Advanced Engine Components Limited ABN 67 009 081 770

Half-Year Financial Report

For the 6 months ended 31 December 2011

Advanced Engine Components Limited

Half-Year Report – 31 December 2011

Directors’ Report Directors’ Declaration Statement of Profit or Loss and Other Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Auditor’s Independence Declaration 15 Independent Review Report to the Members 16

Advanced Engine Components Limited Half-Year Report – 31 December 2011

Directors’ Report

The Directors of Advanced Engine Components Limited (“ACE’ or “the Company”) and its controlled entities (the “Group”) submit herewith the financial report for the six months ended 31 December 2011 (“half-year”).

Details of Directors

The names of the Directors of the Company during or since the end of the half-year are:

Mr Faldi Ismail (appointed 5 June 2015) Dr Brendan de Kauwe (appointed 5 June 2015) Mr Nicholas Young (appointed 5 January 2015 and resigned 27 October 2015) Mr Peter Wall (appointed 27 October 2015) Mr Chris Ntoumenopoulos (appointed 27 October 2015) Mr Graham Keys (resigned 5 June 2015) Mr Antony Middleton (resigned 5 June 2015) Mr Kin Wa Pun (Albert) (resigned 5 June 2015) Mr Manharial Bhaichand Gathani Jain (resigned 5 June 2015)

Mr Mark Summers and Mr Jack James were appointed as Administrators of the Company on 29 August 2014. On 24 October 2014 Mr Summers and Mr James were appointed as Joint and Several Deed Administrators of the Company. Mr Summers subsequently resigned as Administrator of the Deed leaving Mr James as sole Administrator until the effectuation of the Deed of Company Arrangement (“DOCA”) on 23 September 2015. During this period, the powers of the Company’s officers (including Directors) were suspended and the administrators assumed control of the Company’s business.

Review and results of operations

The loss after tax for the half-year ended 31 December 2011 was $196,190 (31 December 2010: $3,093,962).

Incomplete records

Due to funding difficulties throughout the period the Company reviewed various strategies for the ongoing development and commercialisation of its technology and products. As a result of this review, product development and trading operations were minimised and in April 2011 the operations of the Group were placed on care and maintenance. At its request the Company was suspended from trading on the Australian Securities Exchange (“ASX”) on 5 April 2011. As detailed in Note 10 to the financial statements, on 6 March 2012, the Company announced that it had signed a Business Sale Agreement (“BSA”) with Westport Innovations (Australia) Pty Ltd (the “Purchaser”), under which the Purchaser would acquire the Company's non-China business assets, including all Australian inventory, plant & equipment, intellectual property and non-China contracts. In addition, on 12 November 2013, the Company announced that it had signed a co-marketing and supply agreement for its China business, as an extension of the BSA, under which it had agreed to sell its China inventory, equipment, customer and supplier contracts to the Purchaser.

On 29 August 2014, the Board resolved to place the Company into voluntary administration and appointed Mr Mark Summers and Mr Jack James of Palisade Business Consulting as joint and several administrators of the Company. Following appointment of the administrators, the powers of the Company’s officers (including Directors) were suspended and the administrators assumed control of the Company’s business, property and affairs.

The financial report has been prepared by Directors who were not in office for the periods presented in this report, nor were they parties involved with the Company and did not have oversight or control over the group’s financial reporting systems including but not limited to being able to obtain access to complete accounting records of the Company. In addition, the Directors have not been able to source books and records of the company’s subsidiaries and associate. Accordingly, the financial information of the group’s subsidiaries has been deconsolidated effective 1 July 2010. The Directors who prepared this financial report were appointed on or after 5 June 2015. Every reasonable effort has been made by the Directors to ascertain the true position of the Company as at 31 December 2011.

To prepare the financial report, the directors have reconstructed the financial records of the Group using data extracted from the Group’s accounting system for the entire financial year. However, there may be information that the current Directors have not been able to obtain, the impact of which may or may not be material on the financial statements.

Advanced Engine Components Limited

Half-Year Report – 31 December 2011

These financial statements do not contain all the required information or disclosures in relation transactions undertaken by the Company as this information is unascertainable due to the administration process and/or the change in directorships and key management personnel.

