COSOL LIMITED — Interim / Quarterly Report 2021

Feb 23, 2021

COSOL Limited Appendix 4D Half-year report

1. Company details

Name of entity: COSOL Limited ACN: 635 371 363 Reporting period: For the half-year ended 31 December 2020 Previous period: For the half-year ended 31 December 2019

2. Results for announcement to the market

				$
Revenues from ordinary activities	up	-	to	15,655,784
Revenue from ordinary activities (proforma basis - half year 2019:
10,766,871)	up	45.4%		15,655,784
Profit from ordinary activities after tax attributable to the owners of
COSOL Limited	up	2693.6%	to	1,845,132
Profit from ordinary activities after tax attributable to the owners of
COSOL Limited (proforma basis - half year 2019: 1,361,630)	up	35.5%		1,845,132
Profit for the half-year attributable to the owners of COSOL Limited	up	2693.6%	to	1,845,132

Dividends

The Directors have declared a 0.5 cent interim dividend payable to all ordinary shareholders for the current financial half year. The dividend will be fully franked. The record date for entitlements to this dividend will be 31 March 2021 with the payment on 15 April 2021.

Comments

The profit for the consolidated entity after providing for income tax amounted to $1,845,132 (31 December 2019: loss of $71,142).

3. Net tangible assets

Net tangible assets per ordinary security	Reporting period Cents (0.47)	Previous period Cents 1.00

4. Control gained over entities

Name of entities (or group of entities) AddOns Inc Date control gained 1 September 2020

COSOL Limited Appendix 4D Half-year report

5. Dividends

Current period

The Directors have declared a 0.5 cent interim dividend payable to all ordinary shareholders for the current financial half year. The dividend will be fully franked. The record date for entitlements to this dividend will be 31 March 2021 with the payment on 15 April 2021.

Previous period

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

6. Foreign entities

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

The results for AddOns Inc are prepared in accordance with Australian Accounting Standards (AAS).

7. Audit qualification or review

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

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

8. Attachments

Details of attachments (if any):

The Interim Report of COSOL Limited for the half-year ended 31 December 2020 is attached.

9. Signed

Signed _________

Date: 23 February 2021

Geoffrey Lewis Chairman

COSOL Limited

Interim Report - 31 December 2020

ACN 635 371 363

COSOL Limited Directors' report 31 December 2020

The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of COSOL Limited (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled at the end of, or during, the half-year ended 31 December 2020.

Directors

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

Geoffrey James Lewis (Chairman) Gerald Peter Strautins Grant Anthony Pestell Stephen Edward Oliver Johnston

Benjamin Thomas Buckley (Managing Director) (appointed 6 October 2020)

Dividends

The Directors have declared a 0.5 cent interim dividend payable to all ordinary shareholders for the current financial half year. The dividend will be fully franked. The record date for entitlements to this dividend will be 31 March 2021 with the payment on 15 April 2021. There were no dividends paid, recommended or declared during the previous financial half-year.

Review of operations

The profit for the consolidated entity after providing for income tax amounted to $1,845,132 (31 December 2019: loss of $71,142).

Revenue for the consolidated entity for the half year amounted to $15,655,332 (31 December 2019: $- ).

Significant changes in the state of affairs

On 1 September 2020, the Company acquired AddOns Inc, a managed services IT, software and professional services business based in Denver, Colorado, USA.

On 6 October 2020, Benjamin Buckley was appointed Managing Director of COSOL Ltd.

There were no other significant changes in the state of affairs of the consolidated entity during the financial half-year.

Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors' report.

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

On behalf of the directors

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Geoffrey Lewis _________ Chairman

23 February 2021

1

Auditor's Independence Declaration

To those charged with the governance of Cosol Limited

As auditor for the review of Cosol Limited for the half-year ended 31 December 2020, I declare that, to the best of my knowledge and belief, there have been:

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

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

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Elderton Audit Pty Ltd

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Nicholas Hollens

Managing Director

23 February 2021

COSOL Limited Contents 31 December 2020

Statement of profit or loss and other comprehensive income	4
Statement of financial position	5
Statement of changes in equity	6
Statement of cash flows	7
Notes to the financial statements	8
Directors' declaration	22
Independent auditor's review report to the members of COSOL Limited	23

General information

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

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

Registered office Principal place of business Murcia Pestell Hillard Lawyers Level 3, 201 Leichhardt Street, Suite 183 Level 6, Spring Hill 580 Hay Street QUEENSLAND 4000 PERTH WA 6000

The financial statements were authorised for issue, in accordance with a resolution of directors, on 23 February 2021.

