CODEIFAI LIMITED — Interim / Quarterly Report 2022

Aug 30, 2022

Appendix 4D - Half Year Report

1. Company details

Name of entity: YPB Group Ltd ACN: 108 649 421 Reporting period: For the half-year ended 30 June 2022 Previous period: For the half-year ended 30 June 2021

2. Results for announcement to the market

						Half year
		Half year to 30 June 2022				to 30 June 2021
			$			$
Revenues from ordinary
activities	Up	70,127	24%	to	362,705	292,578
Loss from ordinary
activities after tax for
the half-year
attributable to the
owners of YPB Group Ltd
	Up	837,523	47%	to	(2,631,589)	(1,794,066)
Loss for the half-year
attributable to the
owners of YPB Group Ltd	Up	837,523	47%	to	(2,631,589)	(1,794,066)

Comments

The loss for the Consolidated Entity, after providing for income tax for the half year ended 30 June 2022 amounted to $2,631,589 (30 June 2021: $1,794,066). The operating loss includes significant items such as employee expenses, and research and development costs, which leaves an underlying cash outflow from operations of $1,420,814 (30 June 2021: $1,608,000). Revenue for the period was $362,705 (30 June 2021: $292,578) which represents a 24% increase on the prior period.

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3. Net tangible liabilities

30 June 2022 30 June 2021 Cents Cents Net tangible liabilities per (0.86) (0.02) ordinary security

The net tangible assets backing per ordinary security of (0.86) cents presented above is inclusive of right-of-use assets and lease liabilities. There are no right of use assets or leave liabilities recorded at 30 June 2022 and accordingly, no impact on the calculation. Net tangible assets are showing a negative value for the reporting and comparative periods due to many recorded assets being intangible.

4. Gain and loss of control over entities

During the period ended 30 June 2022, the Consolidated Entity restructured the legal entity organisation structure, and as a result, nTouch Agency Pty Ltd was deregistered (30 June 2021: nTouch IP Pty Ltd).

5. Dividends

Current period

There were no dividends paid, recommended or declared during the current financial period.

Previous period

There were no dividends paid, recommended or declared during the previous financial period.

6. Dividend reinvestment plans

There are no dividend reinvestment plans for the half-year ended 30 June 2022 (30 June 2021: Nil).

7. Details of associates and joint venture entities

No changes since the previous annual report was released.

8. Foreign entities

Details of origin of accounting standards used in compiling the report:

There has been no change in foreign-owned subsidiaries to those reported for the year ended 31 December 2021. All group entities comply with International Financial Reporting Standards (‘IFRS’).

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9. Audit qualification or review

Details of audit/review dispute or qualification (if any):

The consolidated financial statements were subject to a review by the auditors and the review report is attached as part of the Interim Report.

10. Attachments

Details of attachment (if any):

The Interim Report of YPB Group Ltd for the half-year ended 30 June 2022 is attached.

11. Signed

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John Houston
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Date: 31 August 2022

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YPB Group Ltd Directors’ report 30 June 2022

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YPB Group Ltd ACN: 108 649 421

Interim Report – 30 June 2022

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YPB Group Ltd Directors’ report 30 June 2022

The directors present their report and the consolidated financial statements of YPB Group Ltd (the “Company”) and its controlled entities (the “Consolidated Entity”) for the half-year ended 30 June 2022.

1. Directors and Secretary

For the period under review and covered by this report, the following persons were director of the Company. Directors have been in office since the start of the halfyear to the date of this report, unless otherwise stated.

Executive Chairman

John Houston

Non-Executive Directors

Su (George) Su Gerard Eakin

Company Secretary

Sebastian Andre (resigned on 8 August 2022) Lucy Rowe (appointed on 8 August 2022)

2. Principal Activities

The principal activity of the Consolidated Entity during the half-year was as a sales, marketing, and developer of anti-counterfeiting, product authentication, and consumer engagement solutions to brand owners globally.