Consequently, although the Directors have prepared this financial report to the best of their knowledge based on the information made available to them, they are of the opinion that it is not possible to state that this financial report has been prepared in accordance with Australian Accounting Standards including Australian interpretations, other authoritative pronouncements of the Australian Accounting Standard Board and the Corporations Act 2001, nor is it possible to state this financial report gives a true and fair view of the Group’s financial position

Significant events after balance date

On 6 March 2012, the Company announced that it had signed a Business Sale Agreement (“BSA”) with Westport Innovations (Australia) Pty Ltd (the “Purchaser”), under which the Purchaser would acquire the Company's non-China business assets, including all Australian inventory, plant & equipment, intellectual property and non-China contracts. This sale was for consideration of $1.45 million, comprising cash, assumption of certain employee entitlements for transferring ACE employees and the repayment by the purchaser of certain bridging finance debt owing by ACE to the purchaser. The sale was completed on 20 March 2012.

On 12 November 2013, the Company announced that it had signed a co-marketing and supply agreement for its China business, as an extension of the BSA, under which it had agreed to sell its China inventory, equipment, customer and supplier contracts to the Purchaser for the Chinese yuan equivalent of US$210,000 (inclusive of VAT) to be paid in part in cash and in part forgiveness of debt. The Company retained the ACE trade mark for China and the non-exclusive right to manufacture, service and sell the ACE natural gas system in China; and access in China, on a fee for service basis and agreed terms to existing ACE technology, former employees and supply of product including software and technical services.

On 29 August 2014, the Company announced that it had accepted an offer from Otsana Pty Ltd (trading as Otsana Capital) (“Otsana”) to recapitalise the Company that will result in all the outstanding debts of the Company being compromised via a Deed of Company Arrangement (“DOCA”) and sufficient cash being injected into the Company to support its near-term business objectives. The Directors resolved to appoint Mark Summers and Jack James of Palisade Business Consulting as joint and several administrators on the same day.

On 3 October 2014, the creditors resolved for the Company to execute a DOCA and that Jack James and Mark Summers be appointed Administrators of the DOCA. The DOCA was executed on 24 October 2014.

On 16 December 2014, Ms Alicia Mitton resigned as Company Secretary.

On 7 January 2015, the Company announced that the recapitalization of the Company under the DOCA that was executed on 24 October 2014 had been delayed due to the requirement for the Company to receive shareholder approval for several transactions that had been undertaken. Mr Mark Summers also resigned as the deed administrator, with Mr Jack James continuing as sole deed administrator.

On 13 March 2015 the creditors of the Company accepted a varied DOCA put to them by the Deed Administrator. On 20 March 2015 the Deed Administrator announced they had finalised negotiations for a restructure and recapitalisation of the Company. The key terms of the restructure and re-capitalisation were:

(a) consolidation of existing share capital on a 1:40 basis;
(b) issue of 5,000,000 new post consolidation shares at a deemed issue price of $0.02 to the Creditors Trust, as consideration for settling $10,656,596 (as estimated by the Deed Administrator) owing to non-trade creditors of the Company;
(c) the Company to pay $200,000 cash to the Creditors Trust as consideration for settling all creditor claims of approximately $953,871 (as estimated by the Deed Administrator);
(d) an agreement to the issue of 25,000,000 new post-consolidation shares for a total consideration of $250 and 25,000,000 options, exercisable on or before 4 years from the date of issue, at a total issue price of $250 price to sophisticated or professional investors who are clients of Otsana; and
(e) resignation of existing Directors with appointment of nominated Directors.

Shareholders approved the recapitalization transactions at a Shareholders meeting on 5 June 2015. At this meeting, the following resolutions were also passed:

(a) the previous disposal of the Group’s China inventory, equipment and supplier contracts was ratified;
(b) the removal of BDO Audit (WA) Pty Ltd from office and the appointment of Ernst & Young as auditor; and

Advanced Engine Components Limited

Half-Year Report – 31 December 2011

(c) Mr Faldi Ismail, Dr Brandan de Kauwe and Mr Nicholas Young were appointed as Directors of the Company. Following the meeting, Mr Graham Keys, Mr Anthony Middleton, Mr Manharlal Bhaichand Jain Gathani and Mr Kin Wa Pun resigned as directors of the Company.

On 19 June 2015, it was announced that the consolidation of share capital had been completed, resulting in 5,092,289 postconsolidation shares being on issue.

On 7 September 2015, 25,000,000 promotor placement shares were issued for $250, 5,000,000 creditor placement shares were issued pursuant to the DOCA and 25,000,000 promoter placement options were issued.

On 22 September 2015, the Company entered into a number of identical convertible loan agreements with unrelated parties (except for as detailed below) for a total amount of $300,000. The Company must seek shareholder approval to convert the loaned amounts no later than 3 months after 22 September 2015. Subject to the Shareholder approval being obtained, each convertible loan holder irrevocably directs the Company to satisfy the repayment of the funds advanced by issuing shares at a deemed issue price of $0.02 per Share upon conversion.

