AMAERO LTD — Annual Report 2021

Aug 29, 2021

Amaero International Ltd Appendix 4E 30 June 2021

Amaero International Ltd Appendix 4E Year ended 30 June 2021

Amaero International Ltd Appendix 4E Year ended 30 June 2021
Name of entity:		Amaero International Ltd
ABN:		82 633 541 634
Year ended:		30 June 2021
Previous period:		30 June 2020
Results for announcement to the market
				$
Revenue from ordinary activities	Up	332.0%	to	504,141
Loss from ordinary activities after tax attributable to members	Up	21.0%	to	(6,990,084)
Net loss for the period attributable to members	Up	21.0%	to	(6,990,084)

Distributions

No dividends have been paid or declared by the company for the current financial year. No dividends were paid for the previous financial year.

Explanation of results

Please refer to the review of operations and activities for explanation of the results.

Additional information supporting the Appendix 4E disclosure requirements can be found in the review of operations and activities, directors' report and the financial statements for the year ended 30 June 2021.

Net tangible assets per security

Net tangible assets per security
	30 June	30 June
	2021	2020
	Cents	Cents
Net tangible asset backing (per security)	7.47	4.69

Changes in controlled entities

In November 2020, Amaero International Ltd formed a wholly owned subsidiary called Amaero Alloys Pty Ltd. For more information please refer to Note 12(a).

There have been no other changes in controlled entities during the year ended 30 June 2021.

Other information required by Listing Rule 4.3A

a. Details of individual and total dividends or distributions and dividend or distribution payments:	N/A
b. Details of any dividend or distribution reinvestment plans:	N/A
c. Details of associates and joint venture entities:	N/A
d. Other information	N/A

Amaero International Ltd Appendix 4E 30 June 2021 (continued)

Audit

The financial statements have been audited by the group's independent auditor without any modified opinion, disclaimer or emphasis of matter.

Annual General Meeting

Amaero International Ltd advises that its Annual General Meeting will be held on 26 November 2021. The time and other details relating to the meeting will be advised in the Notice of Meeting to be sent to all shareholders and released to ASX immediately after dispatch.

Amaero International Ltd ABN 82 633 541 634

Audited financial report for the year ended 30 June 2021

Amaero International Ltd ABN 82 633 541 634 Audited financial report - 30 June 2021

Corporate directory	1
Directors' report	2
Directors and company secretary	2
Principal activities	2
COVID-19	2
Dividends - Amaero International Ltd	2
Review of operations	2
Significant changes in the state of affairs	3
Events since the end of the financial period	3
Likely developments and expected results of operations	3
Environmental regulation	3
Information on directors	4
Company secretary	6
Meetings of directors	6
Remuneration report (audited)	7
Shares under option	14
Insurance of officers and indemnities	14
Proceedings on behalf of the company	14
Non-audit services	14
Auditor's independence declaration	15
Rounding of amounts	15
Financial statements	17
Independent auditor's report to the members	58

Amaero International Ltd Corporate directory

Directors

Secretary

Registered office

Principal registered office in Australia

Share register

Auditor

Solicitors

Website

Mr David Hanna Non-Executive Chairman Mr Stuart Douglas Executive Director Ms Kathryn Presser Non-Executive Director Mr Mark Licciardo Mr Richard Baker 13 Normanby Road Notting Hill VIC 3168 Australia Telephone: +61 (0)3 9905 9847 13 Normanby Road Notting Hill VIC 3168 Australia Telephone: +61 (0)3 9905 9847 Automic Pty Ltd Level 5, 126 Phillip Street Sydney NSW 2000 Australia Telephone: +61 (0)2 9698 5414 RSM Australia Partners Level 21, 55 Collins Street Melbourne VIC 3000 Australia Telephone: +61 (0)3 9286 8000 Elevate Legal Level 1 455 Bourke Street Melbourne VIC 3000 Australia Telephone: +61 1300 582 715 www.amaero.com.au

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Amaero International Ltd

Amaero International Ltd Directors' report 30 June 2021

Your directors present their report on the consolidated entity consisting of Amaero International Ltd and the entities it controlled at the end of, or during, the year ended 30 June 2021. Throughout the report, the consolidated entity is referred to as the group.

Directors and company secretary

The following persons held office as directors of Amaero International Ltd during the whole of the financial year and up to the date of this report, except where otherwise stated:

Mr David Hanna, Non-Executive Chairman Mr Stuart Douglas, Executive Director Ms Kathryn Presser, Non-Executive Director

The following persons held office as company secretary of Amaero International Ltd during the whole of the financial year and up to the date of this report, except where otherwise stated:

Mr Mark Licciardo (appointed 30 November 2020) Mr Richard Baker (appointed 30 November 2020) Ms Carolin Darmanin (resigned 30 November 2020)

Principal activities

During the year, the principal continuing activities of the group are the provision of end-to-end additive manufacturing solutions in terms of services, equipment and technology to its key clients in the Aviation, Defence and Space sectors and in the Tool and Die industry.

Amaero has worked with many of the world’s leading manufacturers of aerospace and defence products in both an R&D and manufacturing capability and has a demonstrated ability to deliver aviation and military specification 3D printed alloy critical operation components.

Amaero was established with the support of Monash University in 2013 to take advantage of commercial opportunities identified by the Monash Centre for Additive Manufacturing (MCAM). Amaero is co-located with MCAM in Melbourne Australia. It operates two additional facilities, in Adelaide, South Australia, and El Segundo, California, USA.

COVID-19

In response to the COVID-19 pandemic, both the Australian and United States governments implemented lockdowns. As a manufacturer servicing the defence sector, Amaero determined from public information obtained from Australian government websites that the company could continue operations during the lockdown period, albeit with a reduced on-site presence. In the United States, with respect to the statewide emergency shelter-in-place order (and related Los Angeles County rules), the activities at the El Segundo manufacturing facility met the definition of Critical Manufacturing sector under the Critical Infrastructure Sector, with operations also continuing.

Dividends - Amaero International Ltd

No dividends were declared or paid to members for the year ended 30 June 2021. The directors do not recommend that a dividend be paid in respect of the financial year.

Review of operations

The group has reported a loss for the year of $6,990,084 (2020: $5,777,946), with net assets amounting to $15,147,353 as at 30 June 2021 (2020: $8,193,728), including cash reserves of $11,466,845 (2020: $4,019,209).

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Amaero International Ltd

Amaero International Ltd Directors' report 30 June 2021

(continued)

Significant changes in the state of affairs

Other than the information disclosed in the review of operations above, there are no significant changes in the state of affairs that the group has not disclosed.

Events since the end of the financial period

Subsequent to the year end, Amaero has committed to build a world class customised and proprietary titanium alloy powder manufacturing plant in Victoria, Australia. The $8 million dollar facility is expected to be the most advanced titanium alloy powder plant in the world, and is planned to be constructed and commissioned over an 18- month period. It is expected that this project will take titanium alloy bar stock inputs and convert the material into powder for 3D printing at approximately half the cost of the current global benchmark.

Apart from the announcement of the commitment of Amaero to the build of the Titanium Plant, no other matter or circumstance has arisen since 30 June 2021 that has significantly affected the group's operations, results or state of affairs, or may do so in future years.

Likely developments and expected results of operations

Other than the information disclosed in the review of operations above, there are no likely developments or details on the expected results of operations that the group has not disclosed.

Environmental regulation

The group is not affected by any significant environmental regulation in respect of its operations.

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Amaero International Ltd

Amaero International Ltd Directors' report 30 June 2021

(continued)

Information on directors

The following information is current as at the date of this report.

The following information is current as at the date of this report.	The following information is current as at the date of this report.
Mr David Hanna -Non-Executive Chairman
Experience and expertise	David is an experienced Board member and senior bureaucrat. He was Director, Business Strategy for Monash University from 2012 until September 2020 where he led a small team providing strategic support and financial advice in relation to the University’s major investment decisions. In the 15 years prior to joining Monash University, David held a variety of senior management positions in the Victorian Government, these positions focused mainly around economic development policy, international policy and operations and innovation policy. Earlier, David spent 15 years in the Commonwealth Government, including three years on the personal staff of then Prime Minister, Bob Hawke. He has substantial experience in strategy development and delivery, innovation, governance and stakeholder engagement and management. He sits or has sat on the finance and risk committees of Docklands Studios Melbourne, the Hudson Institute of medical Research and Unimutual Ltd giving him varied experience on both commercial and not for profit Board with particular focus on strategy, governance and financial accountability. David has a Bachelor of Economics and a Bachelor of Arts (Asian Studies) from The Australian National University. He is also a Graduate of the Australian Institute of Company Directors.
Date of appointment	13 June 2019
Other current directorships	David is also Chairman of Docklands Studios Melbourne Pty Ltd (DSM), and President of Film Victoria.
Former directorships in last 3 years	No listed directorships in the last 3 years but was a Director of Unimutual Ltd, a Director of the Hudson Institute of Medical Research Ltd, and a Director of Springvale Monash Legal Service Ltd until June/September 2020.
Special responsibilities	Member of the Audit and Risk Committee

Amaero International Ltd

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Amaero International Ltd Directors' report 30 June 2021

(continued)

Information on directors (continued)

Information on directors (continued)	Information on directors (continued)
Mr Stuart Douglas -Executive Director
Experience and expertise	Stuart joined the Board as an Executive Director in May 2019, providing strategic and operational advice to management and preparing the Company for capital raisings and scaling its operations in preparation for its anticipated IPO. Stuart successfully implemented a similar strategy for Titomic Limited (ASX: TTT). Stuart is the co-founder of Innovyz, one of Australia’s leading commercialisation firms which has assisted more than 70 early stage innovations to commercialise. Stuart is a member of the Australian Institute of Company Directors.
Date of appointment	17 May 2019
Other current directorships	Stuart is also a Director of Co-Hab Tonsley Limited, Innovyz Pty Ltd (who are Advisors to Amaero International Limited) as well as a number of small Proprietary companies.
Former directorships in last 3 years	No listed Directorships in the last 3 years
Special responsibilities	No additional responsibilities
Ms Kathryn Presser -Non-Executive Director
Experience and expertise	Kathryn Presser has previously served as CFO and Company Secretary for Beach Energy Limited (formerly Beach Petroleum Limited) (ASX: BPT), assisting the company from a junior explorer through numerous capital raisings as the CFO and then scaling for growth to become an ASX100 company. Kathryn has extensive experience in governance, risk and financial reporting and management. Kathryn serves as Chair of the Audit & Risk Committee to oversee the financial elements of the business as well as providing direction to the Company Secretary. Kathryn has a Bachelor of Arts and Accounting from the University of South Australia, a Master’s in Business Administration from the University of Adelaide and has completed a Women’s Advanced Leadership Course at Harvard University. She is a Certified Practising Accountant and is a Fellow of the Australian Society of CPAs, the Institute of Company Directors and the Governance Institute of Australia.
Date of appointment	1 September 2019
Other current directorships	Kathryn is also a Director of KP Advisory Pty Ltd, a Non-Executive Director of Funds SA and the Police Credit Union. She is also on the Council of the University of Adelaide and Walford Anglican School for girls.
Former directorships in last 3 years	No Listed Directorships in the past 3 years
Special responsibilities	Chair of the Audit and Risk Committee

Amaero International Ltd

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Amaero International Ltd Directors' report 30 June 2021 (continued)

Information on directors (continued)

Company secretary

Mr Mark Licciardo, appointed 30 November 2020

Mark Licciardo is Managing Director of Mertons Corporate Services Pty Ltd (Mertons) which provides company secretarial and corporate governance consulting services to ASX listed and unlisted public and private companies.

