings Limited: ● ● ● ● Mr S Wallace - Non-Executive Chairman Mr M Capocchi - Executive Managing Director Mr D Stewart - Non-Executive Director Mr M Chartres - Non-Executive Director (appointed 1 February 2022) And the following persons: ● ● ● Mr D Payne - Chief Financial Officer (Ceased 30 November 2021) and Company Secretary Mr W Christie - Chief Technical Officer Mr D Sleigh - Chief Financial Officer (Appointed 1 December 2021) 11 The remuneration for each director and each of the other key management personnel of the Group receiving the highest remuneration during the year was as follows: Short-term benefits Cash salary and fees $ Cash bonus and commission $ Employee benefits payable (b) $ Post- employment benefits Superannuation $ Long-term benefits Share-based payments Employee benefits payable $ Options (a) $ Total $ 68,182 20,833 41,666 - - - - - - 6,818 - - - - - - 4,245 - 75,000 25,078 41,666 432,506 52,969 8,319 52,591 7,210 25,865 579,460 89, 744 224,034 121,338 998,303 5,000 5,000 26,666 89,635 1,201 12,414 1,615 23,549 9,574 22,403 12,250 3,034 4,928 238 103,636 15,410 - - 15,818 45,928 108,553 268,779 177,925 1,276,461 Short-term benefits Cash salary and fees $ Cash bonus and commission $ Employee benefits payable (b) $ Post- employment benefits Superannuation $ Long-term benefits Share-based payments Employee benefits payable $ Options (a) $ Total $ 61,111 - 27,777 - - - - - - - - - - - - 441,236 179,088 9,460 41,917 6,818 179,113 205,332 914,569 20,000 - 199,088 (1,727) (1,952) 5,781 17,015 19,322 78,254 (9,918) 4,229 1,849 - - - - - - - 61,111 - 27,777 678,519 205,203 226,931 1,199,541 30 June 2022 Non-Executive Directors: Mr S Wallace Mr M Chartres Mr D Stewart Executive Directors: Mr M Capocchi (c) Other Key Management Personnel: Mr D Payne Mr W Christie Mr D Sleigh 30 June 2021 Non-Executive Directors: Mr S Wallace Mr C Hung Mr D Stewart Executive Directors: Mr M Capocchi (c) Other Key Management Personnel: Mr D Payne Mr W Christie 12 (a) 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 ap proval, 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 2022 his remuneration has been converted into AU dollars at the exchange (b) (c) rate on 30 June 2022 of 0.6889 (2021: 0.7158) The proportion of remuneration linked to performance and the fixed proportion are as follows: Fixed remuneration At risk - STI At risk - LTI Name: 30 June 2022 30 June 2021 30 June 2022 30 June 2021 30 June 2022 30 June 2021 Non-Executive Directors: Mr S Wallace Mr C Hung Mr D Stewart Mr M Chartres Executive Directors: 100% - 100% 83% 100% 100% 100% - - - - - - - - - - - - 17% Mr M Capocchi (c) 86% 74% 9% 26% 5% Other Key Management Personnel: Mr D Payne Mr W Christie Mr D Sleigh 95% 98% 76% 90% 100% - 5% 2% 15% 10% - - - - 9% - - - - - - - - SHARE-BASED COMPENSATION Share holdings The number of shares in the Company held during the financial year by each key management person including their personally related parties are set Balance 1 July 2021 Received as remuneration Options exercised Placement issue Ceasing to be a KMP Net change other (a) Balance 30 June 2022 out below. 2022 Directors: Mr S Wallace Mr M Capocchi 200,000 2,671,897 Mr D Stewart (c) 10,905,000 Mr M Chartres (b) - Other: Mr D Payne Mr W Christie Mr D Sleigh 328,570 62,778 - 14,168,245 - - - - - - - - - - - - - - - - - - - - - - 18,182 18,182 - - - - (328,570) - - - 200,000 160,202 2,832,099 - - - - - 10,905,000 - - 62,778 18,182 (328,570) 160,202 14,018,059 13 2021 Directors: Mr S Wallace Mr M Capocchi Mr C Hung (d) Mr D Stewart Other: Mr D Payne Mr W Christie Balance 1 July 2020 Received as remuneration Options exercised Placement issue Ceasing to be a KMP Net change other (a) Balance 30 June 2021 200,000 1,603,899 5,409,874 10,905,000 328,570 62,778 18,510,121 - - - - - - - - 907,500 - - - - 907,500 - - - - - - - - - - 200,000 160,498 2,671,897 (5,409,874) - - - - - - - - 10,905,000 328,570 62,778 (5,409,874) 160,498 14,168,245 Net Change Other refers to shares purchased or sold on-market or off-market at current market prices during the financial year. Mark Chartres was appointed as a director on 1 February 2022. Upon appointment Mr Chartres held no shares in the Group. David Stewart announced his intention to the market to retire at 30 September 2022. He remains a director for the full 2022 financial year. Carl Hung retired on 30 November 2020 and was no longer a director at the end of the 2021 financial year. (a) (b) (c) (d) Options 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 July 2021 Granted as remuneration Issued as equity investment Options exercised Options lapsed Balance 30 June 2022 - - - - - - - - - Balance 1 July 2021 907,500 - - 190,575 272,250 1,370,325 - 530,798 - 200,000 - - 400,000 1,130,798 - - - - - - 4,546 4,546 Granted as remuneration Issued as equity investment Options exercised - - - - - - - - - - - - - - - - - - - - - - - (907,500) - - - - (907,500) - - - - - - - - - - - - Options lapsed (190,575) (272,250) (462,825) - 530,798 - 200,000 - - 404,546 1,135,344 Balance 30 June 2022 - - - - - - - 2022 Directors: Mr S Wallace Mr M Capocchi Mr D Stewart Mr M Chartres Other: Mr D Payne Mr W Christie Mr D Sleigh 2021 Directors: Mr S Wallace Mr M Capocchi Mr C Hung Mr D Stewart Other: Mr D Payne Mr W Christie 14 All options held by Directors and key management personnel at 30 June 2022 were currently un-exercisable as at balance date. SHARES ISSUED ON EXERCISE OF REMUNERATION OPTIONS No options were issued during the current period. 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. OPTIONS ISSUED Details of options over ordinary shares granted, vested and lapsed for directors and other key management personnel as part of compensation during the years ended 30 June 2022 and 30 June 2021 are set out below: 2022 Name Grant date Vesting date Number of options granted Value of options granted $ Value of options vested $ Value of options exercised $ Value of options lapsed $ Directors: Mr S Wallace - - - - - Mr M Capocchi 23/12/2021 31/08/2024 530,798 122,614 25,865 Mr D Stewart - - - - Mr M Chartres 01/02/2022 01/02/2023 200,000 10,400 Other: Mr D Payne Mr W Christie - - - - - - - - - 4,245 - - Mr D Sleigh 23/12/2021 23/12/2024 400,000 92,400 15,818 2021 Name Grant date Vesting date Number of options granted Value of options granted $ Value of options vested $ Value of options exercised $ Directors: Mr S Wallace Mr M Capocchi Mr C Hung Mr D Stewart Other: Mr D Payne Mr W Christie - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 229,588 - - - - - - - - - - - - - - - - - - - - - - - Value of options lapsed $ 21,916 31,309 15 Details of options granted to and/or vested to