If Shareholder approval is not obtained, the funds advanced are repayable no later than four (4) months after 22 September 2015 or any other date as is agreed in writing between the parties. The Company may repay funds advanced at any time and amount repaid cannot be redrawn. No interest is payable and no security is required. One of the converting loan agreements, for an amount of $20,000, is with Davinch Pty Ltd, an entity controlled by Mr Chris Ntoumenopoulos, a current Director of the Company.

On 23 September 2015, the DOCA has wholly effectuated and control of the Company reverted back to the Board of Directors.

On 24 September 2015, Ms Shannon Coates was appointed as Company Secretary of the Company.

On 5 October 2015, the Company announced that it had signed a binding heads of agreement to acquire 100% of Investia Technologies Pty Ltd (“Investia”), a software and technology development company. In consideration for the acquisition, ACE will issue to Investia shareholders:

17,500,000 fully paid ACE shares at a deemed price of $0.02 and 17,500,000 options exercisable at $0.03 each, expiring three years from date of issue; and
Up to 32,500,000 deferred consideration shares subject to certain milestones being achieved.

Settlement of the acquisition will be subject to the required regulatory approvals and completing a capital raising of $3,400,000 through the offer of ACE shares at a price of not less than $0.02 per share.

On 27 October 2015, the Company announced the appointment of Mr Peter Wall and Mr Chris Ntoumenopolous as Non-Executive Directors and the resignation of Mr Nicholas Young as a Non-Executive Director.

Other than as outlined above, at the date of this report, there are no matters or circumstances which have arisen since 31 December 2011 that have significantly affected or may significantly affect:

the operations, in financial years subsequent to 31 December 2011, of the Consolidated Entity;
the results of those operations, in financial years subsequent to 31 December 2011, of the Consolidated Entity; or
the state of affairs, in financial years subsequent to 31 December 2011, of the Consolidated Entity.

Auditor’s Independence Declaration

The auditor’s independence declaration is included on page 15 and forms part of the Director’s report for the six months ended 31 December 2011.

Signed in accordance with a resolution of Directors.

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Faldi Ismail Non-Executive Chairman Perth, Western Australia , 18 November 2015

Advanced Engine Components Limited Half-Year Report – 31 December 2011

Directors’ Declaration

In the opinion of the Directors of Advanced Engine Components Limited and its controlled entities (‘the Group’)
As set out in Note 2(b), although the Directors have prepared the financial statements and notes thereto, to the best of their knowledge based on the information made available to them, they are of the opinion that it is not possible to state that the financial statements and notes thereto are in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Company’s financial position as at 31 December 2011 and of its performance for the financial year ended on that date; and
(b) complying with Australian Accounting Standards AASB 134 Interim Financial Reporting
Subject to the matters highlighted in Note 3, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Directors by:

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Faldi Ismail Non-Executive Chairman Perth, Western Australia,

18 November 2015

Advanced Engine Components Limited

Half-Year Report – 31 December 2011

Statement of Profit or Loss and Other Comprehensive Income

for the half-year ended 31 December 2011

		31 Dec 11	31 Dec 10
		$	$
Sales revenue		1,111,267	1,036,267
Cost ofgoods sold		(777,974)	(901,621)
Grossprofit		333,293	134,646
Other income		430,710	17,994
Distribution expenses		(53,959)	(63,008)
Marketing expenses		(2,518)	(3,212)
Administration expenses		(866,820)	(2,848,708)
Other operating expenses		(20,864)	(397,332)
Finance costs		(16,032)	(495,545)
Loss from continuing operations before income tax expense		(196,190)	(3,655,165)
Income tax benefit		-	561,203
Loss after income tax from continuing operations		(196,190)	(3,093,962)
Net Loss for the half-year attributable to owners of
Advanced Engine Components Limited		(196,190)	(3,093,962)
Other comprehensive income
-Exchange difference on translation of foreign operations		-	(289,478)
Total comprehensive loss for the half-year attributable
to owners of Advanced Engine Components Limited		(196,190)	(3,383,440)
		Cents	Cents
Basic and diluted loss per share	11	(3.86)	(60.92)

The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

Advanced Engine Components Limited

Half-Year Report – 31 December 2011

Statement of Financial Position

Statement of Financial Position
as at 31 December 2011
	Notes	31 Dec 11	30 Jun 11
		$	$
ASSETS
Current Assets
Cash and cash equivalents		26,692	138,546
Trade and other receivables		357,784	51,034
Inventories		767,311	811,886
Total Current Assets		1,151,787	1,001,466
Non-Current Assets
Property, plant and equipment		262,189	277,522
Total Non-Current Assets		262,189	277,522
Total Assets		1,413,976	1,278,988
LIABILITIES
Current Liabilities
Trade and other payables	6	1,526,720	1,503,125
Borrowings	7	10,288,813	9,981,230
Provisions		773,530	773,530
Total Current Liabilities		12,589,063	12,257,885
Total Liabilities		12,589,063	12,257,885
Net Liabilities		(11,175,087)	(10,978,897)
DEFICIT
Contributed equity		21,193,635	21,193,635
Reserves		1,353,280	1,353,280
Accumulated losses		(33,722,002)	(33,525,812)
Shareholders Deficit		(11,175,087)	(10,978,897)

The above Statement of Financial Position should be read in conjunction with the accompanying notes.

