VECTION TECHNOLOGIES LTD — Interim / Quarterly Report 2020

Aug 30, 2020

31 August 2020 | Australia

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ASX RELEASE

STRONG FY20 GROWTH AMID A GLOBAL PANDEMIC

VECTION ANNOUNCES PRELIMINARY RESULTS FOR THE YEAR TO 30 JUNE 2020

Real-time software company Vection Technologies Ltd ( ASX:VR1 ) ( Vection Technologies , Vection or the Company ) has announced its preliminary results for the financial year ended 30 June 2020.

Vection achieved strong triple digit total revenue growth of 131% to $3.1M for the financial year ended 30 June 2020 with record Underlying EBITDA growth of 120% to $173,078, despite the challenging COVID-19 lockdowns commenced in Q3 FY20.

Highlights:

• Strong triple digit total revenue growth of 131% to $3.1M (2019: $1.4M)

• Record Underlying EBITDA growth of 120% to $173,078 (2019: -$876,715)

• Strong balance sheet with ~$1.6M cash at bank

• Net Assets at 30 June 2020 increased by 52% to ~$6.1M

Gianmarco Biagi, Managing Director of Vection Technologies, commented:

“The management team has performed strongly in the challenging COVID-19 environment, highlighting the validity of the Company’s long term strategy and of the people within our organisation. During the second half of the financial year, we have successfully adapted to the general market conditions, while implementing critical organisational and financial initiatives to position Vection Technologies for continued growth.

accretive initiative for the benefit of our shareholders, aligned with the Company’s long-term overarching strategy within real-time CAD (Computer Aided Design), providing direct access to key proprietary technology, the U.S. market and to critical strategic partners and shareholders.

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3D VIRTUAL REALITY AUGMENTED REALITY INDUSTRIAL IoT CAD

With the emergence of real-time and XR (Extended Reality) technologies as increasingly beneficial solutions for companies, organisation and governments to navigate this challenging time, we have strongly focussed on key commercial initiatives to set the foundations for long-term growth, while carefully transitioning towards a sustainable recurring revenue business model, for the benefit of all our stakeholders.

Key market opportunities have arisen within critical sectors, including healthcare, education, tourism and defence, that we confidently believe will provide strong growth during the second half of FY21 and into FY22.

The management team of Vection Technologies remains strongly committed to the delivery of its growth strategy, aligned with our goal of achieving 50% Annualised Recurring Revenue (ARR) by June 2022.”

Vection Technologies Ltd (ASX:VR1) ACN: 614 814 041

Address: Suite 1, 437 Roberts Road Subiaco WA 6008, Australia Phone: +618 6380 2555

Europe Address: Via Isonzo 61 40033 Casalecchio di Reno (BO), Italy

North America Address: 785 Market Street, #600 San Francisco CA 94103 USA

Media Enquiries AUpress@vection.com.au EUpress@vection.com.au

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1

3D

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Consolidated Change 30 June 20 30 June 19 +/- $ $ Revenue 131% 3,147,111 1,362,124 Underlying EBITDA1 120% 173,078 (876,715) Cash and cash equivalents 99% 1,584,715 796,569 Net Assets 52% 6,086,090 4,014,440 Cashfow from Operating Activities 101% 15,263 (1,518,923)	Consolidated Change 30 June 20 30 June 19 +/- $ $ Revenue 131% 3,147,111 1,362,124 Underlying EBITDA1 120% 173,078 (876,715) Cash and cash equivalents 99% 1,584,715 796,569 Net Assets 52% 6,086,090 4,014,440 Cashfow from Operating Activities 101% 15,263 (1,518,923)
Revenue 131% 3,147,111	1,362,124
Underlying EBITDA1 120% 173,078	(876,715)
Cash and cash equivalents 99% 1,584,715	796,569
Net Assets 52% 6,086,090	4,014,440
Cashfow from Operating Activities 101% 15,263	(1,518,923)

1 Underlying EBITDA is an unaudited, non-AIFRS financial measure which is not prescribed by Australian Accounting Standards (‘AAS’). Please refer to the Preliminary Appendix 4E dated 31 August 2020 for additional information.