key management personnel during the 2022 financial year are outlined below: 2022 Name Vested No. Granted No. Grant date Value of options granted date Exercise price First exercise date Expiry date Directors: Mr S Wallace Mr M Capocchi Mr D Stewart Mr M Chartres Other: Mr D Payne Mr W Christie Mr D Sleigh - - - - - - - - - - - 530,798 23/12/2021 - - 200,000 01/02/2022 730,798 - 0.231 - 0.052 - - - 0.35 31/08/2024 31/08/2026 - - - 0.53 01/02/2023 01/02/2025 - - - - - - - - - - - - 400,000 23/12/2021 0.231 0.35 23/12/2024 23/12/2026 400,000 1,130798 No options were granted and/or vested to key management personnel in the 2021 financial year. This concludes the remuneration report, which has been audited. SHARES UNDER OPTION Unissued ordinary shares of Beam Communications Holdings Limited under option at the date of this report are as follows: Grant date 30 November 2020 30 November 2020 30 November 2021 23 December 2021 23 December 2021 Expiry date 31 December 2022 31 December 2022 31 December 2023 31 August 2026 23 December 2026 Exercise price Number under option $0.50 $0.50 $1.00 $0.35 $0.35 7,085,334 1,500,000 3,340,905 530,798 400,000 12,857,037 Shares issued on the exercise of options The following ordinary shares of Beam Communications Holdings Limited were issued during the year ended 30 June 2022 and up to the date of this report on the exercise of options granted: Date options granted 30 November 2020 INDEMNITY AND INSURANCE OF DIRECTORS AND OFFICERS Exercise price Number of shares issued $0.50 5,333 During the year, the Group 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 Group. Further disclosure required under section 300(9) of the Corporations Act is prohibited under the terms of the insurance contract. INDEMNITY AND INSURANCE OF AUDITOR The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor. 16 During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity. PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. NON-AUDIT SERVICES There were no non-audit services provided during the financial year by the auditor. 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. AUDITOR RSM Australia Partners continues in office in accordance with section 327 of the Corporations Act 2001. This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001. On behalf of the directors ___________________________ Mr Simon Wallace Chairman 30 August 2022 17 GENERAL INFORMATION The financial statements cover Beam Communications Holdings Limited as a Group consisting of Beam Communications Holdings Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Beam Communications Holdings Limited's functional and presentation currency. Beam Communications Holdings Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Unit 5 / 8 Anzed Court Mulgrave, VIC, 3170 Australia A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on 30 August 2022. The directors have the power to amend and reissue the financial statements. 18 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 2022, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) (ii) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and any applicable code of professional conduct in relation to the audit. RSM AUSTRALIA PARTNERS M PARAMESWARAN Partner Melbourne, VIC Dated: 30 August 2022 Beam Communications Holdings Limited SSTTAATTEEMMEENNTT OOFF PPRROOFFIITT OORR LLOOSSSS AANNDD OOTTHHEERR CCOOMMPPRREEHHEENNSSIIVVEE IINNCCOOMMEE For the year ended 30 June 2022 Revenue Other income Expenses Cost of sales Employment expense Depreciation and amortisation expense Finance costs Administrative expense Legal, insurance and patent Marketing and ICT Share of loss from interest in Joint Venture Other Profit before income tax expense Income tax expense Profit/(loss) after income tax expense for the year attributable to the owners of Beam Communications Holdings Limited Other comprehensive income for the year, net of tax Total comprehensive income/(loss) for the year attributable to the owners of Beam Communications Holdings Limited Consolidated Note 30 June 2022 30 June 2021 $ $ 4 5 23,662,530 18,497,060 664,689 1,028,018 (17,237,342) (3,445,277) (1,205,446) (150,643) (390,944) (262,380) (729,603) (248,820) (536,132) (12,780,319) (2,818,700) (1,010,377) (200,057) (570,356) (203,970) (605,555) (137,080) (418,217) 120,632 780,447 7 (297,437) (271,268) (176,805) 509,179 - - (176,805) 509,179 Cents Cents Basic earnings per share Diluted earnings per share 28 28 (0.22) (0.22) 0.76 0.76 The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 20 Beam Communications Holdings Limited STATEMENT OF FINANCIAL POSITION As at 30 June 2022 Assets Current assets Cash and cash equivalents Trade and other receivables Inventories Total current assets Non-current assets Plant and equipment Right-of-use assets Development costs Deferred tax Interest in joint venture Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Lease liabilities Provisions Total current liabilities Non-current liabilities Borrowings Lease liabilities Provisions Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity Consolidated Note 30 June 2022 30 June 2021 $ $ 8 9 10 13 11 14 15 12 16 18 19 17 18 19 5,774,988 6,035,433 4,335,631 16,146,052 3,707,484 3,156,473 3,071,973 9,935,930 91,272 218,881 7,569,088 317,503 - 8,196,744 71,530 360,309 5,500,054 596,169 232,560 6,760,622 24,342,796 16,696,552 6,048,193 221,492 1,199,544 7,469,229 2,633,268 207,437 1,101,924 3,942,629 485,756 105,208 48,098 639,062 735,112 309,129 48,112 1,092,353 8,108,291 5,034,982 16,234,505 11,661,570 20 17,374,871 163,429 (1,303,795) 12,703,060 85,500 (1,126,990) 16,234,505 11,661,570 The above statement of financial position should be read in conjunction with the accompanying notes 21 Beam Communications Holdings Limited STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2022 Consolidated Balance at 1 July 2020 Profit after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with owners in their capacity as owners: Shares issued, net of transaction costs Adjustment for broker options issued Adjustment for employee share options lapsed Adjustment for employee share options exercised Issued capital $ Reserves $ Accumulated losses $ Total equity $ 7,646,641 320,394 (1,956,563) 6,010,472 - - - - - - 509,179 - 509,179 - 509,179 509,179 4,964,957 (85,500) - 176,962 - 85,500 (320,394) - - - 320,394 - 4,964,957 - - 176,962 Balance at 30 June 2021 12,703,060 85,500 (1,126,990) 11,661,570 Consolidated Balance at 1 July 2021 Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive loss for the year Transactions with owners in their capacity as owners: Shares issued, net of transaction costs Remuneration based option