As a former Company Secretary of ASX 50 companies, Transurban Group and Australian Foundation Investment Company Limited, his expertise includes working with Boards of Directors in the areas of corporate governance, business management, administration, consulting and company secretarial matters. Mark is also an experienced Chairman and non-executive Director of a number of ASX listed public and private companies. Mark holds a Bachelor of Business Degree (Accounting) from Victoria University and a Graduate Diploma in Company Secretarial Practice, is a Fellow of the Australian Institute of Company Directors, the Governance Institute of Australia and the Institute of Company Secretaries and Administrators.

Mr Richard Baker, appointed 30 November 2020

Richard has extensive experience as a Company Secretary and CFO of listed and unlisted companies including emerging industries. Prior to his company secretarial roles he spent many years in client focused corporate consulting roles. His expertise obtained over a 30 year career is in establishing effective governance in both listed and unlisted companies, financial management and reporting, corporate compliance and the capital raising and ASX listing processes.

He is a Fellow of the Governance Institute of Australia and a Certified Practising Accountant with CPA Australia.

Meetings of directors

The numbers of meetings of the company's Board of directors and of each Board committee held during the year ended 30 June 2021, and the numbers of meetings attended by each director were:

	Full meetings of directors	Full meetings of directors	Meetings of committees	Meetings of committees
			Audit and Risk
	A	B	A	B
Mr David Hanna Mr Stuart Douglas Ms Kathryn Presser	12 12 12	12 12 12	4 - 4	4 - 4

A= Number of meetings attended.

B= Number of meetings held during the time the director held office or was a member of the Audit & Risk Committee during the year.

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Amaero International Ltd

Amaero International Ltd Directors' report 30 June 2021

(continued)

Remuneration report (audited)

The directors present the Amaero International Ltd 2021 remuneration report, outlining key aspects of our remuneration policy and framework, and remuneration awarded this year.

The report is structured as follows:

• (a) Key management personnel (KMP) covered in this report

• (b) Remuneration policy and link to performance

• (c) Elements of remuneration

• (d) Link between remuneration and performance

• (e) Remuneration expenses

• (f) Contractual arrangements with executive KMPs

• (g) Non-executive director arrangements

• (h) Additional statutory information

• (a) Key management personnel covered in this report

Non-executive and executive directors (see pages 4 to 5 for details about each director)

Mr David Hanna, Non-Executive Chairman Mr Stuart Douglas, Executive Director Ms Kathryn Presser, Non-Executive Director

Other key management personnel

Mr Barrie Finnin, Chief Executive Officer

(b) Remuneration policy and link to performance

Any review of remuneration is determined by the Board, as the company does not see a need for a separate Remuneration and Nomination Committee due to the size of the company. The Board reviews and determines our remuneration policy and structure annually to ensure it remains aligned to business needs, and meets our remuneration principles. In particular, the Board aims to ensure that remuneration practices are:

• competitive and reasonable, enabling the company to attract and retain key talent

• aligned to the company's strategic and business objectives and the creation of shareholder value

• transparent and easily understood, and

• acceptable to shareholders.

Element	Purpose	Performance metrics	Potential value
Fixed remuneration (FR)	Provide competitive market salary including superannuation and non-monetarybenefits	Nil	Positioned at the market rate
Annual Key Performance Incentives (KPI's)	Reward for in-year performance and retention	KPI achievement, determined by the Board	CEO: An amount of approximately 825,000 shares across three years upon the achievement of agreed key performance indicators (KPI's)

Amaero International Ltd

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Amaero International Ltd Directors' report 30 June 2021

(continued)

Remuneration report (audited) (continued)

(b) Remuneration policy and link to performance (continued)

Assessing performance

The Board is responsible for assessing performance against KPIs and determining the STI to be paid.

Performance is monitored on an informal basis throughout the year and a formal evaluation is performed annually.

(c) Elements of remuneration

(i) Fixed annual remuneration (FR)

Key management personnel may receive their fixed remuneration as cash, or cash with non-monetary benefits such as health insurance and car allowances. FR is reviewed annually, or on promotion. It is benchmarked against market data for comparable roles in companies in a similar industry and with similar market capitalisation. The Board aims to position executives at or near the median, with flexibility to take into account capability, experience, value to the organisation and performance of the individual.

(ii) Short-term incentives

All employees are entitled to participate in a short-term incentive scheme which provides for employees to receive short-term incentives (STI) as part of their total remuneration if they achieve certain performance indicators as set by the Board. The STI can be paid either by cash, or a combination of cash and the issue of equity in the company, at the determination of the Board.

The company's CEO is entitled to short-term incentives in the form of equity. To be entitled to receiving the equity, the CEO must complete agreed key performance indicators (KPIs). On an annual basis, KPIs are reviewed and agreed in advance of each financial year and include financial and non-financial company and individual performance goals.

(d) Link between remuneration and performance

Statutory performance indicators

Amaero aligns Executive remuneration to the company's strategic and business objectives and the creation of shareholder wealth. The table below shows measures of the group's financial performance over the last five years as required by the Corporations Act 2001 . However, these are not necessarily consistent with the measures used in determining the variable amounts of remuneration to be awarded to KMPs. As a consequence, there may not always be a direct correlation between the statutory key performance measures and the variable remuneration awarded.

	2021	2020	2019
Loss for the year attributable to owners	(6,990,084)	(5,777,946)	(82,341)
Basic loss per share (cents)	(3.70)	(4.05)	(0.3)
Share price at year end ($)	0.575	0.140	0.00

The company's earnings have remained negative since inception due to the early stages of development of business. No dividends have been declared by Amaero International Ltd. The company continues to focus on revenue growth with the objective of achieving key commercial milestones in order to add shareholder value.

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Amaero International Ltd

Amaero International Ltd Directors' report 30 June 2021

(continued)

Remuneration report (audited) (continued)

(e) Remuneration expenses

The following tables show details of the remuneration expense recognised for the group's key management personnel for the current and previous financial year measured in accordance with the requirements of the accounting standards.

The following table shows details of remuneration expenses recognised for the year ended 30 June 2021.

2021 Non-executive directors Ms Kathryn Presser Mr David Hanna Executive directors Mr Stuart Douglas Other KMP Mr Barrie Finnin Total KMP compensation	Short-term benefits Post- employment benefits Long- term benefits Share- based payments Cash salary and fees Cash bonus Annual leave Super- annuation Long service leave Options Shares Rights to deferred shares Total $ $ $ $ $ $ $ $ $ 47,500 - - 4,987 - - 5,000 - 57,487 57,000 - - 5,985 - - 6,000 - 68,985 100,000 - - - - - 120,000 - 220,000 258,938 - 8,391 25,000 9,338 - 86,185 61,950 449,802
	463,438 - 8,391 35,972 9,338 - 217,185 61,950 796,274

Notes

• Mr Stuart Douglas is compensated via Innovyz (a company of which he is a Principal)

• During the year, directors and other employees received a portion of their annual remuneration in the form of equity.

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Amaero International Ltd

Amaero International Ltd Directors' report 30 June 2021 (continued)

Remuneration report (audited) (continued)

(e) Remuneration expenses (continued)

The following table shows details of remuneration expenses recognised for the year ended 30 June 2020.

2020 Non-executive directors Ms Kathryn Presser Mr David Hanna Executive directors Mr Stuart Douglas Other KMP Mr Barrie Finnin Total KMP compensation	Short-term benefits Post- employment benefits Long- term benefits Share- based payments Cash salary and fees Cash bonus Annual leave Super- annuation Long service leave Options Rights to deferred shares Total $ $ $ $ $ $ $ $ 29,167 - - 2,771 - - - 31,938 35,000 - - 3,325 - - - 38,325 80,000 - - - - - - 80,000 257,417 - 24,803 23,633 16,457 - 28,000 350,310
	401,584 - 24,803 29,729 16,457 - 28,000 500,573

Notes

• Mr Stuart Douglas is compensated via Innovyz (a company of which he is a Principal)

• Barrie Finnin's rights to deferred shares have not been granted at 30 June 2020. The amount has been taken up for accounting purposes at 30 June 2020.

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Amaero International Ltd

Amaero International Ltd Directors' report 30 June 2021

(continued)

Remuneration report (audited) (continued)

(f) Contractual arrangements with executive KMPs

Name: Mr Barrie Finnin Position: Chief Executive Officer Contract duration: Unspecified Notice period: 3 months by either party Fixed remuneration: $275,000 per annum, plus 9.5% superannuation

(g) Non-executive director arrangements

Non-executive directors receive a Board fee and fees for chairing but not participating on Board committees, see table below. They do not receive performance-based pay or retirement allowances. The fees are exclusive of superannuation.

Fees are reviewed annually by the Board taking into account comparable roles and market data.

The maximum annual aggregate directors' fee pool limit is $500,000, adopted on initial public offering of Amaero International Ltd on 5 December 2019.

	2021
	$
Chair	60,000
Director	40,000
Chair of Committee	10,000

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Amaero International Ltd

Amaero International Ltd Directors' report 30 June 2021

(continued)

Remuneration report (audited) (continued)

• (h) Additional statutory information

(i) Relative proportions of fixed vs variable remuneration expense

The following table shows the relative proportions of remuneration that are linked to performance and those that are fixed, based on the amounts disclosed as statutory remuneration expense on page 9 above:

Name	Fixed remuneration	Fixed remuneration	At risk		At risk - LTI
	2021	2020	2021	2020	2021	2020
	%	%	%	%	%	%
Non-executive director
Ms Kathryn Presser	91	100	9	-	-	-
Mr David Hanna	91	100	9	-	-	-
Executive directors
Mr Stuart Douglas	45	100	55	-	-	-
Name	Fixed remuneration		At risk - STI		At risk - LTI
	2021	2020	2021	2020	2021	2020
	%	%	%	%	%	%
Other KMP
Mr Barrie Finnin	67	92	33	8	-	-

During the year, directors and other employees received a portion of their annual remuneration in the form of equity.