Investor Presentation and Call:

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VIRTUAL REALITY

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AUGMENTED REALITY

Vection’s management will host a conference call on 1 September 2020 at 11.00 AEST to discuss the investor presentation (slides to be released separately to the market) and to provide an update of the Company’s business strategy and financial performance.

Participants must register in advance for the investor call using the following link to receive dial-in details: - https://zoom.us/webinar/register/WN_ Bt_bcPaQm2QrB2qzal8kA

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INDUSTRIAL IoT

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CAD

webinar.

Vection Technologies Ltd (ASX:VR1) ACN: 614 814 041

Media Enquiries AUpress@vection.com.au EUpress@vection.com.au

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2 Asia Pacific Europe Address: Suite 1, 437 Roberts Road Address: Via Isonzo 61 Subiaco WA 6008, Australia 40033 Casalecchio di Reno (BO), Phone: +618 6380 2555 Italy

North America Address: 785 Market Street, #600 San Francisco CA 94103 USA

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Investor Relations Contact Details

Gianmarco Biagi - Managing Director (Europe Based) Email: gianmarco.biagi@vection.com.au Phone: +39 051 0142248

Gianmarco Orgnoni - Director and COO (Australia Based) Email: gianmarco.orgnoni@vection.com.au Phone: +61 8 6380 2555

ENDS

About Vection Technologies:

Vection Technologies Ltd (ASX:VR1) is a multinational software company that focuses on real-time technologies for industrial companies’ digital transformation.

Through a combination of our 3D, Virtual Reality, Augmented Reality, Industrial IoT and CAD solutions, Vection Technologies helps companies and organisations to innovate, collaborate and create value.

For more information please visit the Company’s websites:

vection.com.au mindeskvr.com

ASX release authorised by the Board of Directors of Vection Technologies Ltd.

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3D VIRTUAL REALITY AUGMENTED REALITY INDUSTRIAL IoT CAD

Vection Technologies Ltd (ASX:VR1) ACN: 614 814 041

Europe North America Address: Via Isonzo 61 Address: 785 Market Street, #600 40033 Casalecchio di Reno (BO), San Francisco CA 94103 Italy USA

Media Enquiries AUpress@vection.com.au EUpress@vection.com.au

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3

Address: Suite 1, 437 Roberts Road Subiaco WA 6008, Australia Phone: +618 6380 2555

31 August 2020 | Australia

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ASX RELEASE

APPENDIX 4E

Preliminary Final Report to the Australian Securities Exchange

Rule 4.3A

Rule 4.3A	Rule 4.3A
Name of entity:		Vection Technologies Limited (formerly known as Servtech Global Holdings Limited)
	Name of entity:	Vection Technologies Limited (formerly known as Servtech Global Holdings Limited)
	ABN or equivalent company reference:	93 614 814 041
	Reporting Period
	Preliminary report for the fnancial year ended	30 June 2020
Previous corresponding period is the fnancial year ended	Previous corresponding period is the fnancial year ended	30 June 2019

1. Reporting Period

2. Results for announcement to the market

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$’000
Revenues from ordinary activities (item 2.1) up 130% to 2,895
Loss from ordinary activities after tax up 74% to -1,166
attributable to members (item 2.2)
Loss for the period attributable to members up 74% to -1,166
(item 2.3)
Dividends (item 2.4) Amount per security Franked amount per
security
Interim dividend Nil Nil
Final dividend Nil Nil
Record date for determining entitlements to Not Applicable
the dividend (item 2.5)
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3D VIRTUAL REALITY AUGMENTED REALITY INDUSTRIAL IoT CAD

understood (item 2.6): Refer to item 12.

Vection Technologies Ltd (ASX:VR1) ACN: 614 814 041

Europe Address: Via Isonzo 61 40033 Casalecchio di Reno (BO), Italy

North America Address: 785 Market Street, #600 San Francisco CA 94103 USA

Media Enquiries AUpress@vection.com.au EUpress@vection.com.au

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1

Address: Suite 1, 437 Roberts Road Subiaco WA 6008, Australia Phone: +618 6380 2555

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3.

