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MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

CONSOLIDATED FINANCIAL REPORT

FOR THE YEAR ENDED 31 DECEMBER 2020

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 54 007 254 346

DIRECTORS

A. Yu (Chairman and Non-executive Director) S. Leung (Chief Executive Officer) S. Yan (Executive Director) N. Chan (Executive Director) T. Chu (Non-executive Director)

COMPANY SECRETARY

Y. Wong

REGISTERED OFFICE

17 Friars Road Moorabbin, Victoria 3189 Australia Tel: 61-3-8586-8200 Fax: 61-3-8586-8201

SOLICITORS

Minter Ellison

PRINCIPAL BANKERS

National Australia Bank Limited

SHARE REGISTER

Computershare Investor Services Pty Limited GPO Box 2975, Melbourne, Vic 3000 Phone: 1300 850 505 Fax: 61 3 9473 2500

AUDITORS

Pitcher Partners

STOCK EXCHANGE

The company is listed on the Australian Securities Exchange. The home exchange is Melbourne.

CONTENTS	PAGE
Directors' Report	2
Auditor’s Independence Declaration	9
Consolidated Statement of Profit or Loss and Other Comprehensive Income 10
Consolidated Statement of Financial Position	11
Consolidated Statement of Changes in Equity	12
Consolidated Statement of Cash Flows	13
Notes to the Financial Statements	14
Directors’ Declaration	39
Independent Auditors' Report	40
Australian Securities Exchange additional information	46

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

DIRECTORS' REPORT

The Directors present their report with the financial report of Multistack International Limited ("Company") and the consolidated financial report of the Group, being the Company and its controlled entities (“Group”), for the year ended 31 December 2020 and auditor’s report thereon.

DIRECTORS

The names and details of the Directors of the company in office during the financial year and until the date of this report, including the qualifications, experience and special responsibilities of each person are provided below, together with details of the company secretary.

Mr. A. Yu	Chairman and Non-executive and Independent Director
	Member of Audit Committee and Remuneration Committee
	A graduate in Accountancy from Hong Kong Polytechnic University, Mr. Yu is a senior consultant
	of a CPA firm based in Hong Kong with a multi-national client base. His expertise is in mergers
	and acquisitions particularly in multi-national courier and air-cargo businesses. Mr Yu was
	appointed as a member of the Board on 16 February 2004 and was elected as Chairman of the
	Board on 23 May 2013.
Mr. S. Leung	Chief Executive Officer and Executive Director
	Member of Nomination Committee
	A graduate in Electrical Engineering (Hong Kong Polytechnic), Mr. Leung was a co-founder of
	the Super Link Group. He has built up substantial manufacturing and distribution resources in
	the People’s Republic of China since 1981. Mr Leung was appointed as a member of the Board
	on 10 October 1991 and has been Chief Executive Officer since 1997.
Mr. S. Yan	Executive Director
	Member of Nomination Committee
	A graduate in Production Engineering, Master of Industrial Engineering (Hong Kong Polytechnic
	University) and a member of the American Institute of Industrial Engineers, Mr. Yan was a co-
	founder of the Super Link Group. He has over 30 years’ experience in manufacturing and
	marketing industrial air conditioning products in the People’s Republic of China. Mr Yan was
	appointed as a member of the Board on 10 October 1991 and was Chairman between August 1999
	and May 2004.
Ms. N. Chan	Executive Director
	Bachelor of Business (Swinburne University of Technology), Graduate Diploma in Business
	Systems (RMIT). Ms Chan has substantial experience in the banking industry. She currently
	oversees all administration for the Multistack Chiller Division in Australia. Ms Chan was
	appointed as a member of the Board on 26 November 2002.
Mr. T. Chu	Non-executive and Independent Director
	Member of Audit Committee and Remuneration Committee
	Bachelor of Laws (University of London), Master of Laws (City University of Hong Kong), Mr.
	Chu is a solicitor admitted in England and Wales, Hong Kong, Australian Capital Territory and
	Singapore. Mr. Chu was appointed as a member of the Board on 19 March 1999 and was Chairman
	of the Board from 17 May 2004 to 23 May 2013.

Directors were in office from the beginning of the financial year until the date of this report, unless otherwise stated.

COMPANY SECRETARY

Ms Y. Wong Chief Financial Officer and Company Secretary Bachelor of Business (Victoria University of Technology) and Masters in Finance (RMIT). Ms Wong is a CPA and has prior experience in the banking industry. Ms Wong was appointed Company Secretary on 13 September 2002.

INTERESTS IN THE SHARES OF THE COMPANY AND RELATED BODIES CORPORATE

As at the date of this report, the interests of the Directors in the shares of the Company and related bodies corporate were:

Multistack International Ltd. Ordinary shares A. Yu - S. Leung 28,405,454 S. Yan 34,567,498 N. Chan 20,000 T. Chu -

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 54 007 254 346

DIRECTORS' REPORT - CONTINUED

PRINCIPAL ACTIVITIES

The principal activities during the year of entities within the Group were:

marketing of industrial air conditioning equipment, primarily in Australia;
distribution of Multistack water-cooled and air-cooled water chillers;
marketing and distribution of Organic Rankine Cycle (ORC) technologies and products, and
distribution of heat exchangers.

RESULTS, EARNINGS PER SHARE AND DIVIDENDS

Total revenue in 2020 increased by 7.28% to $600,819. Revenue from Other Income has also increased from $149,603 to $862,733. The net loss for the period attributable to members was $368,316 (2019: $902,355).

Basic earnings per share for continuing operations was (loss $0.0033) (2019: loss $0.0080).

DIVIDENDS

No dividend has been declared or recommended for the financial year ended 31 December 2020, (2019: nil).

REVIEW OF OPERATIONS	Jan - Dec 2020	Jan - Dec 2019
	A$	A$
Total revenue	600,819	560,067
Total comprehensive (loss) after tax attributable to members	(368,316)	(902,355)

The trading entity, Multistack Australia Pty Ltd, has incurred losses before income tax for the year ending 31 December 2020 of $457,031 (2019: $572,871).

The year 2020 has not been an easy year for everyone, with the outbreak of COVID-19 and the lockdown restrictions in the country, sales have been affected by the slowing economy, travel restrictions and the interests of the community’s health and safety, as such sales and marketing activities were reduced. There have also been delays in the delivery of our purchases due to unexpected transportation problems around the world, consequently in turn become delays in the delivery to our customers. Despite all sorts of difficulties, we were glad that sales have picked up in the last quarter of the year.

On 15 June 2020, Multistack International Limited (ASX:MSI) announced that the Group would buy the assets of Verdicorp, Inc., and in order to fund the Verdicorp acquisition, the Group has entered into a loan agreement with Super Link Company Limited which is owned by interests associated with MSI's major shareholders (S W Yan and Stephen Leung, both of whom are also Directors of MSI).

The Group is pleased that after a drawn out process, it has secured both access to and control of the new ORC technology and products in an area which complements its existing modular chiller business and in an area which the MSI Board believes has significant future growth.

The Group is now looking at marketing and selling these ORC products in Australia as well as to the rest of the world. The Group is in negotiations with various interested parties for local and overseas distribution rights in their regions. Given the current pandemic environment, these negotiations may take longer than expected, but the Directors trust that this will be the right direction.

Global warming is a big issue threatening human generations. The United Nations and many country leaders are determined to take actions to reduce carbon emission, where reusable energy is a significant topic for improving it. The MSI Board believes that this ORC technology has great future growth potential and has good faith in these assets that will bring more value to the Group than its current carrying value of the book records.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There have been no significant changes during the financial year. As mentioned above, the Company is continuing to commercialise the ORC technology and its products, also in negotiations with various interested parties for local and overseas distribution rights in their regions. The Group believes the COVID-19 pandemic is continuing to affect both the Company as well as the overall economy, in terms of sales and various sales activities.

SHARE OPTIONS

No options over un-issued shares or interests in the Company were issued during or since the end of the financial period and there were no options outstanding at the end of the financial year.

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

DIRECTORS' REPORT - CONTINUED

DIRECTORS' AND OTHER OFFICERS’ EMOLUMENTS

REMUNERATION REPORT (AUDITED)

The directors present the Group’s 2020 remuneration report which details the remuneration information for Multistack International Limited’s executive directors, non-executive directors and other key management personnel.

Details of Key management personnel:

Directors	Period of Responsibility	Position
A. Yu	Appointed 16 February 2004	Chairman-Non-Executive
S. Leung	Appointed 10 October 1991	Director & Chief Executive Officer
S. Yan	Appointed 10 October 1991	Director-Executive
N. Chan	Appointed 26 November 2002	Director-Executive
T. Chu	Appointed 19 March 1999	Director-Non-Executive
Executives	Period of Responsibility	Position
Y. Wong	Appointed 13 September 2002	Company Secretary

The Remuneration Committee of the Board of Directors is responsible for determining and reviewing compensation arrangements for Directors and the Chief Executive Officer. There is no formal Board policy in place and the key management personnel are contracted to ongoing employment contracts with Notice Periods of 4 weeks and no termination payments provided for under the contracts. The Remuneration Committee determines and reviews compensation of the executive team by assessing the appropriateness of the nature and amount of emoluments of such officers by reference to relevant market conditions and the capacity to pay. There has been no bonus payments made to directors or other key management personnel. Further salaries for the key management personnel have remained the same or been adjusted in the current period due to CPI% increase only.

The Remuneration Committee did not meet during the year as no issue had arisen in the respective field during the relevant period.

Compensation Policy

The Remuneration Committee is responsible for determining and reviewing compensation arrangements for Directors, the Chief Executive Officer and all other key management personnel. The Board determines and reviews compensation of the executive team by assessing the appropriateness of the nature and amount of compensation of key management personnel by reference to relevant employment and market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality board and executive team. The Group has not utilised the services of a Remuneration Consultant during the year or up to the date of this report.

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

DIRECTORS' REPORT - CONTINUED

REMUNERATION REPORT- CONTINUED

Details of the nature and amount of each element of the emolument of each key management personnel of the company and the controlled entities for the financial year are as follows.

		2020 Remuneration	2020 Remuneration	2020 Remuneration
		Short term benefits		Post employment benefits

	Salary fees		Non-cash benefits	Superannuation	Total
A. Yu S. Leung S. Yan N. Chan T. Chu Y. Wong	- $81,482 $81,482 $90,500 - $90,500		- - - $18,200 - $18,200	- - - $12,218 - $12,218	- $81,482 $81,482 $120,918 - $120,918
Total	$343,964		$36,400	$24,436	$404,800

		2019 Remuneration	2019 Remuneration	2019 Remuneration	2019 Remuneration
		Short term benefits		Post employment benefits

	Salary fees		Non-cash benefits		Superannuation	Total

A. Yu S. Leung S. Yan N. Chan T. Chu Y. Wong	- $84,615 $84,615 $89,750 - $89,750		- - - $18,200 - $18,200		- - - $12,116 - $12,116	- $84,615 $84,615 $120,066 - $120,066
Total	$348,730		$36,400		$24,232	$409,362

*Converted to AUD at HKD 5.40 (2019: HKD 5.20)

Consequences of Group’s performance on shareholder wealth

The following table summarises company performance and key performance indicators:

	2020	2019	2018	2017	2016
Revenue	$600,819	$560,067	$713,477	$1,321,582	$818,979
% increase/(decrease) in revenue	7.28%	(21.50%)	(46.01%)	61.37%	(119%)
Profit/(loss) before tax	($368,316)	($902,355)	($941,290)	($310,437)	($713,519)
% increase/(decrease) in profit/loss before tax	(59.18%)	(4.14%)	203.21%	(56.49%)	(27.61%)
Change in share price %	-%	-%	-%	-%	-%
Total remuneration of KMP	$404,800	$409,362	$392,168	$385,358	$375,792
Total performance based remuneration	$-	$-	$-	$-	$-

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

DIRECTORS' REPORT - CONTINUED

REMUNERATION REPORT- CONTINUED

Employee benefits are not performance based.

