AUSSIE BROADBAND LIMITED — Interim / Quarterly Report 2021

Feb 16, 2021

ABN 29 132 090 192

Aussie Broadband Limited

Appendix 4D and Interim Financial Report for period ending 31 December 2020

1. Reporting periods:

Current: 1 July 2020 to 31 December 2020 Previous: 1 July 2019 to 31 December 2019

2. Results for announcement to the market:

$’000	31 Dec 2020	31 Dec 2019	Change $’000	Change %
Revenue from ordinary activities	157,444	83,385	74,059	89%
Loss from ordinary activities after tax attributable to members	(10,467)	(1,354)	(9,113)	(673%)
Net loss after tax attributable to members	(10,467)	(1,354)	(9,113)	(673%)

The company generated revenue of $157.4m and a net loss after tax of $10.5m for the period. The result reflects growth in revenue of 89% compared to the prior corresponding period primarily due to growth in broadband subscribers in both the residential and business segments. The net loss after tax includes a cost of $12.3m associated with a change in fair value of the embedded derivative arising from the convertible notes which converted at the time of the IPO (Dec 19: $0.3m) and $1.1m of IPO expenses.

The result before the fair value adjustments and IPO expenses for 2020 was a profit of $2.9m (2019: loss of $1.6m) an increase in profit of $4.5m. This result was driven by the increase in revenue set out above.

No dividend has been proposed or declared in respect of the period ended 31 December 2019.

3. Net tangible assets

	31 Dec 2020	31 Dec 2019
Net tangible assets / (liabilities) backing per share	$0.26	($2,176.62)

Note that the Company undertook a share split of 1:9,773.40 during the period and prior to its IPO.

4. Additional Information

Additional financial information is included in attached Interim Financial Report which has been reviewed by the Group’s auditors.

Aussie Broadband Limited

ABN 29 132 090 192

Interim Financial Report for the half-year ended 31 December 2020

AUSSIE BROADBAND LIMITED AND ITS CONTROLLED ENTITIES ABN: 29 132 090 192 Interim Financial Report for the half-year ended 31 December 2020

Directors’ Report

The Directors present their report, together with the financial statements, of the Group (referred to hereafter as the ‘Group’) consisting of Aussie Broadband Limited (referred to hereafter as the ‘Company’) and the entities it controlled at the end of, or during, the half-year ended 31 December 2020.

Board of Directors

The following persons were Directors of Aussie Broadband Limited during the half-year ended 31 December 2020 and up to the date of this report, unless otherwise stated:

Adrian Fitzpatrick – Non-Executive Director and Chairman (appointed 1 July 2020)

Richard Dammery – Non-Executive Director (appointed 1 July 2020)

Vicky Papachristos – Non-Executive Director (appointed 1 July 2020)

Patrick Greene – Non-Executive Director

Phillip Britt – Managing Director and Executive Director

John Reisinger – Chief Technology Officer and Executive Director

Principal activities

The principal activity of the Group is a national carrier of telecommunications services in Australia focused on providing broadband, mobile and related services to residential and business segments.

No significant changes in the nature of the Group’s activity occurred during the half-year.

Review of operations

The loss for the half-year for the Group after providing for income tax amounted to $10,467,277 (31 December 2019: $1,354,135).

Significant changes in the state of affairs

At a general meeting of the Company on 22 July 2020 shareholders passed special resolutions to, inter alia:

• Change the company type from a proprietary company limited by shares to a public company limited by shares;

• Change the company name from Aussie Broadband Pty Ltd to Aussie Broadband Limited effective from the date on which the Company changed its type to a public company limited by shares; and

• Repeal its constitution and replace it with a new constitution effective from the date on which the Company changed to a public company limited by shares.

At a general meeting of the Company on 13 September 2020 shareholders passed a special resolution to split the share capital of the Company on a 1:9,773.40 basis following which the Company had 104,086,766 shares on issue.