(ii) Reconciliation of options and ordinary shares held by KMP

Option holdings

Option holdings
	Balance at				Balance at
	start of the	Granted as		Other	end of the	Vested and
2021	period	remuneration	Exercised	changes 1	period	exercisable
Options
Mr David Hanna	-	-	-	-	-	-
Mr Stuart Douglas	-	-	-	-	-	-
Ms Kathryn Presser	-	-	-	-	-	-
Mr Barrie Finnin	200,000	105,000	-	(200,000)	105,000	105,000
	200,000	105,000	-	(200,000)	105,000	105,000

Notes

1. Other changes incorporates changes resulting from the acquisition or sale of shares during the reporting period.

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Amaero International Ltd

Amaero International Ltd Directors' report 30 June 2021

(continued)

Remuneration report (audited) (continued)

• (h) Additional statutory information (continued)

• (ii) Reconciliation of options and ordinary shares held by KMP (continued)

Share holdings

Share holdings
	Balance at the		Received on		Balance at the
	start of the	Granted as	exercise of		end of the
2021	period 1	remuneration	options Other changes 2		period
Ordinary shares
Mr David Hanna	281,250	9,083	-	132,591	422,924
Mr Stuart Douglas	21,440,495	363,306	-	-	21,803,801
Ms Kathryn Presser	112,500	7,569	-	18,181	138,250
Mr Barrie Finnin	572,916	441,998	-	-	1,014,914
	22,407,161	821,956	-	150,772	23,379,889

Notes

1. Balance may include shares held prior to individuals becoming KMP. For individuals who became KMP during the period, the balance is as at the date they became KMP.

2. Other changes incorporates changes resulting from the acquisition or disposal of shares from on or off market transactions including the Share Purchase Plan completed in January 2021.

[This concludes the remuneration report, which has been audited]

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Amaero International Ltd

Amaero International Ltd Directors' report 30 June 2021

(continued)

Shares under option

(a) Unissued ordinary shares

No options were granted to the directors of the company in the year ended 30 June 2021.

(b) Shares issued on the exercise of options

No ordinary shares of Amaero International Ltd were issued during the year ended 30 June 2021 on the exercise of options granted.

Insurance of officers and indemnities

(a) Insurance of officers

During the financial year, Amaero International Ltd paid a premium of $77,430 to insure the directors and secretaries of the company and its Australian-based controlled entities, and the general managers of each of the divisions 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 wilful 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 company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities.

Proceedings on behalf of the company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party, for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the company with leave of the Court under section 237 of the Corporations Act 2001.

Non-audit services

The group may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor's expertise and experience with the group and/or the group are important.

Details of the amounts paid or payable to the auditor (RSM Australia Partners) for audit and non-audit services provided during the year are set out below.

The Board of directors has considered the position and, in accordance with advice received from the audit and risk committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

• all non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor

• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.

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Amaero International Ltd

Amaero International Ltd Directors' report 30 June 2021

(continued)

Non-audit services (continued)

During the year the following fees were paid or payable for non-audit services provided by the auditor of the parent entity, its related practices and non-related audit firms:

entity, its related practices and non-related audit firms:
Taxation services RSM Australia Partners and its related entities and other network firms: Tax due diligence and review of prospectus Total remuneration for taxation services RSM Australia Partners Australian firm: Investigating accountant's report Total remuneration for other services Total remuneration for non-audit services	2021 $ 2020 $ - 16,500
	- 16,500
	- 43,000
	- 43,000
	- 59,500

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 16.

Rounding of amounts

The company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the 'rounding off' of amounts in the directors' report. Amounts in the directors' report have been rounded off in accordance with the instrument to the nearest dollar.

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

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Mr David Hanna Non-Executive Chairman

Melbourne 30 August 2021

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Amaero International Ltd

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AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the financial report of Amaero International Limited and its controlled entities for the year ended 30 June 2021, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• (ii) any applicable code of professional conduct in relation to the audit.

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RSM AUSTRALIA PARTNERS

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J S CROALL

Partner

Dated: 30 August 2021 Melbourne, Victoria

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Amaero International Ltd

ABN 82 633 541 634

Annual financial report - 30 June 2021

Financial statements

Financial statements
Consolidated statement of profit or loss and other comprehensive income	18
Consolidated balance sheet	19
Consolidated statement of changes in equity	20
Consolidated statement of cash flows	21
Notes to the financial statements	22
Directors' declaration	57

These financial statements are consolidated financial statements for the group consisting of Amaero International Ltd and its subsidiaries. A list of major subsidiaries is included in note 12.

The financial statements are presented in the Australian currency.

Amaero International Ltd is a company limited by shares, incorporated and domiciled in Australia.

Its registered office is:

13 Normanby Road Notting Hill VIC 3168

Its principal place of business is: Amaero International Ltd 13 Normanby Road Notting Hill VIC 3168

The financial statements were authorised for issue by the directors on 30 August 2021. The directors have the power to amend and reissue the financial statements.

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Amaero International Ltd

Amaero International Ltd Consolidated statement of profit or loss and other comprehensive income For the year ended 30 June 2021

Notes Revenue from contracts with customers 2 Cost of sales Gross profit Other income 3(a) Other (losses)/gains Distribution costs General and administrative expenses 3(b) Research and development expenses Selling and marketing expenses Operating loss Finance income Finance expenses Finance costs - net Share of loss from equity accounted joint ventures 12(b) Loss before income tax Income tax expense 4 Loss for the period Other comprehensive income Items that may be reclassified to profit or loss: Exchange differences on translation of foreign operations 7(b) Total comprehensive loss for the period Loss per share for loss attributable to the ordinary equity holders of the company: Basic and diluted loss per share 18	30 June 2021 $ 30 June 2020 $ 504,141 116,584 (424,809) (115,023)
	79,332 1,561 839,353 208,620 (59,729) 100,090 (51,940) (41,846) (5,347,061) (4,573,530) (1,743,270) (954,803) (491,692) (344,121)
	(6,775,007) (5,604,029)
	6,838 234 (220,257) (174,151)
	(213,419) (173,917) (1,658) -
	(6,990,084) (5,777,946) - -
	(6,990,084) (5,777,946)
	(281,277) (55,659)
	(7,271,361) (5,833,605)
	Cents Cents (3.70) (4.05)

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

18

Amaero International Ltd

Amaero International Ltd Consolidated balance sheet As at 30 June 2021

Notes ASSETS Current assets Cash and cash equivalents 5(a) Trade and other receivables 5(b) Inventories 6(a) Other current assets Total current assets Non-current assets Investments accounted for using the equity method 6(f) Property, plant and equipment 6(b) Other non-current assets 6(c) Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables 5(c) Deferred revenue Employee benefit obligations 6(d) Other current liabilities 6(e) Total current liabilities Non-current liabilities Employee benefit obligations 6(d) Other non-current liabilities 6(e) Total non-current liabilities Total liabilities Net assets EQUITY Share capital 7(a) Other reserves 7(b) Accumulated losses Total equity	30 June 2021 $ 30 June 2020 $ 11,466,845 4,019,209 165,825 126,646 770,828 548,076 139,532 90,888
	12,543,030 4,784,819
	321,535 - 6,102,903 7,382,211 179,773 196,930
	6,604,211 7,579,141
	19,147,241 12,363,960
	1,053,886 816,544 34,337 93,656 168,251 116,615 235,223 217,907
	1,491,697 1,244,722
	37,768 21,347 2,470,423 2,904,163
	2,508,191 2,925,510
	3,999,888 4,170,232
	15,147,353 8,193,728
	27,173,600 14,026,374 824,124 27,641 (12,850,371) (5,860,287)
	15,147,353 8,193,728

The above consolidated balance sheet should be read in conjunction with the accompanying notes.

19

Amaero International Ltd

Amaero International Ltd Consolidated statement of changes in equity For the year ended 30 June 2021

Notes Balance at 1 July 2019 Loss for the period Other comprehensive loss Total comprehensive loss for the period Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs and tax 7(a) Employee share schemes - value of employee services 7(b) Balance at 30 June 2020 Notes Balance at 1 July 2020 Loss for the period Other comprehensive loss Total comprehensive loss for the period Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs and tax 7(a) Issue of shares in lieu of payment for services 7(a) Performance rights issued Employee share schemes - value of employee services 7(b) Options issued as part of capital raise 7(b) Issue of deferred shares Balance at 30 June 2021	Attributable to owners of Amaero International Ltd Share capital $ Other reserves $ Accumulated losses $ Total equity $ 561,542 - (82,341) 479,201
	- - (5,777,946) (5,777,946) - (55,659) - (55,659)
	- (55,659) (5,777,946) (5,833,605)
	13,464,832 - - 13,464,832 - 83,300 - 83,300
	13,464,832 83,300 - 13,548,132
	14,026,374 27,641 (5,860,287) 8,193,728
	Attributable to owners of Amaero International Ltd Share capital $ Other reserves $ Accumulated losses $ Total equity $ 14,026,374 27,641 (5,860,287) 8,193,728
	- - (6,990,084) (6,990,084) - (281,277) - (281,277)
	- (281,277) (6,990,084) (7,271,361)
	13,192,215 - - 13,192,215 125,500 - - 125,500 102,809 - - 102,809 354,252 (4,090) - 350,162 (627,550) 627,550 - - - 454,300 - 454,300
	13,147,226 1,077,760 - 14,224,986
	27,173,600 824,124 (12,850,371) 15,147,353

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

Amaero International Ltd 20

Amaero International Ltd Consolidated statement of cash flows For the year ended 30 June 2021

Notes Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) R&D tax incentive and other grants received Interest received Interest paid Net cash outflow from operating activities 8(a) Cash flows from investing activities Payments for property, plant and equipment Payments for joint ventures Payments for rental bonds Net cash outflow from investing activities Cash flows from financing activities Proceeds from issues of shares 7(a) Share issue transaction costs 7(a) Repayment of borrowings Repayment of principal portion of leases Net cash inflow from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of year 5(a)	30 June 2021 $ 30 June 2020 $ 456,714 192,953 (5,960,856) (4,452,452) 839,353 208,620 3,645 234 (220,257) (174,151)
	(4,881,401) (4,224,796)
	(358,152) (3,703,918) (320,000) - - (196,930)
	(678,152) (3,900,848)
	13,825,000 13,500,000 (632,785) (1,283,168) - (30,000) (215,210) (137,142)
	12,977,005 12,049,690
	7,417,452 3,924,046 4,019,209 169,991 30,184 (74,828)
	11,466,845 4,019,209

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

21

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

Contents of the notes to the financial statements

		Page
1	Segment information	23
2	Revenue from contracts with customers	23
3	Other income and expense items	24
4	Income tax expense	25
5	Financial assets and financial liabilities	26
6	Non-financial assets and liabilities	28
7	Equity	33
8	Cash flow information	36
9	Critical estimates, judgements and errors	36
10	Financial risk management	37
11	Capital management	40
12	Interests in other entities	41
13	Contingent liabilities	42
14	Events occurring after the reporting period	42
15	Related party transactions	43
16	Share-based payments	44
17	Remuneration of auditors	47
18	Loss per share	47
19	Parent entity financial information	48
20	Summary of significant accounting policies	49

22

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

1 Segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer of Amaero International Ltd. The group has identified one reportable segment; that is, the research, development, manufacture and sales of laser-based metal additive (3D printed) goods. The segment details are therefore fully reflected in the body of the financial statements.