Payment of emoluments to Messrs. Leung and Yan are made in Hong Kong dollars. Messrs. Leung and Yan have continued to agree to receiving only 50% of their entitled emoluments (in Hong Kong dollars) for the 2020 year, waiving the final 50% of their emoluments. Amount owing has been accrued but not paid for in the last 5 years from 2016 to 2020.

No options or bonus payments have been granted to any Directors.

At the company’s most recent AGM, the adoption of Remuneration Report was voted as ‘Not Carried’. No further comments were made on the remuneration report at the AGM.

Key management personnel’s equity holdings

Ordinary shares	Balance	Acquired /	Sold		Balance
	1 January 2020	transferred			31 December	2020
Directors
A Yu	-	-		-		-
S. Leung	28,405,454	-		-	28,405,454
S. Yan	34,567,498	-		-	34,567,498
N. Chan	20,000	-		-	20,000
T. Chu	-	-		-		-
Y Wong	-	-		-		-

Ordinary shares	Balance	Acquired /	Sold		Balance
	1 January 2019	transferred			31 December	2019
Directors
A Yu	-	-		-		-
S. Leung	28,405,454	-		-	28,405,454
S. Yan	34,567,498	-		-	34,567,498
N. Chan	20,000	-		-	20,000
T. Chu	-	-		-		-
Y Wong	-	-		-		-

Other transactions and balances with key management personnel

Management services provided by Welletin Investment Ltd. (a related party of S. Yan and S. Leung) to Multistack International Limited and its controlled entities were on normal commercial terms and conditions. The aggregate service fees for the year was $162,963 (2019: $169,230). At the year-end total management fees payable was $736,932 (2019: $642,058).

Multistack International Limited and its controlled entities purchased inventory from Super Link Company Ltd (a related party of S. Yan and S. Leung) on normal commercial terms and conditions. The aggregate purchases for the year were $411,067 (2019: $332,377). At year-end total payable was $370,815 (2019: $200,838).

Freight expenses and some other expenses were paid for by ACR Equipment (HK) Ltd (a related party of S.Yan and S. Leung) on behalf of Multistack International Limited and its controlled entities, these were on normal commercial terms and conditions. The aggregate expenses for the year was $44,266 (2019: $110,434). At year-end total payable was $356,700 (2019: $110,744), of which $286,000 was a loan provided to Multistack Australia Pty Ltd and the balance relates to freight and other expenses.

In June 2020, the Group purchased the assets of Verdicorp, Inc., and in order to fund the Verdicorp acquisition, the Group has entered into a loan agreement for US$1,800,000 (A$2,402,653) with Super Link Company Limited (a related party of S Yan and S Leung).

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

DIRECTORS' REPORT - CONTINUED

Transactions with director related entities

Messrs. Leung and Yan through their related entities provide management support and inventory purchases to Multistack International Limited and Multistack Australia Limited as follows:

Directors and related entities	Transaction	Expenditure	Expenditure	Balance (Payable)	Balance (Payable)
		*31-Dec-20*	*31-Dec-19*	*31-Dec-20*	*31-Dec-19*
Welletin Investment Ltd Super Link Company Ltd Super Link Company Ltd ACR Equipment(HK)Ltd	Management Purchases Loan + Interest Purchases	$162,963 $411,067 - $44,266	$169,230 $332,377 - $110,434	($736,932) ($370,815) ($2,402,653) ($356,700)	($642,058) ($200,838) - ($110,744)

There were no transactions with other related parties during the year. There were no loans to key management personnel. This marks the end of the audited Remuneration Report.

INDEMNIFICATION OF DIRECTORS, OFFICERS AND AUDITORS

No indemnities have been given or insurance premiums paid during or since the end of the financial year, for any directors, officers or auditors of the Group.

CORPORATE GOVERNANCE

In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Multistack International Limited and controlled entities support and strive to adhere to the best principles of corporate governance. The company’s corporate governance statement is contained in the additional ASX information section of this annual report.

PROCEEDINGS ON BEHALF OF THE CONSOLIDATED ENTITY

No person has applied for leave of Court to bring proceedings on behalf of the consolidated entity.

DIRECTORS' MEETINGS

The numbers of meetings of the board of Directors (including meetings of committees of Directors) held during the year and the number of meetings attended by each Director were as follows:

	Board of	Directors	Audit Committee	Audit Committee	Remuneration	Remuneration	Nomination	Nomination
					Committee		Committee
	Eligible	Attended	Eligible to	Attended	Eligible to	Attended	Eligible to	Attended
	to attend		attend		attend		attend
Mr A. Yu	5	5	2	2	-	-	-	-
Mr. S. Leung	5	5	-	-	-	-	-	-
Mr. S. Yan	5	5	-	-	-	-	-	-
Ms N. Chan	5	5	-	-	-	-	-	-
Mr. T. Chu	5	5	2	2	-	-	-	-

As at the date of this report, the Board of Directors had an Audit Committee, a Remuneration Committee and a Nomination Committee. The members of the Audit Committee are Mr T. Chu and Mr A. Yu. The members of the Remuneration committee are Mr T. Chu and Mr A. Yu. The members of the Nomination Committee are Mr S W Yan and Mr S Leung.

The Audit Committee met on 26 February 2020 and 26 August 2020. The Remuneration Committee and the Nomination Committee did not meet during the year as no issue had arisen in the respective field during the relevant period.

EMPLOYEES

The consolidated entity employed 5 employees and 5 Directors as at 31 December 2020 (2019: 5 employees and 5 Directors). Ms N. Chan has been included as both an employee and a director in her capacity as an executive director for the current year and comparative.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

The Company believes the COVID-19 pandemic is continuing to affect both the Company as well as the overall economy, in terms of sales and various sales activities.

There has been no other significant event after balance date.

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

DIRECTORS' REPORT - CONTINUED

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

The business of Multistack Group comprises Multistack Australia Pty Ltd, (Multistack) which includes the Chiller Sales Division in Melbourne and a wholly owned subsidiary Option King Ltd.

Multistack has a loyal clientele base for modular chillers that have been supplied to the Australian market for over 20 years. Multistack also supports the overseas agent network in New Zealand, the Philippines, South Korea, Singapore and Thailand with a reputation of flexibility, durability and reliability in modular chilled water systems.

Option King is a pure investment entity that provides income to the Group.

As mentioned above, the Company is also continuing to commercialise the ORC technology and its products, also in negotiations with various interested parties for local and overseas distribution rights in their regions.

ENVIRONMENT REGULATION AND PERFORMANCE

The Group’s operations are not subject to any significant environmental Commonwealth or state regulations or laws.

NON-AUDIT SERVICES

Non-audit services are approved by resolution of the audit committee and approval is provided in writing to the board of Directors. Non-audit services provided by the auditors of the consolidated entity during the year, Pitcher Partners, Melbourne, are detailed below. The directors are satisfied that the provision of the non-audit services during the year by the auditor is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 , for the following reasons:

all non-audit services were subject to the corporate governance procedures adopted by Multistack and have been reviewed and approved by the Audit Committee to ensure they do not impact on the integrity and objectivity of the auditor; and - the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants (including Independence Standards), as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for Multistack or any of its related entities, acting as an advocate for Multistack or any of its related entities, or jointly sharing risks and rewards in relation to the operations or activities of Multistack or any of its related entities.

Amounts paid or payable to the auditor for non-audit services provided during the year by the auditor to Multistack International Limited and controlled entities for:

	2020	2019
Taxation Services	$27,750	$11,500

AUDITOR’S INDEPENDENCE DECLARATION

The auditor’s independence declaration as required under section 307C of the Corporations Act 2001 in relation to the audit for the financial year is included on page 9 of the financial report and forms part of this report.

ROUNDING OF AMOUNTS

The parent entity and the consolidated entity have applied the relief available under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and accordingly, the amounts in the consolidated financial statements and in the directors’, report have been rounded to the nearest dollar.

Signed in accordance with a resolution of the Directors.

Allan Yu Chairman Stephen Leung Director, CEO Melbourne 31 March 2021

MULTISTACK INTERNATIONAL LIMITED

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF MULTISTACK INTERNATIONAL LIMITED

In relation to the independent audit for the year ended 31 December 2020, to the best of my knowledge and belief there have been:

(i) No contraventions of the auditor independence requirements of the Corporations Act 2001 ; and
(ii) No contraventions of APES 110 Code of Ethics for Professional Accountants (including Independence Standards) .

This declaration is in respect of Multistack International Limited and the entities it controlled during the year.

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D A KNOWLES Partner Date: 31 March 2021

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PITCHER PARTNERS Melbourne

Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008 Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities

pitcher.com.au

Adelaide Brisbane Melbourne Newcastle Sydney Perth

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2020

Notes Sale of goods 2 Cost of sales 3 Gross Profit Other Income Subsidies and grants 2 Reversal of impairment on Verdicorp Inc. Loan 2 Foreign currency gains 2 Interest / dividend income 2 Sundry income 2 Total Other Income Expenses Employee benefits expense 3 Occupancy expenses 3 Administration expenses Consultancy fees Professional fees Impairment recognised on Verdicorp Inc. loan Other expenses Total expenses Loss before income tax Income tax 4 Loss for the year from continuing operations Other comprehensive loss for the year Items that may be reclassified subsequently to profit and loss Total comprehensive loss for the year Earnings per share for loss from continuing operations attributable to members of the parent: Basic loss per share 20 Diluted loss per share 20	CONSOLIDATED 2020 $ 2019 $ 600,819 560,067 (474,929) (390,897)
	125,890 169,170 249,501 - 167,975 - 353,068 63,043 58,245 70,661 33,944 15,899
	862,733 149,603 (432,781) (466,716) (8,869) (6,226) (425,244) (408,020) (231,367) (75,560) (141,546) (80,740) - (167,975) (117,132) (15,891)
	(1,356,939) (1,221,128)
	(368,316) (902,355) - -
	(368,316) (902,355)
	- -
	(368,316) (902,355)
	$(0.0033) $(0.0080) $(0.0033) $(0.0080)

==> picture [476 x 141] intentionally omitted <==

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

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 54 007 254 346

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020

Notes ASSETS Current Assets Cash and cash equivalents 16(a) Investment 9 Receivables 6 Inventories 8 Loan to Verdicorp Inc. 7 Prepayments Deposit – Bond for property Total Current Assets Non-current Assets Receivables 6 Intangible assets – ORC Technology 10 Leased assets – right of use 19 Total Non-current Assets TOTAL ASSETS LIABILITIES Current Liabilities Payables 12 Lease liability 19 Provisions 13 Total Current Liabilities Non-current Liabilities Lease liability 19 Loan from Super Link Company Ltd 12 Provisions 13 Total Non-current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT Contributed equity 14 Accumulated losses 15 TOTAL EQUITY	CONSOLIDATED
	2020 $ 2019 $


	346,758 640,238
	666,528 691,625
	233,842 2,660
	299,328 243,753
	- 433,691
	5,664 3,000
	17,612 17,612
	1,569,732 2,032,579

	51,935 -
	3,113,182 -
	35,770 107,310
	3,200,887 107,310
	4,770,619 2,139,889



	1,787,145 1,043,073
	45,540 81,987
	117,830 121,921
	1,950,515 1,246,981

	- 45,540
	2,337,055 -
	3,997 -
	2,341,052 45,540
	4,291,567 1,292,521
	479,052 847,368