During the period the Company applied for, and was granted, admission to the Official List of the Australian Securities Exchange (ASX). As a consequence of this approval the Convertible Notes issued by the Company in October 2019, together with interest accrued thereon, was converted to share capital with the issue of 45,776,260 shares.

In the course of finalising its admission to the ASX the Company completed an Initial Public Offering of 40,000,000 shares at $1.00 per share and debuted on the ASX on 16 October 2020.

Aussie Broadband Limited

31 December 2020 Interim Financial Report

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AUSSIE BROADBAND LIMITED AND ITS CONTROLLED ENTITIES ABN: 29 132 090 192 Interim Financial Report for the half-year ended 31 December 2020

Matters subsequent to the end of the half-year

There has not arisen in the interval between the end of the period and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company, in future periods.

Impacts of COVID-19

The coronavirus (COVID-19) pandemic developed in late 2019, rapidly increased through 2020 and remains ongoing. The impact of COVID-19 has been significantly detrimental to many businesses and industries, and whilst the operations of the Group have been adversely affected in number of ways, this has not been to a material extent.

The business has continued to see significant growth through the COVID-19 period. Operationally the business has coped well with the implementation of a COVIDSafe plan for its office locations and many staff working from home. Impacts the business has experienced are:

• There have been some interruptions to the supply chain of customer routers, but the business has found alternative equipment where necessary and the impact on customers has been some modest delays in delivery times.

• Certain marketing activities have been impacted due to logistical challenges faced by mail and courier service providers.

• Bandwidth usage has increased through the COVID-19 period with significant national spikes during the major lockdowns in the earlier stages of the pandemic, and smaller localised spikes associated with lockdowns we’ve seen more recently in the pandemic. The impact of this was mitigated by cost relief provided by network service providers.

• The Company eased its debt collection processes, recognising the difficulties faced by many of its customers. Whilst it was envisaged that the changed processes might yield slower collection it has also resulted in an increase in debt defaults increasing bad debt expense by approximately $500,000 above expectations.

In the period following this report there will continue to be COVID-19 impacts but these are difficult to fully determine due to the uncertainty of future outbreaks and governmental responses. The following areas will be monitored by the Company:

• Recently NBN announced that it would not be taking any new orders from internet retailers for customers requiring the use of HFC technology due to a shortage in global supply of chipsets used in the NBN HFC equipment. It is anticipated that this will have a modest impact on our future growth for as long this situation continues.

• Supply chain challenges in relation to hardware provided to customers – the Company holds significant forward inventory but will continue to work with its partners to ensure continuity of supply.

• Credit exposure – the Company is reviewing its debt collection processes to ensure that it can continue to support our customers where necessary, but limit the exposure to accumulating debt balances.

Aussie Broadband Limited 31 December 2020 Interim Financial Report

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AUSSIE BROADBAND LIMITED AND ITS CONTROLLED ENTITIES ABN: 29 132 090 192 Interim Financial Report for the half-year ended 31 December 2020

Rounding off

The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and in accordance with that Instrument, amounts in the consolidated financial statements and Directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated.

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.

This report is made in accordance with a resolution of Directors, pursuant to section 306(3)(a) of the Corporations Act 2001.

On behalf of the Directors.

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Adrian Fitzpatrick Chairman

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Phillip Britt Managing Director

Melbourne

16 February 2021

Aussie Broadband Limited 31 December 2020 Interim Financial Report

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Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

To the Directors of Aussie Broadband Limited

I declare that, to the best of my knowledge and belief, in relation to the review of Aussie Broadband Limited for the half-year ended 31 December 2020 there have been:

• i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and

• ii. no contraventions of any applicable code of professional conduct in relation to the review.

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KPMG

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Suzanne Bell Partner

Melbourne 16 February 2021

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©2021 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.