2 Revenue from contracts with customers

(a) Disaggregation of revenue from contracts with customers

The group derives revenue from the transfer of goods at a point in time and the transfer of services over time:

Sale of goods Component sales Services Machine hours rental Engineering services	30 June 2021 $ 30 June 2020 $ 490,153 106,740 6,522 7,776 7,466 2,068
	504,141 116,584

(b) Accounting policies

(i) Component sales

Revenue from the sale of laser-based metal additive (3D printed) goods are recognised at a point in time. The performance obligation is satisfied when the customer has access and thus control of the product. This occurs at the time of delivery of goods to the customer. Delivery occurs when the products have been shipped to the specific location, the risks and rewards have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the group has objective evidence that all criteria for acceptance have been satisfied.

(ii) Machine hours rental

Revenue from the rental of metal additive manufacturing machine hours is recognised over time in the accounting period in which the machine use occurs. This is determined based on the actual machine hours spent relative to the total expected machine hours.

Some contracts include multiple deliverables. In this case, the transaction price will be allocated to each performance obligation based on the stand-alone selling prices. Where these are not directly observable, they are estimated based on expected cost-plus margin.

(iii) Engineering services

Revenue from the provision of engineering services is recognised over time in the accounting period in which the services are rendered. For fixed-price contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided, because the customer receives and uses the benefits simultaneously. This is determined based on the actual labour hours spent relative to the total expected labour hours.

23

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

2 Revenue from contracts with customers (continued)

(b) Accounting policies (continued)

Some contracts include multiple deliverables. In this case, the transaction price will be allocated to each performance obligation based on the stand-alone selling prices. Where these are not directly observable, they are estimated based on expected cost-plus margin.

Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management.

In the case of fixed-price contracts, the customer pays the fixed amount based on a payment schedule. If the services rendered by the group exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.

If the contract includes an hourly fee, revenue is recognised in the amount to which the group has a right to invoice. Customers are invoiced on a monthly basis and consideration is payable when invoiced.

Critical judgements in allocating the transaction price

Revenue relating to the provision of services is recognised based on managements' best estimate of forecast final costs required to complete the service and the forecast final margin. Management reviews these forecasts on a regular basis and adjusts revenue recognised when there are material changes.

(iv) Financing components

The group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the group does not adjust any of the transaction prices for the time value of money.

3 Other income and expense items

(a) Other income

(a) Other income
Research and development tax incentive Other grants	30 June 2021 $ 30 June 2020 $ 516,304 - 323,049 208,620
	839,353 208,620

(i) Fair value of R&D tax incentive

The group's research and development (R&D) activities are eligible under an Australian government tax incentive for eligible expenditure. Management has assessed these activities and expenditure to determine which are likely to be eligible under the incentive scheme. Amounts are recognised when it has been established that the conditions of the tax incentive have been met and that the expected amount can be reliably measured.

(ii) Fair value of other grants

The group's other grant income consists of grants received by the group and government assistance received in relation to COVID-19. For the year ended 30 June 2021, the group received $141,000 (2020: $208,620) in government assistance packages.

24

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

3 Other income and expense items (continued)

(b) Breakdown of expenses by nature

Notes General and administrative expenses Accounting and audit Contracting and consulting Depreciation Employee benefits Equipment expenses Insurance Investor and public relations Legal and company secretarial Listing and share registry Occupancy 6(e) Share-based payments 16(d) Superannuation Travel Other 4 Income tax expense (a) Numerical reconciliation of income tax expense to prima facie tax payable Loss from continuing operations before income tax expense Tax at the Australian tax rate of 26% (2020: 27.5%) Tax effect of amounts which are not deductible (taxable) in calculating taxable income: R&D tax incentive Accounting expenditure subject to R&D tax incentive Other grants Blackhole expenditure (Section 40-880, ITAA 1997) Employee leave obligations Gain on debt defeasance Initial public offering costs Legal fees Share-based payments Other items Subtotal	30 June 2021 $ 30 June 2020 $ 174,241 178,389 571,335 520,548 1,126,127 517,599 1,205,603 825,542 336,099 180,735 185,656 142,110 95,021 54,120 165,328 179,367 154,557 275,835 154,800 152,658 745,726 931,300 90,428 62,123 106,127 343,561 236,013 209,643
	5,347,061 4,573,530
	30 June 2021 $ 30 June 2020 $ (6,990,084) (5,777,946) (1,817,422) (1,588,935) (134,239) - 308,595 - 27,642 - (13,479) (14,256) 13,752 20,881 - (38,148) - 71,281 43,033 49,326 193,889 256,108 17,624 14,434
	(1,360,605) (1,229,309)

4 Income tax expense

(a) Numerical reconciliation of income tax expense to prima facie tax payable

25

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

4 Income tax expense (continued)

(a) Numerical reconciliation of income tax expense to prima facie tax payable (continued)

Difference in overseas tax rates Tax losses and other timing differences for which no deferred tax asset is recognised Income tax expense	30 June 2021 $ 30 June 2020 $ (12,619) - 1,373,224 1,229,309
	- -

(b) Tax losses

Unused tax losses for which no deferred tax asset has been recognised Tax benefit of debt defeasance clawed back through reduction of tax losses (Division 245, ITAA 1997) Total unused tax losses Potential tax benefit @ 26% (2020: 27.5%)	30 June 2021 $ 30 June 2020 $ 9,845,314 5,545,103 - (138,721)
	9,845,314 5,406,382
	2,559,782 1,486,755

Unused tax losses comprise those attributed to the group for the year ended 30 June 2021 and pre-acquisition losses attributed to Amaero Engineering Pty Ltd.

5 Financial assets and financial liabilities

(a) Cash and cash equivalents

(a) Cash and cash equivalents
Current assets Cash at bank and in hand Deposits at call	30 June 2021 $ 30 June 2020 $ 11,416,406 3,969,209 50,439 50,000
	11,466,845 4,019,209

(i) Reconciliation to cash flow statement

The above figures reconcile to the amount of cash shown in the consolidated statement of cash flows at the end of the financial year as follows:

26

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

5 Financial assets and financial liabilities (continued)

(a) Cash and cash equivalents (continued)

(a) Cash and cash equivalents (continued)
Balances as above Balances per statement of cash flows	30 June 2021 $ 30 June 2020 $ 11,466,845 4,019,209
	11,466,845 4,019,209

(ii) Classification as cash equivalents

Term deposits are presented as cash equivalents if they have a maturity of three months or less from the date of acquisition and are repayable with 24 hours' notice with no loss of interest. See note 20(k) for the group’s other accounting policies on cash and cash equivalents.

(b) Trade and other receivables

Trade receivables Provision for impairment (see note 10(b)) Other receivables Total trade and other receivables	30 June 2021 30 June 2020 Current $ Non- current $ Total $ Current $ Non- current $ Total $ 106,914 - 106,914 91,052 - 91,052 - - - (6,911) - (6,911)
	106,914 - 106,914 84,141 - 84,141
	58,911 - 58,911 42,505 - 42,505
	165,825 - 165,825 126,646 - 126,646

(i) Classification as trade receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 30 days and therefore are all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method. Details about the group’s impairment policies and the calculation of the loss allowance are provided in note 10(b).

(ii) Fair value of trade and other receivables

Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value.

(iii) Impairment and risk exposure

Information about the impairment of trade receivables and the group’s exposure to foreign currency risk and credit risk can be found in note 10(a) and 10(b).

27

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

5 Financial assets and financial liabilities (continued)

(c) Trade and other payables

Trade payables Accrued expenses Other payables	30 June 2021 30 June 2020 Current $ Non- current $ Total $ Current $ Non- current $ Total $ 847,564 - 847,564 595,445 - 595,445 162,449 - 162,449 142,296 - 142,296 43,873 - 43,873 78,803 - 78,803
	1,053,886 - 1,053,886 816,544 - 816,544

Trade payables are unsecured and are usually paid within 30 days of recognition.

The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-term nature.

6 Non-financial assets and liabilities

(a) Inventories

Raw materials Work in progress	30 June 2021 30 June 2020 Current $ Non- current $ Total $ Current $ Non- current $ Total $ 770,063 - 770,063 548,076 - 548,076 765 - 765 - - -
	770,828 - 770,828 548,076 - 548,076

(i) Impairment

The level of the provision is assessed by taking into account the life of the raw material based on use. This is assessed by experts within the group.

28

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

6 Non-financial assets and liabilities (continued)

(b) Property, plant and equipment

Non-current At 1 July 2019 Cost or fair value Net book amount Year ended 30 June 2020 Opening net book amount Additions Exchange differences Depreciation charge Closing net book amount At 30 June 2020 Cost or fair value Accumulated depreciation Net book amount At 1 July 2020 Cost or fair value Accumulated depreciation Net book amount Year ended 30 June 2021 Opening net book amount Additions Exchange differences Depreciation charge Closing net book amount At 30 June 2021 Cost Accumulated depreciation Net book amount	Plant and equipment $ Furniture, fittings and equipment $ Leasehold improvements $ Right-of-use assets $ Total $ 536,370 2,011 - - 538,381
	536,370 2,011 - - 538,381
	536,370 2,011 - - 538,381 3,129,404 63,283 511,231 3,656,123 7,360,041 1,388 - - - 1,388 (197,428) (11,949) (23,483) (284,739) (517,599)
	3,469,734 53,345 487,748 3,371,384 7,382,211
	3,665,774 65,294 511,231 3,656,123 7,898,422 (196,040) (11,949) (23,483) (284,739) (516,211)
	3,469,734 53,345 487,748 3,371,384 7,382,211
	3,665,774 65,294 511,231 3,656,123 7,898,422 (196,040) (11,949) (23,483) (284,739) (516,211)
	3,469,734 53,345 487,748 3,371,384 7,382,211
	3,469,734 53,345 487,748 3,371,384 7,382,211 308,523 49,629 - - 358,152 (263,800) (51,266) 4,947 (201,214) (511,333) (669,139) (16,209) (48,840) (391,939) (1,126,127)
	2,845,318 35,499 443,855 2,778,231 6,102,903
	3,703,676 63,471 515,297 3,438,140 7,720,584 (858,358) (27,972) (71,442) (659,909) (1,617,681)
	2,845,318 35,499 443,855 2,778,231 6,102,903

(i) Depreciation methods and useful lives

Property, plant and equipment is recognised at historical cost less depreciation.