	155,638,695 155,638,695
	(155,159,643) (154,791,327)
	479,052 847,368

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

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2020

Attributable to equity holders of the parent

CONSOLIDATED At 1 January 2019 Loss for the year Total comprehensive loss for the year Transactions with owners in their capacity as owners As at 31 December 2019	Contributed Equity Accumulated Losses Total Equity $ $ $ 155,638,695 (153,888,972) 1,749,723 - (902,355) (902,355) - (902,355) (902,355) - - - 155,638,695 (154,791,327) 847,368

CONSOLIDATED At 1 January 2020 Loss for the year Total comprehensive loss for the year Transactions with owners in their capacity as owners As at 31 December 2020	Attributable to equity holders of the parent Contributed Equity Accumulated Losses Total Equity $ $ $ 155,638,695 (154,791,327) 847,368 - (368,316) (368,316) - (368,316) (368,316) - - - 155,638,695 (155,159,643) 479,052

This statement should be read in conjunction with the accompanying notes

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MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2020

Notes Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest and other items of similar nature received Finance costs Net cash (used in) operating activities 16(b) Cash flows from investing activities Payment for acquisition of Verdicorp assets Proceeds on sale of Property, Plant and Equipment Payments for investments Funds advanced to Verdicorp Inc. Payment for Property, Plant and Equipment Net cash (used in) investing activities Cash flows from financing activities Proceeds from borrowings Principal portion of lease payments Net cash provided by / (used in) financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Reclassification of cash components of financial assets to cash equivalents as at 1 January 2019 Cash and cash equivalents at end of year 16(a)	CONSOLIDATED
	2020 $ 2019 $

	732,520 637,218
	(1,048,804) (1,182,465)
	30,068 41,895
	(10,013) (19,098)
	(296,229) (522,450)


	(2,578,628) -
	6,852 -
	- (20,000)
	- (572,892)
	(67,871) -
	(2,639,647) (592,892)



	2,724,383 -
	(81,987) (70,222)
	2,642,396 (70,222)


	(293,480) (1,185,564)

	640,238 284,465
	- 1,541,337

	346,758 640,238

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

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies adopted by the Group in the preparation and presentation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

A) BASIS OF PREPARATION OF THE FINANCIAL REPORT

The financial report is a general purpose financial report, which has been prepared in accordance with Australian Accounting Standards, Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001 .

The financial report covers Multistack International Limited and controlled entities as a consolidated entity. Multistack International Limited is a company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on the Australian Stock Exchange. The address of Multistack International Limited’s registered office and principal place of business is 17 Friars Road, Moorabbin, Victoria, 3189. Multistack International Limited is a for-profit entity for the purpose of preparing the financial report.

The financial report was authorised for issue in accordance with a resolution of the Directors as at the date of this report.

The nature of the operations and principal activities of the Group are described on Page 3.

Compliance with IFRS

The financial report also complies with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Historical cost convention

The financial report has been prepared under the historical cost convention, as modified by revaluations to fair value for certain classes of assets as described in the accounting policies.

Significant accounting estimates

The preparation of the financial report requires the use of certain estimates and judgements in applying the entity’s accounting policies. Those estimates and judgements significant to the financial report are disclosed in Note 1(O).

B) GOING CONCERN

The Directors have prepared the financial statements for the Group on a going concern basis which contemplates the continuity of normal business activities and the realisation of assets and the discharge of liabilities in the ordinary course of business.

During the year ended 31 December 2020, the Group incurred a loss after income tax for the year of $368,316 (2019: $902,355 loss). The Group had a net asset position of $479,052 (2019 $847,368). The Group had a net cash outflow from operating activities of $296,229 (2019: $522,450 outflow).

As a result of these matters, there is a material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern and therefore the Group may be unable to realise its assets and discharge its liabilities in the ordinary course of business. However, the Group has obtained an undertaking from, the Managing director, an executive director, and a director related company that the Group will receive financial support to enable the Group to meet its debts and obligations as and when they fall due for at least 12 months from the date of signing the Group’s financial report for the year ended 31 December 2020. The Directors therefore have concluded that the Going Concern basis is appropriate.

The Financial Statements do not include any adjustment relating to the recoverability or classification of recorded asset amounts nor to the amounts or classification of liabilities that might be necessary should the Company not be able to trade as forecast or to secure sufficient funding to continue as a going concern. If the going concern basis of accounting is found to no longer be appropriate, the recoverable amount of the assets shown in the Statement of Financial Position are likely to be significantly less than the amounts disclosed, and the extent of liabilities may differ significantly from those reflected.

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES - CONT’D

C) NEW AND REVISED ACCOUNTING STANDARDS EFFECTIVE AT 1 JANUARY 2020

Accounting standards issued but not yet effective

The Group has applied all new and revised Australian Accounting Standards that apply to annual reporting periods beginning on or after 1 January 2020.

AASB 2018-6: Amendments to Australian Accounting Standards – Definition of a Business

AASB 2018-6 amends AASB 3: Business Combinations to clarify the definition of a business, assisting entities to det whether a transaction should be accounted for as a business combination or as an asset acquisition. The amendments:

(a) clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an i a substantive process that together significantly contribute to the ability to create outputs;
(b) remove the assessment of whether market participants are capable of replacing any missing inputs or processes continuing to produce outputs;
(c) add guidance and illustrative examples to help entities assess whether a substantive process has been acquired;
(d) narrow the definitions of a business and of outputs by focusing on goods and services provided to customers an removing the reference to an ability to reduce costs; and
(e) add an optional concentration test that permits a simplified assessment of whether an acquired set of activities a is not a business.

AASB 2018-6 mandatorily applies to annual reporting periods commencing on or after 1 January 2020 and will be fir applied by the Group in the financial year commencing 1 July 2020.

The likely impact of this accounting standard on the financial statements of the Group has not been determined.

AASB 2018-7: Amendments to Australian Accounting Standards – Definition of Material

AASB 2018-7 principally amends AASB 101: Presentation of Financial Statements and AASB 108: Accounting Poli Changes in Accounting Estimates and Errors . The amendments refine the definition of material in AASB 101. The amendments clarify the definition of material and its application by improving the wording and aligning the definition AASB Standards and other publications. The amendment also includes some supporting requirements in AASB 101 i definition to give it more prominence and clarifies the explanation accompanying the definition of material.

AASB 2018-7 mandatorily applies to annual reporting periods commencing on or after 1 January 2020 and will be fir applied by the Group in the financial year commencing 1 July 2020.

The likely impact of this accounting standard on the financial statements of the Group has not been determined.

AASB 2014-10: Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture , AASB 2015-10: Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and AASB 2017-5: Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections.

AASB 2014-10 amends AASB 10: Consolidated Financial Statements and AASB 128: Investments in Associates and Ventures to clarify the accounting for the sale or contribution of assets between an investor and its associate or joint v by requiring:

(a) a full gain or loss to be recognised when a transaction involves a business, whether it is housed in a subsidiary and
(b) a partial gain or loss to be recognised when a transaction involves assets that do not constitute a business, eve these assets are housed in a subsidiary.

These amending standards mandatorily apply to annual reporting periods commencing on or after 1 January 2022 and first applied by the Group in the financial year commencing 1 July 2022.

The likely impact of this accounting standard on the financial statements of the Group has not been determined.

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES - CONT’D

AASB 2020-1: Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Noncurrent.

AASB 2020-1 amends AASB 101 Presentation of Financial Statements to clarify requirements for the presentation o liabilities in the statement of financial position as current or non-current.

AASB 2020-1 mandatorily applies to annual reporting periods commencing on or after 1 January 2022 and will be fir applied by the Group in the financial year commencing 1 July 2022.

The likely impact of this accounting standard on the financial statements of the Group has not been determined.

D) BASIS OF CONSOLIDATION

The consolidated financial statements are those of the Group, comprising Multistack International Limited (parent entity) and all entities, which Multistack International Limited controlled from time to time during the year and at balance date. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Information from the financial statements of subsidiaries is included from the date the parent company obtains control until such time as control ceases. Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during which the parent company had control.

The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies, which may exist. All intercompany balances and transactions, including any unrealised profits or losses arising from intra-group transactions, have been eliminated in full on consolidation.

E) FOREIGN CURRENCY TRANSLATION

Both the functional and presentation currency of Multistack International Limited and its wholly owned subsidiaries Multistack Australia Pty Ltd and Option King Ltd are Australian dollars (A$).

Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange at the balance sheet date. All exchange gains and losses are recognised in profit and loss for the period in which they arises.

F) PLANT AND EQUIPMENT

Cost and valuation

Plant and equipment is stated at cost less accumulated depreciation and any impairment in value.

Depreciation

Depreciation is provided on a straight-line basis on all plant and equipment, over the estimated useful lives commencing from the time the asset is held ready for use.

G) IMPAIRMENT

Assets subject to annual depreciation or amortisation are reviewed for impairment whenever events or circumstances arise that indicate that the carrying amount of the asset may be impaired.

An impairment loss is recognised where the carrying amount of the asset exceeds its recoverable amount. The recoverable amount of an asset is defined as the higher of its fair value less costs to sell and value in use.

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES - CONT’D

H) INVENTORIES

Inventories are valued at the lower of cost and net realisable value.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:

Raw materials – purchase cost on a first-in, first-out basis;
Finished goods and work-in-progress – cost of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

I) CASH AND CASH EQUIVALENTS

Cash and short-term deposits in the balance sheet comprise cash at bank, cash in hand and short-term deposits with an original maturity of three months or less.

For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above.

J) PROVISIONS

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation for which a reliable estimate can be made of the amount of the obligation.

K) REVENUE RECOGNITION

Revenue from contracts with customers

The Group derives revenue from the sale of heating, ventilation and air-conditioning goods. Revenue from the sale of heating ventilation and air-conditioning goods is recognised at the point in time when control of the goods is transferred to the customer, which generally occurs at the time the goods are delivered to the customers. Customers are required to pay in full for all goods purchased within 30 days of invoice date. Customers have the right to return purchased goods, for a refund, within 7 days of purchase, less any freight and handling charges. The estimated amount of refunds for returned goods is recognised as a refund liability. Revenue is measured net of any discounts and other price concessions, and net of the estimated amount of refunds for returned goods.

Interest

Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset.

Dividends

Dividend revenue is recognised when the right to receive a dividend has been established.

Warranty obligations

The Group provides a general warranty for all goods sold. The Group also provides customers with the option to purchase additional or extended warranty. Warranty obligations are recognised as a provision, and are measured at the company’s estimate of the expenditure required to fulfil its warranty obligations at reporting date. The Group updates the measurement of the warranty provision at the end of each reporting period for changes in expectations.

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES - CONT’D

Government grants

Government grants are recognised when there is reasonable certainty that the grant will be received and all grant conditions are met.

Grants relating to expense items are recognised as income over the periods necessary to match the grant to the costs they are compensating.

Grants relating to depreciable assets are credited to deferred income and are recognised in profit or loss over the period and in the proportions in which depreciation expense on those assets is recognised.

All revenue is stated net of the amounts of goods and services tax (GST).

L) INCOME TAX

Current income tax expense or revenue is the tax payable on the current period’s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities.

Deferred tax assets and liabilities are recognised for temporary differences at the applicable tax rate when the assets are expected to be recovered or liabilities are settled. No deferred tax asset or liability is recognised in relation to temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.

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

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

M) EMPLOYEE BENEFITS

Short-term employee benefit obligations

Liabilities arising in respect of wages and salaries, annual leave and other employee benefits (other than termination benefits) expected to be settled wholly before twelve months after the end of the reporting period are measured at the (undiscounted) amounts based on remuneration rates which are expected to be paid when the liability is settled.

The expected cost of short-term employee benefits in the form of compensated absences such as annual leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables in the statement of financial position.