payments Adjustment for broker options issued Adjustment for share options exercised Issued capital $ Reserves $ Accumulated losses $ Total equity $ 12,703,060 85,500 (1,126,990) 11,661,570 - - - - - - (176,805) - (176,805) - (176,805) (176,805) 4,701,144 - (32,000) 2,667 - 45,929 32,000 - - - - - 4,701,144 45,929 - 2,667 Balance at 30 June 2022 17,374,871 163,429 (1,303,795) 16,234,505 The above statement of changes in equity should be read in conjunction with the accompanying notes 22 Beam Communications Holdings Limited STATEMENT OF CASH FLOWS For the year ended 30 June 2022 Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received Interest and finance charges paid Income tax credit COVID-19 relief Net cash from operating activities Cash flows from investing activities Payments for property, plant and equipment Payments for capitalised development costs Proceeds from research and development grant Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares, net of transaction costs Net loan payments Lease liability repayments Net cash from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Consolidated Note 30 June 2022 30 June 2021 $ $ 23 13 20 28,175,997 (27,856,077) 1,276 (98,661) 104,447 - 19,191,491 (18,496,129) 561 (158,066) 28,645 366,500 326,982 933,002 (60,464) (3,061,489) 712,663 (22,037) (2,507,345) 689,703 (2,409,290) (1,839,679) 4,703,811 (345,539) (208,460) 4,964,957 (1,046,592) (178,164) 4,149,812 3,740,201 2,067,504 3,707,484 2,833,524 873,960 Cash and cash equivalents at the end of the financial year 8 5,774,988 3,707,484 The above statement of cash flows should be read in conjunction with the accompanying notes 23 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 1. Significant accounting policies New or amended Accounting Standards and Interpretations adopted The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. The impact of these standards did not have a material impact on the Group. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. 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. Historical cost convention The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through other comprehensive income. Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 2. Accounting policies The following is a summary of the material accounting policies adopted by the 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 30. 24 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 1. Significant accounting policies (continued) (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. 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 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. The current tax liability of each group entity and deferred tax assets arising from tax losses are immediately assumed by the parent entity. (c) Trade and other receivables Other receivables are recognised at amortised cost, less any allowance for expected credit losses. (d) Plant and 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. 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 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 Computer and test equipment Rental equipment 5-10 years 3 years 3-5 years 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. 25 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 1. Significant accounting policies (continued) (e) Inventories Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct materials and direct labour. (f) 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 2022. (g) 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 re-measurements for changes in assumptions of obligations for other long-term employee benefits are recognised in profit or 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. (h) 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 21 for a detailed review of the group’s financial instruments. The Group does not designate any interests in subsidiaries as being subject to the requirements of Financial Instruments accounting standards. 26 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 1. Significant accounting policies (continued) (i) 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. (j) 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. (k) 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 had been classified as operating leases, the Group discounted lease payments using its incremental borrowing rate at 1 July 2019. The weighted average rate applied was 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. (l) 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. (m) 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. There are no unfulfilled conditions or other contingencies attaching to government grants recognised in the financial statements. 27 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 1. Significant accounting policies (continued) (n) 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. (o) 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. (p) 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. (q) Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. (r) Issued capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new  shares or options are shown in equity as a deduction, net of tax, from the proceeds. (s) New Accounting Standards and Interpretations not yet mandatory or early adopted 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: 28 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 1. Significant accounting policies (continued) Accounting Standards and Interpretations Applicable to annual reporting periods beginning on or after AASB 2020-1 Amendments to AASs - Classification of Liabilities as Current or Non-current liabilities as Current or Non-current AASB 2020 -3 Amendments to AASs - Annual Improvements 2018-2020 and Other Amendments 1 Jan 2022 1 Jan 2022 AASB 2020-6 Amendments to AASs - Classification of Liabilities as Current or Non-current 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 AASB 2014-10 Sale or contribution of Assets between an Investor and its Associate or Joint Venture 1 Jan 2023 1 Jan 2023 1 Jan 2023 1 Jan 2025 Note 2. Critical accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. Share-based payment transactions The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Allowance for expected credit losses The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit loss rate for each group. These assumptions include recent sales experience and historical collection rates. Provision for impairment of inventories The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that affect inventory obsolescence. Estimation of useful lives of assets The  consolidated group  determines the estimated useful lives and related amortisation charges for its finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down. Lease liabilities The incremental borrowing rate applied to various lease liabilities recognised under AASB 16 ranges between 7.3% - 8%. 