COMMS GROUP LTD — Interim / Quarterly Report 2023

Feb 21, 2023

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APPENDIX 4D

Under ASX Listing Rule 4.2A

Current reporting period Prior corresponding period

1 July 2022 to 31 December 2022 1 July 2021 to 31 December 2021

1. RESULTS FOR ANNOUNCEMENT TO THE MARKET

	Increase/Decrease	Change %	To $'000
Revenuefromcontinuing operations	11,194	64.5%	28,557
Profitfromordinary activities aftertaxattributable tomembers	801	1,112%	729
NetProfitforthe period attributable tomembers	830	1,360%	768

Dividend

No dividend has been declared.

Operating and Financial Review

Operating revenues have increased significantly from the prior year largely due to the inclusion of revenues from business acquired since the prior year. Underlying EBITDA of $2.269m has been generated as follows.

	$’000
Statutory profit for theperiod before income tax	1,416
Add: Depreciation and amortisation	1,529
Add: Finance charges	564
EBITDA	3,509
Add:Share based payments	544
Add: Business acquisition,integration and restructuringcosts	329
Add: Establishment and otherone-offcosts	351
Less: Vendor loan write-back(Other Income)	(2,464)
UnderlyingEBITDA	2,269

In regards to the increase in Profit from ordinary activities after tax attributable to members, the increase in revenues and net profits from acquired businesses has been assisted by the gain from the reduction of earn out amounts previously recognised for acquired businesses of $2.464m, offset by a $0.179m increase in Share based payments and $0.613m increase in Depreciation and amortisation on acquired intangible assets.

2. NET TANGIBLE ASSET PER SECURITY

Net tangible assets per ordinary share: (3.4) cents per share (2021: (0.2)). The Group has positive tangible assets as at 31 December 2022.

3. ENTITIES OVER WHICH CONTROL HAS BEEN GAINED DURING THE PERIOD

None.

4. OTHER

Additional Appendix 4D disclosure requirements and further information including commentary on significant features of the operating performance, results of segments, trends in performance and other factors affecting the results for the current period are contained in the Half-Year Financial Report 2022.

The consolidated financial statements contained within the Half-Year Financial Report 2022, of which this report is based upon, have been reviewed by the company’s auditors, BDO.

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Comms Group Limited

Interim Financial Report For the half year ended 31 December 2022 ACN 619 196 539

Comms Group Limited Directors’ report for the half year ended 31 December 2022

Directors’ report

Your directors present their report on the consolidated entity consisting of Comms Group Limited (the “Company”) and the entities it controlled (collectively “Comms Group” or “Group”) at the end of or during the financial half year ended 31 December 2022.

Directors

The following persons were directors of the Company during the whole of the financial half year up to the date of this report, unless otherwise stated:

J A Mackay - Independent Non-Executive Chairman

P J McGrath - Executive Director, Chief Executive Officer

B J Jennings – Non-Executive Director

C E Bibby – Independent Non-Executive Director

Ryan O’Hare – Non-Executive Director

Principal activities

Comms Group is a telecommunications and IT services business, providing a comprehensive range of telco and IT managed services. Comms Group services clients in Australia and internationally including New Zealand and Singapore.

The principal continuing activities of Comms Group are the provision of a full range of IT (Information Technology) and telecommunications services from the Cloud including IT managed services, cloud hosting, cloud communications and UCaaS (unified communications) services to business customers in Australia and internationally.

For the half year ended 31 December 2022 Comms Group derived revenue from the sale of the above-mentioned IT and telecommunications services. These revenues consist of recurring charges for access to facilities and capabilities as well as consumption charges for variable usage of those facilities. Revenue was also derived from the installation and sale of hardware, equipment and consulting services to support the primary products of the business.

There were no significant changes in the nature of the activities of Comms Group during the reporting period.

Dividends

The Directors have resolved not to pay an interim dividend for the period ended 31 December 2022.

Review of operations

The Group generated revenue of $26.00m during the period, an increase of $8.70m from the prior year. This includes revenues for the full period from the acquisitions of SwitchedOn and On Group Holdings Pty Ltd (onPlatinum) completed in the year ended 30 June 2022.