Other long-term employee benefit obligations

The provision for other long-term employee benefits, including obligations for long service leave and annual leave, which are not expected to be settled wholly before twelve months after the end of the reporting period, are measured at the present value of the estimated future cash outflow to be made in respect of the services provided by employees up to the reporting date. Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee turnover, and are discounted at rates determined by reference to market yields at the end of the reporting period on high quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. For currencies in which there is no deep market in such high quality corporate bonds, the market yields (at the end of the reporting period) on government bonds denominated in that currency are used. Any remeasurements for changes in assumptions of obligations for other long-term employee benefits are recognised in profit or loss in the periods in which the change occurs.

Other long-term employee benefit obligations are presented as current liabilities in the balance sheet if the group does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual settlement is expected to occur. All other long-term employee benefit obligations are presented as non-current liabilities in the statement of financial position.

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES - CONT’D

Defined contribution superannuation plan

The group makes superannuation contributions to the employee’s defined contribution superannuation plan of choice in respect of employee services rendered during the year. These superannuation contributions are recognised as an expense in the same period when the related employee services are received. The group’s obligation with respect to employee’s defined contributions entitlements is limited to its obligation for any unpaid superannuation guarantee contributions at the end of the reporting period. All obligations for unpaid superannuation guarantee contributions are measured at the (undiscounted) amounts expected to be paid when the obligation is settled and are presented as current liabilities in the statement of financial position.

N) LEASES

At the commencement date of a lease (other than leases of 12-months or less and leases of low value assets), the Group recognises a lease asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments.

Lease assets

Lease assets are initially recognised at cost, comprising the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date of the lease, less any lease incentives received, any initial direct costs incurred by the Group, and an estimate of costs to be incurred by the Group in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories.

Subsequent to initial recognition, lease assets are measured at cost (adjusted for any remeasurement of the associated lease liability), less accumulated depreciation and any accumulated impairment loss.

Lease assets are depreciated over the shorter of the lease term and the estimated useful life of the underlying asset, consistent with the estimated consumption of the economic benefits embodied in the underlying asset.

Lease liabilities

Lease liabilities are initially recognised at the present value of the future lease payments (i.e., the lease payments that are unpaid at the commencement date of the lease). These lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined, or otherwise using the Group’s incremental borrowing rate.

Subsequent to initial recognition, lease liabilities are measured at the present value of the remaining lease payments (i.e., the lease payments that are unpaid at the reporting date). Interest expense on lease liabilities is recognised in profit or loss (presented as a component of finance costs). Lease liabilities are remeasured to reflect changes to lease terms, changes to lease payments and any lease modifications not accounted for as separate leases.

Variable lease payments not included in the measurement of lease liabilities are recognised as an expense when incurred.

Leases of 12-months or less and leases of low value assets

Lease payments made in relation to leases of 12-months or less and leases of low value assets (for which a lease asset and a lease liability has not been recognised) are recognised as an expense on a straight-line basis over the lease term.

O) CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The Group makes certain estimates and assumption concerning the future, which, by definition will seldom represent actual results. The estimates and assumptions that have a significant inherent risk in respect of estimates based on future events which could have a material impact on the assets and liabilities in the next financial year are disclosed below:

Impairment of financial assets other than goodwill

The Group assesses impairment at each reporting date by evaluating the conditions specific to the Group and to a particular asset that may lead to impairment of assets. These include adverse changes in the economic or political environment, technology changes and future expectations. If an impairment trigger exists, then the recoverable amount of the asset shall be evaluated.

Fair value measurements

Certain financial assets and liabilities are measured at fair value. Fair values have been determined in accordance with fair value measurement hierarchy. Refer to Note 26.

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES - CONT’D

P) FINANCIAL INSTRUMENTS

Initial recognition and measurement

Financial assets and financial liabilities are recognised when the group becomes a party to the contractual provisions of the instrument. For financial assets, this is equivalent to the date that the group commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).

Financial instruments are initially measured at fair value adjusted for transaction costs, except where the instrument is classified as fair value through profit or loss, in which case transaction costs are immediately recognised as expenses in profit or loss.

Financial assets

Financial assets recognised by the group are subsequently measured in their entirety at either amortised cost or fair value, subject to their classification and whether the group irrevocably designates the financial asset on initial recognition at fair value through other comprehensive income (FVtOCI) in accordance with the relevant criteria in AASB 9.

Financial assets not irrevocably designated on initial recognition at FVtOCI are classified as subsequently measured at amortised cost, FVtOCI or fair value through profit or loss (FVtPL) on the basis of both: (i) the group’s business model for managing the financial assets; and (ii) the contractual cash flow characteristics of the financial asset.

Trade and other receivables

Trade and other receivables arise from the Group’s transactions with its customers and are normally settled within 30-90 days.

Consistent with both the Group’s business model for managing the financial assets and the contractual cash flow characteristics of the assets, trade and other receivables are subsequently measured at amortised cost, except when the effect of discounting is not material, in which case the financial asset is carried at its nominal amount. Loans and receivables are non‐derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are subsequently measured at amortised cost using the effective interest rate method.

The Group has chosen to apply the simplified approach under AASB 9 to measuring impairment provisions for receivables, including lease receivables. Under the AASB 9 Financial Instruments simplified approach, the Group determines the impairment provision for receivables on the basis of the lifetime expected credit losses of the receivable. Lifetime expected credit losses represent the expected credit losses that are expected to result from default events over the expected life of the receivable.

Financial liabilities

Financial liabilities include trade payables, other creditors and loans from third parties including inter‐company balances and loans from or other amounts due to director‐related entities. Non‐derivative financial liabilities are subsequently measured at amortised cost, comprising original debt less principal payments and amortisation. Financial liabilities are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES - CONT’D

Q) INTANGIBLE ASSETS

Separately acquired Intangible assets

Except for indefinite useful life intangible assets, which are not amortised but are tested annually for impairment, separately acquired intangible assets are recognised at cost and amortised over their estimated useful lives commencing from the time the asset is available for use. The amortisation method applied to an intangible asset is consistent with the estimated consumption of economic benefits of the asset. Subsequent to initial recognition, separately acquired intangible assets are measured at cost, less accumulated amortisation (where applicable) and any accumulated impairment losses.

R) COMPARATIVES

Where necessary, comparative information has been reclassified and repositioned for consistency with current year disclosures.

S) GOODS AND SERVICES TAX (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST.

Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

T) ROUNDING OF AMOUNTS

The Company and the Group have applied the relief available under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and accordingly, the amounts in the consolidated financial statements and in the directors’ report have been rounded to the nearest dollar.

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

2. REVENUES Revenue from contracts with customers Revenue recognised at a point in time Sale of chillers Sale of related spare parts Other Income Subsidies and grants Reversal of impairment on Verdicorp Inc. Loan Foreign currency gains Interest / Dividends received Sundry Income 3. LOSS FROM CONTINUED OPERATIONS Loss from continuing operations before income tax has been determined after the following specific expenses: Cost of goods sold Changes in inventories of finished goods and work in process Raw materials and consumables Cost of goods sold Employee benefits expense Other expenses Finance costs Occupancy expense		CONSOLIDATED 2020 $ 2019 $ 543,210 525,002 57,609 35,065 600,819 560,067 249,501 - 167,975 - 353.068 63,043 58,245 70,661 33,944 15,899 862,733 149,603 1,463,552 709,670 55,575 87,774 (530,504) (478,671)
		(474,929) (390,897)
		(432,781) (466,716) (75,611) (19,098) (8,869) (6,226)

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

4. INCOME TAX (a) Components of tax expense: Income tax (b) Prima facie tax payable The prima facie tax on loss before income tax is reconciled to the income tax benefit as follows: Prima facie income tax benefit on loss before income tax at 27.5% (2019: 27.5%) Add tax effect of: unused tax losses not brought to account non-taxable foreign entity proportion foreign exchange legal fees Income tax benefit attributable to loss (c) Current tax Opening balance Closing balance (d) Unused tax losses not brought to account Deferred tax balances of the Group are not brought to account at balance date as realisation of the deferred tax assets are not regarded as being probable.	CONSOLIDATED
	2020 2019
	$ $


	- -
	- -




	(101,287) (248,148)


	233,128 242,658
	(45,980) 4,098
	(101,979) 1,392
	16,118 -
	101,287 248,148

	- -


	- -
	- -


	3,183,407 3,059,614

The Group has accumulated significant capital losses following the sale of the Chinese operations. No deferred tax balances have been brought to account to date. Deferred tax balances will only be recognised when it is probable that future taxable amounts will be available. Utilisation of tax losses are also subject to certain tests as required by the Income Tax Assessment Act 1997 , including the Same Business Test and the Continuity of Ownership Test.

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MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

5. FRANKING ACCOUNT Balance per prior year 6. RECEIVABLES Current Receivables from contracts with customers Allowance for credit loss (a) Sundry receivable Non-current Sundry receivables (a) Movement in allowance for credit loss Balance at beginning of year - provision / reversal of provision during the year Balance at end of year	CONSOLIDATED
	2020 2019
	$ $

	143,137 143,137
	143,137 143,137



	219,097 2,687
	(3,255) (27)
	18,000 -
	233,842 2,660

	51,935 -
	51,935 -


	(27) (181)
	(3,228) 154
	(3,255) (27)

Trade receivables ageing analysis at 31 December is:

Not past due Past due 1-30 days Past due 31-60 days Past due more than 61 days	Gross 2020 Credit Loss 2020 Gross 2019 Credit Loss 2019 $ $ $ $ 216,601 (759) 2,562 - 1,730 (1,730) 125 (27) - - - - 766 (766) - -
	219,097 (3,255) 2,687 (27)

A receivable from a contract with a customer represents the Group’s unconditional right to consideration arising from the transfer of goods or services to the customer. Trade receivables are non-interest bearing with 30 days terms. An impairment loss is recognised when there is objective evidence that an individual trade receivable is impaired. Trade receivables not impaired are expected to be received.

The Group applies the simplified approach under AASB 9 to measuring the allowance for credit losses for receivables from contracts with customers, contract assets and lease receivables. Under the AASB 9 simplified approach, the Group determines the allowance for credit losses for receivables from contracts with customers, contract assets and lease receivables on the basis of the lifetime expected credit losses of the instrument. Lifetime expected credit losses represent the expected credit losses that are expected to result from default events over the expected life of the financial asset.

The Group determines expected credit losses using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the financial asset as well as current and future expected economic conditions relevant to the financial asset. When material, the time value of money is incorporated into the measurement of expected credit losses. There has been no change in the estimation techniques or significant assumptions made during the reporting period.

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

7. LOAN TO VERDICORP INC.

This loan in February 2019 had the option to receive repayment with the agreed interest (8%) or to waive its right to repayment in exchange for receiving all rights to distribute the ORC products in the Australian market.

On 15 June 2020, Multistack International Limited (ASX:MSI) announced that the Group would purchase the assets of Verdicorp, Inc. at US$1,800,000. As part of that Court process and as additional consideration for the acquisition of the assets of Verdicorp MSI agreed to exercise the Option and waive its right to repayment of the Verdicorp Loan (being a significant factor in the Court’s determination that MSI’s bid was the highest and best bid offered).