29 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 2. Critical accounting judgements, estimates and assumptions (continued) Income tax The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on the Group's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made. Deferred tax assets Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The deferred tax expense reflects the movements in the deferred assets and liabilities. The directors have maintained a consistent approach and have recognised 60% (2021: 60%) of the deferred tax assets and liabilities relating to 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 $762,526 (2021: $765,430) and capital tax losses of $1,681,896 (2021: $1,681,896). 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 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. Employee benefits provision As discussed in Note 1, the liability for employee benefits expected to be settled more than 12 months from the reporting date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account. Warranty provision In determining the level of provision required for warranties the Group has made judgements in respect of the expected performance of the products, the number of customers who will actually claim under the warranty and how often, and the costs of fulfilling the conditions of the warranty. The provision is based on estimates made from historical warranty data associated with similar products and services. Note 3. Operating segments Identification of reportable operating segments The 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. Major customers The Group has a number of customers to whom it provides products and services. The Group supplied a single customer in Canada accounting for 34% of external revenue (2021: 29%) and the second largest customer, located in the United States, accounted for 15% of external revenue (2021: 13%). The next most significant customer also accounts for 10% of external revenue (2021: 10%). 30 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 3. Operating segments (continued) Geographical information The geographical disaggregation of sales has been presented in Note 4. Note 4. Revenue Equipment sales Airtime Other Revenue Disaggregation of revenue The disaggregation of revenue from contracts with customers is as follows: Geographical regions 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 Note 5. Other income Research and development grant Interest COVID-19 relief Foreign exchange Gain on reversal of joint venture loss accrual Other Other income Consolidated 30 June 2022 30 June 2021 $ $ 22,423,412 699,967 539,151 17,353,524 969,627 173,909 23,662,530 18,497,060 Consolidated 30 June 2022 30 June 2021 $ $ 5,114,365 4,520,584 574,837 1,328,640 133,315 9,153,440 363,400 2,473,949 4,166,871 3,454,692 760,875 1,279,838 227,169 6,053,935 343,460 2,210,220 23,662,530 18,497,060 22,549,205 1,113,325 17,423,393 1,073,667 23,662,530 18,497,060 Consolidated 30 June 2022 30 June 2021 $ $ 470,138 1,276 - 193,275 - - 363,258 561 366,500 - 294,893 2,806 664,689 1,028,018 31 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 6. Expenses Profit before income tax includes the following specific expenses: Cost of sales Opening inventories Add: Purchases and other stock adjustments Less: Closing inventories (note 10) Finance costs expense Interest expense on lease liabilities Other financial costs Other expenses Product development costs expensed Operating lease payments Note 7. Income tax expense Income tax expense US tax loss (credit) Current movement of temporary difference in net deferred tax assets Movement in deferred tax asset associated with carry forward tax losses Aggregate income tax expense Numerical reconciliation of income tax expense and tax at the statutory rate Profit before income tax expense Tax at the statutory tax rate of 25% Tax reconciling items US tax loss (credit) Deferred tax assets loss Income tax expense 2022 $ 2021 $ 3,071,973 18,501,000 21,572,973 3,576,082 12,276,210 15,852,292 (4,335,631) (3,071,973) 17,237,342 12,780,319 31,629 119,014 150,643 45,432 154,625 200,057 248,897 36,118 241,071 34,409 Consolidated 30 June 2022 30 June 2021 $ $ 18,770 274,310 4,357 (147,976) 310,941 108,303 297,437 271,268 120,632 780,447 30,158 195,112 (30,158) 18,771 278,666 (195,112) (147,976) 419,244 297,437 271,268 Income tax expense includes a tax expense of $18,770, incurred by the Group's USA subsidiary, which is unable to be combined with Australian tax losses. There are no franking credits available to equity holders. 32 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 8. Cash and cash equivalents Current assets Cash at bank and on hand Note 9. Trade and other receivables Current assets Trade receivables Less: Allowance for expected credit losses Other receivables and prepayments Rental & other security deposits Consolidated 30 June 2022 30 June 2021 $ $ 5,774,988 3,707,484 Consolidated 30 June 2022 30 June 2021 $ $ 1,376,942 - 1,376,942 1,793,387 - 1,793,387 4,544,705 113,786 4,658,491 1,249,621 113,465 1,363,086 6,035,433 3,156,473 Ageing reconciliation Within trade terms Past due but not impaired (days overdue) 31-60 Past due but not impaired (days overdue) 61-90 Past due but not impaired (days overdue) 90+ Past due & impaired Gross amount 2022 Current Trade receivables Other receivables Rental & other security deposits 1,031,925 4,544,706 113,786 345,017 - - Expected credit loss rate - - - - - - 2021 Current Trade receivables Other receivables Rental & other security deposits 1,521,905 1,249,621 113,465 248,880 - - 17,296 - - Expected credit loss rate - - - - - - - 5,306 - - - - - - - - - - - 1,376,942 4,544,706 113,786 - 1,793,387 1,249,621 113,465 - All trade receivables past due terms but not impaired are expected to be received in the normal course of business. 