Advanced Engine Components Limited

Half-Year Report – 31 December 2011

Statement of Changes in Equity

for the half-year ended 31 December 2011

	Issued Capital $ Asset Revaluation Reserve $ Share Based Payments Reserve $ Foreign Exchange Translation Reserve $ Accumulated Losses $ Total $
As at 1 July 2010 Net loss for the period Other comprehensive income *Total Comprehensive* *Loss* At 31 December 2010 As at 1 July 2011 Net loss for the period Other comprehensive income *Total Comprehensive* *Loss* At 31 December 2011	21,193,635 750,000 603,280 79,991 (24,573,520) (1,946,614) - - - - (3,093,962) (3,093,962) - - - (289,478) - (289,478)
	- - - (289,478) (3,093,962) (3,383,440)
	21,193,635 750,000 603,280 (209,487) (27,667,482) (5,330,054)
	21,193,635 750,000 603,280 - (33,525,812) (10,978,897) - - - - (196,190) (196,190) - - - - - -
	- - - - (196,190) (196,190)
	21,193,635 750,000 603,280 - (33,722,002) (11,175,087)

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

Advanced Engine Components Limited

Half-Year Report – 31 December 2011

Statement of Cash Flows

for the half-year ended 31 December 2011

for the half-year ended 31 December 2011
	Consolidated
	31 Dec 11	31 Dec 10
	$	$
Cash Flows from Operating Activities
Receipts from customers	830,586	965,426
Payments to suppliers and employees	(1,656,377)	(1,966,065)
R&D tax rebate	399,627	395,947
Interest received and export development grant	31,084	1,954
Interestpaid and borrowingcosts	(23,807)	(30,327)
Net cash outflow from operating activities	(418,887)	(633,065)
Cash Flows from Investing Activities
Payments for property, plant and equipment	(550)	(1,835)
Payment for capitalised development costs	-	(327,278)
Net cash outflow from investing activities	(550)	(329,113)
Cash Flows from Financing Activities
Proceeds from borrowings	361,731	597,045
Repayment of borrowings	(54,148)	(109,197)
Net cash inflow from financing activities	307,583	487,848
Net decrease in cash held	(111,854)	(474,330)
Cash and cash equivalents at the beginningof the half-year	138,546	828,891
Cashand cash equivalentsat the end of the half-year	26,692	354,561

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

Advanced Engine Components Limited Half-Year Report – 31 December 2011 Notes to the Financial Statements

1 Reporting Entity

The consolidated financial statements of Advanced Engine Components Limited (“the Company”) for the half-year ended 31 December 2011 were authorised for issue in accordance with a resolution of the Directors on 18 November 2015. The Company was incorporated in Australia. The Group is a for-profit entity.

2 Basis of Preparation of Half-year Report

(a) Statement of Compliance

The half-year financial report is a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001 and AASB 134: Interim Financial Reporting. Compliance with AASB 134 ensures compliance with IAS 34 ‘Interim Financial Reporting’ where possible (refer to note 2 (b)).

The financial statements have been prepared on an accruals basis and is based on historical costs modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

This half-year report does not include the full disclosures of the type normally included in an annual financial report. Therefore, it cannot be expected to provide as full an understanding of the financial performance, financial position and cash flows of the Company as in the full financial report.

It is recommended that this half-year financial report is read in conjunction with the annual financial report for the year ended 30 June 2011 and any public announcements made by Advanced Engine Components Limited during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001 and the ASX Listing Rules.

The Accounting policies adopted in the preparation of this half-year financial report are consistent with those followed in preparation of the Group’s annual consolidated financial statements for the year ended 30 June 2011, except for the adoption of new standards and interpretations effective as of 1 July 2011 detailed below.

Amendment to AASB 101 Presentation of Financial Statements

The amendment provides a choice of presenting the reconciliations for each component of other comprehensive income either in the statement of changes in equity or in the notes to the financial statements. The consolidated group has elected to retain reconciliations within the Consolidated Statement of Changes in Equity as previously disclosed.