3

COSOL Limited Statement of profit or loss and other comprehensive income For the half-year ended 31 December 2020

Note Revenue 2 Other income 3 Interest income Expenses Cost of sales Depreciation and amortisation expense 4 Salaries & Wages Share based payments Operating and General Expenses Finance costs Profit/(loss) before income tax expense Income tax expense 5 Profit/(loss) after income tax expense for the half-year attributable to the owners of COSOL Limited Other comprehensive income for the half-year, net of tax Total comprehensive income for the half-year attributable to the owners of COSOL Limited Basic earnings per share 24 Diluted earnings per share 24	Consolidated For the half year ended 31 December 2020 For the period 7 August 2019 to 31 December 2019 $ $ 15,654,936 - 80,903 - 848 - (9,957,347) - (269,315) - (1,577,178) - (217,748) - (1,149,748) (71,142) (47,499) -	Consolidated For the half year ended 31 December 2020 For the period 7 August 2019 to 31 December 2019 $ $ 15,654,936 - 80,903 - 848 - (9,957,347) - (269,315) - (1,577,178) - (217,748) - (1,149,748) (71,142) (47,499) -
	2,517,852 (672,720)	(71,142) -
	1,845,132 -	(71,142) -
	1,845,132	(71,142)
	Cents 1.43 1.35	Cents (0.61) (0.61)

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

4

COSOL Limited Statement of financial position As at 31 December 2020

Note Assets Current assets Cash and cash equivalents Trade and other receivables Inventories Prepayments and other current assets 6 Total current assets Non-current assets Property, plant and equipment 7 Right-of-use assets 8 Intangibles 9 Deferred tax 10 Total non-current assets Total assets Liabilities Current liabilities Trade payables Bank loans 11 Lease liability 12 Income tax Employee benefits 13 Deferred consideration and other provisions Accrued and other liabilities 14 Total current liabilities Non-current liabilities Bank loans 15 Lease liability Deferred consideration Total non-current liabilities Total liabilities Net assets Equity Issued capital 16 Reserves Retained profits Total equity	Consolidated 31 December 2020 30 June 2020 $ $ 9,361,767 6,774,536 5,558,279 4,021,414 121,271 - 404,388 127,355	Consolidated 31 December 2020 30 June 2020 $ $ 9,361,767 6,774,536 5,558,279 4,021,414 121,271 - 404,388 127,355
	15,445,705	10,923,305
	317,983 952,556 24,271,815 388,690	109,671 418,356 18,209,183 364,249
	25,931,044	19,101,459
	41,376,749	30,024,764
	1,670,091 1,000,000 454,805 80,988 603,198 2,795,309 6,606,541	1,457,534 - 101,531 206,401 473,736 3,704,619 1,490,390
	13,210,932	7,434,211
	1,750,000 574,976 2,264,799	- 290,124 2,795,381
	4,589,775	3,085,505
	17,800,707	10,519,716
	23,576,042	19,505,048
	20,053,353 171,147 3,351,542	17,987,986 10,652 1,506,410
	23,576,042	19,505,048

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

5

COSOL Limited Statement of changes in equity For the half-year ended 31 December 2020