Comprehensive Income for the year ended 30 June 2020.

4.

Refer to attached unaudited Preliminary Consolidated Statement of Financial Position as at 30 June 2020.

5.

30 June 2020.

6. Statement of changes in equity

30 June 2020.

7. Dividends

7. Dividends	7. Dividends
				Total amount of dividend
		Date of payment		Total amount of dividend
	Interim dividend – year ended 30 June 2020	N/A		N/A
Final dividend – year ended 30 June 2020	Final dividend – year ended 30 June 2020	N/A		N/A
				N/A

Amount per security

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Amount per Franked Amount per
security amount per security of
security at foreign
% tax sourced
dividend
Total dividend: Current year N/A N/A N/A
Previous year N/A N/A N/A
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3D VIRTUAL REALITY AUGMENTED REALITY INDUSTRIAL IoT

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CAD

Vection Technologies Ltd (ASX:VR1) ACN: 614 814 041

Europe Address: Via Isonzo 61 40033 Casalecchio di Reno (BO), Italy

North America Address: 785 Market Street, #600 San Francisco CA 94103 USA

Media Enquiries AUpress@vection.com.au EUpress@vection.com.au

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2

Address: Suite 1, 437 Roberts Road Subiaco WA 6008, Australia Phone: +618 6380 2555

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Total dividend on all securities

		Current period $A'000	Previous corresponding Period - $A'000	3D
	Ordinary securities (each class separately)	N/A	N/A
	Preference securities (each class separately)	N/A	N/A
	Other equity instruments (each class separately)	N/A	N/A
Total	Total	N/A	N/A
					D

8. Details of dividend or distribution reinvestment plans in operation are described below:

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VIRTUAL REALITY

N/A

The last date(s) for receipt of election notices for participation in the N/A dividend or distribution reinvestment plan

9. Net tangible assets per security

Current period Previous corresponding Period Net tangible asset backing per ordinary 0.0001 0.0060 security

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AUGMENTED REALITY

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INDUSTRIAL IoT CAD

Vection Technologies Ltd (ASX:VR1) ACN: 614 814 041

North America Media Enquiries Address: 785 Market Street, #600 AUpress@vection.com.au San Francisco CA 94103 EUpress@vection.com.au USA

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Europe Address: Suite 1, 437 Roberts Road Address: Via Isonzo 61 Subiaco WA 6008, Australia 40033 Casalecchio di Reno (BO), Phone: +618 6380 2555 Italy

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10. Details of entities over which control has been gained or lost during the period:

Control gained over entities

Control gained over entities	Control gained over entities	Control gained over entities
Name of entities_(item 10.1)_			Mindesk Inc and its controlled entity
	Name of entities_(item 10.1)_		Mindesk Inc and its controlled entity
	Date(s) of gain of control_(item 10.2)_		29 April 2020
	Proft (loss) from ordinary activities after tax of the controlled entities for the whole of the previous corresponding period_(item 10.3)_		-$87,875
	Loss of control of entities
	Name of entities_(item 10.4)_		N/A
	Date(s) of loss of control_(item 10.5)_		N/A
	Contribution to consolidated proft (loss) from ordinary activities after tax by the controlled entities to the date(s) in the current period when control was lost_(item 10.6)._		N/A
	Proft (loss) from ordinary activities after tax of the controlled entities for the whole of the previous corresponding period_(item 10.7)_		N/A
	Details of associates and joint venture entities
	Name of associate or joint venture entity(item 11.1)		% Securities held(item 11.2)
N/A			N/A
	N/A		N/A
Aggregate share of profts (losses) of associates and joint venture entities (item 11.3)

11. Details of associates and joint venture entities

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3D VIRTUAL REALITY AUGMENTED REALITY INDUSTRIAL IoT CAD

Aggregate share of profits (losses) of associates and joint venture entities (item 11.3)

Vection Technologies Ltd (ASX:VR1) ACN: 614 814 041

North America Address: 785 Market Street, #600 San Francisco CA 94103 USA

Media Enquiries AUpress@vection.com.au EUpress@vection.com.au

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4

Europe Address: Via Isonzo 61 40033 Casalecchio di Reno (BO), Italy

Address: Suite 1, 437 Roberts Road Subiaco WA 6008, Australia Phone: +618 6380 2555