Amendments to AASB 134 Interim Financial Reporting

The amendments clarified certain disclosures relating to events and transactions that are significant to an understanding of changes in the consolidated group’s circumstances since the last annual financial statements. The consolidated group’s interim financial statements as of 31 December 2011 reflect these amended disclosure requirements, where applicable.

(b) Incomplete records

Due to funding difficulties throughout the period the Company reviewed various strategies for the ongoing development and commercialisation of its technology and products. As a result of this review, product development and trading operations were minimised and in April 2011 the operations of the Group were placed on care and maintenance. At its request the Company was suspended from trading on the Australian Securities Exchange (“ASX”) on 5 April 2011. As detailed in Note 10, on 6 March 2012, the Company announced that it had signed a Business Sale Agreement (BSA) with Westport Innovations (Australia) Pty Ltd (the Purchaser), under which the Purchaser would acquire the Company's non-China business assets, including all Australian inventory, plant & equipment, intellectual property and non-China contracts. In addition, on 12 November 2013, the Company announced that it had signed a co-marketing and supply agreement for its China business, as

Advanced Engine Components Limited Half-Year Report – 31 December 2011

an extension of the BSA, under which it had agreed to sell its China inventory, equipment, customer and supplier contracts to the Purchaser.

The financial report has been prepared by Directors who were not in office for the periods presented in this report, nor were they parties involved with the Company and did not have oversight or control over the group’s financial reporting systems including but not limited to being able to obtain access to complete accounting records of the Company. In addition, Directors have not been able to source books and records of the company’s subsidiaries and associate. Accordingly, the financial information of the group’s subsidiaries have been deconsolidated effective 1 July 2010. The Directors who prepared this financial report were appointed on or after 5 June 2015. The Directors who prepared this financial report were appointed on or after 5 June 2015. Every reasonable effort has been made by the Directors to ascertain the true position of the Company as at 31 December 2011.

To prepare the financial report, the Directors have reconstructed the financial records of the Group using data extracted from the Group’s accounting system for the entire financial year. However, there may be information that the current Directors have not been able to obtain, the impact of which may or may not be material on the financial statements.

3 Going Concern Basis

The group incurred a loss of $196,190 for the half-year ended 31 December 2011. In addition, the Group has net current liabilities and shareholders’ deficit of $11,175,087.

The financial report has been prepared on the basis of a going concern, which assumes continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. The Directors believe it is appropriate to prepare these accounts on a going concern basis because under the DoCA effectuated on 23 September 2015 the Company has extinguished all liabilities associated with the previous administration of the Company is in the process of undertaking the following transactions:

Completion of a capital raising to raise a minimum of $3,400,000.
Acquisition of Investia Technologies Pty Ltd (“Investia”), a software and technology development company. In consideration for the acquisition, ACE will issue to Investia shareholders:
17,500,000 fully paid ACE shares at a deemed price of $0.02 and 17,500,000 options exercisable at $0.03 each, expiring three years from date of issue.
Up to 32,500,000 deferred consideration shares subject to certain milestones being achieved.

Refer to Note 10: Events subsequent to reporting date for further details.

The cash flow forecast indicates that based on the completion of the capital raising as described above, the consolidated entity will have sufficient cash flows to meet all commitments and working capital requirements for a period of at least 12 months from the signing of this financial report. The Directors are also confident that all the necessary regulatory approvals

Advanced Engine Components Limited Half-Year Report – 31 December 2011

and requirements will be met to enable the Company to be re-instated on the ASX and for the transaction with Investia to proceed. Accordingly, the Directors are satisfied that the going concern basis of the preparation is appropriate.

Should the Group not achieve the matters set out above, there is significant uncertainty whether the Group will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.

The financial report does not contain any adjustments relating to the recoverability and classification of recorded assets or liabilities that might be necessary should the Group not be able to continue as a going concern.

4 Segment Information

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (the chief operating decision makers) in assessing performance and in determining the allocation of resources. The group previously reported its segments on geographical location. As disclosed in Note 2(b), the Directors have not been able to obtain financial information of the group’s subsidiaries and accordingly, the financial information of the group’s subsidiaries have been deconsolidated effective 1 July 2010. The financial information reflected in these financial statements only relate to the Australian geographical location which relate entirely to Advanced Engine Components Limited only.

As detailed in Note 2 (b), the directors do not have access to sufficient information to enable additional entity level disclosures to be made.

5 Dividends

No dividend has been paid or proposed in respect of the current or previous half-year (2010: Nil).