Consolidated Balance at 7 August 2019 Loss after income tax expense for the half-year Other comprehensive income for the half-year, net of tax Total comprehensive income for the half-year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs Balance at 31 December 2019 Issued capital Consolidated $ Balance at 1 July 2020 17,987,986 Profit after income tax expense for the half- year - Other comprehensive income for the half-year, net of tax - Total comprehensive income for the half-year - Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 16) 2,093,131 Share-based payments (note 25) - Foreign currency translation - Adjustment to tax on listing fees for equity issue (27,764) Balance at 31 December 2020 20,053,353	Consolidated Balance at 7 August 2019 Loss after income tax expense for the half-year Other comprehensive income for the half-year, net of tax Total comprehensive income for the half-year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs Balance at 31 December 2019 Issued capital Consolidated $ Balance at 1 July 2020 17,987,986 Profit after income tax expense for the half- year - Other comprehensive income for the half-year, net of tax - Total comprehensive income for the half-year - Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 16) 2,093,131 Share-based payments (note 25) - Foreign currency translation - Adjustment to tax on listing fees for equity issue (27,764) Balance at 31 December 2020 20,053,353	Issued capital $ - - -	Reserves $ - - -	Retained profits $ - (71,142) -	Total equity $ - (71,142) -
		- 2,150,000	- -	(71,142) -	(71,142) 2,150,000
		2,150,000	-	(71,142)	2,078,858
		Share based payment reserve $ 10,652 - -	Foreign exchange reserve $ - - -	Retained profits $ 1,506,412 1,845,132 -	Total equity $ 19,505,050 1,845,132 -
	- 2,093,131 - - (27,764)	- - 217,748 - -	- - - (57,255) -	1,845,132 - - - -	1,845,132 2,093,131 217,748 (57,255) (27,764)
	20,053,353	228,400	(57,255)	3,351,544	23,576,042

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

6

COSOL Limited Statement of cash flows For the half-year ended 31 December 2020

Note Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received Other revenue Interest and other finance costs paid Income taxes paid Net cash from/(used in) operating activities 23 Cash flows from investing activities Payment for purchase of business, net of cash acquired 21 Payments for prior period's business acquisition 21 Payments for property, plant and equipment 7 Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares 16 Proceeds from bank loan Repayment of bank loan Repayment of lease liabilities Net cash from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial half-year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the financial half-year	Consolidated For the half year ended 31 December 2020 For the period 7 August 2019 to 31 December 2019 $ $ 16,306,822 - (10,764,246) (504,669)	Consolidated For the half year ended 31 December 2020 For the period 7 August 2019 to 31 December 2019 $ $ 16,306,822 - (10,764,246) (504,669)
	5,542,576 848 80,903 (47,499) (822,574)	(504,669) - - - -
	4,754,254	(504,669)
	(851,501) (3,704,619) (32,931)	- - -
	(4,589,051)	-
	- 3,000,000 (250,000) (259,065)	2,945,000 - - -
	2,490,935	2,945,000
	2,656,138 6,774,536 (68,907)	2,440,331 - -
	9,361,767	2,440,331

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

7

COSOL Limited Notes to the financial statements 31 December 2020

Note 1. Significant accounting policies

These general purpose financial statements for the interim half-year reporting period ended 31 December 2020 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'.

These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2020 and any public announcements made by the company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated.

New or amended Accounting Standards and Interpretations adopted

The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

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

Note 2. Revenue

Rendering of services Product sales Revenue Note 3. Other income Government grants Reimbursement of expenses Other income	Consolidated For the half year ended 31 December 2020 For the period 7 August 2019 to 31 December 2019 $ $ 14,967,675 - 687,261 -	Consolidated For the half year ended 31 December 2020 For the period 7 August 2019 to 31 December 2019 $ $ 14,967,675 - 687,261 -
	15,654,936	-
	Consolidated For the half year ended 31December 2020 For the period 7 August 2019 to 31 December 2019 $ $ 70,000 - 10,903 -
	80,903	-