33 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 10. Inventories Current assets Raw materials - at cost Finished goods - at cost Less: Provision for impairment Note 11. Right-of-use assets Non-current assets Plant and equipment - right-of-use Less: Accumulated depreciation Consolidated 30 June 2022 30 June 2021 $ $ 677,249 4,058,382 (400,000) 364,113 2,987,860 (280,000) 4,335,631 3,071,973 Consolidated 30 June 2022 30 June 2021 $ $ 1,330,659 (1,111,778) 1,312,066 (951,757) 218,881 360,309 Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Consolidated Balance at 1 July 2020 Depreciation expense Balance at 30 June 2021 Additions Depreciation expense Balance at 30 June 2022 Balance $ 519,068 (158,759) 360,309 18,594 (160,022) 218,881 The Group leases several assets, which includes building, forklift and printers with original lease terms of 9, 5 and 5 years respectively. There are no variable lease payment terms in any lease contracts. There are no extension or termination options on the leases. Amount recognised in profit or loss Depreciation expense on right-of-use assets Interest expense on lease liabilities Expense relating to short-term leases 2022 $ 2021 $ 160,022 31,629 18,665 158,759 45,432 11,892 34 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 12. Interest in joint venture Non-current assets Investment in joint venture Group's accumulated share of loss from Zoleo Inc joint venture for the year ended Consolidated 30 June 2022 30 June 2021 $ $ 1,098,699 (1,098,699) 1,082,439 (849,879) - 232,560 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 2022. The Group's accumulated contribution US$775,100 had been previously recognised as an increase in investment as per the equity accounting method and was written down to nil during the financial year as the Group's share of the accumulated losses exceeds the investment total. 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 Gross profit Expenses Operating staff costs Marketing Professional services Billing & support fees Other expenses Total expenses Gain on FX Non-operating expense Loss for the year Group's share of loss for the year ended Zoleo Inc 2022 $ Zoleo Inc 2021 $ 7,397,880 7,397,880 3,484,866 3,484,866 (7,620,740) (2,249,964) (9,870,704) (3,021,515) (2,061,719) (5,083,234) (2,472,824) (1,598,368) 290 (2,473,114) 266 (1,598,634) (2,472,824) (1,598,368) 30,386,673 (27,767,580) 2,619,093 13,477,482 (12,766,594) 710,888 (2,618,583) (205,802) (33,804) (175,619) (241,919) (3,275,727) (604,867) (28,100) (46,135) (183,389) (124,020) (986,511) - 1,463 (71,884) - (728,518) (274,160) (364,259) (137,080) 35 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 13. Plant and equipment Non-current assets Office furniture and equipment - at cost Less: Accumulated depreciation Computer and test equipment - at cost Less: Accumulated depreciation Rental equipment - at cost Less: Accumulated depreciation Total plant and equipment Consolidated 30 June 2022 30 June 2021 $ $ 498,346 (472,515) 25,831 456,722 (402,920) 53,802 45,952 (34,313) 11,639 491,431 (462,463) 28,968 410,808 (378,864) 31,944 43,493 (32,875) 10,618 91,272 71,530 Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Office furniture & equipment $ Computer & test equipment $ Rental equipment $ Total $ 42,451 - - (13,483) 28,968 6,915 - (10,052) 34,559 22,037 (2,200) (22,452) 31,944 45,915 - (24,057) 16,801 - (952) (5,231) 10,618 7,635 (1,680) (4,934) 93,811 22,037 (3,152) (41,166) 71,530 60,465 (1,680) (39,043) 25,831 53,802 11,639 91,272 Consolidated 30 June 2022 30 June 2021 $ $ 9,385,922 (1,816,834) 6,310,505 (810,451) 7,569,088 5,500,054 Consolidated Balance at 1 July 2020 Additions Disposals Depreciation expense Balance at 30 June 2021 Additions Disposals Depreciation expense Balance at 30 June 2022 Note 14. Development costs Non-current assets Development costs Less: Accumulated amortisation 36 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 14. Development costs (continued) Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Movement in carrying amount of development costs Consolidated Balance at 1 July 2020 Additions Amortisation expense Balance at 30 June 2021 Additions Amortisation expense Balance at 30 June 2022 $ 3,803,161 2,507,344 (810,451) 5,500,054 3,885,868 (1,816,834) 7,569,088 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 2022 financial year. The balance at 30 June 2022 included an ongoing Iridium product development costs of an accumulated total of $4,905,745 not subject to amortisation during the year. In line with the accounting policy detailed in Note 1(i), 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. Note 15. Deferred tax Non-current assets Deferred tax asset Deferred tax assets Carrying amount of patents and capital raising costs Accruals Provisions Lease liabilities Tax losses Deferred tax liabilities Product development costs Right-of-use assets Other financial liabilities Consolidated 30 June 2022 30 June 2021 $ $ 317,503 596,169 Balance at Charged to Balance at income 1 July 2021 30 June 2022 48 41,427 218,725 77,485 1,148,144 1,485,829 (45) (3,486) 39,043 (28,480) (4,355) 2,677 3 37,941 257,768 49,005 1,143,789 1,488,506 (825,008) (54,046) (10,606) (310,355) 21,214 7,797 (1,135,363) (32,832) (2,809) 596,169 (278,667) 317,502 37 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 16. Trade and other payables Current liabilities Trade payables and accruals Deferred R&D income Other deferred income Consolidated 30 June 2022 30 June 2021 $ $ 4,428,550 826,278 793,365 1,795,657 583,753 253,858 6,048,193 2,633,268 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. $470,138 of R&D grant income was recognised in the statement of profit & loss for the year as shown in Note 5. Refer to Note 21 for further information on financial instruments. Note 17. Borrowings Non-current liabilities Secured loan Consolidated 30 June 2022 30 June 2021 $ $ 485,756 735,112 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 2022, US$344,716 has been drawn down. The total loan balance of A$485,756 represents the fair value of the loan at 30 June 2022. The loan is secured by Beam's pledge of shares in Zoleo Inc, an entity established with Roadpost to manage the Zoleo business. Refer to Note 21 for further information on financial instruments. Banking facilities All bank facilities are secured by first ranking Registered Mortgage Debenture over the Group's assets including uncalled capital and called but unpaid capital. At 30 June 2022, the company had the following unused bank facilities: ● ● ● An Australian dollar overdraft with a limit of $300,000 (2021: $300,000). The overdraft was not utilised at 30 June 2022 or 30 June 2021. A US dollar overdraft with a limit of US$320,000 (2021: US$320,000). The US dollar overdraft was not utilised at 30 June 2022 or 30 June 2021. Bank guarantee facilities of the Group total $150,000 (2021: $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 2022 and 30 June 2021. On 1 July 2020 the NAB granted Beam a 3 year, low interest term loan of $500,000 and a further $500,000 on 10 May 2021 part secured by the Australian government under their Covid19 relief program to assist with funding of Beam’s product development program. The principal outstanding of $972,970 was repaid on 19 May 2021 and, after allowing for amortisation, $665,979 was available to be redrawn at 30 June 2022. 