6 Trade and Other Payables

Trade payables Other payables Foreign currency payable	31 Dec 11 $ 30 June 11 $ 1,093,703 1,065,875 382,331 426,143 50,686 11,107
	1,526,720* 1,503,125

Following effectuation of the DOCA on 23 September 2015 (Refer to Note 10), all liabilities, contingent liabilities, obligations, warranties and long-term commitments of the Company were released.

7 Borrowings

Current: Bridging Loan from CCM Global Limited Bridging Loan from SQT Loan from 698 Capital Asia Pacific Ltd Loan from Syndicate Loan from Ocean Accord Loan from Director related entity Loan from 698 Capital Asia Pacific Ltd Total Borrowings	31 Dec 11 $ 30 June 11 $ 250,000 137,269 249,000 - 5,082,648 5,082,648 665,556 719,704 471,995 471,995 157,332 157,332 3,412,282 3,412,282
	10,288,813* 9,981,230

Following effectuation of the DOCA on 23 September 2015 (Refer to Note 10), all liabilities, contingent liabilities, obligations, warranties and long-term commitments of the Company were released.

Advanced Engine Components Limited Half-Year Report – 31 December 2011

The terms and conditions of the above borrowings are consistent with those disclosed in the 30 June 2011 financial statements.

8 Commitments and Contingencies

In prior years, the Company facilitated a US$700,000 loan (balance at 31 December 2011: US$615,000) from an unrelated company, CCM Global Limited, to the company’s associate, Monika ACE Limited. The loan was delivered directly to Monika ACE Limited and did not involve cash flow through the Company. The loan was only repayable to CCM Global Limited if amount receivable from Monika ACE Limited was collected. As at 31 December 2011, the receivable from Monika ACE Limited was impaired and accordingly, the liability has been written back against the asset as the liability is not considered payable. If the receivable from Monika ACE Limited is collected, then ACE would have a liability due to CCM Global Limited.

Other than the above, as detailed in Note 2 (b), the Directors do not have access to sufficient information to enable detailed disclosure to be made regarding contingent liabilities and commitments.

Following effectuation of the DOCA on 23 September 2015 (Refer to Note 10), all liabilities, contingent liabilities, obligations, warranties and long-term commitments of the Company were released.

9 Related Party Transactions

On 19 November 2010, Mr Vivekananthan M.V. Nathan (Director of AEC) provided a working capital facility of $150,000 to AEC. The facility was repayable on or before 31 December 2011 with interest payable at 8% quarterly in arrears. The facility remains outstanding at 31 December 2011.

Other than the above, as detailed in Note 2 (b), the Directors do not have access to sufficient information to enable detailed disclosure to be made regarding related party transactions.

10 Subsequent Events

On 3 October 2014, the creditors resolved for the Company to execute a DOCA and that Jack James and Mark Summers be appointed Administrators of the DOCA. The DOCA was executed on 24 October 2014.

On 16 December 2014, Ms Alicia Mitton resigned as Company Secretary.

Advanced Engine Components Limited

Half-Year Report – 31 December 2011

(a) consolidation of existing share capital on a 1:40 basis;
(b) issue of 5,000,000 new post consolidation shares at a deemed issue price of $0.02 to the Creditors Trust, as consideration for settling $10,656,596 (as estimated by the Deed Administrator) owing to non-trade creditors of the Company;
(c) the Company to pay $200,000 cash to the Creditors Trust as consideration for settling all creditor claims of approximately $953,871 (as estimated by the Deed Administrator);
(d) an agreement to the issue of 25,000,000 new post-consolidation shares for a total consideration of $250 and 25,000,000 options, exercisable on or before 4 years from the date of issue, at a total issue price of $250 price to sophisticated or professional investors who are clients of Otsana; and
(e) resignation of existing Directors with appointment of nominated Directors.

Shareholders approved the recapitalization transactions at a Shareholders meeting on 5 June 2015. At this meeting, the following resolutions were also passed:

(a) the previous disposal of the Group’s China inventory, equipment and supplier contracts was ratified;
(b) the removal of BDO Audit (WA) Pty Ltd from office and the appointment of Ernst & Young as auditor; and
(c) Mr Faldi Ismail, Dr Brandan de Kauwe and Mr Nicholas Young were appointed as Directors of the Company. Following the meeting, Mr Graham Keys, Mr Anthony Middleton, Mr Manharlal Bhaichand Jain Gathani and Mr Kin Wa Pun resigned as directors of the Company.

On 19 June 2015, it was announced that the consolidation of share capital had been completed, resulting in 5,092,289 postconsolidation shares being on issue.

On 23 September 2015, the DOCA has wholly effectuated and control of the Company reverted back to the Board of Directors.

On 24 September 2015, Ms Shannon Coates was appointed as Company Secretary of the Company.