3. Review of Operations

The consolidated loss of the Consolidated Entity after providing for income tax amounted to $2,631,589 (30 June 2021: $1,794,066). The operating loss includes a number of significant cash items such as employee expenses, and research and development costs, which leaves an underlying cash outflow from operations of $1,420,814 (30 June 2021: $1,608,000). Revenue for the period was $362,705 (30 June 2021: $292,578), which represents a 24% increase over the comparative period.

The COVID-19 pandemic has had an adverse global economic impact and the Consolidated Entity has been actively working with its customers to assist them wherever possible and to monitor the potential risk for its revenue base. There does not appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the Consolidated Entity unfavourably as at reporting date or subsequently as a result of the COVID-19 Pandemic. The Board continues to actively monitor the situation.

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YPB Group Ltd Directors’ report 30 June 2022

Significant Changes in State of Affairs

On 23 February 2022, 3,400,336,576 quoted options with an exercise price of $0.005 expired with none being exercised.

On 28 March 2022, YPB received commitment to raise $1,500,000 from sophisticated and professional investors, whereby YPB issued an aggregate of 1,500,000 convertible notes, together with 52,500,000 free attaching options. The issue of shares on conversion of the convertible notes and the issue of the options was subject to shareholder approval at the AGM 2022 on 30 May 2022. Subject to shareholder approval, the Company has also agreed to issue 1,800,000 shares and 52,500,000 options to Everblu, the lead manager to the convertible note raising.

On 30 May 2022, YPB shareholders approved the consolidation of its shares on the basis of 1 new share for every 25 existing shares held.

On 30 May 2022, 36,363,636 performance rights have been converted into 36,363,636 fully paid ordinary shares following vesting conditions met in accordance with shareholder approval obtained on 23 December 2021.

On 27 June 2022, YPB received commitment to raise $500,000 from sophisticated and professional investors, whereby YPB issued an aggregate of 500,000 convertible notes, together with 17,500,000 free attaching options. The issue of shares on conversion of the convertible notes and the issue of the option was approved by the shareholders at the AGM 2022 on 30 May 2022. The Company has also agreed to issue 600,000 shares and 17,500,000 options to Everblu, the lead manager to the convertible note raising.

4. Events Subsequent to Balance Sheet Date

On 5 July 2022, the Company converted 2,000,000 convertible notes into shares. Together with the share issuing of 2,400,000 to Everblu, a total of 160,377,883 ordinary fully paid shares were issued.

On 6 July 2022, the remaining proceeds of $326,000 were received from the convertible notes raised in June 2022.

On 7 July 2022, 140,000,000 of quoted options with an exercise price of $0.0236 each were issued to the investors who participated in the March 2022 and June 2022 convertible note raises. The total value of these options, should they be fully exercised before the expiry date of 5 July 2024 is $3,304,000.

Other than the above, no matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the Consolidated Entity's operations, the results of those operations, or the Consolidated Entity's state of affairs in future financial years.

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YPB Group Ltd Directors’ report 30 June 2022

5. Rounding of Amounts

The Company is an entity to which ASIC Corporations (Rounding in Financial / Directors’ Reports) Instrument 2016/191 applies, and accordingly, amounts in the consolidated financial statements and directors’ report have been rounded to the nearest dollar.

6. 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 on the following page.

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

John Houston Executive Chairman

Dated: 31 August 2022

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AUD ’ C C UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF YPB GROUP LTD

I declare that, to the best of my knowledge and belief, during the half-year ended 30 June 2022, there have been:

• (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• (b) no contraventions of any applicable code of professional conduct in relation to the review.