The Group generated an Underlying EBITDA of $2.27m, an increase of $0.32m from the prior corresponding period. In addition to the contributions from acquired businesses, this increase has also come from realising a number of synergies identified pre-acquisition and from a continued emphasis on cost control.

The Group’s cash position at 31 December 2022 was $1.76m cash on hand. Whilst reporting statutory net cash inflow from operations of $0.48m, excluding payments for acquisition, restructuring and integration expenses underlying cashflows from operations was $0.77m. Significant non-operating cash payments included a second payment of $1.00m for the acquisition of onPlatinum and final payment of $0.49m for the acquisition of Switched On.

1

Comms Group Limited Directors’ report for the half year ended 31 December 2022

A reconciliation of underlying EBITDA from continuing operations to the reported profit before tax from continuing operations in the consolidated statement of profit or loss and comprehensive income is tabled below:

	$000
Revenue	26,001
Reported profit before income tax	1,416
Add: Depreciation and amortisation(1)	1,529(1)
Add: Finance charges(1)	564
EBITDA	3,509
Add: Share based payments	544
Add: Business acquisition, integration and restructuring costs	329
Add: Establishment and other one-off costs	351
Less: Gain on write-back of contingent consideration	(2,464)
Underlying EBITDA	2,269

(1) Includes lease interest and depreciation as per AASB 16

The Underlying EBITDA from operations is a non-IFRS measure that is presented to provide an understanding of the underlying performance of the Group’s operations. In the opinion of the Directors, the Group’s underlying EBITDA reflects the results generated from ongoing operating activities which excludes non-operating adjustments that are considered to be non-cash or non-recurring in nature. These items are included in the Group’s consolidated statutory result but excluded from the underlying result. The non-IFRS financial information is unaudited. However, the numbers have been extracted from the financial statements which have been subject to review by the Company’s auditor.

Earnings per share

Earnings per share for the period is as follows:

	Cents per security
Earnings per share (cents)	0.21
Diluted earnings per share (cents)	0.20

Business integration and simplification

The Group has continued to refine and simplify its businesses as further acquisitions are made, rationalising and consolidating acquired management systems with those of the existing business.

Operating segment

The Group has three operating segments under AASB 8 Operating Segments including Global (International, Wholesale and Enterprise), SME telecommunications and ICT services. Customers with similar and primarily telecommunication needs are allocated to either Global or SME based on their size and customers with primarily IT managed service needs are allocated to ICT (including those customers acquired as part of the onPlatinum acquisition). These customer bases are then managed by dedicated resources and each division has its own CEO, responsible for the delivery of service to all customers categorised to that division and financial performance of the division.

For internal purposes, each division has its own monthly and annual budget, against which actual results are measured and reported through to the Board of Directors.

The Group's revenues from external customers are predominantly domiciled in Australia.

Significant changes in the state of affairs

No significant changes in the state of affairs occurred during the period.

2

Comms Group Limited Directors’ report for the half year ended 31 December 2022

Events since the end of the interim financial period

No matter or circumstance has arisen since 31 December 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.

Insurance of officers and indemnities

During the period, Comms Group incurred a premium of $150,937 to insure the directors, officers and secretary of the Group.

The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the Group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a willful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Group. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities.

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 page 4.

This report is made in accordance with a resolution of directors.

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John Mackay Non-Executive Chairman

Sydney 22 February 2023

3

Tel: +61 2 9251 4100 Level 11, 1 Margaret Street Fax: +61 2 9240 9821 Sydney NSW 2000 www.bdo.com.au Australia

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DECLARATION OF INDEPENDENCE BY GRANT SAXON TO THE DIRECTORS OF COMMS GROUP LIMITED

As lead auditor for the review of Comms Group Limited for the half-year ended 31 December 2022, I declare that, to the best of my knowledge and belief, there have been:

1. No contraventions of the auditor independence requirements of the Corporations Act 2001 relation to the review; and

2. No contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Comms Group Limited and the entities it controlled during the period.

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Grant Saxon Director

BDO Audit Pty Ltd

Sydney, 22 February 2023

BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.