Depreciation is calculated using the diminishing value method to allocate their cost, net of their residual values, over their estimated useful lives as follows:

29

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

6 Non-financial assets and liabilities (continued)

(b) Property, plant and equipment (continued)

•	Plant and equipment	5 -10 years
•	Furniture, fittings and equipment	2 - 10 years
•	Leasehold improvements	10 years
•	Right-of-use assets	10 years

Right-of-use assets are depreciated over the term of the lease.

See note 20(p) for the other accounting policies relevant to property, plant and equipment.

(c) Other non-current assets

Non-current assets Rental bond (d) Employee benefit obligations Leave obligations (i)	Notes 30 June 2021 $ 30 June 2020 $ 179,773 196,930 30 June 2021 30 June 2020 Current $ Non- current $ Total $ Current $ Non- current $ Total $ 168,251 37,768 206,019 116,615 21,347 137,962	30 June 2021 $ 30 June 2020 $ 179,773 196,930

(d) Employee benefit obligations

(i) Leave obligations

The leave obligations cover the group’s liabilities for annual leave which are classified as short-term benefits, as explained in note 20(s).

The current portion of this liability includes all of the accrued annual leave, the unconditional entitlements to long service leave where employees have completed the required period of service and also for those employees that are entitled to pro-rata payments in certain circumstances. The entire amount of the provision of $168,251 (2020: $116,615) is presented as current, since the group does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the group does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months.

(e) Leases

The group leases three office and manufacturing facilities in Melbourne and Adelaide, Australia and El Segundo, California, USA.

The group leases office and manufacturing facilities in California, USA. Commencing November 2019, the term of the lease is for five years with an option to extend for a further term of five years.

The group has a sub-lease agreement with the University of Adelaide for the use of manufacturing and office facilities in Womma Road, Edinburgh North, South Australia. Commencing October 2019, the term of the lease is for three years and six months with a further term of four years and eight months commencing on 30 April 2023.

30

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

6 Non-financial assets and liabilities (continued)

(e) Leases (continued)

The group has a sub-lease agreement with Monash University for its head office and manufacturing facility at 13 Normanby Road, Notting Hill, Victoria. Commencing 1 October 2019, the term of the lease is for one year and eleven months with a further term of five years commencing 1 September 2021.

The group entered a Strategic Partnership Agreement with The University of Adelaide for the provision of facility, equipment and services. Commencing 14 October 2019, the term is for 5 years.

(i) Amounts recognised in the balance sheet

The balance sheet shows the following amounts relating to leases:

Right-of-use assets 1 Properties Lease liabilities 2 Current Non-current	30 June 2021 $ 30 June 2020 $ 2,778,231 3,371,384
	2,778,231 3,371,384
	235,223 217,907 2,470,423 2,904,163
	2,705,646 3,122,070

1. Included in the line item ‘property, plant and equipment’ in the consolidated balance sheet.

2. Included in the line items ‘other current liabilities’ and ‘other non-current liabilities’ in the consolidated balance sheet.

(ii) Amounts recognised in the statement of profit or loss

The statement of profit or loss shows the following amounts relating to leases:

Notes Depreciation charge of right-of-use assets Properties 3(b) Interest expense (included in finance cost) Expense relating to short-term leases (included in other expenses) 3(b) Expense relating to leases of low-value assets that are not short-term leases (included in other expenses) 3(b) Expense relating to variable lease payments not included in lease liabilities (included in other expenses) 3(b) The total cash outflow for leases in 2021 was $371,864 (2020: $322,744).	30 June 2021 $ 30 June 2020 $ 391,939 287,828
	391,939 287,828
	217,064 170,086 - - 154,800 152,658 - -

31

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

6 Non-financial assets and liabilities (continued)

(e) Leases (continued)

(iii) The group’s leasing activities and how these are accounted for

Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

• fixed payments (including in-substance fixed payments), less any lease incentives receivable

• variable lease payment that are based on an index or a rate

• amounts expected to be payable by the lessee under residual value guarantees

• the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and

• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the group’s incremental borrowing rate.

Right-of-use assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability

• any lease payments made at or before the commencement date, less any lease incentives received

• any initial direct costs, and

• restoration costs.

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and small items of office furniture.

The incremental borrowing rate used for the calculation of leases and lease terms was 7.74%.

(f) Investments accounted for using the equity method

Non-current assets Interest in joint venture partnership	30 June 2021 $ 30 June 2020 $ 321,535 -

Refer to note 12(b) for further information on interests in joint ventures.

32

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

7 Equity

(a) Share capital

Notes 30 June 2021 Shares 30 June 2020 Shares 30 June 2021 $ 30 June 2020 $ Ordinary shares 7(a)(ii) Fully paid 201,777,549 174,853,651 27,173,600 14,026,374 7(a)(i) 201,777,549 174,853,651 27,173,600 14,026,374 (i) Movements in ordinary shares: Details Notes Number of shares Total $ Balance at 1 July 2019 75,011,983 561,542 Issue at $0.06 pursuant to private placement (2019-07-01) 6,666,666 - Issue at $0.12 pursuant to private placement (2019-09-10) 16,666,668 2,000,000 Issue at $0.16 to suppliers in lieu of payment for services (2019-10-10) 5,300,000 848,000 Issue at $0.12 to suppliers in lieu of payment for services (2019-10-15) 3,333,334 400,000 Issue at $0.16 pursuant to private placement (2019-10-29) 21,875,000 3,500,000 Issue at $0.20 pursuant to private placement (2019-11-29) 40,000,000 8,000,000 Issue at $0.20 to suppliers in lieu of payment for services (2019-11-29) 6,000,000 1,200,000 Less: Transaction costs arising on share issues (Pre-IPO) - (784,752) Less: Transaction costs arising on share issues (IPO Cash) - (498,416) Less: Transaction costs arising on share issues (IPO Non-Cash) - (1,200,000) Balance 30 June 2020 174,853,651 14,026,374 Details Notes Number of shares Total $ Balance at 1 July 2020 174,853,651 14,026,374 Issue at $0.33 performance milestone shares (2020-09-01) 595,000 196,529 Issue at $0.33 salary sacrifice shares (2020-09-01) 269,713 89,086 Issue at $0.33 performance rights shares (2020-10-01) 311,260 102,809 Issue at $0.66 salary sacrifice shares (2020-11-17) 104,518 68,637 Issue at $0.33 in lieu of payment for services (2020-11-30) 379,958 125,500 Issue at $0.55 pursuant to placement (2020-12-10) 16,490,909 9,070,000 Issue at $0.55 pursuant to Share Purchase Plan (2021-02-02) 8,772,540 4,825,000 Less: Transaction costs arising on share issues (Cash) - (632,785) Less: Transaction costs arising on share issues (Non-Cash) - (697,550) Balance 30 June 2021 201,777,549 27,173,600	Notes 30 June 2021 Shares 30 June 2020 Shares 30 June 2021 $ 30 June 2020 $ Ordinary shares 7(a)(ii) Fully paid 201,777,549 174,853,651 27,173,600 14,026,374 7(a)(i) 201,777,549 174,853,651 27,173,600 14,026,374 (i) Movements in ordinary shares: Details Notes Number of shares Total $ Balance at 1 July 2019 75,011,983 561,542 Issue at $0.06 pursuant to private placement (2019-07-01) 6,666,666 - Issue at $0.12 pursuant to private placement (2019-09-10) 16,666,668 2,000,000 Issue at $0.16 to suppliers in lieu of payment for services (2019-10-10) 5,300,000 848,000 Issue at $0.12 to suppliers in lieu of payment for services (2019-10-15) 3,333,334 400,000 Issue at $0.16 pursuant to private placement (2019-10-29) 21,875,000 3,500,000 Issue at $0.20 pursuant to private placement (2019-11-29) 40,000,000 8,000,000 Issue at $0.20 to suppliers in lieu of payment for services (2019-11-29) 6,000,000 1,200,000 Less: Transaction costs arising on share issues (Pre-IPO) - (784,752) Less: Transaction costs arising on share issues (IPO Cash) - (498,416) Less: Transaction costs arising on share issues (IPO Non-Cash) - (1,200,000) Balance 30 June 2020 174,853,651 14,026,374 Details Notes Number of shares Total $ Balance at 1 July 2020 174,853,651 14,026,374 Issue at $0.33 performance milestone shares (2020-09-01) 595,000 196,529 Issue at $0.33 salary sacrifice shares (2020-09-01) 269,713 89,086 Issue at $0.33 performance rights shares (2020-10-01) 311,260 102,809 Issue at $0.66 salary sacrifice shares (2020-11-17) 104,518 68,637 Issue at $0.33 in lieu of payment for services (2020-11-30) 379,958 125,500 Issue at $0.55 pursuant to placement (2020-12-10) 16,490,909 9,070,000 Issue at $0.55 pursuant to Share Purchase Plan (2021-02-02) 8,772,540 4,825,000 Less: Transaction costs arising on share issues (Cash) - (632,785) Less: Transaction costs arising on share issues (Non-Cash) - (697,550) Balance 30 June 2021 201,777,549 27,173,600	Notes 30 June 2021 Shares 30 June 2020 Shares 30 June 2021 $ 30 June 2020 $ Ordinary shares 7(a)(ii) Fully paid 201,777,549 174,853,651 27,173,600 14,026,374 7(a)(i) 201,777,549 174,853,651 27,173,600 14,026,374 (i) Movements in ordinary shares: Details Notes Number of shares Total $ Balance at 1 July 2019 75,011,983 561,542 Issue at $0.06 pursuant to private placement (2019-07-01) 6,666,666 - Issue at $0.12 pursuant to private placement (2019-09-10) 16,666,668 2,000,000 Issue at $0.16 to suppliers in lieu of payment for services (2019-10-10) 5,300,000 848,000 Issue at $0.12 to suppliers in lieu of payment for services (2019-10-15) 3,333,334 400,000 Issue at $0.16 pursuant to private placement (2019-10-29) 21,875,000 3,500,000 Issue at $0.20 pursuant to private placement (2019-11-29) 40,000,000 8,000,000 Issue at $0.20 to suppliers in lieu of payment for services (2019-11-29) 6,000,000 1,200,000 Less: Transaction costs arising on share issues (Pre-IPO) - (784,752) Less: Transaction costs arising on share issues (IPO Cash) - (498,416) Less: Transaction costs arising on share issues (IPO Non-Cash) - (1,200,000) Balance 30 June 2020 174,853,651 14,026,374 Details Notes Number of shares Total $ Balance at 1 July 2020 174,853,651 14,026,374 Issue at $0.33 performance milestone shares (2020-09-01) 595,000 196,529 Issue at $0.33 salary sacrifice shares (2020-09-01) 269,713 89,086 Issue at $0.33 performance rights shares (2020-10-01) 311,260 102,809 Issue at $0.66 salary sacrifice shares (2020-11-17) 104,518 68,637 Issue at $0.33 in lieu of payment for services (2020-11-30) 379,958 125,500 Issue at $0.55 pursuant to placement (2020-12-10) 16,490,909 9,070,000 Issue at $0.55 pursuant to Share Purchase Plan (2021-02-02) 8,772,540 4,825,000 Less: Transaction costs arising on share issues (Cash) - (632,785) Less: Transaction costs arising on share issues (Non-Cash) - (697,550) Balance 30 June 2021 201,777,549 27,173,600
	201,777,549 174,853,651	27,173,600 14,026,374
		Number of shares Total $ 75,011,983 561,542 6,666,666 - 16,666,668 2,000,000 5,300,000 848,000 3,333,334 400,000 21,875,000 3,500,000 40,000,000 8,000,000 6,000,000 1,200,000 - (784,752) - (498,416) - (1,200,000)
		174,853,651 14,026,374
		Number of shares Total $ 174,853,651 14,026,374 595,000 196,529 269,713 89,086 311,260 102,809 104,518 68,637 379,958 125,500 16,490,909 9,070,000 8,772,540 4,825,000 - (632,785) - (697,550)
		201,777,549 27,173,600