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PKF BRISBANE AUDIT

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SHAUN LINDEMANN PARTNER

31 AUGUST 2022

BRISBANE

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YPB Group Ltd Contents 30 June 2022

Contents

ontents
Consolidated statement of profit or loss and other comprehensive	10
income / (loss)
Consolidated statement of financial position	11
Consolidated statement of changes in equity	12
Consolidated statement of cash flows	14
Notes to the consolidated financial statements	15
Directors’ declaration	27
Independent auditor’s review report to the members of YPB Group Ltd	28

9

YPB Group Ltd Consolidated statement of profit or loss and other comprehensive income / (loss) For the half-year ended 30 June 2022

Note Revenue 4 Expenses Consulting Depreciation and amortisation expense Directors’ fees Employee benefits expense Finance costs Production costs Rental expenses Research and development costs Marketing costs Investor relations Travelling expenses Share-based payments Regulatory expenses Professional fees Other expenses Exchange gain/(loss) Loss before income tax expense Income tax expense Loss after income tax expense for the half-year attributable to the owners of YPB Group Ltd Other comprehensive loss Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations Other comprehensive profit/(loss) for the half-year, net of tax Total comprehensive loss for the half- year period attributable to the owners of YPB Group Ltd Basic and diluted earnings per share 12	Half year to Half year to 30 June 2022 30 June 2021 $ $ 362,705 292,578 (711,297) (163,945) (11,449) (79,615) (40,000) (40,000) (709,644) (811,928) (65,962) (137,699) (18,214) (17,424) (61,226) (22,040) (305,968) (201,567) (31,073) (19,749) (49,889) (187,578) (59,508) (6,119) (388,123) - (44,186) (101,510) (106,016) (103,357) (290,239) (343,338) (101,500) 149,225
	(2,631,589) (1,794,066) - -
	(2,631,589) (1,794,066) 376,044 (14,123)
	376,044 (14,123)
	(2,255,545) (1,808,189)
	Cents Cents (1.07) (0.04)

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

10

YPB Group Ltd Consolidated statement of financial position As at 30 June 2022

Note Assets Current assets Cash and cash equivalents Trade and other receivables Other assets Inventories Non-current assets Plant and equipment Intangibles 5 Total assets Liabilities Current liabilities Trade and other payables 6 Financial liabilities 7 Total liabilities Net assets Equity Issued capital 8 Reserves 9 Accumulated losses Total equity	As at As at 30 June 2022 31 December 2021 $ $ 665,996 531,477 298,524 321,403 416,378 329,695 196,066 209,277
	1,576,964 **1,391,852 **
	41,668 50,106 5,708,741 5,419,929
	5,750,409 5,470,035
	7,327,373 6,861,887 2,027,526 1,476,033 1,708,082 -
	3,735,608 1,476,033
	3,735,608 1,476,033 3,591,765 5,385,854
	81,846,527 81,773,800 3,038,288 3,040,859 (81,293,050) (79,428,805)
	3,591,765 5,385,854

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

11

YPB Group Ltd Consolidated statement of changes in equity For the half-year ended 30 June 2022

Consolidated Balance at 1 January 2022 Loss after income tax benefit for the half-year Other comprehensive profit for the half-year, net of tax Total comprehensive profit/(loss) for the half- year Transactions with owners in their capacity as owners: Performance right exercised during the half-year Options lapsed during the half-year Performance right issued during the half-year Balance at 30 June 2022	Issued capital Foreign currency translation reserve Issued options Share- based payment reserve Accumulated losses Total equity $ $ $ $ $ $ 81,773,800 2,192,710 767,344 80,805 (79,428,805) 5,385,854 - - - - (2,631,589) (2,631,589) - 376,044 - - - 376,044
	- 376,044 - - (2,631,589) (2,255,545) 72,727 - - (72,727) - - - - (767,344) - 767,344 - - - - 461,456 - 461,456
	81,846,527 2,568,754 - 469,534 (81,293,050) 3,591,765