Comms Group Limited ACN 619 196 539 Consolidated financial report – for the half year ended 31 December 2022

Contents	Page
Consolidated statement of profit or loss and other comprehensive income	6
Consolidated statement of financial position	7
Consolidated statement of changes in equity	8
Consolidated statement of cash flows	9
Notes to the consolidated financial statements	10
Directors' declaration	22
Independent auditor's review report to the members	23

5

Comms Group Limited Consolidated statement of profit or loss and other comprehensive income For the half year ended 31 December 2022

	Notes	31 December 2022 $	31 December 2021 $
Revenue	4	26,001,092	17,302,959
Gain on write-back of contingent consideration	14	2,464,618	-
Other income		90,857	60,423
		28,556,567	17,363,382
Cost of sales		(13,796,441)	(9,396,295)
Employee benefits expense		(7,887,163)	(4,263,700)
Administration expenses		(816,350)	(421,151)
Sales & marketing expenses		(608,726)	(554,112)
Information technology expenses		(636,331)	(516,869)
Professional fees	5	(330,241)	(222,939)
Property expenses		(227,580)	(60,617)
Business acquisition and integration expenses		(177,148)	(568,324)
Share based payments		(544,284)	(364,584)
Other expenses		(20,996)	(15,305)
Finance expenses		(564,499)	(54,718)
Depreciation & amortisation	5	(1,529,894)	(916,921)
Profit before income tax		1,416,914	7,847
Income tax expense	6	(648,656)	(69,202)
Profit/(Loss) for the period		768,258	(61,355)
Other comprehensive income
Foreign currency translation		(39,192)	(10,879)
Total comprehensive income or loss attributable to shareholders		729,066	(72,234)
Earnings per share for profit from continuing operations attributable
to the ordinary equity holders of the company:
		Cents	Cents
Basic earnings per share	19	0.21	(0.02)
Diluted earnings per share	19	0.20	(0.02)

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

6

Comms Group Limited Consolidated statement of financial position As at 31 December 2022

		31 December 2022	30 June 2022
	Notes	$	$
Current assets
Cash and cash equivalents		1,763,268	2,938,051
Trade and other receivables	7	5,161,399	4,939,410
Other current assets	8	2,154,229	1,949,077
Total current assets		9,078,896	9,826,538
Non-current Assets
Property, plant & equipment		203,763	233,530
Right of use asset	9	2,697,284	3,194,120
Goodwill	10	21,723,405	20,622,808
Intangible assets	10	22,876,143	25,092,775
Deferred tax assets	11	1,931,071	2,478,455
Total non-current assets		49,431,666	51,621,688
Total assets		58,510,562	61,448,226
Current liabilities
Trade and other payables	12	5,238,543	5,189,265
Deferred revenue		598,023	774,719
Lease liabilities		866,421	927,886
Income tax payable		373,350	87,764
Borrowings	13	1,000,000	750,000
Deferred consideration	14	-	5,362,318
Provisions	15	1,231,784	1,135,038
Total current liabilities		9,308,121	14,226,990
Non-current liabilities
Provisions	15	208,158	308,445
Deferred tax liability	16	6,470,990	7,015,468
Borrowings		8,127,911	7,368,802
Lease liabilities		2,118,575	2,525,064
Total non-current liabilities		16,925,634	17,217,779
Total liabilities		26,233,755	31,444,769
Net assets		32,276,807	30,003,457
Equity
Share capital	17	48,778,371	47,778,371
Share based payment reserves		1,333,380	981,088
Foreign currency translation reserve		(62,698)	(23,506)
Accumulated losses		(17,772,246)	(18,732,496)
Total Equity		32,276,807	30,003,457

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

7

Comms Group Limited Consolidated statement of changes in equity For the half year ended 31 December 2022