33

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

7 Equity (continued)

(a) Share capital (continued)

(ii) Ordinary shares

Ordinary shares entitle the holder to participate in dividends, and to share in the proceeds of winding up the company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

Ordinary shares have no par value and the company does not have a limited amount of authorised capital.

(b) Other reserves

The following table shows a breakdown of the consolidated balance sheet line item ‘other reserves’ and the movements in these reserves during the year. A description of the nature and purpose of each reserve is provided below the table.

Notes At 1 July 2019 a No movements noted Currency translation differences Other comprehensive income Transactions with owners in their capacity as owners Share-based payment expenses 16 At 30 June 2020 At 1 July 2020 Currency translation differences Other comprehensive income Transactions with owners in their capacity as owners Share-based payment expenses Issue of options 16 Issue of deferred shares At 30 June 2021	Share- based payments reserve $ Foreign currency translation $ Total other reserves $ - - -
	- - -
	- (55,659) (55,659)
	- (55,659) (55,659) 83,300 - 83,300
	83,300 (55,659) 27,641
	83,300 (55,659) 27,641 - (281,277) (281,277)
	- (281,277) (281,277) (4,090) - (4,090) 627,550 - 627,550 454,300 - 454,300
	1,161,060 (336,936) 824,124

(i) Nature and purpose of other reserves

Share-based payments

The share-based payment reserve records items recognised as expenses on valuation of share options issued to key management personnel, other employees and and eligible contractors.

34

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

7 Equity (continued)

(b) Other reserves (continued)

Foreign currency translation

Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive income as described in note 20(d) and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of.

(ii) Performance rights

On 7 July 2020, the Amaero Board resolved to offer approximately 3 million Retention Performance Rights to their employees subject to certain conditions. The number of Retention Performance rights issued on 1 September 2020 was 1,422,883 based on the 5-day VWAP (volume weighted average price) for the period from 24 to 28 August 2020 inclusive. Each of the Retention Performance Rights entitles the holder to be issued one fully paid ordinary share of the group for no cash consideration upon vesting. The Retention Performance Rights will convert into ordinary shares upon achievement of each performance condition and will expire when the performance condition is met. if the employee does not remain as an employee of Amaero at the time of the performance condition, the remainder of their Retention Performance Rights will lapse. The performance conditions are set out to incentivise employees to remain with Amaero to ensure their interests and motivations are aligned with the interests and motivations of shareholder of Amaero. The number of offered Retention Performance Rights that each employee is to receive is based on 30% of their salary as at 30 June 2020.

During the financial year 311,260 Performance Rights vested upon the attainment of conditions and a further 389,538 Performance Rights were cancelled due to conditions not being met.

As at 30 June 2021, 722,085 Performance Rights remain outstanding.

Performance right class	Performance condition	Approximate number of rights
Class B	Performance rights vest on 1 July2021	240,695
Class C	Performance rights vest on 1 July2022	240,695
Class D	Performance rights vest on 1 July2023	240,695
	Total	722,085

(iii) Movements in options:

Details Balance at 1 July 2019 No movement during the period Balance 30 June 2020 Issue of listed options at $1.00 (2020-12-10) Balance 30 June 2021	Number of options Total $ - - - -
	- -
	3,500,000 627,550
	3,500,000 627,550

3.5 million options were issued to the Lead Manager of the 2020 capital raise at an exercise price of $1 and which will expire on 10 December 2022.

35

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

8 Cash flow information

(a) Reconciliation of loss after income tax to net cash inflow from operating activities

Notes Loss for the period Adjustments for Depreciation and amortisation Finance costs Finance income Gain on debt defeasance Movement in employee benefits liability Share-based payments 16 Share of loss of joint ventures Unrealised net foreign currency (gains)/losses Change in operating assets and liabilities: Movement in trade and other receivables Movement in inventories Movement in other operating assets Movement in trade and other payables Net cash inflow (outflow) from operating activities

30 June 2021 $ 30 June 2020 $ (6,990,084) (5,777,946) 1,126,127 517,599 220,257 174,151 (6,838) (234) - (138,721) 68,057 97,265 745,726 931,300 1,658 - 41,839 20,885 (39,179) (28,668) (222,752) (486,520) (48,644) (14,258) 222,432 480,351

(4,881,401) (4,224,796)

(b) Non-cash investing and financing activities

Non-cash investing and financing activities disclosed in other notes are:

• shares issued for no cash consideration - note 7(a)(i)

9 Critical estimates, judgements and errors

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the group’s accounting policies.

This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be wrong. Detailed information about each of these estimates and judgements is included in other notes together with information about the basis of calculation for each affected line item in the financial statements. In addition, this note also explains where there have been actual adjustments this year as a result of an error and of changes to previous estimates.

36

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

9 Critical estimates, judgements and errors (continued)

(a) Significant estimates and judgements

The areas involving significant estimates or judgements are:

• Estimation of R&D tax incentive income accrual - note 3(a)(i)

• Estimation of employee benefit obligations - note 6(d)(i)

• Estimation of share-based payments - note 16(a)

• Estimation of useful lives of property, plant and equipment - note 6(b)(i)

• Estimation of incremental borrowing rates for leases and lease terms - note 6(e)(iii)

Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

(b) Coronavirus (COVID-19) pandemic

Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the group based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing and geographic regions in which the group operates. Other than as addressed in specific notes, there does not currently 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 group unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic

10 Financial risk management

This note explains the group's exposure to financial risks and how these risks could affect the group’s future financial performance.

The group’s risk management is predominantly controlled by the Board. The Board monitors the group's financial risk management policies and exposures and approves substantial financial transactions. It also reviews the effectiveness of internal controls relating to market risk, credit risk and liquidity risk.

(a) Market risk

(i) Foreign exchange risk

The group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations.

Foreign exchange rate risk arises from financial assets and financial liabilities denominated in a currency that is not the group's functional currency. Exposure to foreign currency risk may result in the fair value of future cash flows of a financial instrument fluctuating due to the movement in foreign exchange rates of currencies in which the group holds financial instruments which are other than the Australian dollar (AUD) functional currency of the group. This risk is measured using sensitivity analysis and cash flow forecasting. The cost of hedging at this time outweighs any benefits that may be obtained.

37

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

10 Financial risk management (continued)

(a) Market risk (continued)

Exposure

The group's exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollar, was as follows:

Cash and cash equivalents Trade receivables Trade payables Total exposure	30 June 2021 30 June 2020 USD $ EUR $ USD $ EUR $ 270,831 113 740,841 117 23,814 - 44,663 - 327,835 144,197 263,643 -
	622,480 144,310 1,049,147 117

Sensitivity

As shown in the table above, the group is primarily exposed to changes in USD/AUD exchange rates. The sensitivity of profit or loss to changes in the exchange rates arises mainly from USD denominated financial instruments.

The group has conducted a sensitivity analysis of its exposure to foreign currency risk. The group is currently materially exposed to the United States dollar (USD). The sensitivity analysis is conducted on a currency-by-currency basis using the sensitivity analysis variable, which is based on the average annual movement in exchange rates over the past five years at year-end spot rates. The variable for each currency the group is materially exposed to is listed below:

• USD: 4.9% (2020: 3.6%)

• EUR: 2.7% (2020: 2.5%)

• USD: 4.9% (2020: 3.6%) • EUR: 2.7% (2020: 2.5%)
		Impact on loss	for the	Impact on other
		period		components of equity
		2021	2020	2021	2020
		$	$	$	$
USD/AUD exchange rate - change by	4.9% (2020:
3.6%)*		30,502	37,572	-	-
EUR/AUD exchange rate - change by	2.7% (2020:
2.5%)*		3,896	-	-	-

• Holding all other variables constant

(b) Credit risk

Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to the group.

(i) Risk management

Credit risk is managed through the maintenance of procedures (such as the utilisation of systems for the approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring the financial stability of significant customers and counterparties), ensuring to the extent possible that customers and counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing receivables for impairment. Credit terms are normally 30 days from the invoice date.

Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating.

38

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

10 Financial risk management (continued)

(b) Credit risk (continued)

(ii) Security

For some trade receivables the group may obtain security in the form of guarantees, deeds of undertaking or letters of credit which can be called upon if the counterparty is in default under the terms of the agreement.

(iii) Impairment of financial assets

The group has one type of financial asset subject to the expected credit loss model:

• trade receivables for sales of goods and from the provision of services

While cash and cash equivalents are also subject to the impairment requirements of AASB 9, the identified impairment loss was immaterial.