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YPB Group Ltd

Consolidated statement of changes in equity For the half-year ended 30 June 2022

Consolidated Balance at 1 January 2021 Prior period adjustment1 Adjusted balance at 1 January 2021 Loss after income tax benefit for the year Other comprehensive loss for the half-year, net of tax Total comprehensive loss for the year Transactions with owners in their capacity as owners: Shares issued, net of transaction costs Options lapsed during the half-year Options granted during the half-year Options exercised during the half-year Balance at 30 June 2021	Issued capital Foreign currency translation reserve Issued options Share- based payment reserve Accumulated losses Total equity $ $ $ $ $ $ 77,664,696 2,940,898 2,040,000 - (77,982,758) 4,662,836 - - - - 29,216 29,216
	77,664,696 2,940,898 2,040,000 - (77,953,542) 4,692,052 - - - - (1,794,066) (1,794,066) - (14,123) - - - (14,123)
	- (14,123) - - (1,794,066) (1,808,189) 403,185 - - - - 403,185 - - (765,000) - 765,000 - - - 536,199 - - 536,199 750,000 - (1,275,000) - 1,275,000 750,000
	78,817,881 2,926,775 536,199 - (77,707,608) 4,573,247

Note 1: The prior period adjustment arose from YPB Limited (“YPB HK”), a wholly -owned subsidiary of the Consolidated Entity, resulting from the audit of its financial statements for periods 1 April 2020 to 31 December 2020 completed during 2021.

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

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YPB Group Ltd Consolidated statement of cash flows For the half-year ended 30 June 2022

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Finance costs Net cash used in operating activities Cash flows from investing activities Payments for plant and equipment Proceeds on disposal of PPE Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares (net of costs) Proceeds from exercise of options Proceeds from issue of convertible notes Proceeds from borrowings Payment of lease liabilities Repayment of borrowings Net cash from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial period Effect on movements in exchange rates on cash held Cash and cash equivalents at the end of the financial period	Half year to Half year to 30 June 2022 30 June 2021 $ $ 310,330 346,000 (1,701,144) (1,847,000) - - (30,000) (107,000)
	(1,420,814) (1,608,000)
	(3,152) (7,000) - 7,000
	(3,152) -
	- 705,000 - 750,000 1,574,000 - 500,000 - - (52,000) (500,000) -
	1,574,000 1,403,000
	150,034 (205,000) 530,776 1,559,000 (14,912) -
	665,898 1,354,000

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

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YPB Group Ltd Notes to the consolidated financial statements For the half-year ended 30 June 2022

Note 1. General information

These consolidated financial statements and notes to the consolidated financial statements cover YPB Group Ltd and the entities it controlled (the “Consolidated Entity” or “Group”) at the end of, or during, the half-year. The separate financial statements of the parent entity, YBP Group Limited, have not been presented within this financial report as permitted by the Corporations Act 2001. The consolidated financial statements are presented in Australian dollars, which is YPB Group Ltd’s functional and presentation currency.

The company is a listed public company incorporated and domiciled in Australia. Its registered office in Australia is Level 5, 126 Phillip Street, Sydney NSW 2000.

The consolidated financial statements were authorised for issue, in accordance with a resolution of directors, on 31 August 2022.

Note 2. Significant accounting policies

These general purpose consolidated financial statements for the half-year ended 30 June 2022 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001 , as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'.

These general purpose consolidated financial statements do not include all the notes of the type normally included in annual consolidated financial statements. Accordingly, these consolidated financial statements are to be read in conjunction with the annual report for the year ended 31 December 2021 and any public announcements made by the company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 .

The principal accounting policies adopted are consistent with those of the previous financial year, except as stated below.

New, revised or amending Accounting Standards and Interpretations adopted

The accounting policies applied in these interim financial statements are the same as those applied in the Group’s consolidated financial statements as at and for the year ended 31 December 2021.

The Group adopted all relevant new and amended accounting standards and interpretations issued by the Australian Accounting Standards Board that are effective for annual reporting periods beginning on or after 1 January 2022. None of the new standards or amendments to standards that are mandatory for the first time materially affected any of the amounts recognised in the period.

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YPB Group Ltd Notes to the consolidated financial statements For the half-year ended 30 June 2022

Critical Accounting Judgments and Key Sources of Estimation and Uncertainty

The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the consolidated 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 following are the critical judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts recognised in the consolidated financial statements.