Balance as at 1 July 2021 Loss for the period to 31 December 2021 Foreign currency translation Total comprehensive loss for the period Transactions with owners in their capacity as owners: Share based payments Balance as at 31 December 2021 Balance as at 1 July 2022 Profit for the period to 31 December 2022 Foreign currency translation Total comprehensive loss for the period Transactions with owners in their capacity as owners: Shares issued as deferred consideration Share based payments Cancellation of share options Balance as at 31 December 2022	Share capital Share- based payments reserves Foreign currency translation reserve Accumulated losses Total $ $ $ $ $ 45,626,371 409,253 3,558 (18,057,406) 27,981,776 - - - (61,355) (61,355) - - (10,879) - (10,879)
	(10,879) (61,355) (72,234) 364,584 - - -
	45,626,371 773,837 (7,321) (18,118,761) 28,274,126
	47,778,371 981,088 (23,506) (18,732,496) 30,003,457 - - - 768,258 768,258 - - (39,192) - (39,192)
	- - (39,192) 768,258 729,066 1,000,000 1,000,000 - 544,284 - - 544,284 - (191,992) - 191,992 -
	48,778,371 1,333,380 (62,698) (17,772,246) 32,276,807

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

8

Comms Group Limited Consolidated statement of cash flows For the half year ended 31 December 2022

Notes Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received Interest paid Income tax refund Net cash inflows from operating activities 18 Cash flows from investing activities Software purchase and IT systems Payments for property, plant & equipment Payments for purchase of businesses, net of cash acquired Net cash outflows from investing activities Cash flows from financing activities Lease payments Net proceeds from borrowings Net cash inflows / (outflows) from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at end of period	31 December 2022 31 December 2021 $ $ 27,960,813 18,481,457 (27,102,998) (17,644,362) 327 28,281 (379,764) (40,520) - 26,251
	478,378 851,107
	(131,673) (282,056) (20,041) (26,300) (1,908,882) (3,582,092)
	(2,060,596) (3,890,448)
	(601,674) (233,220) 1,009,109 -
	407,435 (233,220)
	(1,174,783) (3,272,561) 2,938,051 5,497,266
	1,763,268 2,224,705

9

Comms Group Limited Notes to the Consolidated Financial Statements 31 December 2022

1 General information

The financial statements cover Comms Group Limited as a consolidated entity consisting of Comms Group Limited and the entities it controlled at the end of, or during, the half year. The financial statements are presented in Australian dollars, which is Comms Group Limited’s functional and presentation currency.

Comms Group Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Level 3, 45 Clarence Street Sydney NSW 2000 Australia

A description of the nature of the entity's operations and its principal activities is included in the directors' report on page 1, which is not part of these financial statements.

These condensed interim financial statements were approved for issue on 22 February 2023. The directors have the power to amend and reissue the financial statements.

2 Significant accounting policies

This consolidated interim financial report for the half year ended 31 December 2022 has been prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.

This consolidated interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2022 and any public announcements made by the Comms Group 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 and corresponding interim reporting period, unless otherwise stated.

New or amended Accounting Standards and Interpretations adopted

Comms Group has adopted all the new or amended Accounting Standards and Interpretations issued by the Australian Standards Board (AASB) that are mandatory for the current reporting period.

Any new or amended Accounting Standards and Interpretations that are not yet mandatory have not been early adopted.

3 Segment reporting

Identification of reportable operating segments

The Group has three operating segments under AASB 8 Operating Segments including Global (International, Wholesale and Enterprise), SME telecommunications and ICT services. These operating segments are based on the internal reports that are reviewed and used by the CEO and Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.

Other (non-operating) segments include the Head Office that accounts for the activities of the Board and other Group employees who provide services across the Group and other costs of being an ASX listed business.

On a monthly basis the CODM reviews each segments EBITDA that is prepared using the same accounting policies as those adopted in the financial statements.

10

Comms Group Limited Notes to the Consolidated Financial Statements 31 December 2022

3 Segment reporting (continued)

For the half year ended 31 December 2022 Revenue Sales to external customers Intersegment sales Total segment sales revenue Less: Intersegment eliminations Total revenue For the half year ended 31 December 2021 Revenue Sales to external customers Intersegment sales Total segment sales revenue Less: Intersegment eliminations Total revenue	Global SME ICT 5,568,004 12,175,504 8,257,584 643,584 2,072 -	Total 26,001,092 645,656
	6,211,588 12,177,576 8,257,584 Global SME ICT 5,160,550 12,142,409 - 22,254 - -	26,646,748 (645,656)
		26,001,092 Total 17,302,959 22.254
	5,182,804 12,142,409 -	17,325,213 (22,254)
		17,302,959

Intersegment transactions

Intersegment transactions were made at market rates. Taking advantage of existing accounts and economies of scale, Global and SME telecommunications purchase telecommunication services on behalf of each other. Intersegment transactions are eliminated on consolidation.