Trade receivables

The group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables.

To measure the expected credit losses, trade receivables assets have been grouped based on shared credit risk characteristics and the days past due.

The expected loss rates are based on the payment profiles of sales over a period of 12 months before 30 June 2021 and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.

On that basis, the loss allowance as at 30 June 2021 was determined for trade receivables as nil (2020: $6,911). Uncollectible amounts were written off as bad debts by Amaero Engineering Pty Ltd immediately prior to the business acquisition.

Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the group, and a failure to make contractual payments for a period of greater than 121 days past due.

Impairment losses on trade receivables are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item.

(c) Liquidity risk

Liquidity risk arises from the possibility that the group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The group manages this risk through the following mechanisms:

• preparing forward looking cash flow analyses in relation to its operating, investing and financing activities;

• obtaining funding from a variety of sources;

• maintaining a reputable credit profile;

• managing credit risk related to financial assets;

• investing cash and cash equivalents and deposits at call with major financial institutions; and

• comparing the maturity profile of financial liabilities with the realisation profile of financial assets.

39

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

10 Financial risk management (continued)

(c) Liquidity risk (continued)

(i) Maturities of financial liabilities

The tables below analyse the group's financial liabilities into relevant maturity groupings based on their contractual maturities. The amounts disclosed in the table are the contractual undiscounted cash flows.

Contractual maturities of financial liabilities At 30 June 2021 Trade and other payables Total At 30 June 2020 Trade and other payables Total	Less than 6 months 6 - 12 months Between 1 and 2 years Between 2 and 5 years Over 5 years Total contractual cash flows Carrying amount (assets)/ liabilities $ $ $ $ $ $ $ 1,053,886 - - - - 1,053,886 1,053,886
	1,053,886 - - - - 1,053,886 1,053,886
	816,544 - - - - 816,544 816,544
	816,544 - - - - 816,544 816,544

11 Capital management

(a) Risk management

The group's objectives when managing capital are to

• safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

• maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the group may issue new shares or reduce its capital, subject to the provisions of the group's constitution. The capital structure of the group consists of equity attributed to equity holders of the group, comprising contributed equity, reserves and accumulated losses. By monitoring undiscounted cash flow forecasts and actual cash flows provided to the Board by the group's management, the Board monitors the need to raise additional equity from the equity markets.

(b) Dividends

No dividends were declared or paid to members for the year ended 30 June 2021 (2020: nil). The group’s franking account balance was nil at 30 June 2021 (2020: nil).

40

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

12 Interests in other entities

(a) Material subsidiaries

The group’s principal subsidiaries at 30 June 2021 are set out below. Unless otherwise stated, they have share capital consisting solely of ordinary shares that are held directly by the group, and the proportion of ownership interests held equals the voting rights held by the group. The country of incorporation or registration is also their principal place of business.

principal place of business.
	Place of business/
	country of
Name of entity	incorporation	Ownership interest held by the group
		2021	2020
		%	%
Amaero Engineering Pty Ltd	Australia	100	100
AM Aero Inc	United States	100	100
Amaero Alloys Pty Ltd	Australia	100	-

In November 2020, Amaero International Ltd formed a wholly owned subsidiary Amaero Alloys Pty Ltd. The nature of the business is the same as Amaero International Ltd's, that being, the provision of end-to-end additive manufacturing solutions in terms of services, equipment and technology to its key clients in the Aviation Defence and Space sectors and the Tool and Die industry.

(b) Interests in joint ventures

Amaero has a 45% interest in a Joint Venture Research Agreement (JV) with PPK Group Ltd (45%) and Deakin University (10%). The parties incorporated Strategic Alloys Pty Limited to develop a super strength aluminium alloy. The group's interest in Strategic Alloys Pty Limited is accounted for using the equity method in the financial statements.

(i) Summarised financial information for joint ventures

Summarised financial information of the joint venture and reconciliation with the carrying amount of the investment in the consolidated financial statements are set out below:

Summarised balance sheet Assets Current assets (including cash and other cash equivalents) Intangible assets Total current assets < blank header row > Liabilities Financial liabilities Total liabilities < blank header row > < blank header row > Net assets	30 June 2021 $ 30 June 2020 $ 70,975 - 572,399 -
	643,374 - 646,957 -
	646,957 -
	(3,583) -

41

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

12 Interests in other entities (continued)

(b) Interests in joint ventures (continued)

Summarised statement of comprehensive income Administration expenses < blank header row > Loss before income tax Income tax expense < blank header row > Other comprehensive income Total comprehensive income < blank header row > Reconciliation of the consolidated entity's carrying amount Opening carrying amount Investment in Strategic Alloys Pty Ltd Share of loss after income tax		2021 $ 2020 $ (3,684) - (3,684) - - - - -
		(3,684) -
		30 June 2021 $ 30 June 2020 $ - - 323,193 - (1,658) -
		321,535 -

(c) Group's transactions with joint ventures

Loan given to joint venture $320,000 (2020: nil).

Loans and capitalised interest to the joint venture are included in the carrying amount of investment.

13 Contingent liabilities

The group had no contingent liabilities at 30 June 2021 (2020: nil).

14 Events occurring after the reporting period

Subsequent to the year end, Amaero has committed to build a world class customised and proprietary titanium alloy powder manufacturing plant in Victoria, Australia. The $8 million dollar facility is expected to be the most advanced titanium alloy powder plant in the world, and is planned to be constructed and commissioned over an 18- month period. It is expected that this project will take titanium alloy bar stock inputs and convert the material into powder for 3D printing at approximately half the cost of the current global benchmark.

Apart from the announcement of the commitment of Amaero to the build of the Titanium Plant, no other matter or circumstance has arisen since 30 June 2021 that has significantly affected the group's operations, results or state of affairs, or may do so in future years.

42

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

15 Related party transactions

(a) Subsidiaries and joint ventures

Interests in subsidiaries and joint ventures are set out in note 12(a) and 12(b) respectively.

(b) Key management personnel compensation

Short-term employee benefits Post-employment benefits Long-term benefits Share-based payments	30 June 2021 $ 30 June 2020 $ 471,829 426,387 35,972 29,729 9,338 16,457 279,135 28,000
	796,274 500,573

Detailed remuneration disclosures are provided in the remuneration report on pages 7 to 13.

(c) Transactions with related parties

The following transactions occurred with related parties:

The following transactions occurred with related parties:
	30 June	30 June
	2021	2020
	$	$
Sales and purchases of goods and services
Purchases of various services from an entity having a significant influence over
the group - Innovyz Institute Pty Ltd	133,365	174,178
Purchases of various services from an entity related to a director - Monash
University	519,743	120,752
Loan forgiven by entity related to a director - Monash University	-	138,721

(d) Outstanding balances arising from sales/purchases of goods and services

The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:

parties:
	30 June	30 June
	2021	2020
	$	$
Current payables (purchases of goods and services)
Entity having a significant influence over the group - Innovyz Institute Pty Ltd	74,905	11,000
Entity related to the director - Monash University	62,685	80,570

43

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

15 Related party transactions (continued)

(e) Loans to/from related parties

Loans from entity with significant influence over the group Beginning of the period Loans repayments made End of year	30 June 2021 $ 30 June 2020 $ - 30,000 - (30,000)
	- -

(f) Terms and conditions

(i) Loans from entity with significant influence over the group

Loans from entity with significant influence over the group comprises $30,000 advanced by Innovyz Institute Pty Ltd as at 30 June 2019, recognised on acquisition of Amaero Engineering Pty Ltd. Entered into on 13 May 2019, the agreement provided Amaero Engineering Pty Ltd with a short-term unsecured loan to fund immediate needs for additional working capital. This loan was repaid in the year ending 30 June 2020.

16 Share-based payments

(a) Options

Amaero International Ltd has the ability to issue options to employees under the employee option plan (ESOP) which was approved by shareholders at the 2019 annual general meeting. Additionally, the group has the ability to issue options to consultants under its 15% capacity. The issuance of options is designed to provide long-term incentives for the holder to deliver long-term shareholder returns. Issuance of the equity is at the board's discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits.

Set out below are summaries of options granted to consultants as part of the 2020 capital raise which were issued under the plan and have an expiry of 10 December 2022, being 24 months after the date of issue:

	30 June		30 June
	2021		2020
	Average		Average
	exercise price		exercise price
	per share	Number of	per share	Number of
	option	options	option	options
As at 1 July	-	-	-	-
Granted during the year	$1.00	3,500,000	-	-
As at 30 June	$1.00	3,500,000	-	-
Vested and exercisable at 30 June	$1.00	3,500,000	-	-

Share options outstanding at the end of the year have the following expiry date and exercise prices:

	Expiry	Exercise
Grant date	date	price	Share options	Share options
		($)	30 June 2021	30 June 2020
2020-12-10	2022-12-10	1	3,500,000	-

Amaero International Ltd

44

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

16 Share-based payments (continued)

(a) Options (continued)

Weighted average remaining contractual life of options outstanding at end of period

1.45 -

(i) Fair value of options granted

The assessed fair value of options at grant date was determined using the Black-Scholes option pricing model that takes into account the exercise price, term of the option, security price at grant date and expected price volatility of the underlying security, the expected dividend yield, the risk-free interest rate for the term of the security and certain probability assumptions.

The model inputs for options granted during the year ended 30 June 2021 included:

				Share			Risk-	Fair value
				price at			free	at grant
	Expiry	Exercise	No. of	grant	Expected	Dividend	interest	date per
Grant date	date	price ($)	options	date ($)	volatility	yield	rate	option ($)
.
2020-12-10	2022-12-10	1.00	3,500,000	0.57	87.00%	0.00%	0.11%	0.1793
			3,500,000

(b) Deferred shares - executive short-term incentive scheme

Under the group's short-term incentive (STI) scheme, employees were offered subject to certain conditions deferred shares based on the achievement of KPI's in FY2021. The shares are offered subsequent to the balance date subject to receiving signed documentation from the employees.

The number of shares offered was determined based on the achievement of certain KPI's. The fair value of the shares offered was determined based on taking the 5-day volume weighted average price (VWAP) per share over the period of 24 June to 30 June ($0.59).