17,500,000 fully paid ACE shares at a deemed price of $0.02 and 17,500,000 options exercisable at $0.03 each, expiring three years from date of issue; and
Up to 32,500,000 deferred consideration shares subject to certain milestones being achieved.

On 27 October 2015, the Company announced the appointment of Mr Peter Wall and Mr Chris Ntoumenopolous as NonExecutive Directors and the resignation of Mr Nicholas Young as a Non-Executive Director.

Other than as outlined above, at the date of this report, there are no matters or circumstances which have arisen since 31 December 2011 that have significantly affected or may significantly affect:

Advanced Engine Components Limited Half-Year Report – 31 December 2011

(a) the operations, in financial years subsequent to 31 December 2011, of the Consolidated Entity;
(b) the results of those operations, in financial years subsequent to 31 December 2011, of the Consolidated Entity; or (c) the state of affairs, in financial years subsequent to 31 December 2011, of the Consolidated Entity.

11 Basic and diluted loss per share

The basic and diluted loss per share has been determined by taking into account the share consolidation (on a 1 for 40 basis) completed on 19 June 2015.

Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843

Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au

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Auditor’s Independence Declaration to the Directors of Advanced Engine Components Limited

In relation to our review of the financial report of Advanced Engine Components Limited for the half-year ended 31 December 2011, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

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Ernst & Young

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V L Hoang Partner 18 November 2015

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

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Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843

Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au

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To the members of Advanced Engine Components Limited Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Advanced Engine Components Limited and its controlled entities (‘the consolidated entity”), which comprises the consolidated statement of financial position as at 31 December 2011, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the half-year end or from time to time during the half-year.

Directors’ responsibility for the half-year financial report

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

Auditor’s responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review conducted in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity. Because of the matters described in the Basis for Disclaimer of Review Conclusion paragraphs, we were not able to obtain sufficient appropriate review evidence to provide a basis for a review conclusion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the Directors’ Report.

Basis for disclaimer of review conclusion

As disclosed in Note 2(b) to the half-year financial report, the half-year financial report has been prepared by the current Directors who were not in office for period presented in the 31 December 2011 half-year financial report and accordingly, did not have oversight or control over the consolidated entity’s financial reporting systems, risk management systems, or internal control systems for the period presented.

Due to the above, the current Board of Advanced Engine Components Limited has been unable to conclude without qualification, within its directors’ declaration, that the half-year financial report of the consolidated entity for the half-year ended 31 December 2011 have been prepared in accordance with the Corporations Act 2001 and Australian Accounting Standards, to give a true and fair view of the financial position of the consolidated entity as at 31 December 2011 and of its performance for the half-year ended on that date.

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

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The representation letter provided to the auditors by the current Directors of the company has also been qualified on the basis that they did not have oversight or control over the consolidated entity’s financial reporting systems, risk management systems, or internal control systems for the period presented.

As a result of the above matters, we were unable to obtain sufficient appropriate review evidence for the existence, measurement, valuation, rights and obligations, completeness and disclosures relating to the assets, liabilities, revenues, expenses and cash flows of Advanced Engine Components Limited, its subsidiaries and associate as at 31 December 2011 and for the half-year then ended.

We audited the financial statements of the consolidated entity for the financial year ended 30 June 2011, for which we were unable to and did not express an opinion as to the truth and fairness of the financial position of the consolidated entity as at 30 June 2011 and of its performance for the year ended on that date due to the existence of the limitation of the scope of our work as detailed in our disclaimer of auditor’s opinion dated 18 November 2015. Certain balances as at 30 June 2011 enter into the determination of financial performance for the half-year ended 31 December 2011. Further, the financial position of the consolidated entity at 30 June 2011 is shown as comparatives in the 31 December 2011 half-year financial report.
The financial statements of the consolidated entity for the half-year ended 31 December 2010 was reviewed by another auditor who in their review report dated 28 February 2011 expressed a qualified conclusion on that half-year financial report as follows:

Attention is drawn to the recoverability of the consolidated entity’s trade and other receivables with a carrying value of $1,445,673. We have not been able to obtain sufficient audit evidence to support the recoverability of $244,475 of these receivables. Due to this limitation of scope, we have not been able to determine if any impairment provision against these receivables is necessary or the amount of the effect, if any, that an impairment provision would have on the consolidated statement of financial position and the statement of profit or loss or other comprehensive income.