Intersegment receivables and payables

Intersegment receivables and payables are eliminated on consolidation.

Major customers

During the six months ended 31 December 2022 no individual customer accounted for more than 10% of Group revenues.

The Group's revenues from external customers and non-current assets are predominantly domiciled in Australia.

4 Revenue

Sales revenue Voice revenue Data revenue Managed service revenue	Consolidated Consolidated 31 December 2022 31 December 2021 $ $ 10,141,534 9,909,155 6,658,311 6,034,008 9,201,247 1,359,796
	26,001,092 17,302,959

11

Comms Group Limited Notes to the Consolidated Financial Statements 31 December 2022

4 Revenue (continued)

Sales revenue Global division SME telecommunications division ICT services division	Consolidated Consolidated 31 December 2022 31 December 2021 $ $ 5,568,004 5,160,550 12,175,504 12,142,409 8,257,584 -
	26,001,092 17,302,959

Disaggregation of revenue

The Group derives its revenue from the delivery of hosted voice, data and enterprise networks and cloud based communication enablement services that are recognised over the term of the contract. The table above provides a breakdown of revenue by major business line. As disclosed in note 3 the Group has three operating segments.

The disaggregation of revenue from contracts with customers is as follows:

Timing of revenue recognition Revenue recognised over time Revenue recognised at a point in time Revenue from direct customers Revenue from wholesale customers	Consolidated Consolidated 31 December 2022 31 December 2021 $ $ 25,120,295 16,998,161 880,797 304,798
	26,001,092 17,302,959
	22,242,723 14,195,276 3,758,369 3,107,683
	26,001,092 17,302,959

5 Individually significant profit or loss items

Depreciation and amortisation Depreciation expense Depreciation – right of use assets Amortisation of intangibles Total depreciation and amortisation Professional fees Legal fees Other professional fees Total professional fees	Consolidated Consolidated 31 December 2022 31 December 2021 $ $ 102,081 28,396 496,837 300,165 930,976 588,360
	1,529,894 916,921
	175,028 91,645 155,213 131,294
	330,241 222,939

12

Comms Group Limited Notes to the Consolidated Financial Statements 31 December 2022

6 Income tax expense

	Consolidated	Consolidated
	31 December 2022	31 December 2021
	$	$
Income tax expense
Deferred tax - origination and reversal of temporary differences	761,348	96,778
Current tax expense	(112,692)	-
Write down deferred tax assets and liabilities from corporate tax rate reduction	-	(27,576)
Total income tax expense	648,656	69,202
he Group has tax losses available for use of $1,413,689 which have been brought to account on the Statement
f Financial Position.
	Consolidated	Consolidated
	31 December 2022	31 December 2021
	$	$
Reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense	1,416,914	7,847
At the Group's statutory income tax rate of 25.0%	354,229	1,962
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non-assessable income	(616,154)	-
Non-deductible expenses	148,089	97,286
Write down deferred tax assets and liabilities from corporate tax rate reduction	-	(27,576)
Deferred tax - origination and reversal of temporary differences	762,492	(2,470)
Income tax expense	648,656	69,202

The Group has tax losses available for use of $1,413,689 which have been brought to account on the Statement of Financial Position.

7 Trade and other receivables

Trade receivables Less: provision for expected credit loss Total trade receivables Other receivables Total trade and other receivables	Consolidated Consolidated 31 December 2022 30 June 2022 $ $ 5,145,138 4,952,929 (95,965) (156,675)
	5,049,172 4,796,254
	112,227 143,156
	5,161,399 4,939,410

13

Comms Group Limited Notes to the Consolidated Financial Statements 31 December 2022

8 Other current assets

Prepayments Accrued revenue Security Deposits Inventory Bundled equipment	Consolidated Consolidated 31 December 2022 30 June 2022 $ $ 970,110 956,323 97,927 95,192 666,422 550,947 164,965 127,907 254,805 218,708
	2,154,229 1,949,077

9 Right of use assets

Land and buildings - right of use Less: Accumulated depreciation Plant and equipment - right of use Less: Accumulated depreciation	Consolidated Consolidated 31 December 2022 30 June 2022 $ $ 4,319,612 4,319,612 (1,657,604) (1,206,088)
	2,662,008 3,113,524
	188,294 188,294 (153,018) (107,698)
	35,276 80,596
	2,697,284 3,194,120

The consolidated entity leases buildings for its offices under agreements from 1 to 5 years. The leases have various escalation clauses. If renewed, the terms of the leases are renegotiated. The consolidated entity also leases equipment under agreements of between three to five years.