38 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 18. Lease liabilities Current liabilities Lease liability Non-current liabilities Lease liability Consolidated 30 June 2022 30 June 2021 $ $ 221,492 207,437 105,208 309,129 326,700 516,566 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. Refer to Note 21 for further information on financial instruments. Carrying amounts and movements Balance at 1 July 2020 Additional Decrease in liability Balance at 30 June 2021 Additional Decrease in liability Balance at 30 June 2022 Note 19. Provisions Current liabilities Employee benefits Warranty costs Other Non-current liabilities Employee benefits $ 697,536 - (180,970) 516,566 18,594 (208,460) 326,700 Consolidated 30 June 2022 30 June 2021 $ $ 1,004,004 84,852 110,688 1,001,500 100,424 - 1,199,544 1,101,924 48,098 48,112 1,247,642 1,150,036 39 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 19. Provisions (continued) Movements in provisions Movements in each class of provision during the current financial year are set out below: Consolidated - 30 June 2022 Carrying amount at the start of the year Additional provisions recognised Amounts used Employee Warranty benefits $ costs $ Other $ Total $ 1,049,612 679,721 (677,230) 100,424 26,660 (42,232) - 110,688 - 1,150,036 817,069 (719,463) Carrying amount at the end of the year 1,052,103 84,852 110,688 1,247,642 Note 20. Issued capital Ordinary shares - fully paid 86,421,921 75,052,952 17,374,871 12,703,060 Consolidated 30 June 2022 30 June 2021 30 June 2022 30 June 2021 Shares Shares $ $ Movements in ordinary share capital Details Balance Shares Issued, net of transaction costs Shares issued on the exercise of options Balance Shares Issued, net of transaction costs (a) Shares issued on the exercise of options (b) Date 1 July 2020 30 June 2021 Shares Issue price $ 52,873,452 21,272,000 907,500 75,052,952 11,363,636 5,333 $0.25 $0.20 $0.44 $0.50 7,646,641 4,879,457 176,962 12,703,060 4,669,144 2,667 17,374,871 Balance 30 June 2022 86,421,921 (a) Shares issued During the 2022 financial year, the Group issued a placement for 11,363,636 ordinary shares on 30 November 2021 for $0.44 per share. The total transaction costs for issuance of the shares was $330,846. Proceeds from the capital raise will be used to fund sales and device development activities and provide the Company with the opportunity to consider strategic acquisitions. Investors participating under the placement were issued with 2,840,905 options as 1:4 attaching options, and the Group's corporate advisor, Peak Asset Management, also received 500,000 share options as payment for corporate advisory services provided, as outlined at note 25. These options were granted on 30 November 2021 at an exercisable price of $1.00 and have an expiry date of 1 December 2023. (b) Exercise of options On 11 November 2021, 5,333 options, which had been granted on 30 November 2020 to participants in a share placement with an expiry date of 31 December 2022, were exercised by the holder. These options had been exercisable from 30 November 2020. (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. 40 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 20. Issued capital (continued) 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) Share buy-back There is no current on-market share buy-back. (e) Capital risk management When managing capital, management's objective is to ensure the Group continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. No dividends have been paid or declared in respect of ordinary shares for the 2022 financial year or prior years. The 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. The capital risk management policy remains unchanged from the 30 June 2021 Annual Report. Note 21. Financial instruments Financial risk management objectives The Group undertakes transactions in a range of financial instruments including: - cash assets; - receivables; - payables; - deposits Activities undertaken by entities within the 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 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 Group's policies for minimising these risks are detailed below. 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 Group primarily arises from bank funding. Facilities are provided by the 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 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: 41 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 21. Financial instruments (continued) 2022 Financial asset Cash assets Receivables Financial liability Payables (excluding deferred income) Lease liabilities 2021 Cash assets Receivables Floating interest $ Fixed interest $ Weighted average interest rate % Non-interest bearing $ Total $ 5,774,988 - 5,774,988 - 0.00% - 0.00% - - 6,035,433 6,035,433 5,774,988 6,035,433 11,810,421 - - - - 0.00% 326,700 7.36% 326,700 4,914,306 - 4,914,306 4,914,306 326,700 5,241,006 Floating interest $ 3,707,484 - 3,707,484 Fixed interest $ Weighted average interest rate % Non-interest bearing $ Total $ - 0.00% - 0.00% - - 3,156,473 3,156,473 3,707,484 3,156,473 6,863,957 Payables (excluding deferred income) Lease liabilities - - - 0.00% - 516,566 7.36% 516,566 2,530,769 - 2,530,769 2,530,769 516,566 3,047,335 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 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: Year ended 30 June 2022 Foreign currency movement $ Year ended 30 June 2021 $ Impact on profit after tax Impact on equity +/- 10% +/- 10% +/- 23,299 +/-157,692 +/- 23,299 +/-157,692 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. 