Note 3. Other income

8

COSOL Limited Notes to the financial statements 31 December 2020

Note 4. Depreciation and amortisation expense

Depreciation on property, plant and equipment Amortisation of right-of-use assets Note 5. Income tax expense Income tax expense Current tax Adjustment recognised for prior periods Deferred tax - origination and reversal of temporary differences Aggregate income tax expense Numerical reconciliation of income tax expense and tax at the statutory rate Profit/(loss) before income tax expense Tax at the statutory tax rate of 26% (2019: 27.5%) Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Entertainment expenses Share-based payments Amortisation of due diligence costs Non assessable income Deductible equity raising costs Adjustment recognised for prior periods Current half-year tax losses not recognised Current half-year temporary differences not recognised Difference in overseas tax rates Adjustment to deferred tax balances as a result of change in statutory tax rate Income tax expense	Consolidated For the half year ended 31 December 2020 For the period 7 August 2019 to 31 December 2019 $ $ 80,741 - 188,574 -	Consolidated For the half year ended 31 December 2020 For the period 7 August 2019 to 31 December 2019 $ $ 80,741 - 188,574 -
	269,315	-
	Consolidated For the half year ended 31December 2020 For the period 7 August 2019 to 31 December 2019 $ $ 704,781 - 20,144 - (52,205) -
	672,720	-
	2,517,852	(71,142)
	654,642 9,859 56,614 15,363 (18,200) (18,997)	(19,564) - - - - -
	699,281 20,144 (4,596) (27,747) (25,462) 11,100	(19,564) - 19,564 - - -
	672,720	-

Note 5. Income tax expense

9

COSOL Limited Notes to the financial statements 31 December 2020

Note 5. Income tax expense (continued)

Amounts charged/(credited) directly to equity Deferred tax assets (note 10) Note 6. Current assets - Prepayments and other current assets Prepayments Other deposits Other current assets	Consolidated For the half year ended 31 December 2020 For the period 7 August 2019 to 31 December 2019 $ $ 27,764 (160,741)	Consolidated For the half year ended 31 December 2020 For the period 7 August 2019 to 31 December 2019 $ $ 27,764 (160,741)
	Consolidated 31 December 2020 30 June 2020 $ $ 184,063 48,263 38,951 - 181,374 79,092
	404,388	127,355

Note 6. Current assets - Prepayments and other current assets

10

COSOL Limited Notes to the financial statements 31 December 2020

Note 7. Non-current assets - property, plant and equipment

Leasehold improvements - at cost Less: Accumulated depreciation Fixtures and fittings - at cost Less: Accumulated depreciation Computer equipment - at cost Less: Accumulated depreciation Office equipment - at cost Less: Accumulated depreciation Low value asset pool - at cost Less: Accumulated depreciation Computer software - at cost Less: Accumulated depreciation	Consolidated 31 December 2020 30 June 2020 $ $ 23,767 16,510 (6,237) (4,175)	Consolidated 31 December 2020 30 June 2020 $ $ 23,767 16,510 (6,237) (4,175)
	17,530	12,335
	47,797 (6,166)	19,438 (3,796)
	41,631	15,642
	156,901 (64,777)	97,633 (45,304)
	92,124	52,329
	217,355 (53,709)	29,203 (720)
	163,646	28,483
	2,379 (1,660)	2,379 (1,497)
	719	882
	2,651 (318)	- -
	2,333	-
	317,983	109,671

Reconciliations

Reconciliations of the written down values at the beginning and end of the current financial half-year are set out below:

Consolidated Balance at 1 July 2020 Additions Additions through business combinations (note 21) Exchange differences Depreciation expense Balance at 31 December 2020	Buildings and improveme nts $ 12,335 - 7,600 (311) (2,094)	Computers $ 52,329 23,097 37,882 (1,210) (19,974)	Furniture and fixtures $ 15,642 - 29,701 (1,272) (2,440)	Low value asset pool $ 881 - - - (162)	Office equipment $ 28,484 9,834 186,756 (5,693) (55,735)	Computer software $ - - 2,776 (107) (336)	Total $ 109,671 32,931 264,715 (8,593) (80,741)
	17,530	92,124	41,631	719	163,646	2,333	317,983

11

COSOL Limited Notes to the financial statements 31 December 2020

Note 8. Non-current assets - right-of-use assets

Land and buildings - right-of-use Less: Accumulated depreciation	Consolidated 31 December 2020 30 June 2020 $ $ 1,296,354 579,260 (343,798) (160,904)	Consolidated 31 December 2020 30 June 2020 $ $ 1,296,354 579,260 (343,798) (160,904)
	952,556	418,356

Reconciliations

Reconciliations of the written down values at the beginning and end of the current financial half-year are set out below:

Consolidated Balance at 1 July 2020 Additions through business combinations (note 21) Exchange differences Depreciation expense Balance at 31 December 2020	$ 418,356 751,028 (28,254) (188,574)	Total $ 418,356 751,028 (28,254) (188,574)
	952,556	952,556