Consolidated Statement of Profit or Loss and Other Comprehensive Income For the half-year ended 31 December 2020

Notes Revenue 5 Network and hardware expenses Employee expenses Marketing expenses Administration and other expenses Depreciation and amortisation 6,7,8 Interest expenses Interest and other income Change in fair value of derivative Loss before income tax benefit Income tax Loss after income tax benefit for the period Other comprehensive income Items that will not be reclassified subsequently to profit or loss Other comprehensive income for the period, net of tax Total comprehensive loss for the period Loss per share Basic and diluted loss per share for the period attributable to ordinary equity holders of the Company 13	31 Dec 2020 $’000 157,444 (115,453) (18,680) (9,676) (6,292) (3,589) (1,972) 24 (12,273) (10,467) - (10,467) - (10,467) $ 0.13	31 Dec 2019
		$’000 83,385 (64,439) (8,873) (3,002) (3,141) (2,493) (3,090) 8 291
		(1,354) -
		(1,354) -
		(1,354)
		$ 127.15

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

Aussie Broadband Limited 31 December 2020 Interim Financial Report

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Consolidated Statement of Financial Position Interim Financial Report for the half-year ended 31 December 2020

Notes Assets Current assets Cash and cash equivalents Trade and other receivables Inventories Financial assets Prepayments Total current assets Non-current assets Property, plant and equipment 6 Right-of-use assets 8 Intangibles 7 Financial assets Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Contract liabilities Borrowings 9 Derivative 10 Lease liabilities 8 Employee benefits Total current liabilities Non-current liabilities Lease liabilities 8 Employee benefits Total non-current liabilities Total liabilities Net assets/(liabilities) Equity Issued capital 11 Reserves Accumulated losses Total surplus / (deficiency) in equity	31 Dec 2020 $’000 50,440 16,490 1,865 1,955 1,237 71,987 12,433 13,859 3,517 229 30,038 102,025 18,878 14,160 500 - 5,477 2,687 41,702 7,375 293 7,668 49,370 52,655 94,323 154 (41,822) 52,655	30 June 2020
		$’000 21,435 11,389 1,692 1,947 590
		37,053
		5,408 12,385 2,458 228
		20,479
		57,532
		16,115 10,764 27,238 10,384 4,009 1,970
		70,480
		7,541 234
		7,775
		78,255
		(20,723)
		10,632 - (31,355)
		(20,723)

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

Aussie Broadband Limited 31 December 2020 Interim Financial Report

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Consolidated Statement of Changes in Equity For the half-year ended 31 December 2020

Notes Consolidated Balance at 30 June 2019 Loss after income tax for the period Total comprehensive loss for the period Balance at 31 December 2019 Consolidated Balance at 30 June 2020 Loss after income tax benefit for the period Total comprehensive loss for the period Transactions with owners of the Company Issue of ordinary shares Costs associated with issue of ordinary shares Arising from expense of share options issued under the Long- Term Incentive Plan 12 Total transactions with owners of the Company Balance at December 2020	Issued capital $’000 10,632 10,632 Issued capital $’000 10,632 86,253 (2,562) 83,691 94,323	Share based payment reserve $’000 - - Share based payment reserve $’000 154 154 154	Accumulated losses $’000 (19,056) (1,645) (1,645) (20,701) Accumulated losses $’000 (31,355) (10,467) (10,467)	Total. (deficiency) in equity.
				$’000 (8,424) (1,645)
				(1,645)
				(10,069)
				Total surplus/ (deficiency) in equity
				$’000 (20,723) (10,467)
				(10,467)
				86,253 (2,562) 154
			(41,822)	83,845
				52,655

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

Aussie Broadband Limited 31 December 2020 Interim Financial Report

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Consolidated Statement of Cash Flows For the half-year ended 31 December 2020

Notes Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers & employees (inclusive of GST) Interest received Interest and other finance costs paid Net cash from operating activities Cash flows from investing activities Payments for property, plant and equipment 6 Payments for intangibles 7 Proceeds from disposal of property, plant and equipment Net cash used in investing activities Cash flows from financing activities Payment of lease liabilities Proceeds from issue of convertible notes (net of costs) Repayment of borrowings Payment for security deposits Proceeds from issue of shares (net of costs) Net cash from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period	31 Dec 2020 $’000 171,486 (162,493) 8,993 50 (274) 8,769 (8,129) (1,350) - (9,479) (2,715) (5,000) (8) 37,438 29,715 29,005 21,435 50,440	31 Dec 2019
		$’000 90,363 (88,487)
		1,876 47 (338)
		1,585
		(1,880) (550) (7)
		(2,437)
		(2,054) 23,436 - (112) -
		21,270
		20,418 490
		20,908