Loan to Verdicorp Inc. Less. Impairment recognised on unsecured amount Add. Accrued interest 8. INVENTORIES Current Finished goods at cost Total inventories 9. INVESTMENT Current Financial Assets at Fair Value Through Profit and Loss Investments held with Bank of Singapore	CONSOLIDATED 2020 2019 $ $ - 572,892 - 167,975 - 28,774
	- 433,691



	299,328 243,753
	299,328 243,753




	666,528 691,625
	666,528 691,625

10. INTANGIBLE ASSETS

ORC distribution rights Danfoss tech licence and supply agreement Accumulated depreciation Net carrying amount	635,048 2,478,134 - - - 3,113,182 -
11. PLANT & EQUIPMENT
Plant and equipment at cost Accumulated depreciation Net carrying amount Motor vehicles at cost Accumulated depreciation Net carrying amount	30,566 30,566 (30,566) (30,566) - - 47,310 47,310 (47,310) (47,310) - -

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

Notes 12. TRADE AND OTHER PAYABLES Current Trade payables Sundry creditors	CONSOLIDATED
	2020 2019
	$ $


	894,387 325,244
	892,758 717,829
	1,787,145 1,043,073

Non current

On 15 June 2020, Multistack International Limited (ASX:MSI) announced that the Group would purchase the assets of Verdicorp, Inc. at US$1,800,000. In order to fund the Verdicorp acquisition, MSI has agreed to borrow US$1,800,000 from Super Link Company Ltd to enable it to complete the acquisition of the Verdicorp assets. The loan is interest bearing at 5.00% per annum, is on commercial and arm's length terms, and will be secured by MSI granting security to Super Link Company Ltd of its interests in the assets to be acquired under Verdicorp Acquisition. Additional consideration for the acquisition of the assets of Verdicorp MSI agreed to exercise the Option and waive its right to repayment of the Verdicorp Loan.

Loan from Super Link Company Ltd 13. PROVISIONS Current Employee entitlements Warranty claims 12 (a) Non current Employee entitlements Aggregate employee benefits liability		2,337,055	-



		105,830	109,921
		12,000	12,000
		117,830	121,921

		3,997 3,997 109,827	- - 109,921

(a) Provision for Warranty

All entities in the wholesale and retail operations provide for warranties under which faulty products are repaired or replaced.

14. CONTRIBUTED EQUITY

a) Issued paid up capital 112,303,924 ordinary shares fully paid (2019: 112,303,924)
		155,638,695	155,638,695

b) Terms and Conditions of contributed equity

Ordinary Shares

Ordinary shares have the right to receive dividends as declared, and in the event of winding up of the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.

c) Capital Management

When managing capital, management's objective is to ensure the Group continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. This is achieved through the monitoring of historical and forecast performance and cash flows.

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

15. ACCUMULATED LOSSES Accumulated losses Accumulated losses Balance at beginning of year Loss for the year Total available for appropriation Balance at end of year 16. CASH FLOW INFORMATION (a) Reconciliation of cash Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows: Cash at bank Cash at bank and in hand earns interest at floating rates based on (b) Reconciliation of the operating (loss) after tax to the net cash flows used in operations Operating loss after tax Non-cash items Depreciation and amortisation Foreign currency gain Provision for doubtful debt Provision for stock impairment Non-cash interest on loan (Recovery)/Impairment on loan to Verdicorp Inc. Accrued interest recognised on loan to Verdicorp Inc. Unrealised gain on investment Profit /loss on sale of Property, Plant and Equipment Inventory write off Changes in assets and liabilities (Increase) / Decrease in receivables (Increase) / Decrease in inventory Increase in prepayment and other assets (Decrease) / Increase in provisions Increase in trade and other payables Net cash (used in) operating activities	CONSOLIDATED 2020 2019 $ $ (155,159,643) (154,791,327)
	(154,791,327) (153,888,972) (368,316) (902,355)
	(155,159,643) (154,791,327)
	(155,159,643) (154,791,327)
	346,758 640,238
	daily bank deposit rates. (368.316) (902,355) 71,540 71,540 (353,068) - 3,228 154 (72,379) 14,281 13,640 - (167,975) 167,975 - (28,774) (25,097) (68,338) 9,084 - 121,341 - (286,345) 9,952 16,804 (102,055) (2,664) (3,000) (94) 464 744,072 317,706
	(296,229) (522,450)

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

17. PARENT ENTITY DETAILS

Summarised presentation of the parent entity, Multistack International Limited, financial statements:

(a) Summarised statement of financial position Assets Current assets Total assets Liabilities Current liabilities Total liabilities Net assets Equity Contributed equity Accumulated losses Total equity (b) Summarised statement of comprehensive income Loss for the year	2020 $ 2019 $ (restated) 359,844 1,065,986
	3,473,026 1,065.986 (855,758) (707,286)
	(3,192.811) (707,286) 280,215 358,700
	155,638,695 155,638,695 (155,358,480) (155,279,995)
	280,215 358,700
	(78,485) (818,699)

18. INTEREST IN CONTROLLED ENTITIES (NON-CURRENT) Investment in controlled entities comprises:

	Multistack Australia Pty Ltd Option King Ltd	Incorporated in Beneficial percentage held by Group
		2020 2019
		Australia 100% 100% Hong Kong 100% 100%

Overseas controlled entities carry on business in the country of incorporation.

Ultimate parent

Multistack International Limited is the ultimate Australian holding company.

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

19. LEASE ASSETS AND LEASE LIABILITIES

The following information relates to the current and prior reporting periods, and is presented in accordance with AASB 16 Leases which was applied by the Group with the full retrospective approach to each reporting period.

The Group’s lease commitments relate to the commercial premises in Moorabbin, Australia. The term of lease is 3 years starting 24 July 2018.

Lease assets Carrying amount of lease assets, by class of underlying asset: Buildings under lease arrangements At cost Accumulated depreciation Total carrying amount of lease assets Reconciliation of the carrying amount of lease assets at the beginning and end of the financial year: Carrying amount at 1 January 2020 Additions Depreciation Carrying amount at 31 December 2020 Lease arrangements (31 December 2020) Lease liabilities Current lease liabilities Non-current lease liabilities Total carrying amount of lease liabilities An analysis of the remaining contractual maturities of lease liabilities is disclosed in Note 24. Lease expenses and cashflows Interest expense on lease liabilities Depreciation expense on lease assets Total cash outflow in relation to leases	2020 2019 214,620 214,620 (178,850) (107,310)
	35,770 107,310
	35,770 107,310
	Buildings 107,310 178,850 - - (71,540) (71,540)
	35,770 107,310
	45,540 81,987 - 45,540
	45,540 127,527
	10,013 19,098 71,540 71,540 61,220 70,722

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

20. EARNINGS PER SHARE

Basic earnings per share amounts are calculated by dividing net loss for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net loss attributable to ordinary shareholders by the weighted average number of potential ordinary shares outstanding during the year.

The following reflects the income and share data used in the total operations basic and diluted earnings per share computations:

computations:
Reconciliation of loss used in calculating earnings per share: Loss from continuing operations Loss used in calculating basic loss per share Loss used in calculating diluted earnings per share from continuing operations Weighted average number of ordinary shares used in calculating basic earnings per share: Weighted average number of ordinary shares used in calculating diluted earnings per share: Basic loss per share for continuing operations Diluted loss per share for ongoing operations	CONSOLIDATED
	2019 $ 2019 $
	(368,316) (902,355)
	(368,316) (902,355)

	(368,316) (902,355)


	112,303,924 112,303,924
	112,303,924 112,303,924
	$(0.0033) $(0.0080)
	$(0.0033) $(0.0080)

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

21. KEY MANAGEMENT PERSONNEL COMPENSATION

(a) Details of Key Management Personnel

(i) Directors

Mr. A. Yu Chairman and Non-executive Director Mr. S. Leung Chief Executive Officer and Executive Director Mr. S. Yan Executive Director Ms. N. Chan Executive Director Mr. T. Chu Non-executive Director (ii) Executives Ms Y.Wong Company Secretary and Chief Financial Officer

(b) Shareholdings of Key Management Personnel

Ordinary shares Directors Balance 1 January 2020 Acquired / transferred	Sold	Balance 31 December 2020
A Yu - - S. Leung 28,405,454 - S. Yan 34,567,498 - N. Chan 20,000 - T. Chu - - Y Wong - -	- - - - - -	- 28,405,454 34,567,498 20,000 - -

Ordinary shares Directors Balance 1 January 2019 Acquired / transferred	Sold	Balance 31 December 2019
A Yu - - S. Leung 28,405,454 - S. Yan 34,567,498 - N. Chan 20,000 - T. Chu - - Y Wong - -	- - - - - -	- 28,405,454 34,567,498 20,000 - -

There have been no other transactions concerning shares or share options between entities in the reporting entity and directors and executives of the reporting entity or their director-related entities.

(c) Directors’ and Executives’ Compensation

Compensation by category Short-term employment benefits Post-employment benefits	2020 2019 380,364 385,130 24,436 24,232 404,800 409,362

(d) Other transactions and balances with key management personnel Transactions with director related entities:

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

21. KEY MANAGEMENT PERSONNEL COMPENSATION– Cont’d

Details of remuneration paid to key management personnel are disclosed in the Directors Report.

Messrs. Leung and Yan through their related entities provide management support and inventory purchases to Multistack International Limited and Multistack Australia Limited as follows:

Directors and related entities	Transaction	Expenditure	Expenditure	Balance (Payable)	Balance (Payable)
		*31-Dec-20*	*31-Dec-19*	*31-Dec-20*	*31-Dec-19*
Welletin Investment Ltd Super Link Company Ltd Super Link Company Ltd ACR Equipment(HK)Ltd	Management Purchases Loan + Interest Purchases	$162,963 $411,067 - $44,266	$169,230 $332,377 - $110,434	($736,932) ($370,815) ($2,402,653) ($356,700)	($642,058) ($200,838) - ($110,744)

There were no transactions with other related parties during the year. There were no loans to key management personnel.

22. AUDITORS’ REMUNERATION Amounts received or due and receivable by the auditors of Multistack International Limited and controlled entities for: Audit and review of financial reports Other services - tax compliance	CONSOLIDATED
	2020 $ 2019 $



	120,746 98,172

	27,750 11,500
	148,496 109,672

23. CONTINGENT LIABILITIES

There were no material contingent liabilities or assets at balance date.

24. SEGMENT INFORMATION

(a) Description of segments

The consolidated entity’s chief operating decision maker has identified the following reportable segments:

Segment 1 – Primary business and geographical segment being the heating, ventilation and air conditioning (HVAC) industry throughout Australia. The major operations comprise the sale and service of Multistack water and air cooled water chillers used in commercial air-conditioning and process cooling applications. The Group also has agency relationships with agents in New Zealand, Philippines, South Korea and the middle east however these sales are a small portion of the overall group sales and the risks and returns of these sales do not differ from the domestic sales.

Segment 2 – Passive investment operations through wholly owned subsidiary – Option King Ltd.

All these operating segments have been identified based on internal reports reviewed by the consolidated entity’s chief executive officer in order to allocate resources to the segment and assess its performance.

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

24. SEGMENT INFORMATION – CONT’D

(b) Segment information

The consolidated entity’s chief executive officer uses segment revenue, segment result, segment assets and segment liabilities to assess each operating segment’s financial performance and position. Amounts reported for each operating segment are the same amount recorded in the internal reports to the chief executive officer.

Amounts of segment information are measured in the same way in the financial statements. They include items directly attributable to the segment and those that can reasonably be allocated to the segment based on the operations of the segment. There is no Inter-segment revenue.

Segment information is reconciled to financial statements and underlying profit disclosure notes if provided elsewhere where these amounts differ.

2020 Segment revenue from external source Segment result from external source Items included within the segment result: Interest/dividend income Interest expense Total segment assets Total segment liabilities 2019 (restated) Segment revenue from external source Segment result from external source Items included within the segment result: Interest/dividend income Interest expense Total segment assets Total segment liabilities	Segment 1 Segment 2 Total $ $ $
	1,265,895 197,657 1,463,552
	(535,516) 167,200 (368,316)
	23,184 35,061 58,245 (75,611) - (75,611) 3,907,527 863,092 4,770,619
	4,291,567 - 4,291,567
	Segment 1 Segment 2 Total $ $ $
	584,148 125,522 709,670
	(916,232) (13,877) (902,355)
	28,774 41,887 70,661 (19,098) - (19,098) 567,105 1,572,784 2,139,889
	1,288,521 4,000 1,292,521

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

24. SEGMENT INFORMATION – CONT’D

(c) Revenue from external customers and non-current assets attributable to segments

The total amount of external revenue derived from major customers where the revenue is greater than 10% of the consolidated entity’s total revenue is $456,166 (2019: $445,018).
There were $3,200,887 non-current assets at period end (2019: $107,310).

25. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments mainly comprise of cash, fixed income funds, and equity funds.

The main purpose of these financial instruments is to provide working capital for the Group’s operations.

The Group has various other financial instruments such as trade debtors and trade creditors, which arise directly from its operations.

The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk, foreign currency risk and credit risk. The board reviews and agrees policies for managing each of these risks and they are summarised below.

Interest rate risk

The Group has an interest-bearing debt obligation with Super Link Company Ltd at 5% per annum, and has fixed income funds, equity funds and cash.

The group’s exposure to interest rate risk is limited to the cash balances on hand. The effective interest rate received on cash balances for the year ended 31 December 2019 was between 0% and 1.15% and interest rate received on cash balances for the year ended 31 December 2020 was 0%.

Sensitivity

If interest rates on cash and bonds were to increase/decrease by 100 basis points from rates used to determine fair values as at the reporting date, assuming all other variables that might impact on fair value remain constant, then the impact on profit for the year and equity is as follows:

t for the year and equity is as follows:
	2020	2019
+/- 100 basis points	$	$
Impact on profit after tax	8,534	12,485
Impact on equity	8,534	12,485

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

25. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES– CONT’D

Financial instruments
2020
(i) Financial assets
Cash
Receivables
Deposit – Bond for property
Managed funds
Current Account
PIMCO GIS – INCOME FND HI-E AUD
BGF-European Equity Inc A8H (AUD)
Total financial assets
(ii) Financial liabilities
Trade payables
Sundry creditors
Lease liabilities
Loan from Super Link Company Ltd
Total financial liabilities
2019
(i) Financial assets
Cash
Receivables
Deposit – Bond for property
Loan to Verdicorp Inc.
Managed funds
Current Account
PIMCO GIS – INCOME FND HI-E AUD
BGF-European Equity Inc A8H (AUD)
Total financial assets
(ii) Financial liabilities
Trade payables
Sundry creditors
Lease liabilities
Total financial liabilities

Interest
bearing
Non-interest
bearing
Total carrying
amount
Weighted
average
effective
interest rate
Fixed /
variable
rate
$
$
$
%
-
346,758
346,758
-
-
285,771
285,771
-
-
17,612
17,612
-
-
-
-
-
-
349,890
349,890
-
-
316,638
316,638
-
-
1,316,669
1,316,669
-
894,387
894,387
-
-
892,758
892,758
-
45,540
-
45,540
12%
Fixed
2,337,055
-
2,337,055
5%
Fixed
2,382,595
1,787,145
4,169,740
454,804
185,434
640,238
1.15%
Variable
-
2,660
2,660
-
-
17,612
17,612
-
433,691
-
433,691
8%
Fixed
-
-
-
-
-
350,551
350,551
-
-
340,926
340,926
-
888,495
897,183
1,785,678
-
325,244
325,244
-
-
717,829
717,829
-
127,527
-
127,527
12%
Fixed
127,527
1,043,073
1,170,600

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

25. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES– CONT’D

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

The following table outlines the group’s remaining contractual maturities for non-derivative financial liabilities. The amounts presented in the table are the undiscounted contractual cash flows of the financial liabilities, allocated to time bands based on the earliest date on which the group can be required to pay.

31-Dec-20 Payables Lease liabilities Loan from Super Link Company Ltd Sundry creditors 31-Dec-19 Payables Lease liabilities Sundry creditors	< 6 months $ 166,872 45,540 - 155,826	6-12 months 1-5 years Total contractual cash flows Carrying amount $ $ $ $ 727,515 - 894,387 894,387 - - 45,540 45,540 - 2,337,055 2,337,055 2,337,055 - 736,932 892,758 892,758
	368,238	727,515 3,073,987 4,169,740 4,169,740
	112,463 45,320 75,771	212,781 - 325,244 325,244 46,680 46,680 138,679 138,679 - 642,058 717,829 717,829
	233,554	259,461 688,738 1,181,752 1,181,752

The payable to Welletin Investments Limited has been included in the above payables as a sundry creditor as it is a related party accrual for management fees. In the event that the Group encounters difficulty in meeting obligations associated with financial liabilities, the Welletin Investments Limited balance will not be called upon within 12 months.

Foreign currency risk

The Group operates internationally and is exposed to foreign exchange risk arising from foreign currency exposures. All Group’s sales are denominated in the functional currency of the operating unit making the sale, whilst approximately 95% of cost of sales are denominated in the unit’s functional currency. The Group does not seek to hedge this exposure.

Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities that are denominated in a currency that is not the entity's functional currency. The Group does not actively mitigate these risks nor does it have a strategy in place for the future to do so.

The balance of financial instruments at year end denominated in foreign currency is not material to the financial statements, therefore the Group is not exposed to material foreign currency risk. Therefore no sensitivity analysis has been performed.

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

25. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES– CONT’D

Credit risk

The Group’s maximum exposure to credit risk at balance date in relation to each class of recognised financial asset is the carrying amount of those assets as indicated in the balance sheet.

The Group minimizes credit risk in relation to cash balances by holding cash on deposit, bonds and bond funds with major banks.

The company minimises concentrations of credit risk in relation to trade accounts receivable by undertaking transactions with a large number of customers.

Terms and conditions relating to receivables:

(a) Trade - Credit sales are on commercial terms and credit terms typically in Australia are up to 60 days from delivery.

(b) Receivables from other persons are on commercial terms and in accordance with the region of operation.

Terms and conditions relating to bonds:

The Group has surplus cash in excess of working capital, in order to gain higher interest rates and also to maintain liquidity, the Group has invested in Bonds and Bond Funds in established banks. Refer to Note 9 for further details.

Fair Values

The fair value of financial assets and financial liabilities approximates their carrying amounts as disclosed in the consolidated statement of financial position and notes to the consolidated financial statements.

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

26. FAIR VALUE MEASUREMENTS

(a) Fair value hierarchy

Assets and liabilities measured and recognised at fair value have been determined by the following fair value measurement hierarchy:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2: Input other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3: Inputs for the asset or liability that are not based on observable market data.

31 Dec 2020 Recurring Fair Value Measurements Financial assets Financial assets at fair value through profit and loss Total financial assets 31 Dec 2019 Recurring Fair Value Measurements Financial assets Financial assets at fair value through profit and loss Total financial assets	Level 1 Level 2 Level 3 Total 666,528 - - 666,528
	666,528 - - 666,528
	Level 1 Level 2 Level 3 Total 691,625 - - 691,625
	691,625 - - 691,625

27. SUBSEQUENT EVENTS

There has been no matter or circumstance, which has arisen since 31 December 2020 which has significantly affected or may significantly affect:

(a) the operations, in financial years subsequent to 31 December 2020, of the Group, or
(b) the results of those operations, or
(c) the state of affairs, in financial years subsequent to 31 December 2020, of the Group.

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

DIRECTORS’ DECLARATION

31 DECEMBER 2019

The directors declare that the financial statements and notes set out on pages 10 to 38 in accordance with the Corporations Act 2001 :

a) Comply with Accounting Standards and the Corporations Regulations 2001 , and other mandatory professional reporting requirements; and
b) As stated in note 1(a) the consolidated financial statements also comply with International Financial Reporting Standards;
c) Give a true and fair view of the financial position of the Group as at 31 December 2020 and of its performance for the year ended on that date.

In the directors’ opinion there are reasonable grounds to believe that Multistack International Limited and controlled entities will be able to pay its debts as and when they become due and payable.

This declaration has been made after receiving the declarations required to be made by the chief executive officer and chief financial officer to the directors in accordance with sections 295A of the Corporations Act 2001 for the financial year ending 31 December 2020.

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

Dated at Melbourne 31[st] day of March 2021.

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----- Start of picture text -----

A. Yu
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Chairman

==> picture [81 x 68] intentionally omitted <==

----- Start of picture text -----

S. Leung
Director, CEO
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MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 54 007 254 346

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MULTISTACK INTERNATIONAL LIMITED

Report on the Audit of the Financial Report

Qualified Opinion

We were engaged to audit the financial report of Multistack International Ltd (“the Company”) and controlled entities (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 year then ended, and notes to the financial report, including a summary of significant accounting policies, and the Directors’ declaration.

In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial report of the Group is in accordance with the Corporations Act 2001 , including:

(a) giving a true and fair view of the Group’s financial position as at 31 December 2020 and of its financial performance for the year then ended; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for Qualified Opinion

During the current financial year, the Group acquired the rights to ORC technology utilising funds borrowed from Super Link Company Limited (a Director related entity). These intangible assets are carried at cost and have a carrying value of $3,113,182 and include both the distribution rights for Australia and New Zealand as well as the licence to the underlying Turbocor technology.

The Directors are in the process of developing a strategy to monetise the technology and distribution rights, however as at the date of this report the Directors have not yet confirmed the strategy or quantified the potential amounts involved.

The Group has however received an offer from Super Link Company Limited to purchase the Turbocor technology licence (original purchase price USD$1,700,000 / AUD$2,478,134) for USD$1,800,000 (value at balance date AUD$2,337,055) which is open for acceptance until 30 June 2022.

Under the terms of this offer, the Group would retain the ORC technology distribution rights in the Australian and New Zealand regions (original purchase price USD$400,000 / AUD$635,048), however the Directors have not yet confirmed the strategy or quantified the recoverable amount of these rights in accordance with AASB 136 Impairment of Assets .

As a result of this matter, we were unable to determine whether any adjustments might have been found necessary in respect of the carrying value of the intangible assets, and the respective elements making up the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows.

Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008 Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities

pitcher.com.au

Adelaide Brisbane Melbourne Newcastle Sydney Perth

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 54 007 254 346

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MULTISTACK INTERNATIONAL LIMITED

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 Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (“the Code”) that are relevant to 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 Group, would be on 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 qualified opinion.

Material Uncertainty Related to Going Concern

Without modifying our opinion, we draw attention to Note 1(b) in the financial report, which indicates that the Group incurred a net loss after income tax of $368,316 during the year ended 31 December 2020 and, as of that date, the Group had a net asset position of $479,052 and a net cash outflow from operating activities of $364,109. These conditions, along with the other matters set forth in Note 1(b), indicate the existence of a material uncertainty that may cast significant doubt upon the Group’s ability to continue as a going concern and therefore, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.

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.

Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008 Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities

pitcher.com.au

Adelaide Brisbane Melbourne Newcastle Sydney Perth

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 54 007 254 346

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MULTISTACK INTERNATIONAL LIMITED

Key Audit Matter

How our audit addressed the key audit matter

Existence and carrying value of investments - $666,528

Refer to Note 9

We focused our audit effort on the existence, completeness and valuation of the Company’s financial assets as they are the most significant driver of the Company’s net tangible assets.

The valuation of investments held at fair value through profit and loss is based on a range of inputs including readily available liquid market prices and rates (Level 1).

Our audit procedures included amongst others:

Obtaining independent confirmation of the existence of investments held with third parties.
Understanding and evaluating the controls over the valuation of investments.
Assessing the Group’s valuation of individual investment holdings, including agreeing the values attributed to the investments to readily observable data.
Assessing the adequacy of disclosures in the financial statements.