Note 9. Non-current assets - Intangibles

Goodwill - at cost	Consolidated 31 December 2020 30 June 2020 $ $ 24,271,815 18,209,183

Reconciliations

Reconciliations of the written down values at the beginning and end of the current financial half-year are set out below:

Consolidated Balance at 1 July 2020 Additions through business combinations (note 21) Balance at 31 December 2020	Goodwill $ 18,209,183 6,062,632	Total $ 18,209,183 6,062,632
	24,271,815	24,271,815

12

COSOL Limited Notes to the financial statements 31 December 2020

Note 10. Non-current assets - deferred tax

Deferred tax asset comprises temporary differences attributable to: Amounts recognised in profit or loss: Property, plant and equipment Employee benefits Revenue received in advance Blackhole expenses Other deferred tax liabilities Borrowing costs Amounts recognised in equity: Transaction costs on share issue Deferred tax asset Movements: Opening balance Credited to profit or loss (note 5) Credited/(charged) to equity (note 5) Closing balance	Consolidated 31 December 2020 30 June 2020 $ $ (12,218) (7,343) 194,483 199,029 (1,432) - 9,955 12,034 62,808 (212) 2,117 -	Consolidated 31 December 2020 30 June 2020 $ $ (12,218) (7,343) 194,483 199,029 (1,432) - 9,955 12,034 62,808 (212) 2,117 -
	255,713	203,508
	132,977	160,741
	388,690	364,249
	364,249 52,205 (27,764)	- 203,508 160,741
	388,690	364,249

Note 11. Current liabilities - bank loans

Bank loans	Consolidated 31 December 2020 30 June 2020 $ $ 1,000,000 -

Refer to note 18 for further information on financial instruments.

Note 12. Current liabilities - lease liability

Lease liability - rent right-of-use Lease liability - equipment	Consolidated 31 December 2020 30 June 2020 $ $ 408,357 101,531 46,448 -	Consolidated 31 December 2020 30 June 2020 $ $ 408,357 101,531 46,448 -
	454,805	101,531

Refer to note 18 for further information on financial instruments.

13

COSOL Limited Notes to the financial statements 31 December 2020

Note 13. Current liabilities - employee benefits

Annual leave Long service leave Employee benefits	Consolidated 31 December 2020 30 June 2020 $ $ 515,927 380,910 77,996 74,210 9,275 18,616	Consolidated 31 December 2020 30 June 2020 $ $ 515,927 380,910 77,996 74,210 9,275 18,616
	603,198	473,736

Note 14. Current liabilities - Accrued and other liabilities

Payroll tax payable Superannuation payable GST payable Accrued expenses Deferred revenue Other current liabilities	Consolidated 31 December 2020 30 June 2020 $ $ 45,487 137,317 314,520 268,620 414,510 327,258 629,444 551,882 484,018 87,367 4,718,562 117,946	Consolidated 31 December 2020 30 June 2020 $ $ 45,487 137,317 314,520 268,620 414,510 327,258 629,444 551,882 484,018 87,367 4,718,562 117,946
	6,606,541	1,490,390

Other current liabilities include a $3.66m advance from a client for regular transaction processing on its behalf. This advance is included in cash reserves at 31 December 2020 and was paid out in January as part of our regular ongoing services for this client.

Note 15. Non-current liabilities - bank loans

The consolidated entity has secured $6,500,000 in banking facilities from Bankwest. This comprises a term debt facility of $3,000,000, a multi-option facility for $3,250,000 and a corporate credit card facility for $250,000. The term of the facilities is three years and they expire on 31 August 2023. They have been provided on an unsecured basis and are subject to the group continuing to meet several performance covenants. As at 31 December 2020, the group was in compliance with all these covenants.

Bank loans	Consolidated 31 December 2020 30 June 2020 $ $ 1,750,000 -

Refer to note 18 for further information on financial instruments.