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

Aussie Broadband Limited 31 December 2020 Interim Financial Report

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Notes to the financial statements For the half-year ended 31 December 2020

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Reporting entity

Aussie Broadband Limited (the ‘Company) is a Company domiciled in Australia. These condensed consolidated interim financial statements (‘interim financial statements’) as at and for the six months ended 31 December 2020 comprise the Company and its subsidiaries (together referred to as the ‘Group’).

The annual financial statements of the Group are available at https://www.aussiebroadband.com.au/investorcentre/.

The principal activity of the Group is a national carrier of telecommunication services in Australia, focused on providing broadband, mobile and related services to its customers.

The registered office and principal place of business is located at 3 Electra Avenue Morwell VIC 3840.

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Basis of preparation

These interim financial statements are general purpose financial statements prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001, and with IAS34 Interim Financial Reporting and have been prepared using the same accounting policies and methods of computation as the last consolidated annual financial statements.

They do not include all of the information required for a complete set of annual financial statements and we recommend that they are read in conjunction with the 2020 Annual Report and the public announcements made by the Group during the half-year. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes to the Group’s financial position and performance since the last annual consolidated financial statements as at and for the year ended 30 June 2020.

These consolidated financial statements also comply with the International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board (‘IASB’).

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Critical accounting judgements, estimates and assumptions

The preparation of the consolidated 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 estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The significant judgements made by Management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements.

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Notes to the financial statements For the half-year ended 31 December 2020

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Segment information

For management purposes, the Group is organised into business units based on the types of customers it provides services to and has identified two reportable segments:

• The “Residential” segment, which provides telecommunications services focusing on providing NBN services to residential users.

• The “Business” segment, which provides telecommunications services focusing on providing NBN services to business users.

No operating segments have been aggregated to form the above reportable operating segments.

The Managing Director is identified as the Chief Operating Decision Maker (‘CODM’) and they monitor the operating results of the business units separately for the purpose of making decisions about resource allocation and performance assessment.

Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the consolidated financial statements.

There are no transfers between operating segments and Other represents income and expenses that are not allocated specifically to segments.

Half-year ended 31 December 2020 Revenue Network and hardware expenses Employee expenses Marketing expenses Administration and other expenses Total expenses Earnings before interest, tax, depreciation and amortisation (EBITDA) Depreciation and amortisation Interest expense Interest income and other income Change in fair value of embedded derivative Profit/(Loss) before income tax Income tax benefit Profit/(Loss) after income tax	Residential $’000 Business $’000 137,767 19,677 (103,197) (12,256) (15,621) (3,059) (8,606) (1,070) (4,591) (511)	Other $’000 Total $’000 157,444 (115,453) (18,680) (9,676) (1,190) (6,292)
	(132,015) (16,896)	(1,190) (150,101)
	5,752 2,781	(1,190) 7,343 (3,589) (3,589) (1,972) (1,972) 24 24 (12,273) (12,273)
	5,752 2,781 - -	(19,000) (10,467) - -
	5,752 2,781	(19,000) (10,467)

Aussie Broadband Limited 31 December 2020 Interim Financial Report

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Notes to the financial statements For the half-year ended 31 December 2020

Note 4. Segment information (continued)