14

Comms Group Limited Notes to the Consolidated Financial Statements 31 December 2022

10 Intangibles

10 Intangibles	tangibles
Customer contract Brand Goodwill Consolidated $ $ $ Cost Balance at 1 July 2022 26,255,970 6,987,218 29,454,252 Provisional value Adjustment - Business Combination (619,677) (797,652) 1,100,597 Additions during the period Balance at 31 December 2022 25,636,293 6,189,566 30,554,849 Accumulated amortisation and impairment Balance at 1 July 2022 (6,763,803) (2,925,418) (8,831,444) Amortisation expense (683,015) (77,569) - Balance at 31 December 2022 18,189,475 3,186,579 21,723,405 11 Deferred tax assets Deferred tax asset comprises temporary differences attributable to: Temporary differences Carried forward losses Acquisitions during the prior year Amounts recognised in equity for capital raising Deferred tax asset Movements in deferred assets: Opening balance Debited/(credited) to: - Prior year losses utilised - Relating to temporary differences - Amounts recognised in equity for capital raising - Finalisation of acquisition accounting Closing balance	Customer contract Brand Goodwill $ $ $ 26,255,970 6,987,218 29,454,252 (619,677) (797,652) 1,100,597	Software Internally generated software Capital work in progress Other Total $ $ $ $ $ 3,401,472 1,125,059 323,123 21,045 67,568,139 - - - - (316,732) 131,673 131,673
	25,636,293 6,189,566 30,554,849	3,401,472 1,125,059 454,796 21,045 67,383,080
		(3,051,964) (266,773) - (13,154) (21,852,556) (57,886) (112,506) - - (930,976)
	18,189,475 3,186,579 21,723,405	291,622 745,780 454,796 7,891 44,599,548
		Consolidated Consolidated 31 December 2022 30 June 2022 $ $ 809,684 1,147,838 304,964 507,313 761,082 755,250 55,341 68,054 1,931,071 2,478,455 2,478,455 1,996,794 (202,349) (380,738) (338,154) 755,250 (12,713) 107,149 5,832 - 1,931,071 2,478,455

15

Comms Group Limited Notes to the Consolidated Financial Statements 31 December 2022

12 Trade and other payables

Trade payables Accrued expenses Payroll liabilities GST liabilities Other payables 3 Borrowings Current liabilities Term loan Non-current liabilities Term loan		Consolidated Consolidated 31 December 2022 30 June 2022 $ $ 3,347,165 3,089,159 1,113,737 1,182,968 374,746 623,848 229,530 232,359 173,365 60,931
		5,238,543 5,189,265
		Consolidated Consolidated 31 December 2022 30 June 2022 $ $ 1,000,000 750,000
		8,127,911 7,368,802

13 Borrowings

Financing arrangements Unrestricted access was available at the reporting date to the following lines of credit:

Total facilities Bank overdraft Bank term loans Used at the reporting date Bank overdraft Bank term loans Unused at the reporting date Bank overdraft Bank loans	Consolidated Consolidated 31 December 2022 30 June 2022 700,000 700,000 10,000,000 10,000,000
	10,700,000 10,700,000
	- - 9,127,911 8,118,802
	9,127,911 8,118,802
	700,000 700,000 872,089 1,881,198
	1,572,089 2,581,198

16

Comms Group Limited Notes to the Consolidated Financial Statements 31 December 2022

13 Borrowings (continued)

In February 2022 Comms Group Limited established a Term Loan facility of $10m with its existing bank CBA, along with an increase to existing working capital facilities ($0.7m overdraft & $0.3m credit and procurement card facilities). The Term Loan facility has been used to cover the cash consideration components related to the Upfront and Deferred payments of the onPlatinum acquisition as well as associated transaction costs.

