Beam International Limited Annual General Meeting
Tuesday 1 December 1998 Address by the Chairman

"The published results for the 1997/98 period show sales revenue of $6.6 million and an operating loss of $2.3 million. Your Directors consider these financial results ... together with the growing level of debt expressed as a percentage of shareholders' equity ... as unacceptable. The results do reflect however, the short-term financial impact of a rapid transition from contract games developer to direct publisher, together with the effects of a delay in completing international distribution agreements for the Company's games. I believe it is necessary to consider the two essential characteristics required for an Australian Company to be successful in the entertainment or Information Technology areas. The first is the ability to produce product equal to the world's best. But it is not sufficient to have great products - it is also essential to have distribution capabilities to reach consumers on an international level. I believe that in the last year, Beam has demonstrated that it now has both of those characteristics. The core activity for the company remains publishing computer games … under the Melbourne House imprint. This is an exciting US$14 billion world-wide market in which our 18 years' experience has provided an enviable reputation for creativity, solid project management skills, and superior quality and assurance systems. Together with our lower cost structure we have, I believe, a real competitive advantage. During the last financial year the company worked on the development of four major new games titles - KKND PC, Dethkarz PC , KKND PSX, and Biotech. These titles however, contributed only modestly to reported 1997/98 sales revenue and earnings. This is because their release to market has been, or will be, reported in a subsequent financial period. My comments on the quality of the products developed here at Beam are supported by the extraordinarily positive and glowing reviews we have received for Dethkarz. DethKarz has just been released in the US and German markets in the past two weeks, and will be released in all major territories by the end of January 1999. I mentioned earlier the need for international distribution capabilities, and in this respect the Company has achieved significant success. We have signed distribution agreements not only with companies that are leaders in their field, but also obtained guarantees of future sales from those companies. The Directors believe any assessment of the company therefore needs to take into consideration the significant sales guarantees obtained from our European and North American distributors. Sales from these territories dominate our inflows. We have already procured guaranteed publishing revenues in excess of $13 million, covering development, manufacturing, marketing and distribution costs over the range of Melbourne House titles previously mentioned. I believe these distribution agreements are a major coup for the company. We are presently on target for a substantial lift in computer game revenues and Earnings Before Interest and Tax in the current 1998/99 financial year. In addition to the move to direct games publishing, the company's other divisions have also been in development or establishment phases over the last eighteen months. This comment relates to Splash Web Authoring, Famous Faces 3-D animation, Smarty Pants educational products, and the Hotgames.com web site. These new developments are expected to make a contribution to the financial results in the current and future years. The Government's support for our 3-D animation project is especially exciting. We believe exploitation of our proprietary technology in Famous Faces and "the Complete Virtual Studio" will create significant new opportunities for the Group with the growing popularity and compelling cost efficiency of 3-D animation in feature films such as Toy Story and Antz. This creates opportunities for our technology in the fields of television commercials, television programming, movies, and animation for game products.

With the emergence of E-commerce as a serious trading mechanism for the future, Hotgames.com is another company initiative with tremendous upside. This web site is recognised as one of the leading websites for computer games reviews and selection. Hotgames.com currently experiences over 3 million page impressions per month - that is approximately 700,000 individual visits per month. Traffic has increased by a factor of 10 in the past year. The site has also recently entered into a strategic relationship with Microsoft, with hotgames.com being linked directly from Microsoft's portal msn.com. The processing and sorting engine behind this site has exciting applications for other consumer products marketed on the web. The Splash! Web Author product is another activity of the Company, with growth potential. We are working on extensions of this technology which should have significant appeal to consumers, as well as applications in the field of e-commerce. These extensions are still at an early stage of development, but indicate a lot of promise for the Company. The Directors are therefore confident that the company is well positioned for growth in its revenue and income stream. The growth aspirations have, and will over the next 12 months, continue to have, a negative impact on cashflow and the quality of the balance sheet. Recognising this, Directors had sought an equity injection. A $6 million Heads of Agreement was signed with Australian development and expansionary capital provider Australian Mezzanine Investments early September. As advised to the ASX last Tuesday, we are extremely disappointed that this funding will not proceed - and Directors are considering legal options. Our lawyers have however advised me not to go into the details - in the event that my comments prejudice the company's legal position. All that I am able to say at present is that any proposed action would be on the basis of Australian Mezzanine failing to proceed with the terms of the original Heads of Agreement with Beam. The company presently has access to sufficient funds for its current requirements but additional equity remains an important objective. Discussions are proceeding with other equity parties that could bring both financial and strategic benefits to the company. The company will keep the market informed through further announcements. The underlying objective of the Directors of the Company is to return appropriate value to the shareholders. This is the key principle underlying the Company's direction. As a result, a NASDAQ listing remains a medium term target in an attempt to unlock shareholder value. I believe the company's Australian share price - and therefore market determined enterprise value - is well below the international benchmark established by comparable organisations such as Acclaim Entertainment, Eidos Interactive, Activision, and so on. But before focussing on NASDAQ, Directors recognise that additional housekeeping and preparatory work is required. Our immediate objectives are: Re-capitalisation of the company Strengthening of the management team Improve critical mass by increasing the Company's game development capabilities. This would have the effect of increasing the number of titles to be released from the current 3 titles in 1998/99 to six in 1999/2000; and finally Seek economic returns from the Company's technologies, through commercial exploitation of our activities in 3-D animation, educational products, and the web. The company's business development strategy will bring opportunities for shareholders, employees, and strategic partners. The next six months in particular is likely to be a watershed period. I trust Directors have your support."

Beam International Limited is Australia's only multimedia development company listed on the Australian Stock Exchange (and trades under the symbol BEM). More information about Beam International Limited, Melbourne House and Beam Software can be found on the Web site at http://www.beam.com.au.
For further information concerning Beam International Limited, please contact Ms. Camille Wall
Beam International Limited
By tel.: +61 (0)3 9866.8300, ext, 207,
by fax on +61 (0)3 9866.8674
or by email at camillew@beam.com.au
Press release:- Tuesday December 1, 1998