Half-year ended 31 December 2019 Residential $’000 Business $’000 Revenue 72,407 10,978 Network and hardware expenses (57,444) (6,995) Employee expenses (7,467) (1,406) Marketing expenses (2,676) (326) Administration and other expenses (2,822) (319) Total expenses (70,409) (9,046) Earnings before interest, tax, depreciation and amortisation (EBITDA) 1,998 1,932 Depreciation and amortisation Interest expense Interest income Change in fair value of embedded derivative Profit/(Loss) before income tax 1,998 1,932 Income tax benefit - - Profit/(Loss) after income tax 1,998 1,932 Revenue Disaggregation of revenue The disaggregation of revenue from contracts with customers is as follows: Rendering of services Sale of goods Other income from customers Revenue from contracts with customers Timing of revenue recognition Services transferred at a point in time Services transferred over time	Residential $’000 Business $’000 72,407 10,978 (57,444) (6,995) (7,467) (1,406) (2,676) (326) (2,822) (319)	Other $’000	Total $’000 83,385 (64,439) (8,873) (3,002) (3,141)
	(70,409) (9,046)	-	(79,455)
	1,998 1,932	- (2,493) (3,090) 8 291	3,930 (2,493) (3,090) 8 291
	1,998 1,932 - -	(5,284) -	(1,354) -
	1,998 1,932	(5,284)	(1,354)
		31 Dec 2020 $’000 148,454 8,957 33 157,444 9,391 148,053 157,444	31 Dec 2019
			$’000 79,521 3,823 41
			83,385
			4,048 79,337
			83,385

Aussie Broadband Limited 31 December 2020 Interim Financial Report

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Notes to the financial statements For the half-year ended 31 December 2020

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Property Plant and Equipment

Property Plant and Equipment
Leasehold improvements, at cost Less: accumulated depreciation Plant and equipment, at cost Less: accumulated depreciation Motor vehicles, at cost Less: accumulated depreciation Office & Computer equipment, at cost Less: accumulated depreciation Capital WIP Total property, plant & equipment at net book value	31 Dec 2020 $’000 474 (243) 231 14,730 (10,830) 3,900 492 (379) 113 1,792 (754) 1,038 7,151 12,433	30 Jun 2020
		$’000 446 (223)
		223
		13,544 (9,988)
		3,556
		492 (365)
		127
		1,394 (566)
		828
		674
		**5,408 **

Reconciliation of the written down values at the beginning and end of the current financial period are set out below:

Carrying amount at 1 July 2020 Additions Disposals Depreciation expense Carrying amount at 31 December 2020	Lease hold Improv’t. $’000 223 28 (20) 231	Plant & Equip’t $’000 3,556 1,275 (30) (901) 3,900	Motor Vehicles $’000 127 - (14) 113	Office & Computer Equip’t $’000 828 398 (188) 1,038	Capital WIP $’000 674 6,477 - 7,151	Total
						$’000 5,408 8,178 (30) (1,123)
						12,433

Capital WIP is expenditure incurred on capital items that are incomplete and have not commenced depreciation. This principally consists of payments in relation to the development of the Group’s fibre optic network.

Aussie Broadband Limited 31 December 2020 Interim Financial Report

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Notes to the financial statements For the half-year ended 31 December 2020

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Intangibles

Intangibles
Software, at cost Less: accumulated depreciation IP Addresses Total intangible assets at net book value	31 Dec 2020 $’000 5,095 (3,541) 1,554 1,963 1,963 3,517	30 Jun 2020
		$’000 4,484 (3,299)
		1,185
		1,273
		1,273
		2,458

Reconciliations

Reconciliations of the carrying amounts of each class of intangible assets at the beginning and end of the current financial period are set out below.

Carrying amount at 1 July 2020 Additions Disposals Amortisation expense Carrying amount at 31 December 2020	Software $’000 1,185 611 (242) **1,554 **	IP Addresses $’000 1,273 810 (120) - 1,963	Total
			$’000 2,458 1,421 (120) (242)
			3,517

The amortisation expenses are recognised in profit or loss in 'depreciation and amortisation'.

IP Addresses with indefinite useful lives are tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Recent purchases confirm that the fair value of the asset is greater than its carrying value therefore no impairment indicators are present.