14

COSOL Limited Notes to the financial statements 31 December 2020

Note 16. Equity - issued capital

31 December 2020 Shares Ordinary shares - fully paid 131,771,695 Movements in ordinary share capital Details Date Balance 1 July 2020 Issue of shares 15 October 2020 Adjustment to tax effect of listing fees Balance 31 December 2020	31 December 2020 Shares 131,771,695	Consolidated 30 June 2020 31 December 2020 Shares $ 127,500,000 20,053,353	Consolidated 30 June 2020 31 December 2020 Shares $ 127,500,000 20,053,353	30 June 2020 $ 17,987,986
		Shares 127,500,000 4,271,695 - 131,771,695	Issue price $0.49 $0.00	$ 17,987,986 2,093,131 (27,764)
				20,053,353

Ordinary shares

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

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

Share buy-back

There is no current on-market share buy-back.

Note 17. Equity - dividends

The Directors have declared a 0.5 cent interim dividend payable to all ordinary shareholders for the current financial half year. The dividend will be fully franked. The record date for entitlements to this dividend will be 31 March 2021 with the payment on 15 April 2021. There were no dividends paid, recommended or declared during the previous financial half-year.

Note 18. Financial instruments

Financial risk management objectives

The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity uses derivative financial instruments such as forward foreign exchange contracts to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The consolidated entity uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk.

Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors ('the Board'). These policies include identification and analysis of the risk exposure of the consolidated entity and appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the consolidated entity's operating units. Finance reports to the Board on a monthly basis.

15

COSOL Limited Notes to the financial statements 31 December 2020

Note 18. Financial instruments (continued)

Market risk

Foreign currency risk

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

Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.

Price risk

The consolidated entity is not exposed to any significant price risk.

Interest rate risk

The consolidated entity's main interest rate risk arises from long-term borrowings. Borrowings obtained at variable rates expose the consolidated entity to interest rate risk. Borrowings obtained at fixed rates expose the consolidated entity to fair value interest rate risk.

As at the reporting date, the consolidated entity had the following variable rate borrowings outstanding:

	31 December 2020	31 December 2020	30 June	2020
	Weighted		Weighted
	average		average
	interest rate	Balance	interest rate	Balance
Consolidated	%	$	%	$
Bankwest term debt	4.19%	2,750,000	-	-
Net exposure to cash flow interest rate risk		2,750,000		-

For the consolidated entity the bank loans outstanding, totalling $2,750,000 ([2019: $-), are principal and interest payment loans. Quarterly cash outlays of approximately $24,000 (2019: $-) per quarter are required to service the interest payments. Minimum principal repayments of $750,000 (2019: $-) are due during the financial year ending 30 June 2021 (2019: $-).

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. The consolidated entity has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The consolidated entity obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The consolidated entity does not hold any collateral.

Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year.

Liquidity risk

Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.

The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.

Fair value of financial instruments

Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.

16

COSOL Limited Notes to the financial statements 31 December 2020

Note 19. Contingent liabilities

The parent entity had no contingent liabilities as at 31 December 2020.

Note 20. Related party transactions

Parent entity

COSOL Limited is the parent entity.

Subsidiaries

Interests in subsidiaries are set out in note 22.

Transactions with related parties

The following transactions occurred with related parties:

Mr Pestell, a non-executive Director, is Managing Director and part owner of, and has significant influence over, Murcia Pestell Hillard Lawyers, the consolidated entity's Australian legal adviser. Murcia Pestell Hillard Lawyers is not a material services supplier to the consolidated entity and the consolidated entity is not a material client of Murcia Pestell Hillard Lawyers. During the financial period, the consolidated entity paid fees as below in connection with the provision of legal services. These transactions occurred within a normal customer-supplier relationship and on terms and conditions no more favourable than those available to other parties on an arms-length basis.

	Consolidated	Consolidated
		For the
		period 7
	For the half	August 2019
	year ended	to 31
	31 December	December
	2020	2019
	$	$
Payment for goods and services:
Payment for services from other related party	122,067	197,445

Receivable from and payable to related parties

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

	Consolidated	Consolidated
	31 December
	2020	30 June 2020
	$	$
Current payables:
Trade payables to other related party	-	22,403

Loans to/from related parties

There were no loans to or from related parties at the current and previous reporting date.