The following table shows the deferred shares offered and outstanding at the beginning and end of the reporting period:

As at 1 July Granted during the year Vested during the year As at 30 June Weighted average remaining contractual life of the deferred shares outstanding at end of period	30 June 2021 Number of shares 30 June 2020 Number of shares - - 770,000 595,000 (770,000) (595,000)
	- -
	0 0

Amaero International Ltd

45

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

16 Share-based payments (continued)

(c) Share-based transactions with suppliers

On 30 November 2019, Amaero International Ltd entered into an agreement with Rosewood Engineering Pty Ltd to provide the company with shares for the rights to the Ampro Agreement. The distribution agreement allows for Amaero International to be the distributor of Ampro 3D metal printers and ancillary equipment with exclusive rights to the North American market, subject to the agreement. Rosewood Engineering Pty Ltd received 5,300,000 shares in Amaero International Ltd at $0.16 per share.

(d) Expenses arising from share-based payment transactions

Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense were as follows:

Total expenses arising from share-based payment transactions recognised during the benefit expense were as follows:	period as part of employee
Deferred shares and performance rights issued under the short-term incentive scheme Shares-based transactions with suppliers	30 June 2021 $ 30 June 2020 $ 745,726 83,300 - 848,000
	745,726 931,300

46

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

17 Remuneration of auditors

During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms:

(a) RSM Australia Partners

• (i) Audit and other assurance services

Audit and review of financial statements Total remuneration for audit and other assurance services (ii) Taxation services Tax due diligence and review of prospectus Total remuneration for taxation services (iii) Other services Investigating accountant's report Total remuneration for other services Total auditor's remuneration 18 Loss per share (a) Reconciliation of loss used in calculating loss per share Basic and diluted loss per share Loss attributable to the ordinary equity holders of the company used in calculating loss per share: From continuing operations (b) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic and diluted loss per share	2021 $ 2020 $ 42,500 35,000
	42,500 35,000
	- 16,500
	- 16,500
	- 43,000
	- 43,000
	42,500 94,500
	30 June 2021 $ 30 June 2020 $ 6,990,084 5,777,946
	2021 Number 2020 Number 188,769,742 142,769,475

Amaero International Ltd

47

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

19 Parent entity financial information

(a) Summary financial information

The individual financial statements for the parent entity show the following aggregate amounts:

Balance sheet Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Shareholders' equity Share capital Reserves Share-based payments reserve Accumulated losses (Loss) for the period Total comprehensive (loss)	30 June 2021 $ 30 June 2020 $ 10,636,096 3,252,883 13,358,656 8,980,420 23,994,752 12,233,303 365,733 350,938 353,626 453,904 719,358 804,842 (46,550,787) (22,856,922) 27,173,600 14,026,374 1,161,060 83,300 (5,059,266) (2,678,879)
	23,275,394 11,430,795
	(2,378,055) (2,596,538)
	(2,378,055) (2,596,538)

(b) Guarantees entered into by the parent entity

The parent entity has not entered into any guarantees in relation to debts of its subsidiaries in the year ended 30 June 2021 (2020: nil).

(c) Contingent liabilities of the parent entity

The parent entity did not have any contingent liabilities as at 30 June 2021 or 30 June 2020.

(d) Contractual commitments for the acquisition of property, plant or equipment

The parent entity has not entered into any contractual commitments for the acquisition of property, plant or equipment in the year ended 30 June 2021 (2020: nil).

(e) Determining the parent entity financial information

The financial information for the parent entity has been prepared on the same basis as the consolidated financial statements, except for the following:

(i) Investments in subsidiaries

Investments in subsidiaries are accounted for at cost in the financial statements of Amaero International Ltd.

48

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

20 Summary of significant accounting policies

This note provides a list of the significant accounting policies adopted in the preparation of these consolidated financial statements to the extent they have not already been disclosed in the other notes above. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the group consisting of Amaero International Ltd and its subsidiaries.

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001 . Amaero International Ltd is a for-profit entity for the purpose of preparing the financial statements.

(i) Compliance with IFRS

The consolidated financial statements of the Amaero International Ltd group also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

(ii) Historical cost convention

The financial statements have been prepared on a historical cost basis.

(iii) New and amended standards adopted by the group

There are no new accounting standards or interpretations that would be expected to have a material impact on the group in the current or future reporting periods and on foreseeable future transactions.

(iv) New standards and interpretations not yet adopted

There are no new standards and interpretations that are not yet effective and that would be expected to have a material impact on the group in the current or future reporting periods and on foreseeable future transactions.

(b) Principles of consolidation

(i) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the group (refer to note 20(i)).

Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

(c) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. This has been identified as the chief executive officer.

49

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

20 Summary of significant accounting policies (continued)

(d) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in Australian dollar ($), which is Amaero International Ltd's functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss.

Foreign exchange gains and losses that relate to borrowings are presented in the consolidated statement of profit or loss and other comprehensive income, within finance costs. All other foreign exchange gains and losses are presented in the consolidated statement of profit or loss and other comprehensive income on a net basis within other gains/(losses).

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equities classified as at fair value through other comprehensive income are recognised in other comprehensive income.

(iii) Group companies

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each consolidated balance sheet presented are translated at the closing rate at the date of that consolidated balance sheet

• income and expenses for each consolidated income statement and consolidated statement of profit or loss and other comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and

• all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

(e) Revenue recognition

The accounting policies for the group’s revenue from contracts with customers are explained in note 2.

50

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

20 Summary of significant accounting policies (continued)

(f) Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received, and the group will comply with all attached conditions. Note 3 provides further information on how the group accounts for government grants.

(g) Income tax

The income tax expense or credit for the period is the tax payable on the current period's taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company and its subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

(h) Leases

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the group as lessee are classified as operating leases . Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.

The accounting policies for the group's leases are explained in note 6(e)(iii).

(i) Business combinations

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:

• fair values of the assets transferred

• liabilities incurred to the former owners of the acquired business

• equity interests issued by the group

• fair value of any asset or liability resulting from a contingent consideration arrangement, and

51

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

20 Summary of significant accounting policies (continued)

(i) Business combinations (continued)

• fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.

Acquisition-related costs are expensed as incurred.

The excess of the

• consideration transferred,

• amount of any non-controlling interest in the acquired entity, and

• acquisition-date fair value of any previous equity interest in the acquired entity

over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain purchase.

(j) Impairment of assets

An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

(k) Cash and cash equivalents

For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the consolidated balance sheet.

(l) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less loss allowance. See note 5(b) for further information about the group’s accounting for trade receivables and note 10(b) for a description of the group's impairment policies.

(m) Inventories

(i) Raw materials and stores, work in progress and finished goods

Raw materials and stores, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on the basis of weighted average costs. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

52

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

20 Summary of significant accounting policies (continued)

(n) Joint ventures

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Investments in joint ventures are accounted for using the equity method. Under the equity method, the share of the profits or losses of the joint venture is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in joint ventures are carried in the statement of financial position at cost plus post-acquisition changes in the consolidated entity's share of net assets of the joint venture. Goodwill relating to the joint venture is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Income earned from joint venture entities reduce the carrying amount of the investment.

(o) Investments and other financial assets

(i) Classification

The group classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through OCI or through profit or loss), and

• those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).

(ii) Recognition and derecognition

Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership.

(iii) Measurement

At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

Debt instruments

Subsequent measurement of debt instruments depends on the group’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the group classifies its debt instruments:

53

Amaero International Ltd

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

20 Summary of significant accounting policies (continued)

(o) Investments and other financial assets (continued)

• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the consolidated income statement.

• FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in the consolidated statement of profit or loss and other comprehensive income.

• FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises.

(iv) Impairment

The group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

(v) Income recognition

Interest income

Interest income is recognised using the effective interest method. When a receivable is impaired, the group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate.

(p) Property, plant and equipment

Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

The depreciation methods and periods used by the group are disclosed in note 6(b).

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount (note 20(j)).

Amaero International Ltd

54

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

20 Summary of significant accounting policies (continued)

(p) Property, plant and equipment (continued)

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.

(q) Trade and other payables

These amounts represent liabilities for goods and services provided to the group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

(r) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are removed from the consolidated balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

(s) Employee benefits

(i) Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.

(ii) Other long-term employee benefit obligations

The group also has liabilities for long service leave and annual leave that are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. These obligations are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period of high-quality corporate bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.

The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.

Amaero International Ltd

55

Amaero International Ltd Notes to the financial statements 30 June 2021

(continued)

20 Summary of significant accounting policies (continued)

(t) Contributed equity

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(u) Loss per share

(i) Basic loss per share

Basic loss per share is calculated by dividing:

• the loss attributable to owners of the company, excluding any costs of servicing equity other than ordinary shares

• by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

(ii) Diluted loss per share

Diluted loss per share adjusts the figures used in the determination of basic loss per share to take into account:

• the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

(v) Rounding of amounts

The company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the 'rounding off' of amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance with the instrument to the nearest dollar.

(w) Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the consolidated balance sheet.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.

56

Amaero International Ltd

Amaero International Ltd Directors' declaration 30 June 2021

In the directors' opinion:

• (a) the financial statements and notes set out on pages 17 to 56 are in accordance with the Corporations Act 2001 , including:

• (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and

• (ii) giving a true and fair view of the consolidated entity's financial position as at 30 June 2021 and of its performance for the financial year ended on that date, and

• (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Note 20(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

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

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Mr David Hanna Director

Melbourne 30 August 2021

Amaero International Ltd

57

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INDEPENDENT AUDITOR’S REPORT

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To the Members of Amaero International Limited

Opinion

We have audited the financial report of Amaero International Limited (“the Company”) and its subsidiaries (together referred to as “the Group”), which comprises the consolidated balance sheet as at 30 June 2021, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration.

In our opinion the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:

• (i) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance for the year then ended; and

• (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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58

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Key Audit Matters (continued)

Key Audit Matter	How our audit addressed this matter
Share-based payments Refer to Note 7 and Note 16 in the financial statements
The Company raised $13.83 Million of equity capital during the year through placement and Share Purchase Plan (SPP) and has issued share-based payments of $0.63 Million in relation to the capital raise. The company has also issued performance rights to employees during the year. Share-based payments expense of $ 0.75 Million was recognised for the year ended 30 June 2021. We considered this area as a key audit matter due to the materiality of the amount and the estimates used in the valuation of share-basedpayments.	As part of our audit procedures, we: • Reviewed the agreements and plans relating to share-based payments and assessed the appropriateness of valuation methods used; and • assessed the reasonableness of the accounting treatment and appropriateness of disclosures relating to share-based payments in accordance with AASB 2_Share-based Payments._

Other Information

The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2021, but does not include the financial report and the auditor's report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Report

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

In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

59

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Auditor's Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar2_2020.pdf This description forms part of our auditor's report.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in the directors' report for the year ended 30 June 2021.

In our opinion, the Remuneration Report of Amaero International Limited, for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001.

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

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RSM AUSTRALIA PARTNERS

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J S CROALL Partner

Dated: 30 August 2021 Melbourne, Victoria

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