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Leases

Group as a lessee

The Group has lease contracts for various offices, long-range data connections and specific equipment in connection with services provided to the Group by various data centres. Lease agreements are typically for fixed periods of three to five years but may have extension options as described below.

Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices.

Aussie Broadband Limited 31 December 2020 Interim Financial Report

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Notes to the financial statements For the half-year ended 31 December 2020

Set out below are the carrying amounts of ROU assets recognised and the movements during the current period:

As at 1 July 2020 Additions Modification Depreciation expense As at 31 December 2020	Property $’000 1,171 - 496 (194) 1,473	Network equipment $’000 11,214 3,153 50 (2,031) 12,386	Total
			$’000 12,385 3,153 546 (2,225)
			13,859

Set out below are the carrying amounts of lease liabilities and the movements during the current period:

As at 1 July 2020 Additions Modification Accretion of interest Payments As at 31 December 2020 Current Non-current	Property $’000 1,155 - 496 31 (175) 1,507	Network equipment $’000 10,395 3,153 50 287 (2,540) 11,345	Total
			$’000 11,550 3,153 546 318 (2,715)
			12,852
			5,477 7,375

The Group has several lease contracts that include extension options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Group’s business needs.

The Group has determined that, with the exception of data network cable leases, it is reasonably certain of exercising all extension options in its current lease agreements. The potential future rental payments relating to periods following the exercise date of extension options have therefore been included in the measurement of lease liabilities.

Management exercises significant judgement in determining whether these extension options are reasonably certain to be exercised.

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Borrowings

Borrowings
Current Other debts - Longreach Convertible notes Total	31 Dec 2020 $’000 500 - 500	30 Jun 2020
		$’000 5,500 21,738
		27,238

Secured term bilateral facility agreement

The Group entered into a secured term bilateral facility agreement with Longreach Credit Investment Limited and AMAL Trustees Limited as trustee for the Longreach Direct Lending Fund in December 2018.

The facility limit of the loan is $5,500,000 and matures in February 2021. The Company repaid $5,000,000 of the loan in December 2020.

Aussie Broadband Limited 31 December 2020 Interim Financial Report

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Notes to the financial statements For the half-year ended 31 December 2020

The rate of interest is 12% per annum and is paid in arrears on the last day of each calendar month and on the maturity date.

Convertible notes

In October 2019, the Group issued convertible notes to investors and raised $25,000,000. Each note had a face value of $100 and had a maturity date and an automatic redemption date of 18 months from the issue date – being April 2021, if the notes were not converted prior to this date. The convertible notes automatically converted to ordinary equity as a result of the IPO which occurred on 16 October 2020. The conversion price was the lesser of:

• (a) The price per share that shares are issued to investors under the IPO (being $1), or the price per share, less a discount of 20% (given the Conversion Event occurred prior to the first anniversary of the Issue Date and;

• (b) The price per security in the Company determined using the aggregate value of all the securities in the Company on a pre-money, fully diluted basis (for the avoidance of doubt, taking into account the discount on the Conversion Price that would apply under paragraph (a) and any Coupon to be converted) as at the Conversion Date but up to a maximum valuation cap of $90,000,000.

The Coupon was calculated on each note at 10% per annum from the issue date up to and including the conversion date if converted or the redemption date if the convertible notes are redeemed. The Coupon was capitalised and not paid to the Noteholder during the term that the Notes are on issue. The Coupon calculated and payable did not compound and was calculated on the basis of a 365-day year. The Coupon which totalled $2,465,753, converted to ordinary equity at IPO.

The conversion resulted in the issue of 45,776,260 shares.