Terms and conditions

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

17

COSOL Limited Notes to the financial statements 31 December 2020

Note 21. Business combinations

On 1 September 2020, COSOL Limited acquired 100% of the ordinary shares of AddOns Inc for the total consideration transferred of $6,838,559. This is a managed services, IT, software and professional services business based in Denver, Colorado, USA. The consideration amount is settled by COSOL Limited through issuance of shares amounting to $2.1 million, cash consideration amounting to $2.4 million, and assumed earn out consideration $2.4 million. The acquisition was in line with COSOL's stated objective of moving to become a global player in the enterprise asset management services space. The acquisition resulted in goodwill of $6,062,632 to be recognised in the consolidated financial statements. The acquired business contributed revenues of $3.0 million and profit after tax of $0.4 million to the consolidated entity for the period from 1 September 2020 to 31 December 2020.

Details of the acquisition are as follows:

Cash and cash equivalents Trade receivables Accrued revenue Prepayments Other current assets Buildings & improvements Computers Furniture & fixtures Office equipment Computer software Right-of-use assets Trade payables Employee benefits Accrued expenses Deferred revenue Lease liability Other liabilities Net assets acquired Goodwill Acquisition-date fair value of the total consideration transferred Representing: Cash paid or payable to vendor COSOL Limited shares issued to vendor Contingent consideration Acquisition costs expensed to profit or loss Cash used to acquire business, net of cash acquired: Acquisition-date fair value of the total consideration transferred Less: cash and cash equivalents Less: contingent consideration Less: shares issued by company as part of consideration Net cash used	Fair value $ 1,525,057 863,764 74,857 52,480 40,794 7,600 37,882 29,701 186,756 2,776 751,028 (315,140) (188,657) (138,726) (121,430) (939,647) (1,093,168)
	775,927 6,062,632
	6,838,559
	2,376,558 2,093,131 2,368,870
	6,838,559
	59,088
	6,838,559 (1,525,057) (2,368,870) (2,093,131)
	851,501

18

COSOL Limited Notes to the financial statements 31 December 2020

Note 22. Interests in subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1:

		Ownership interest	Ownership interest
		31 December
	Principal place of business /	2020	30 June 2020
Name	Country of incorporation	%	%
COSOL Australia Pty Limited	Australia	100.00%	100.00%
AddOns Inc	USA	100.00%	-

Note 23. Reconciliation of profit/(loss) after income tax to net cash from/(used in) operating activities

Profit/(loss) after income tax expense for the half-year Adjustments for: Depreciation and amortisation Share-based payments Foreign currency differences Change in operating assets and liabilities: Increase in trade and other receivables Increase in inventories Increase in deferred tax assets Increase in prepayments Increase in other operating assets Decrease in trade payables Decrease in provision for income tax Decrease in employee benefits Decrease in other provisions Increase in other operating liabilities Net cash from/(used in) operating activities	Consolidated For the half year ended 31 December 2020 For the period 7 August 2019 to 31 December 2019 $ $ 1,845,132 (71,142) 269,315 - 217,748 - 6,006 - (598,244) - (121,271) - (24,441) - (83,320) - (100,400) - (207,328) (433,527) (125,413) - (59,195) - (104,142) - 3,839,807 -	Consolidated For the half year ended 31 December 2020 For the period 7 August 2019 to 31 December 2019 $ $ 1,845,132 (71,142) 269,315 - 217,748 - 6,006 - (598,244) - (121,271) - (24,441) - (83,320) - (100,400) - (207,328) (433,527) (125,413) - (59,195) - (104,142) - 3,839,807 -
	4,754,254	(504,669)

19

COSOL Limited Notes to the financial statements 31 December 2020

Note 24. Earnings per share

Profit/(loss) after income tax attributable to the owners of COSOL Limited Basic earnings per share Diluted earnings per share Weighted average number of ordinary shares used in calculating basic earnings per share Adjustments for calculation of diluted earnings per share: Options over ordinary shares Weighted average number of ordinary shares used in calculating diluted earnings per share	Consolidated For the half year ended 31December 2020 For the period 7 August 2019 to 31 December 2019 $ $ 1,845,132 (71,142)	Consolidated For the half year ended 31December 2020 For the period 7 August 2019 to 31 December 2019 $ $ 1,845,132 (71,142)
	Cents 1.43 1.35 Number 129,297,380 7,246,311	Cents (0.61) (0.61) Number 11,678,083 -
	136,543,691	11,678,083

Note 25. Share-based payments

A share option plan has been established by the consolidated entity and approved by shareholders at a general meeting, whereby the consolidated entity may, at the discretion of the Nomination and Remuneration Committee, grant options over ordinary shares in the company to certain key management personnel of the consolidated entity. The options are issued for nil consideration and are granted in accordance with performance guidelines established by the Nomination and Remuneration Committee.