42 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 21. Financial instruments (continued) 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 Group. The credit risk on financial assets of the Group that have been recognised in the statement of financial position is the carrying amount, net of any provision for doubtful debts. The Group minimises credit risk by performing credit assessments on all new customers, and 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 Group does not have any credit risk arising from money market instruments, foreign currency contracts, cross currency and interest rate swaps. Liquidity risk management Liquidity risk includes the risk that, as a result of the 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 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 Group's exposure to liquidity risk on classes of financial assets and financial liabilities, is as follows: 2022 Asset/Liability class Cash and cash equivalents Receivables Payables and borrowings (excluding deferred income) Lease liabilities Net maturities 2021 Asset/Liability class Cash and cash equivalents Receivables Payables and borrowings (excluding deferred income) Lease liabilities Net maturities <1 year $ 1 - 5 years $ Total contractual cash flows $ 5,774,988 5,921,649 (4,428,550) (221,492) - 113,785 (485,756) (105,208) 5,774,988 6,035,434 (4,914,306) (326,700) 7,046,595 (477,179) 6,569,416 3,707,484 3,043,008 (1,795,657) (207,437) - 113,465 (735,112) (309,129) 3,707,484 3,156,473 (2,530,769) (516,566) 4,747,398 (930,776) 3,816,622 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 upon inception of the loan. This assumption is not directly observable. Any increase in the discount rate would decrease the fair value of the loan. 43 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 22. Commitments and contingencies Capital expenditure projects Within one year One to five years More than five years Consolidated 30 June 2022 30 June 2021 $ $ 3,943,920 - - 2,294,233 - - 3,943,920 2,294,233 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. Note 23. Reconciliation of profit/(loss) after income tax to net cash from operating activities Profit/(loss) after income tax expense for the year Adjustments for: Depreciation Amortisation Net loss on disposal of plant and equipment Share of loss in joint venture Unrealised foreign currency net gain Share options expensed Notional interest expense Change in operating assets and liabilities: Increase in trade and other receivables Decrease/(increase) in inventories Decrease in deferred tax assets Increase/(decrease) in trade and other payables Decrease in employee benefits Decrease in provision for warranty costs Increase in provision for stock obsolescence Consolidated 30 June 2022 30 June 2021 $ $ (176,805) 509,179 199,063 1,006,383 1,680 248,820 (75,985) 77,929 51,982 (2,820,961) (1,383,658) 278,666 2,812,949 2,491 (15,572) 120,000 199,926 810,451 3,152 137,080 (27,235) - 41,992 (832,809) 469,109 419,244 (640,891) (80,488) (110,708) 35,000 Net cash from operating activities 326,982 933,002 44 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 24. Key management personnel disclosures Compensation The aggregate compensation made to directors and other members of key management personnel of the Group is set out below: Short-term employee benefits Post-employment benefits Long-term benefits Termination benefits Share-based payments Note 25. Share-based payments Share Option Incentive Plan Consolidated 30 June 2022 30 June 2021 $ $ 1,111,487 103,636 15,410 - 45,928 1,119,438 78,254 1,849 - - 1,276,461 1,199,541 Share options under the Share Option Incentive Plan are granted at the discretion of the directors based on terms and conditions set out in the Company'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. 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: 30 June 2022 No. WAEP $ 30 June 2021 WAEP No. $ Outstanding at the beginning of the financial year Issued during the financial year Lapsed during the financial year Exercised during the financial year Outstanding at the end of the financial year Outstanding at the date of this report - - 1,130,798 0.3818 - - - - 1,130,798 1,130,798 1,697,025 0.1950 - - (789,525) - (907,500) 0.1950 - - Other share based payments During the financial year, the Group issued 500,000 share options to the Group's corporate advisor, Peak Asset Management, as payment for corporate advisory services provided. (See also Note 20). The fair value of the options was determined using the Black-Scholes option valuation model as detailed below. 45 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 25. Share-based payments (continued) Peak KMP: CEO KMP: CFO KMP: NED Grant date Number of options in series Expiry date Share price at grant date Exercise price Expected volatility Risk-free interest rate Dividend yield Fair value of option at grant date Note 26. Remuneration of auditors 530,798 19 November 2021 30 November 2021 30 November 2021 2 January 2022 500,000 30 November 2023 31 August 2026 $0.45 $1.00 65% 0.67% 0% $0.064 400,000 31 August 2026 $0.42 $0.35 65% 1.29% 0% $0.231 200,000 1 February 2023 $0.37 $0.53 65% 1.50% 0% $0.052 $0.42 $0.35 65% 1.29% 0% $0.231 During the financial year the following fees were paid or payable for services provided by RSM Australia Partners, the auditor of the company: Consolidated 30 June 2022 30 June 2021 $ $ 79,800 69,400 Audit services - Audit or review of the financial statements Note 27. Related party transactions Parent entity Beam Communications Holdings Limited is the parent entity. Subsidiaries Interests in subsidiaries are set out in Note 30. Key management personnel Disclosures relating to key management personnel are set out in Note 24 and the remuneration report included in the directors' report. Transactions with related parties The following transactions occurred with related parties: Transactions with the Season Group Purchases Sales Consolidated 30 June 2022 30 June 2021 $ $ - - 2,357,459 (40,603) 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. The Season Group was not considered a related party in the 2022 financial year. Receivable from and payable to related parties There were no trade receivables from or trade payables to related parties at the current and previous reporting date. 46 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 27. Related party transactions (continued) Loans to/from related parties There were no loans to or from related parties at the current and previous reporting date. Terms and conditions All transactions were made on normal commercial terms and conditions and at market rates. Note 28. Earnings per share Profit/(loss) after income tax attributable to the owners of Beam Communications Holdings Limited Profit/(loss) after income tax attributable to the owners of Beam Communications Holdings Limited used in calculating diluted earnings per share Consolidated 30 June 2022 30 June 2021 $ $ (176,805) 509,179 (176,805) 509,179 Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 81,674,718 67,139,375 Weighted average number of ordinary shares used in calculating diluted earnings per share 81,674,718 67,139,375 Options have not been considered in the dilutive earnings per share calculation due to the average market price being less than the exercisable price. Basic earnings per share Diluted earnings per share Note 29. Parent entity information 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 Cents Cents (0.22) (0.22) 0.76 0.76 Parent Parent 30 June 2022 30 