The Term Loan has a term of 3 years and repayments of $0.125m for the September 2022 and December 2022 quarters and $0.25m per quarter thereafter.

Security includes fixed and floating charges from Comms Group Limited and all subsidiaries and Guarantees from all Australian registered lending and non-lending Group entities.

Comms Group believes that all other negotiated terms and conditions are favourable and typical for facilities of this nature, including for pricing, covenants and conditions precedent and subsequent.

14 Deferred Consideration

Deferred consideration*	Consolidated Consolidated 31 December 2022 30 June 2022 $ $
	- 5,362,318

• Deferred consideration as at 30 June 2022 represented further consideration estimated to be payable for Switched On (based on the business’ revenue of the first twelve months from completion) and for onPlatinum (Deferred payment to be paid on 1 July 2022 and additional consideration estimated to be payable based on the earnings of this business for the December 2022 quarter).

As at 31 December 2022, the full amounts have been paid to the vendor of Switched On in line with the terms of the agreement.

Earnings for OnPlatinum in the December quarter have been calculated and do not meet the earnings target stipulated in the share purchase agreement, and as such the fair value of the consideration payable to the vendors of OnPlatinum has been assessed as $nil at 31 December 2022. The gain of $2,464,618 on write back has been recognised in the statement of profit or loss and other comprehensive income.

This calculation is subject to finalisation under the terms and conditions of the share purchase agreement.

15 Provisions

Current liabilities Annual leave Long Service Leave Non-current liabilities Long service leave	Consolidated Consolidated 31 December 2022 30 June 2022 $ $ 799,069 866,731 432,715 268,307
	1,231,784 1,135,038
	208,158 308,445

17

Comms Group Limited Notes to the Consolidated Financial Statements 31 December 2022

16 Deferred tax liability

Movements in deferred liabilities: Opening balance Debited/(credited) to: - profit or loss - intangible assets acquired on acquisition	Consolidated Consolidated 31 December 2022 30 June 2022 $ $ 7,015,468 2,374,673 (190,146) (380,533) (354,332) 5,021,328
	6,470,990 7,015,468

17 Share capital

Ordinary Shares - fully paid Movements in ordinary share capital Opening balance Acquisition of subsidiary Issued to Vendor as deferred consideration Balance 30 June 2022 Opening balance Issued to Vendor as deferred consideration Balance 31 December 2022	Consolidated Consolidated Consolidated Consolidated 31 December 2022 30 June 2022 31 December 2022 30 June 2022 Shares Shares $ $ 374,653,877 361,320,543 48,778,371 47,778,371
	Date Shares $ 1 July 2021 340,329,715 45,626,371 10 February 2022 18,990,828 2,000,000 1 April 2022 2,000,000 152,000 361,320,543 47,778,371 1 July 2022 361,320,543 47,778,371 1 July 2022 13,333,334 1,000,000 374,653,877 48,778,371

18

Comms Group Limited Notes to the Consolidated Financial Statements 31 December 2022

18 Reconciliation of operating profit/(loss) after income tax to net cash from operating activities

Profit/(Loss) for the period Adjustments for: Share based payments Depreciation and amortisation Change in assets and liabilities: (Increase) / decrease in receivables (Increase) / decrease in current assets (Increase) / decrease in deferred tax Increase / (decrease) in payables Increase / (decrease) in provisions Increase / (decrease) in other working capital Net cash inflow from operating activities 9 Earnings per share Reconciliation of earnings used in calculating earnings per share Profit/(Loss) attributable to the ordinary equity holders of the company Weighted average number of ordinary shares used as the denominator in calculating earnings per share Adjustments for calculation of diluted earnings per share: Share performance rights on issue Share performance rights that are not dilutive Weighted average number of ordinary shares used as the denominator in calculating earnings per share Basic earnings per share Diluted earnings per share	31 December 2022 31 December2021 $ $ 768,259 (61,355) 544,284 364,584 1,529,894 916,921 2,842,437 1,220,150 (253,019) 501,815 (174,121) (755,824) (357,258) 486,062 (1,777,444) (315,393) (3,541) 22,740 201,325 (308,443) 478,378 851,107 Consolidated Consolidated 31 December 2022 31 December 2021 $ $ 768,258 (61,355)
	374,653,877 340,329,715 45,190,000 22,050,000 (44,171,995) (22,050,000)
	375,671,882 340,329,715
	Cents Cents 0.21 (0.02) 0.20 (0.02)