The options granted as part of the COSOL Limited employee share option plan are as laid out below:

Outstanding at the beginning of the financial half-year Granted Outstanding at the end of the financial half-year	Number of options Weighted average exercise price 31 December 2020 31 December 2020 5,000,000 $0.21 4,525,000 $0.40 9,525,000 $0.61	Number of options Weighted average exercise price For the period 7 August 2019 to 31 December 2019 For the period 7 August 2019 to 31 December 2019 - $0.00 - $0.00 - $0.00

20

COSOL Limited Notes to the financial statements 31 December 2020

Note 25. Share-based payments (continued)

Tranche Grant date Exercise price Tranche 1 Mr McGowan 24/04/2020 $0.3625 Tranche 2 Mr McGowan 24/04/2020 $0.415 Tranche 3 Mr McGowan 24/04/2020 $0.415 Tranche 1 Mr Buckley 24/04/2020 $0.3625 Tranche 2 Mr Buckley 24/04/2020 $0.415 Tranche 3 Mr Buckley 24/04/2020 $0.415 Tranche 1 Senior Leadership Team 01/07/2020 $0.61 Tranche 2 Senior Leadership Team 01/07/2020 $0.7 Tranche 4 Mr Buckley 17/11/2020 $0.9 Tranche 5 Mr Buckley 17/11/2020 $1.0	Balance at the start of the period 1,200,000 900,000 900,000 800,000 600,000 600,000 - - - - 5,000,000	Granted - - - - - - 762,500 762,500 1,500,000 1,500,000 4,525,000	Exercised - - - - - - - - - - -	Expired/ other - - - - - - - - - - -	Balance at the end of the period 1,200,000 900,000 900,000 800,000 600,000 600,000 762,500 762,500 1,500,000 1,500,000 9,525,000

The weighted average remaining contractual life of options outstanding at the end of the financial half-year was 2.41 years (2019: 0 years).

21

COSOL Limited Directors' declaration 31 December 2020

In the directors' opinion:

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

• the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at 31 December 2020 and of its performance for the financial half-year ended on that date; and

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

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

On behalf of the directors

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Geoffrey Lewis _________ Chairman

23 February 2021

22

Independent Auditor's Review Report

To the members of Cosol Limited

Report on the Half-Year Financial Report

Conclusion

We have reviewed the 31 December 2020 financial report of Cosol Limited (‘the Company’) and its controlled entities (collectively referred to as ‘the Group’), which comprises the consolidated statement of financial position as at 31 December 2020, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year then ended, a summary of significant accounting policies and other explanatory information, and the director’s declaration.

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the accompanying 31 December 2020 financial report of the Group has not been prepared, in all material respects, in accordance with Australian Accounting Standards and the Corporation Act 2001 .

Basis for Conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity . Our responsibilities are further described in the Auditor’s Responsibilities for the Review of the Financial Report section of our report. We are independent of the Group in accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants ( including Independence Standards) (the Code) that are relevant to our audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

Responsibility of Management for the Financial Report

Management of the Group are responsible for the preparation and fair presentation of the 31 December 2020 financial report in accordance with the Australian Accounting Standards and the Corporations Act 2001 . and for such internal control management determine is necessary to enable the preparation and fair presentation of the 31 December 2020 financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility for the Review of the Financial Report

Our responsibility is to express a conclusion on the financial report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us believe that the financial report has not been prepared, in all material respects in accordance with Australian Accounting Standards and the Corporations Act 2001 .

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

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Elderton Audit Pty Ltd

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Nicholas Hollens

Managing Director

23 February 2021 Perth