Impairment of Intangible Assets other than Goodwill

In the process of evaluating the potential impairment of intangible assets other than goodwill, the Consolidated Entity is required to make subjective judgments in determining the independent cash flows, useful lives, expected future revenue and expenses related to the specific asset groups with the consideration of the nature of the industry that is applicable to the underlying technology. Any changes in these estimates based on changed economic conditions or business strategies could result in significant impairment charges or reversal in future years. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows.

The underlying technology of MotifMicro is still under constant development and therefore management has considered the carrying value of the patent licence rights to be supported through expected future generation of cash flows from the first-time adoption program with the current partners and additional partners in the pipeline. In addition, the technological milestone achievements during the period has also enhanced the intrinsic value of MotifMicro. However, the ongoing negative effects of COVID-19 on the business and global economy is causing a delay in the commercialisation of MotifMicro. Furthermore, management is exploring other business strategies to accelerate the development of MotifMicro that would support the carrying amount of the patent license rights.

Going concern

The financial statements have been prepared on a going concern basis.

The Directors note that the Group has continued to incur operating losses as it establishes its business model throughout various markets, performs internal restructuring, and improves the conversion rate of its order pipeline.

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YPB Group Ltd Notes to the consolidated financial statements For the half-year ended 30 June 2022

The group incurred an operating loss after tax for the half-year of $2,631,589, had net cash outflows from operating activities of $1,420,814 and a deficiency of current assets over current liabilities of $2,158,644. As at 30 June 2022, the Group has cash and cash equivalents of $665,996.

Notwithstanding this, the Group believes there are reasonable grounds that it will be able to pay its debts as and when they fall due, and on that basis the preparation of the consolidated financial statements on a going concern basis is dependent on the following points:

• The Directors have completed a reforecast of the cash flow for the remainder of the financial year, and for a period being not less than 12 months from the date of signing this report. This includes reliance on further capital raising activities via new equity placements by the end of 2022, showing positive cash balances which is supported by both the existing sales contracts as well as reflecting revenue growth expected from the sales pipeline.

• Reliance on further capital raising activities which have been undertaken subsequent to balance date, of which $326,000 has been received in July 2022. A further placement is expected to be undertaken in the coming months.

• The Group is continuing to explore alternative funding mechanisms including securing strategic partnerships.

Based on the above, the directors consider the going concern basis of the Group is appropriate.

Note 3. Operating segments

The Consolidated Entity is organised into operating segments as outlined below.

Management determines operating segments based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.

The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the consolidated financial statements.

Types of products and services

For the half year ended 30 June 2022, management considers the Group to offer its client base a complete end-to-end service and product offering, hence considering its main operations to be represented by one business

The bundled “complete solution offering” encompasses a range of products and services which are available to customers, including:

• Digital engagement platform that provides brand engagement with end consumers to promote product authenticity;

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YPB Group Ltd Notes to the consolidated financial statements For the half-year ended 30 June 2022

• Covert forensic products which are invisible particles (‘tracers’) fused into a product or packaging during or after the manufacturing process and are detectable using YPB’s proprietary scanner;

• Forensic laboratory services for the examination of counterfeit products;

• Security consulting services provided to governments, corporations and intellectual property owners for the deterrence of counterfeiting, grey markets, product diversions and fraud; and

• Brand protection labelling solutions effective for sellers, brands and product owners.

(a) Geographical information

In $ Half-year to June 2022 External revenue Interest income Other income Total revenue Half-year to June 2021 External revenue Interest income Other income Total revenue	Reportable segments Australia People’s Republic of China Thailand United States of America Total 191,063 169,123 - - 360,186 281 - 5 - 286 - 2,233 - - 2,233
	191,344 171,356 5 - 362,705
	105,726 166,952 - - 272,678 954 - 7 - 961 - 6,008 12,931 - 18,939
	106,680 172,960 12,938 - 292,578