Attention is drawn to the recoverability of the consolidated entity’s intangible asset relating to engine development costs with a carrying value of $3,696,175. The entity has forecast sales based upon their best estimates and have utilised this information for assessing the asset for impairment in accordance with AASB 136. Due to the inherent uncertainties of future sales forecasts, we have not been able to obtain sufficient appropriate audit evidence to support the likelihood of the sales being achieved nor have we been able to perform support appropriate alternative procedures to support the sales forecasts to assess the recoverability of the asset. Due to this limitation of scope, we have not been able to determine if any impairment provision against this intangible asset is necessary or the amount of the effect, if any, that an impairment provision would have on the consolidated statement of financial position and the statement of profit or loss or other comprehensive income.

The financial performance of the consolidated entity for the half-year ended 31 December 2010 is shown as comparatives in the 31 December 2011 half-year financial report.

The current Board of Advanced Engine Components Limited has not been able to source and provide to ourselves certain books and records of the company. Without access to this documentation, we are unable to obtain sufficient appropriate review evidence for the existence, measurement, valuation, rights and obligations, completeness and disclosures relating to the assets, liabilities, revenues, expenses and cash flows of Advanced Engine Components Limited as reflected in the financial statements as at 31 December 2011 and for the half-year then ended.

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

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The current Board of Advanced Engine Components Limited has also not been able to source and provide to ourselves books and records of the company’s subsidiaries. As detailed in Note 2(b) to the half-year financial report, the financial information of the subsidiaries has been deconsolidated from 1 July 2010. Under Australian Accounting Standards, the financial information of subsidiaries should be consolidated. Had the financial information of the subsidiaries been consolidated, many elements in the accompanying financial report would have been materially affected. The effects on the financial report of the failure to consolidate the subsidiaries financial position as at 31 December 2011 and its performance for the half-year then ended have not been able to be determined.
The current Board of Advanced Engine Components Limited has not been able to source and provide to ourselves books and records of the company’s associate. The investment in the associate was impaired to nil at 30 June 2011 and is being carried at a nil value at 31 December 2011. We were unable to obtain sufficient appropriate review evidence concerning the carrying amount of the company’s investment in the associate as at 31 December 2011 and the company’s share of the associate’s profit or loss and other comprehensive income for the half-year then ended.
As detailed in Note 2(b), the directors have reconstructed the financial records of the consolidated entity using data extracted from the consolidated entity’s accounting system and the financial statements do not contain all required information or disclosures in relation to transactions undertaken by the consolidated entity.

Disclaimer of review conclusion

Because of the significance of the matters described in the basis for disclaimer of review conclusion paragraphs, we have not been able to obtain sufficient appropriate review evidence to provide a basis for a review conclusion. Accordingly we do not express a review conclusion on the financial report for the halfyear ended 31 December 2011.

Emphasis of matter

Without amendment to our disclaimer of review conclusion, we draw attention to Note 3 in the financial report. The conditions as set forth in Note 3 indicate the existence of a material uncertainty that may cast significant doubt about the consolidated entity’s ability to continue as a going concern and therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business.

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

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Report on other legal and regulatory requirements

Due to the matters described in the basis for disclaimer of review conclusion paragraphs, we have not been given all information, explanation and assistance necessary for the conduct of the review; and we are unable to determine whether the company has kept:

a) financial records sufficient to enable the financial report to be prepared and reviewed; and
b) other records and registers as required by the Corporations Act 2001 .

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Ernst & Young

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V L Hoang Partner Perth 18 November 2015

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

AI assistant

FIRST LITHIUM LIMITED — Interim / Quarterly Report 2012

64921_rns_2015-11-18_5c224cab-6b6c-402d-a309-f3566650ab28.pdf

Advanced Engine Components Limited ABN 67 009 081 770

Table of Contents

Directors’ Report

Details of Directors

Review and results of operations

Incomplete records

Half-Year Report – 31 December 2011

Significant events after balance date

Auditor’s Independence Declaration

Directors’ Declaration

Statement of Profit or Loss and Other Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

1 Reporting Entity

2 Basis of Preparation of Half-year Report

(a) Statement of Compliance

Amendment to AASB 101 Presentation of Financial Statements

Amendments to AASB 134 Interim Financial Reporting

(b) Incomplete records

3 Going Concern Basis

4 Segment Information

5 Dividends

6 Trade and Other Payables

7 Borrowings

8 Commitments and Contingencies

9 Related Party Transactions

10 Subsequent Events

11 Basic and diluted loss per share

Auditor’s Independence Declaration to the Directors of Advanced Engine Components Limited

To the members of Advanced Engine Components Limited Report on the Half-Year Financial Report

Directors’ responsibility for the half-year financial report

Auditor’s responsibility

Independence

Basis for disclaimer of review conclusion

Disclaimer of review conclusion

Emphasis of matter

Report on other legal and regulatory requirements

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FIRST LITHIUM LIMITED Interim / Quarterly Report 2012