Reconciliation of convertible note in the current period Opening balance at 1 July 2020 Accreted interest Converted to equity Carrying amount of liability as at 31 December 2020	2020
	$ '000 21,738 1,381 (23,119)
	-

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Fair values

Set out below is the classification of financial assets and liabilities according to their measurement bases together with their carrying amounts as reported on the balance sheet:

Note Financial assets Cash and cash equivalents Trade & other receivables Financial Assets Total Financial liabilities Trade & other payables Borrowings 9 Convertible note 9 Derivative Lease liabilities 8 Total	31 December 2020 At amortised cost At fair value Total $'000 $'000 $'000 50,440 - 50,440 16,490 - 16,490 2,184 2,184 69,114 - 69,114 18,878 - 18,878 500 - 500 - - - - - - 12,852 - 12,852 32,230 - 32,230	30 June 2020 At amortised cost At fair value Total $'000 $'000 $'000 21,435 - 21,435 11,389 - 11,389 2,175 - 2,175
		34,999 - 34,999
		- 16,115 - 16,115 5,500 - 5,500 21,738 - 21,738 - 10,384 10,384 11,550 - 11,550
		54,903 10,384 65,287

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31 December 2020 Interim Financial Report

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Notes to the financial statements For the half-year ended 31 December 2020

Reconciliation of derivative in the current period Opening balance at 1 July 2020 Change in fair value during period Converted to equity Carrying amount of liability as at 31 December 2020	2020
	$ '000 10,384 12,273 (22,657)
	-

Issued capital Ordinary shares, fully paid	31 Dec 2020 $’000 94,323	30 Jun 2020
		$’000 10,632

Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders' meetings.

The shares do not have a par value.

Movements in ordinary share capital

Opening balance Share Split Conversion of convertible note and interest Shares issued at IPO Employee gift shares issued at IPO IPO costs attributable to equity Closing balance	Date 1 July 2020 13 Sep 2020 15 Oct 2020 15 Oct 2020 15 Oct 2020 31 Dec 2020	Shares 10,650 104,076,116 45,776,260 40,075,000 402,000 190,340,026	Issue Price - $1.00 $1.00 $1.00	$’000 $’000 10,632 - 45,776 40,075 402 (2,562) 94,323

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Share-based payment arrangements

On 28 August 2020 the Company established a Long-Term Incentive Plan which awarded share options to three members of key management personnel and five senior employees to purchase shares in the Company at a future date. The plan is designed to provide incentives to deliver long-term shareholder value. Under this plan, holders of vested options are entitled to purchase shares at the market price at grant and participation is at the discretion of the People & Community Committee by recommendation to the Board.

The terms and conditions of the share options granted during the half-year ended 31 December 2020 are as follows:

Grant Date 28 August 2020 28 August 2020	Employees entitled Number of options
	Key management personnel 1,125,785 Senior management 786,155

Aussie Broadband Limited 31 December 2020 Interim Financial Report

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Notes to the financial statements For the half-year ended 31 December 2020

The fair value of each share option granted has been measured as $0.48 per option using a Black-Scholes model utilising the following inputs:

• Market price at grant - $1.00 per share being the IPO offer price

• Exercise price of the option - $1.00

• Vesting date – 1 July 2023

• Expiry date – 30 June 2026

• Expected share price volatility – 60.9% being based on the 12-month standard deviation of daily returns of 13 comparable companies

• Expected dividend yield – 1.5% pa

• Risk-free interest rate – 0.38% pa being the 5-year Australian Government bond yield

No options have vested or expired since grant and no options have been exercised or forfeited during the period.

On 15 October 2020 and as part of the IPO, all qualifying employees who elected to participate were issued $1,000 of shares for no cash consideration under the Aussie Broadband Tax-Exempt Share Plan. A total of 402,000 shares were issued and the fair value of those shares was $402,000 based on the IPO issue price of $1.00.

On 15 October 2020 and as part of the IPO, three Directors were issued 25,000 shares each in recognition of the special exertions required during the course of the IPO. A total of 75,000 shares were issued and the fair value of those shares was $75,000 based on the IPO issue price of $1.00.

Expenses arising from share-based payment transactions

Long-term incentive plan share options Employee share gift offer Director special exertion shares	$
	154,000 402,000 75,000
	631,000

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Earnings per share

Basic EPS is calculated by dividing the profit for the period attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the period.