(b) Assets

In $ As at 30 June 2022 Current assets Non-current assets Total assets As at 31 December 2021 Current assets Non-current assets Total assets	Reportable segments Australia People’s Republic of China Thailand United States of America Total 896,910 267,700 411,915 439 1,576,964 - 11,260 24,260 5,714,889 5,750,409
	896,910 278,960 436,175 5,715,328 7,327,373 755,426 307,210 328,800 416 1,391,852 - 11,920 29,585 5,428,530 5,470,035
	755,426 319,130 358,385 5,428,946 6,861,887

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YPB Group Ltd Notes to the consolidated financial statements For the half-year ended 30 June 2022

Note 4. Revenue

Revenue Sale of goods and services Other revenue Interest Other income ote 5. Intangibles Goodwill – at cost Less: Accumulated impairment losses Intellectual property – at cost Less: Accumulated amortisation Less: Accumulated impairment losses Customer relationship – at cost Less: Accumulated amortisation Less: Accumulated impairment losses Patent licence rights – at cost Less: Accumulated impairment losses	Half year to Half year to 30 June 2022 30 June 2021 $ $ 360,186 272,678 286 961 2,233 18,939 362,705 292,578 30 June 2022 31 December 2021 $ $ 3,089,466 3,089,466 (3,089,466) (3,089,466)	Half year to Half year to 30 June 2022 30 June 2021 $ $ 360,186 272,678 286 961 2,233 18,939
		362,705 292,578
	- -
	16,250,550 16,250,550 (4,942,153) (4,942,153) (11,308,397) (11,308,397)
	- -
	206,000 206,000 (28,000) (28,000) (178,000) (178,000)
	- -
	8,651,473 8,213,892 (2,942,732) (2,793,892)
	5,708,741 5,420,000

Note 5. Intangibles

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YPB Group Ltd Notes to the consolidated financial statements For the half-year ended 30 June 2022

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial years are set out below:

Consolidated Balance at 31 December 2021 Balance at 1 January 2022 Effect of movement in exchange rates Balance at 30 June 2022	Patent licence rights Total $ $ 5,420,000 5,420,000
	5,420,000 5,420,000 288,741 288,741
	5,708,741 5,708,741

Intellectual Property

In 2018, in reviewing the recoverable amount of the intellectual property, the carrying value was written to nil due to overhauls on the Group’s core products and upgrades to the underlying technologies.

Patent Licence Rights

Effective in December 2017, the Group acquired MotifMicro’s patented licence rights to develop and commercialise its secure smartphone readable authentication technology. The non-replicable invisible micro-barcode technology works whereby the smartphone becomes the authentication device for uncopiable, invisible and indestructible physical marking technology.

In February 2018, a specific milestone under the agreement was successfully achieved with MotifMicro under which an additional $851,000 was payable to the vendors. The corresponding payable was settled via the issue of ordinary shares in October 2018.

As the technology was still in the development phase and under commercial trials during the period ended 30 June 2022, the patent licence rights have not been amortised. The progress of the MotifMicro development in 2022 was advanced through a number of technological achievements together with two customers that signed first-adopter agreements in 2019 to expedite its commercialisation in the market. The company is pursuing further opportunities to commercially release MotifMicro in the near future.

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YPB Group Ltd Notes to the consolidated financial statements For the half-year ended 30 June 2022

An independent valuation was conducted by Nexia Brisbane Forensics Pty Ltd (‘Nexia’) to perform a Value in Use (‘VIU’) valuation of the patent licence rights of MotifMicro for the year ended 31 December 2021. The independent valuation provided a valuation of $5,420,000. As a result, an impairment loss expense of $503,000 was recognised to write-down the patent licence rights to $5,420,000 during that year.

The directors have applied the ‘value in use’ methodology to assess the carrying value of the patent licence rights at 30 June 2022. The half-year impairment assessment was based on a reforecast of the approved annual operating plan (‘AOP’) and the accompanying five-year outlook.

The key assumptions and results arising from the ‘value in use’ methodology, based on approved AOP, relating to the commercialisation of the technology include:

• Revenue growth from conversion of sales pipeline revised for FY2022 with an annual long-term growth of 12% until 2026 that follows the industry growth rate with a long-term annual growth rate of 2% (life of the patent licence rights) thereafter;

• Discounted cash flow modelling to 2035 (life of the patent licence rights) with no terminal value;

• A WACC of 25.77% (post-tax) and

• The group securing sufficient funding to continue as a going concern.