June 2021 $ $ (1,176,610) (278,666) (1,455,276) (564,814) (419,244) (984,058) - - Total loss and other comprehensive income for the year attributable to owners of the Company (1,455,276) (984,058) 47 Beam Communications Holdings Limited NOTES TO THE FINANCIAL STATEMENTS 30 June 2022 Note 29. Parent entity information (continued) Statement of financial position Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Parent Parent 30 June 2022 30 June 2021 $ $ 5,148,860 616,016 5,764,876 1,855,443 1,017,389 2,872,832 1,447,565 153,306 1,600,871 1,646,051 357,241 2,003,292 4,164,005 869,540 17,374,871 163,429 (13,374,295) 12,703,060 85,500 (11,919,020) 4,164,005 869,540 Guarantees entered into by the parent entity in relation to the debts of its subsidiaries The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2022 and 30 June 2021. Contingent liabilities The parent entity had no contingent liabilities as at 30 June 2022 and 30 June 2021. Capital commitments The parent entity had no capital commitments as at 30 June 2022 and 30 June 2021. Significant accounting policies The accounting policies of the parent entity are consistent with those of the Group, as disclosed in Note 1. Note 30. Interests in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in Note 1.: Name Beam Communications Pty Ltd SatPhonerental Pty Ltd SatPhone Shop Pty Ltd Beam Communications USA Inc Pacarc (PNG) Limited (Dormant) Note 31. Events after the reporting period Principal place of business / Country of incorporation Ownership interest 30 June 2022 30 June 2021 % % Australia Australia Australia USA Papua New Guinea 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% No matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years. 48 DIRECTORS' DECLARATION In the directors’ opinion: ● ● ● ● the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 1 to the financial statements; the attached financial statements and notes give a true and fair view of the consolidated group’s financial position as at 30 June 2022 and of its performance for the financial year ended on that date; and there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. The directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors ___________________________ Mr Simon Wallace Chairman 30 August 2022 49 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 (together ‘the Group’), which comprises the consolidated statement of financial position as at 30 June 2022, 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 2022 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. Key Audit Matters (Continued) Key Audit Matter How our audit addressed this matter Impairment of Development costs Refer to Note 14 in the financial statements The Group has intangible assets of $7.6m, being the capitalised development costs Marconi, GO! SFX and Zoleo Post Launch projects. relating to 2020, The Marconi asset was available for use from January amortisation commenced during FY20. The GO! SFX project and one Zoleo Post Launch were not available for use as at 30 June 2022. therefore and impairment Management have performed an assessment and testing for material project assets based on a value in use calculation, which determined that no impairment had occurred. the intangible assets balance, We identified this area as a Key Audit Matter due to the size of the management judgement required to assess whether any indicators of impairment exist, and where any impairment existed, management indicators of judgement involved in determining the value in use of the relevant assets based on the estimated future cash flows generated. Our audit procedures in relation to development costs included: • Assessing management’s review for any indicators of impairment; • Where indicators existed, assessing management’s impairment test by checking the mathematical accuracy of the cash flow model, and reconciling to supporting evidence, such as input data approved the budgets reasonableness of these budgets; considering and • • • the reasonableness Challenging key assumptions, including the cash flow and revenue projections, exchange rates, discount rates, and any sensitivities used; of Confirming our understanding of the nature of the intangible assets, the strategic purpose of the projects and its ability to generate future revenues in place and through discussions with management; and reviewing contracts Reviewing the adequacy of disclosures against the requirements of AASB 136. 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 2022, 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. 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 2022. In our opinion, the Remuneration Report of Beam Communications Holdings Limited., for the year ended 30 June 2022, 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 Melbourne, VIC Dated: 30 August 2022 SHAREHOLDERS INFORMATION The shareholder information set out below was applicable as at 11 August 2022. Distribution of equitable securities - Analysis of number of equitable security holders by size of holding: Ordinary shares Options over ordinary shares Number of holders % of total shares issued Number of holders % of total shares issued 272 339 186 414 103 1,314 327 21% 26% 14% 31% 8% 100% 0.2 3 68 149 227 19 466 - 1% 15% 32% 48% 4% 100% - 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and over EQUITY SECURITY HOLDERS Twenty largest quoted equity security holders - The names of the twenty largest security holders of quoted equity s ecurities are listed below: David Stewart FF Okram Pty Ltd SCGV1 Holdings Limited Bolivianos Group Michael Capocchi HSBC Custody Nominees Artpreciation Pty Ltd Vincent Galante Trent Millar Catch88 Pty Ltd Dr Malaka Ameratunga Hotton Family G Chan Pension Pty Ltd Tom Bekiars Rapaki Pty Ltd Paul Reithmailer Mrs Anna Vocale Citicorp Nominees Gavin Dunhill Snowball Asset Management Pty Ltd Unquoted equity securities - There are no unquoted equity securities. Substantial holders - There are no substantial holders in the company. VOTING RIGHTS: The voting rights attached to ordinary shares are set out below: Ordinary shares Number held % of total shares issued 10,905,000 8,634,258 5,409,874 4,869,400 2,832,099 2,155,289 1,798,632 1,667,922 1,600,000 1,456,070 1,450,000 1,101,730 985,191 911,835 876,473 811,639 800,000 769,538 750,000 685,250 12.6 10.0 6.3 5.6 3.3 2.5 2.1 1.9 1.9 1.7 1.7 1.3 1.1 1.1 1.0 0.9 0.9 0.9 0.9 0.8 50,470,200 58.5 Ordinary shares There are 86,421,921 ordinary fully paid shares held by 1,314 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. There are no other classes of equity securities. 53 

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