19 Earnings per share

19

Comms Group Limited Notes to the Consolidated Financial Statements 31 December 2022

20 Business combinations

Acquisition of onPlatinum

On 3 February 2022 Comms Group entered into a binding share purchase agreement to acquire 100% of the shares of on Group Holdings Pty Ltd (“onPlatinum”). The acquisition was completed on 11 February 2022 at which time Comms Group took control of the acquired business per the terms of the share purchase agreement.

Total Purchase price was $14.26m and included an upfront cash payment of $8.0m and $2.0m of Comms Group scrip issued at $0.105 per share escrowed for 12 to 18 months from the date of completion, Deferred Consideration paid on 1 July of $1.0m in cash and $1.0m of Comms Group scrip issued at $0.105 per share and additional consideration by way of an earn out was to be paid, based on an annual EBITDA as measured by the audited EBIDTA of the December 2022 quarter in excess of annualised earnings of $2.0m. At the time of completion this deferred consideration was estimated at $2.28m, however EBITDA for the December 2022 quarter is estimated to not reach the required level for further consideration and as such, the fair value of the recognised contingent consideration has been assessed as $nil at 31 December 2022.

The Company has funded the upfront and deferred cash consideration from proceeds of the Borrowings made in February 2022 and July 2022.

onPlatinum contributed $8.26m to Group revenue and $0.36m to Group net profit before tax for the six months ended 31 December 2022.

Acquisition accounting for the consideration and the assets and liabilities acquired has been finalised at 31 December 2022, with the resulting changes in the value of the intangible assets acquired disclosed in Note 10.

These values are set out below.

Assets Cash and cash equivalents Trade receivables Other assets Intangible assets customer contracts and other Intangible assets brands Property, plant & equipment Right of use asset Deferred tax assets Other long-term assets Liabilities Trade and other payables Employee provisions Lease liabilities Other liabilities Income tax payable Deferred tax liability on customer contracts, brands and other Net asset acquired Goodwill Acquisition-date fair value of the total consideration	Total $ 432,776 1,498,868 285,944 9,749,548 1,397,173 49,670 2,271,209 758,943 273,810 (1,511,509) (730,881) (2,335,889) (33,750) (169,988) (3,331,987)
	8,603,937 5,653,607
	14,257,544

20

Comms Group Limited Notes to the Consolidated Financial Statements 31 December 2022

20 Business combinations (continued)

Cash used to acquire business; net of cash acquired: Acquisition-date fair value of the total consideration Less: shares issued as consideration Less: deferred consideration Less: cash and cash equivalents Net cash used	14,257,544 (2,000,000) (4,678,393) (432,776)
	7,146,375

21

Comms Group Limited Notes to the Consolidated Financial Statements 31 December 2022

Directors’ declaration

In the Directors' opinion:

• the attached 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 financial statements and notes give a true and fair view of the consolidated entity's financial position as at 31 December 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.

On behalf of the Directors

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John Mackay Non-Executive Chairman

Sydney 22 February 2023

22

Tel: +61 2 9251 4100 Level 11, 1 Margaret Street Fax: +61 2 9240 9821 Sydney NSW 2000 www.bdo.com.au Australia

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INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of Comms Group Limited

Report on the Half-Year Financial Report

Conclusion

We have reviewed the half-year financial report of Comms Group Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 December 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 halfyear ended on that date, a summary of significant accounting policies and other explanatory information, and the directors’ declaration.

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

• (i) Giving a true and fair view of the Group’s financial position as at 31 December 2022 and of its financial performance for the half-year ended on that date; and

• (ii) Complying with 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 . 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 Company 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 the audit of the annual 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 the same terms if given to the directors as at the time of this auditor’s review report.

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 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 half-year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.

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Auditor’s responsibility 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 Group’s financial position as at 31 December 2022 and its financial 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.

BDO Audit Pty Ltd

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Grant Saxon Director

Sydney, 22 February 2023