The valuation methodology has been updated as at 30 June 2022 to reflect updated forecasts and progress made on the MotifMicro technology.

The impairment testing indicated that the recoverable amount of the patent licence rights exceeds the carrying amount and therefore no impairment is considered necessary as at 30 June 2022.

The total impairment loss recorded as at 30 June 2022 is $2,942,732 (30 June 2021: $2,211,072), and this loss can be reversed in future accounting periods to the extent that future recoverable amounts support a higher carrying value.

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YPB Group Ltd Notes to the consolidated financial statements For the half-year ended 30 June 2022

Note 6. Trade and other payables

ote 6. Trade and other payables
Trade payables Other payables and accruals	As at As at 30 June 2022 31 December 2021 $ $ 752,439 658,490 1,275,079 817,543
	2,027,518 1,476,033

Note 7. Financial liabilities

Convertible notes (Sophisticated investors)	As at As at 30 June 2022 31 December 2021 $ $ 1,708,082 -

These convertible notes will accrue interest on their face value daily at an interest rate of 10% per annum.

As at 30 June 2022, $34,082 (31 December 2021: nil) of convertible loan notes interest was accrued. The convertible notes will mature on the date that is six months from the date of issue.

Note 8. Equity – Issued Capital

Ordinary shares – fully paid	30 June 2022 31 December 2021 30 June 2022 31 December 2021 Shares Shares $ $ 246,168,270 6,117,833,701 81,846,527 81,773,800

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YPB Group Ltd Notes to the consolidated financial statements For the half-year ended 30 June 2022

Movements in ordinary share capital

Movements in ordinary share capital
Details Date Balance 1 January 2022 Consolidation 25:1 30 May 2022 Conversion of options 30 May 2022 Balance 30 June 2022	Shares $ 6,117,833,701 81,773,800 244,713,348 81,773,800 1,454,922 72,727
	246,168,270 81,846,527

Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital.

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Note 9. Equity – Reserves

Note Issued options reserve (a) Share-based payment (b) Foreign currency translation reserve (c)	30 June 2022 31 December 2021 $ $ - 767,344 469,534 80,805 2,568,754 2,192,710
	3,038,288 3,040,859

(a) Issued options reserve

The option reserve records items recognised as expenses on valuation of share options issued.

sued.
Details Date Balance 1 January 2022 Options expired 23 February 2022 Balance 23 February 2022 Options consolidated 25:1 30 May 2022 Balance 30 June 2022	Options $ 3,464,336,576 767,344 (3,400,336,576) (767,344)
	64,000,000 - 2,560,000 -
	2,560,000 -

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YPB Group Ltd Notes to the consolidated financial statements For the half-year ended 30 June 2022

• (b) Share-based payment reserve

The share-based payment reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties as part of their compensation for services rendered.

Details Date Balance 1 January 2022 Performance Rights reversed 29 April 2022 Performance Rights issued under share-based payments 29 April 2022 Performance Rights converted to shares 30 May 2022 Performance Rights issued under share-based payments 30 May 2022 Balance 30 June 2022	$ 80,805 (8,078) 389,534 (72,727) 80,000
	469,534

• (c) Foreign currency translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations. Monetary items receivable from or payable to foreign operations whereby settlements to these receivables and payables are not planned nor likely to occur in the foreseeable future are classified as net investment in foreign operations. Exchange differences arising from monetary items that forms part of the Group’s net investment in foreign operations are recognised as foreign currency translation reserve in equity.

Note 10. Dividends

There were no dividends paid, recommended or declared during the current or previous financial half-year.

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YPB Group Ltd Notes to the consolidated financial statements For the half-year ended 30 June 2022

Note 11. Events after the reporting period

On 5 July 2022, the Company converted 2,000,000 convertible notes into shares. Together with the share issuing of 2,400,000 to Everblu, a total of 160,377,883 ordinary fully paid shares were issued.