Carrying value of intangible assets – ORC Technology - $3,113,182

Refer to Note 10 and the Basis of Qualification section of the Auditors Report

Our audit focused on the carrying value of intangible assets as it is the largest asset on the Group’s balance sheet.

On 22 June 2020, the Group completed the purchase of the ORC Turbocor technology, related distribution rights and additional assets including supply and license agreements from Verdicorp Inc. for the value of A$3,113,182 after interest and foreign exchange. Since its acquisition the Group has been considering its strategy to monetise the assets acquired but at the date of this report has not yet confirmed its strategy.

Given the nature of the asset, there are assumptions and judgements concerning management’s assessment of impairment, which are necessary to determine the carrying value of the intangible asset. Our audit focus in this area as a key audit matter was to consider whether the carrying value of the intangible asset is appropriate at balance date.

Our audit procedures included amongst others:

Reviewing the loan/option agreements with Verdicorp Inc. to obtain an understanding of the assets purchased and their value.
Reviewing the contracts, court judgements, licence and supply agreements, to obtain an understanding of the assets purchased and the Groups allocation of the purchase price.
Vouching funds paid to Verdicorp Inc. to bank statements and agreements.
Understanding and evaluating the controls over the valuation of the intangibles.
Reviewing the progress on various licencing negotiations of the acquired technology.
Reviewing the irrevocable offer from Super Link Company Limited for purchase of the Danfoss technology licence and supply agreement and assessing the value of the offer with respect to the carrying value of the specific intangibles concerned.

Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008 Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities

pitcher.com.au

Adelaide Brisbane Melbourne Newcastle Sydney Perth

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

ABN: 54 007 254 346

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MULTISTACK INTERNATIONAL LIMITED

Information Other than the Financial Report and Auditor’s Report Thereon

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 31 December 2020, but does not include the financial report and our 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.

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.

Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008 Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities

pitcher.com.au

Adelaide Brisbane Melbourne Newcastle Sydney Perth

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 54 007 254 346

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF

MULTISTACK INTERNATIONAL LIMITED

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are

inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008 Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities

pitcher.com.au

Adelaide Brisbane Melbourne Newcastle Sydney Perth

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 54 007 254 346

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MULTISTACK INTERNATIONAL LIMITED

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 4 to 6 of the Directors’ report for the year ended 31 December 2020. In our opinion, the Remuneration Report of Multistack International Ltd and controlled entities, for the year ended 31 December 2020, complies with section 300A of the Corporations Act 2001 .

Responsibilities

The Directors of the Group 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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D A KNOWLES Partner

==> picture [148 x 40] intentionally omitted <==

PITCHER PARTNERS Melbourne

Date: 31 March 2021

pitcher.com.au

Adelaide Brisbane Melbourne Newcastle Sydney Perth

ASX ADDITIONAL INFORMATION

Additional information required by the Australian Stock Exchange Limited and not shown elsewhere in this report is as follows. The information is current at 30 March 2021.

CLASS OF SHARES AND VOTING RIGHTS.

There are 567 registered holders of ordinary shares of the company. All ordinary shares carry one vote per share.

TWENTY LARGEST SHAREHOLDERS.

Name
Siu Wai Yan
Mr S Leung Kwok Yin
China Agents Ltd.
Weyman Investment Ltd.
ECS Holdings Pty Ltd
GA & AM Leaver Investments Pty Ltd
National Nominees Limited
Welletin Investment Ltd.
BNP Paribas Noms Pty Ltd
Galufo Pty Ltd
Mr Douglas Roy Dillon
Mr Mark Anthony Broglio
NASA Capital Pty Ltd
Facoory Investments (QLD) Pty Ltd
Mr Bilal Ahmad
Shootingfish Pty Ltd
Mr Mark Broglio
Mr Anh Quoc Bao Bui
Mr Anthony Bohnenn
Kingston Investment Group Pty Ltd
Total

Number of shares held
% held
Substantial shareholder interest
34,567,498
30.78
64,895,799
28,405,454
25.29
64,895,799
7,678,390
6.84
3,428,000
3.05
2,693,409
2.40
2,189,965
1.95
1,999,900
1.78
1,672,000
1.49
64,895,799
1,379,219
1.23
1,099,000
0.98
1,000,000
0.89
999,999
0.89
943,572
0.84
850,000
0.76
838,850
0.75
800,000
0.71
667,500
0.59
628,555
0.56
620,954
0.55
586,999
0.52
93,049,264
82.85

The twenty largest shareholders hold 82.85% of the ordinary shares of the company.

Messrs. Yan and Leung through their interests in the above entities are registered as having a substantial shareholder interest. There is no on-market buy-back currently in progress.

DISTRIBUTION OF SHAREHOLDERS

Ordinary shares

Range	Holders	Shares
1 - 1,000	65	38,429
1,001 - 10,000	249	1,099,665
10,001 - 100,000	193	7,442,932
100,001+	60	103,722,898
TOTAL	567	112,303,924

DIVIDEND REINVESTMENT PLAN

This plan is currently suspended.

==> picture [476 x 33] intentionally omitted <==

ASX ADDITIONAL INFORMATION - continued

CORPORATE GOVERNANCE STATEMENT

The Board of Directors of Multistack International Limited has the responsibility for the corporate governance of the Group. The Board guides and monitors the business and the affairs of the Group on behalf of the shareholders.

The Corporate Governance Statement of Multistack International Limited is structured with reference to the Australian Stock Exchange Corporate Governance Council’s principles set out in the 3rd Edition Recommendations. Directors and management of Multistack International Limited and controlled entities are committed to high standards of corporate governance. The Board of Directors oversee the consolidated entity and performs its functions on behalf of shareholders. The goals of good corporate governance adopted by the Directors and Management of Multistack International Limited and controlled entities are to ensure alignment of Directors and shareholders interests. The following principles are adopted.

	BEST PRACTICE RECOMMENDATION	COMMENT
1.	*Lay solid foundations for management and oversight*
1.1	A listed entity should disclose: a) the respective roles and responsibilities of its board and management; and b) those matters expressly reserved to the board and those delegated to management.	The Board of Directors of Multistack International Limited and controlled entities is responsible for the direction and supervision of the Company’s businesses on behalf of the shareholders and the other stakeholders in the Company, including employees, lenders and the wider communities to which the Company belongs. Every year, the Board ordinarily reviews and approves a strategic plan for the Group and its one-year operating plan, including the annual operating and capital budgets. At each half-yearly meeting, the Board reviews progress against the strategic plan. The Board separately receives submissions from the management on major capital expenditures, acquisitions and disposals of significant assets or other material investment issues.
1.2	A listed entity should a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director.	The Company will undertake appropriate checks before appointing a person, or putting forward to shareholders a candidate for election, as a director; and The Company will provide shareholders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director.
1.3	A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment.	The Company has written agreements with each director and senior executive setting out the terms of their appointment.
1.4	The Company Secretary should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board.	The Company Secretary is accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board.

ASX ADDITIONAL INFORMATION - continued

CORPORATE GOVERNANCE STATEMENT (CONT’D)

1.5	The Company should: (a) have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the Company’s progress in achieving them; (b) disclose that policy or a summary of it; and (c) disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board in accordance with the Company’s diversity policy and its progress towards achieving them, and either: 1) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); or 2) as a “relevant employer” under the Workplace Gender Equality Act, the Company’s most recent “Gender Equality Indicators”, as defined in and published under that Act.	The Company has a diversity policy and the relevant disclosures, please refer to page 54. The Company is not a “relevant employer” under the Workplace Gender Equality Act.
1.6	Disclose in the Corporate Governance section of its annual report or on its website: (a) its process for periodically evaluating the performance the board, its committees and individual directors; and (b) in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.	There was no formal evaluation process of the performance of the Board, its committees and individual Directors.
1.7	Disclose in the Corporate Governance section of its annual report or on its website: (a) its process for periodically evaluating the performance of its senior executives; and (b) in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.	There was no formal evaluation process of the performance of its senior executives. Payment of remuneration entitlements to senior executives are not performance based. Every year the Board requires a summary report from management on succession planning and management development. There has been no performance evaluation undertaken in 2020.

ASX ADDITIONAL INFORMATION - continued

CORPORATE GOVERNANCE STATEMENT (CONT’D)

2.	*Structure the board to add value*
2.1	The Board should establish a nomination committee which: (a) has at least three members, a majority of whom are independent directors; and (b) is chaired by an independent director, and should disclose the charter of the committee on its website. The Company should disclose in the Corporate Governance section of its annual report or on its website: (a) the members of the nomination committee; and (b) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings.	The Board has a Nomination Committee. The members of the Nomination Committee are Mr S. Yan and Mr S. Leung. The Nomination Committee has only two members and both are not independent directors. The Nomination Committee is not chaired by an independent director. There is no formal charter for the Nomination Committee. Given the size of the Board and the size of operations, the Board has considered the current composition appropriate and will consider appointment of more independent Directors as the operations expand. The Nomination Committee did not meet during the year 2020.
2.2	The Company should disclose in the Corporate Governance section of its annual report or on its website a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.	The Company has disclosed the mix of skills and diversity of its Board. Please refer to Page 2 for the composition of its skill and experience of its various Board members. The Board considered the current composition appropriate for its size and operations.
2.3	The Company should disclose in the Corporate Governance section of its annual report or on its website: (a) the names of the directors considered by the board to be independent directors; (b) if a director has an interest, position, association or relationship of the type listed below but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and (c) the length of service of each director.	The Directors in office at the date of this statement are: - Allan Yu, Chairman & Independent Non-executive Director; appointed as a member of the Board since 2004. - Siu Yan, Executive Director; appointed as a member of the Board since 1991. - Stephen Leung, Group CEO; appointed as a member of the Board since 1991. - Yim Chan, Executive Director; appointed as a member of the Board since 2002. - Terence Chu, Independent Non-executive Director; appointed as a member of the Board since 1999.
2.4	A majority of the board should be independent directors.	Of the five Board members, three Directors listed above are not considered to be independent. Therefore the majority of the Board are not independent. With the consideration of the industry experience and the specific expertise of its Board members, also the existing size of operations, the Board has considered the current composition adequate and will consider appointment of more independent Directors as the operations expand.

ASX ADDITIONAL INFORMATION - continued

CORPORATE GOVERNANCE STATEMENT (CONT’D)

2.5	The chair should be an independent director and, in particular, should not be the same person as the CEO.	Mr Allan Yu is the Chairman of the Board who is an independent non-executive director while Mr Stephen Leung is an Executive Director and the Group CEO.
2.6	The Company should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.	The Company has an induction program for new directors which introduces the company, its products and activities, this includes meeting with the CEO and its senior management.
3.	*Act ethically and responsibly*
3.1	A listed entity should articulate and disclose its values.	The Company is a for-profit entity, the Company and its team will act lawfully, ethically and responsibly when attempting to achieve this goal.
3.2	A listed entity should: (a) have and disclose a code of conduct for its directors, senior executives and employees; and (b) ensure that the board or a committee of the board is informed of any material breaches of that code.	The Company does not have a formal code of conduct because it believes that a more effective means of actively promoting ethical and responsible decision making is for the Board and senior management team to build, through their own actions, an ethical culture.
3.3	A listed entity should: (a) have and disclose a whistleblower policy; and (b) ensure that the board or a committee of the board is informed of any material incidents reported under that policy.	The Company does not have a whistleblower policy, nevertheless its employees may report to the Board about any unlawful, unethical or irresponsible behaviour within the organisation.
3.4	A listed entity should: (a) have and disclose an anti-bribery and corruption policy; and (b) ensure that the board or a committee of the board is informed of any material breaches of that policy.	The Company does not have an anti-bribery and corruption policy, nevertheless the Board acknowledges the serious criminal and civil penalties that may be incurred and the reputational damage that may be done if the organisation is involved in bribery or corruption, the Board requires such breaches to be reported to the appropriate person or body within the organisation.