	Group’s share of associates’ and joint			venture		2020		2019
	entities’:					$		$
	Proft (loss) from ordinary activities before				tax	N/A		N/A
	Income tax on ordinary activities Net proft (loss) from ordinary activities after					N/A N/A		N/A N/A
	tax Adjustments Share of net proft (loss) of associates and JV entities					N/A N/A		N/A N/A

Review of Operations

Real-time software company Vection Technologies Limited ( ASX:VR1 ) ( Vection Technologies , Vection or the Company ) reports the following for the Financial Year ended 30 June 2020:

Overview

Vection Technologies achieved triple digit revenue growth, expanded its Underlying EBITDA and significantly improved its overall financial performance in the financial year ended 30 June 2020, despite the challenging global COVID-19 pandemic commencing in Q3 FY20.

Financial highlights include:

• FY20 Total Revenue increased by 131% compared to FY19

• FY20 Underlying EBITDA increased by 120% compared to FY19

• Total Assets at 30 June 2020 increased by 131% compared to 30 June 2019

3D VIRTUAL REALITY

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AUGMENTED REALITY INDUSTRIAL IoT CAD

• Net Assets at 30 June 2020 increased by 52% compared to 30 June 2019

• Cash and Cash Equivalents at 30 June 2020 increased by 99% compared to 30 June 2019

FY20 Total Revenue was a record $3,147,111 (2019: $1,362,124) with record FY20 Underlying EBITDA of $173,078 (2019: -$876,715)

Vection’s balance sheet is strong, ending the year with a cash balance of $1,584,715 (2019: $796,569). The Company’s management is strategically focused on ensuring a continued strong cash position across all international subsidiaries to secure a robust framework for future growth during and following this uncertain time, for value creation for all of its stakeholders.

Vection Technologies Ltd (ASX:VR1) ACN: 614 814 041

Europe North America Address: Via Isonzo 61 Address: 785 Market Street, #600 40033 Casalecchio di Reno (BO), San Francisco CA 94103 Italy USA

Media Enquiries AUpress@vection.com.au EUpress@vection.com.au

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5

Address: Suite 1, 437 Roberts Road Subiaco WA 6008, Australia Phone: +618 6380 2555

3D

INDUSTRIAL IoT

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Total Assets at 30 June 2020 were $13,684,548 (2019: $5,933,805) while Net Assets were $6,086,090 (2019: $4,014,440).

The Company reported a Net Cash Inflow from Operating activities of $15,263 in FY20, compared to a Net Cash Outflow of -$1,518,923 in FY19.

Net Cash Inflow from Investing activities increased to $366,078 from -$72,388 in FY19, stating the positive strong financial impact of the Mindesk acquisition completed on 29 April 2020. Mindesk is the developer of the first Software as a Service ( SaaS ) real-time 3D design platform that combines Computer Aided Design ( CAD ) with Virtual Reality ( VR ) and graphic engines.

As part of the Mindesk acquisition, the Company also welcomed global institutional shareholders including HTC, the Italian Government (via its innovation fund CDP Ventures), Primomiglio SGR and A11 Ventures SGR.

Net Cash Inflow from Financing activities decreased to $393,420 representing a sharp decrease from 1,871,963 in FY19, as part of the Company’s overall increased ordinary commercial activities and the implementation of the Company’s smart capital strategy.

Vection Technologies posted an after-tax loss attributed to members of $1,163,637 for the financial year ended 30 June 2020, representing a decrease of 74% over the prior corresponding period (30 June 2019: loss $4,502,612). Several non-cash and one-off expenses were recorded in the Company’s accounts during the period, specifically for legacy assets related expenses and for costs incurred pursuant to the acquisition of Mindesk.