On 6 July 2022, the remaining proceed $326,000 was settled from the convertible notes raise in June 2022.

On 7 July 2022, 140,000,000 of quoted options with an exercise price of $0.0236 each were issued to the investors who participated in the March 2022 and June 2022 convertible note raises. The total value of these options, should they be fully exercised before the expiry date of 5 July 2024 is $3,304,000.

Other than the above, no matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the Consolidated Entity's operations, the results of those operations, or the Consolidated Entity's state of affairs in future financial years.

Note 12. Earnings per share

ote 12. Earnings per share
Loss after income tax attributable to the owners of YPB Group Limited Weighted average number of ordinary shares used in calculating basic earnings per share Weighted average number of ordinary shares used in calculating diluted earnings per share Basic/Diluted earnings per share (*)	30 June 2022 30 June 2021 $ $ (2,631,589) (1,794,066)
	Number Number 244,837,262 4,804,835,818 244,837,262 4,804,835,818 Cents Cents (1.07) (0.04)

(*) The current year EPS calculation was undertaken post completion of a share consolidation (refer Note 8).

There are no quoted options as at 30 June 2022. On 23 February 2022, 3,400,336,576 quoted options with an exercise price of $0.005 expired with none being exercised.

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YPB Group Ltd Notes to the consolidated financial statements For the half-year ended 30 June 2022

Note 13. Related party transactions

ote 13. Related party transactions
	Transaction	Transaction
	values for the	values for the
	period ended	year 31
	30 June 2022	December 2021
	$	$
Manifest Capital Management Pty Ltd
(related entity of Gerard Eakin)
Investor Relations	19,996	60,000

Terms and conditions

All transactions were made on normal commercial terms and conditions and at market rates.

Other transactions with related parties

There were no other transactions with related parties for the half year ended 30 June 2022.

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YPB Group Ltd Directors’ declaration For the half-year ended 30 June 2022

In the directors’ opinion:

• the attached consolidated financial statements and notes comply with the Corporations Act 2001 , Australian Accounting Standard AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other mandatory professional reporting requirements;

• the attached consolidated financial statements and notes give a true and fair view of the Consolidated Entity’s consolidated financial position as at 30 June 2022 and of its performance for the financial half-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.

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

For and on behalf of the directors

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John Houston Executive Chairman

Date: 31 August 2022

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U ’ V W

TO THE MEMBERS OF YPB GROUP LTD

Conclusion

We have reviewed the accompanying half-year financial report of YPB Group Ltd (“ ”) comprises the consolidated statement of financial position as at 30 June 2022, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, a statement of accounting policies, other selected e ’ comprising the company and the entities it controlled at the half- ’ the financial half-year.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of YPB Group Ltd is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of ’ financial position as at 30 June 2022, and of its financial performance for the half-year ended on that date; and

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

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 ’ Responsibilities for the Review of the Financial Report section of our report. We are independent of the consolidated entity in accordance with the auditor independence requirements of the Corporations Act 2001 q ’ 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.

Independence

In conducting our review, we have complied with the auditor independence requirements of the Corporations Act 2001 . In accordance with the Corporations Act 2001 , we have given the directors of the ’ .

Material Uncertainty Related to Going Concern

We draw attention to Note 2 of the financial statements which describes the events and/or conditions which give rise to the existence of a material uncertainty that may cast significant doubt about the ’ ility to realise its assets and discharge its liabilities in the normal course of business. Our conclusion is not modified in respect of this matter.

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Responsibility of the Directors for the Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with the Australian Accounting Standards and the Corporations Regulations 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibilities for the Review of the Financial Report

Our responsibility is to express a conclusion on the half year 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 half year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the financial position as at 30 June 2022 and its performance for the half year ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

A review of a half-year 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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PKF BRISBANE AUDIT

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SHAUN LINDEMANN PARTNER

31 AUGUST 2022 BRISBANE

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