Diluted EPS is calculated by dividing the profit attributable to ordinary equity holders of the Company (after adjusting for interest, amortisation of transaction costs and the fair value movements on the embedded derivative in relation to the convertible notes) by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

The following table reflects the income and share data used in the basic and diluted EPS calculations:

Loss for the period ($’000) Weighted average number of shares in calculating basic EPS Basic and diluted loss per share ($)	31 Dec 2020 (10,467) 79,054,544 (0.13)	31 Dec 2019
		(1,354) 10,650 (127.15)

Aussie Broadband Limited 31 December 2020 Interim Financial Report

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Notes to the financial statements For the half-year ended 31 December 2020

At December 2019, the convertible notes were excluded from the diluted weighted-average number of ordinary shares calculation because their effect would have been anti-dilutive.

At December 2020, the long term incentive plan share options were excluded from the diluted weighted-average number of ordinary shares calculation because their effect would have been anti-dilutive.

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Commitments

Capital expenditure contracted for at the end of each period but not recognised as liabilities is as follows:

Property, plant and equipment Total committed spend	31 Dec 2020 $’000 2,918 2,918	30 Jun 2020
		$’000 5,392
		5,392

Capital commitments relate to contractual commitments associated with upgrades to network infrastructure and the development of the fibre optic network.

The Group had one lease contract that had not yet commenced as at 30 June 2020. The future lease payments for this non-cancellable lease contract was $56,000 within one year, $306,231 within the next five years and $355,006 thereafter. This lease is included in lease liabilities at 31 December 2020.

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Events occurring after reporting date

There has not arisen in the interval between the end of the period and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company, in future periods.

Aussie Broadband Limited 31 December 2020 Interim Financial Report

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Aussie Broadband Limited Directors’ Declaration 31 December 2020

In the opinion of the Directors of Aussie Broadband Limited:

1. the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including:

2. a. giving a true and fair view of the Group’s financial position as at 31 December 2020 and of its performance for the six month period ended on that date; and

3. b. complying with Australian Accounting Standard AASB134 Interim Financial Reporting and the Corporations Regulations 2001; and

4. there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the Directors made pursuant to section 303(5) of the Corporations Act 2001.

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Adrian Fitzpatrick Chairman

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Phillip Britt Managing Director

16 February 2021

Aussie Broadband Limited 31 December 2020 Interim Financial Report

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Independent Auditor’s Review Report

To the shareholders of Aussie Broadband Limited,

Report on the Interim Financial Report

Conclusion

We have reviewed the accompanying Interim Financial Report of Aussie Broadband Limited.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the Interim Financial Report of Aussie Broadband Limited does not comply with the Corporations Act 2001 , including:

• giving a true and fair view of the Group’s financial position as at 31 December 2020 and of its performance for the half-year ended on that date; and

• complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

The Interim Financial Report comprises:

• Consolidated statement of financial position as at 31 December 2020

• Consolidated statement of profit or loss and other comprehensive income for the half-year ended 31 December 2020

• Consolidated statement of changes in equity for the half-year ended 31 December 2020

• Consolidated statement of cash flows for the halfyear ended 31 December 2020

• Notes 1 to 15 comprising a summary of significant accounting policies and other explanatory information

• The Directors’ Declaration.

The Group comprises Aussie Broadband Limited and the entities it controlled at the Half year’s end or from time to time during the Half-year Period.

Basis for Conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity . Our responsibilities are further described in the Auditor’s Responsibilities for the Review 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 (including Independence Standards) (the Code) that are relevant to our audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

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Responsibilities of the Directors for the Interim Financial Report

The Directors of the Group are responsible for:

• the preparation of the Interim Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001.

• such internal control as the Directors determine is necessary to enable the preparation of the Interim Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibilities for the Review of the Interim Financial Report

Our responsibility is to express a conclusion on the Interim Financial Report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us believe that the Interim Financial Report does not comply with the Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31 December 2020 and its performance for the Half-Year ended on that date, and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

A review of an Interim Financial Report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

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KPMG

Suzanne Bell

Partner

Melbourne

16 February 2021

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