ASX ADDITIONAL INFORMATION - continued

CORPORATE GOVERNANCE STATEMENT (CONT’D)

4.	*Safeguard integrity in corporate reporting*
4.1	The board should establish an audit committee which. (a) has at least three members, all of whom are non-executive independent directors; and (b) is chaired by an independent director who is not the chair of the board, and should disclose the charter of the committee on its website. The Company should disclose in the Corporate Governance section of its annual report or on its website: (a) the relevant qualifications and experience of the members of the committee; and (b) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings.	The Board has an Audit Committee. Mr T. Chu (Independent Non-executive director) chairs the Audit Committee. The members of the audit committee were: Mr T. Chu and Mr A. Yu. Both members are non- executive and independent directors. There are only 2 members whilst Recommendation 4.1 suggested the Audit Committee to have at least three members, with the consideration of the existing size of operations and the size of the Board, the Board has considered the current composition adequate and will consider appointment of more members as the operations expand. There is no formal charter for the audit committee. The relevant qualifications and experience of the members of Audit Committee are disclosed at Page 2 of this annual report. The Audit Committee met on 26 February 2020 and 26 August 2020.
4.2	The board should, before it approves the financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the Group have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the Group, and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.	The Board will before it approves the financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the Group have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the Group, and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.
4.3	A listed entity should disclose its process to verify the integrity of any periodic corporate report it releases to the market that is not audited or reviewed by an external auditor.	The Company provides periodically audited or reviewed financial statements, the Company will state any periodic corporate report it releases to the market if that is not audited or reviewed by an external auditor.
5	*Make timely and balanced disclosure*
5.1	A listed entity should have and disclose a written policy for complying with its continuous disclosure obligations under listing rule 3.1.	The Audit Committee monitors the Company’s compliance with the Continuous Disclosure policies of the Australian Stock Exchange and oversees the Company’s annual reports, media and ASX announcements. The Company adheres to the continuous disclosure requirements of the ASX as a means of continually communicating with shareholders
5.2	A listed entity should ensure that its board receives copies of all material market announcements promptly after they have been made.	The Board will receive copies of all material market announcements promptly after they have been made.
5.3	A listed entity that gives a new and substantive investor or analyst presentation should release a copy of the presentation materials on the ASX Market Announcements Platform ahead of the presentation.	The Company will give any of such presentation materials on the ASX Market Announcements Platform ahead of any presentation to new and substantive investor or analyst.

ASX ADDITIONAL INFORMATION - continued

CORPORATE GOVERNANCE STATEMENT (CONT’D)

6.	*Respect the rights of security holders*
6.1	The Company should provide information about itself and its governance to investors via its website	The Board is responsible for the governance of the Company. The Company has information about itself and its products at its website.
6.2	The Company should design and implement an investor relations program to facilitate effective two- way communication with investors.	The Company does not have investor relations program, investors may write in for queries about the company. The Company at the AGM will meet its shareholders and investors, either at the AGM venue or virtually via Zoom platform, and respond to their enquiries.
6.3	The Company should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders.	All shareholders are invited to attend its AGM, either in person or by representatives, either at the AGM venue or virtually via Zoom platform be in the forum in which to discuss issues relevant to the Company.
6.4	A listed entity should ensure that all substantive resolutions at a meeting of security holders are decided by a poll rather than by a show of hands.	The Company has all substantive resolutions at a meeting of security holders decided by a poll.
6.5	The Company should give shareholders the option to receive communications from, and send communications to, the entity and its security registry electronically.	Shareholders are able to contact the Company or its share registrar, Computershare, by mail, telephone or email. Shareholders may choose to receive communication from and send communications to, the Company and Computershare electronically.
7.	*Recognise and manage risk*
7.1	The Company needs to have a risk committee which: (a) has at least three members, a majority of whom are independent directors; and (b) is chaired by an independent director, and should disclose the charter of the committee on its website. The Company should disclose in the Corporate Governance section of its annual report or on its website: (a) the members of the committee; (b) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings.	Given the size and nature of the operations, there is no Risk Committee. The Board oversees the management of business risks and internal control. The Board identifies, assesses and monitors business risks by considering such matters during Board meetings and through discussions with senior management on an informal basis. Minutes of discussions are documented within Board meeting minutes.
7.2	The board or a committee of the board should: (a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and (b) disclose, in relation to each reporting period, whether such a review has taken place.	The Board has reviewed its risk management framework and risk profile for the Company during the year.

ASX ADDITIONAL INFORMATION - continued

CORPORATE GOVERNANCE STATEMENT (CONT’D)

7.3	The Company should disclose in the Corporate Governance section of its annual report or on its website: (a) if it has an internal audit function, how the function is structured and what role it performs; or (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes.	The Company does not have an internal audit function. The Audit Committee oversees and assesses the Company’s internal compliance and control systems and processes.
7.4	The Company should disclose in the Corporate Governance section of its annual report or on its website whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks.	The Board oversees the management to identify and manage various business risks including economic risk. The Board is satisfied that there has been no material exposure to economic risk. The Company is not subject to material exposure to Environmental sustainability and Social sustainability risks.
8.	*Remunerate fairly and responsibly*
8.1	The Company needs to have a remuneration committee which: (a) has at least three members, a majority of whom are independent directors; and (b) is chaired by an independent director, and should disclose the charter of the committee on its website. The Company should disclose in the Corporate Governance section of its annual report or on its website: (a) the members of the committee; and (b) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings.	The Board has a Remuneration Committee. Mr T. Chu (Independent Non-executive director) chairs the Remuneration Committee. The members of the Remuneration committee are Mr T. Chu and Mr A. Yu. Both members are independent directors. There is no formal charter for the remuneration committee. There are only 2 members whilst Recommendation 8.1 suggested the Remuneration Committee to have at least three members, with the consideration of the existing size of operations and the size of the Board, the Board has considered the current composition adequate and will consider appointment of more independent members as the operations expand. The Remuneration Committee did not meet during the year as remuneration policies were not reviewed.
8.2	The Company should disclose in the Corporate Governance section of its annual report or on its website its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives.	This information is set out in the Remuneration Report section of the Directors’ Report. The non-executive directors do not receive remuneration entitlements and this is clearly separated from the remuneration of the executives.
8.3	If the Company has an equity-based remuneration scheme, then it should disclose this in the Corporate Governance section of its annual report or on its website its policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme.	The Company does not have an equity-based remuneration scheme.

ASX ADDITIONAL INFORMATION - continued

CORPORATE GOVERNANCE STATEMENT (CONT’D)

9.1	A listed entity with a director who does not speak the language in which board or security holder meetings are held or key corporate documents are written should disclose the processes it has in place to ensure the director understands and can contribute to the discussions at those meetings and understands and can discharge their obligations in relation to those documents.	The Board and all its fellow directors speak the language in which board or security holder meetings are held or key corporate documents are written and all directors understand and can contribute to the discussions at those meetings and understand and can discharge their obligations in relation to those documents.
9.2	A listed entity established outside Australia should ensure that meetings of security holders are held at a reasonable place and time.	The Company is established in Australia and it holds its meetings of security holders in Australia at a reasonable place and time.
9.3	A listed entity established outside Australia, and an externally managed listed entity that has an AGM, should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit.	The Company is established in Australia and holds its meetings of security holders in Australia; an external auditor will attend its AGM and is available to answer questions from security holders relevant to the audit.

The above principles were in place throughout the financial year ending 31 December 2020, with some exceptions of the departures from the Corporate Governance Council recommendations as detailed above, the corporate governance practices of Multistack International Limited and controlled entities were compliant with the Council’s recommendations.

DIVERSITY POLICY

Multistack has adopted a diversity policy on 21 May 2012.

Broadly, the measurable diversity objectives of Multistack are as follows:

Multistack states and, where necessary, will regularly re-state that there are no forms of discrimination / bias in considering anyone for a position with the Multistack Group, i.e. on grounds of gender, age, physical appearance, origins, race, religion, marital status, sexual preference, pregnancy or likely pregnancy, political leanings, disabilities or otherwise;
All new appointments or promotion / career enhancement and remuneration is on the basis of merit and ability to carry out the work responsibilities;
Within the broad ambit of ensuring that the Multistack Group’s activities are best developed and to ensure harmony of working within the Multistack Group that there be flexibility in working hours to enable domestic / private lives to allow for a balance between career and family obligations; and
Consideration will be given to job sharing and time flexibility wherever that is practically possible.

Consistent with the reporting requirements of the ASX Corporate Governance Principles and Recommendations, the table below provides details of the gender diversity within Multistack and its controlled entities.

Level		Male		Female
	Number	%	Number	%	Total
Board	4	80	1	20	5
Other staff	3	75	1	25	4
Total	7	78	2	22	9

AI assistant

MULTISTACK INTERNATIONAL LIMITED — Annual Report 2020

65378_rns_2021-04-26_50b356bb-0635-48b9-8bd3-56aaae73b7a9.pdf

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

CONSOLIDATED FINANCIAL REPORT

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 54 007 254 346

DIRECTORS

COMPANY SECRETARY

REGISTERED OFFICE

SOLICITORS

PRINCIPAL BANKERS

SHARE REGISTER

AUDITORS

STOCK EXCHANGE

DIRECTORS' REPORT

DIRECTORS

COMPANY SECRETARY

INTERESTS IN THE SHARES OF THE COMPANY AND RELATED BODIES CORPORATE

DIRECTORS' REPORT - CONTINUED

PRINCIPAL ACTIVITIES

RESULTS, EARNINGS PER SHARE AND DIVIDENDS

DIVIDENDS

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

SHARE OPTIONS

DIRECTORS' REPORT - CONTINUED

DIRECTORS' AND OTHER OFFICERS’ EMOLUMENTS

REMUNERATION REPORT (AUDITED)

Details of Key management personnel:

Compensation Policy

DIRECTORS' REPORT - CONTINUED

REMUNERATION REPORT- CONTINUED

Consequences of Group’s performance on shareholder wealth

DIRECTORS' REPORT - CONTINUED

REMUNERATION REPORT- CONTINUED

Key management personnel’s equity holdings

Other transactions and balances with key management personnel

DIRECTORS' REPORT - CONTINUED

Transactions with director related entities

INDEMNIFICATION OF DIRECTORS, OFFICERS AND AUDITORS

CORPORATE GOVERNANCE

PROCEEDINGS ON BEHALF OF THE CONSOLIDATED ENTITY

DIRECTORS' MEETINGS

EMPLOYEES

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

DIRECTORS' REPORT - CONTINUED

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

ENVIRONMENT REGULATION AND PERFORMANCE

NON-AUDIT SERVICES

AUDITOR’S INDEPENDENCE DECLARATION

ROUNDING OF AMOUNTS

MULTISTACK INTERNATIONAL LIMITED

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF MULTISTACK INTERNATIONAL LIMITED

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2020

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2020

Attributable to equity holders of the parent

MULTISTACK INTERNATIONAL LIMITED AND CONTROLLED ENTITIES

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2020

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

A) BASIS OF PREPARATION OF THE FINANCIAL REPORT

Compliance with IFRS

Historical cost convention

Significant accounting estimates

B) GOING CONCERN

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES - CONT’D

C) NEW AND REVISED ACCOUNTING STANDARDS EFFECTIVE AT 1 JANUARY 2020

Accounting standards issued but not yet effective

AASB 2018-6: Amendments to Australian Accounting Standards – Definition of a Business

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES - CONT’D

D) BASIS OF CONSOLIDATION

E) FOREIGN CURRENCY TRANSLATION

F) PLANT AND EQUIPMENT

Cost and valuation

MULTISTACK INTERNATIONAL LIMITED Annual Report 2020