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Full Year Ended
Change 30-Jun-20 30-Jun-19
+/- $ $
Profit (Loss) after Income Tax 74% (1,163,637) (4,502,612)
Interest and Financing related Costs 94,385 38,217
Depreciation and Amortisation 507,851 146,249
One-Off Transaction Costs 513,294 321,548
Non-Cash Accounting charges 219,522 3,119,883
Income Tax 1,663 -
Underlying EBITDA [1] 120% 173,078 (876,715)
----- End of picture text -----

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VIRTUAL REALITY

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AUGMENTED REALITY

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CAD

1 Underlying EBITDA is an unaudited, non-AIFRS financial measure which is not prescribed by Australian Accounting Standards (‘AAS’)

Vection Technologies Ltd (ASX:VR1) ACN: 614 814 041

North America

Media Enquiries AUpress@vection.com.au EUpress@vection.com.au

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Europe Address: Via Isonzo 61 40033 Casalecchio di Reno (BO), Italy

Address: Suite 1, 437 Roberts Road Subiaco WA 6008, Australia Phone: +618 6380 2555

Address: 785 Market Street, #600 San Francisco CA 94103 USA

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Operational Highlights

mission to deliver proprietary real-time software to industrial companies enabling the digital transformation of workflows, and continuously delivered on its growth strategy aligned with its three building blocks (Technology, Partnerships and Growth).

Technology

Vection made significant progress in the development and commercialisation of its 360° SaaS product suite for Industry 4.0, launching multiple software products and solutions:

• Design & Engineering : release of Mindesk Suite 2020.1

• Manufacturing : continuous development of FrameS 1.7, bringing to market the highly anticipated AR features

• Training : development and early commercialisation of FrameS VR training and FrameS Dental

• Marketing & Sales : development and commercialisation of the In-Store Fashion and Furniture Configurator, launch of FrameS Events and eHealth app with Compugroup Medical (ETR:COP)

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3D VIRTUAL REALITY

• Maintenance : development and early commercialisation of Trainer Creator

across multiple sectors, including: Architecture Engineering and Construction ( AEC ), Machinery , Automotive , Naval , Fashion & Furniture , Education and Healthcare .

Partnerships

Vection progressed and gained access to additional technology and industrial partners, including:

• OEM Segment : Logitech, Varjo, HP, HTC Vive, NVIDIA and Intel

• CAD/CAM/CAE/PLM Software Segment : Autodesk, Solidworks, McNeel & Associates and Siemens

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AUGMENTED REALITY INDUSTRIAL IoT CAD

• Network Segment : Epic Games and Microsoft BizSpark

• Software Segment : Vodafone

• Industrial Segment : MUNER and Bi-Rex

Growth

FY20:

• Europe, Middle East and Africa : 35 Partners

• : 6 Partners

• Americas : 5 Partners

Medical, Heatherwick Studio, Electric80, NSA, V-Shapes and Volvo Car Italy.

Vection Technologies Ltd (ASX:VR1) ACN: 614 814 041

Europe Address: Via Isonzo 61 40033 Casalecchio di Reno (BO), Italy

North America Address: 785 Market Street, #600 San Francisco CA 94103 USA

Media Enquiries AUpress@vection.com.au EUpress@vection.com.au

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Address: Suite 1, 437 Roberts Road Subiaco WA 6008, Australia Phone: +618 6380 2555

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Organisation & People

Aligned with its growth strategy, Vection further consolidated its sales infrastructure and expanded its operations internationally by appointing Mr Gabriele Sorrento as a Company director and Head of Global Partnerships based in San Francisco (U.S.), Mr Vittorio Bava as Head of SaaS and Mr Paolo Mossa as Sales Vice President Europe.

Furthermore, Vection successfully discontinued its South-East Asian operations and consolidated and relaunched its Indian subcontinent operations to ensure a robust software development framework aligned with its strong focus on recurring revenue generation across the group.

Financial Strategy

The Company advanced initiatives to access smart capital to secure a stronger cash position across each of the Company’s international subsidiaries, including:

• Receipt of ~$0.6M in research and development (R&D) funding, including fiscal credits.

• Execution of a ~$3.2M E.U. grant (Horizon 2020 Grant) for the PrismArch project, of which $0.5M will flow directly to the Company.

• Commercial loans of ~$0.6M with ~44 months weighted average repayment period and ~4.4% weighted average interest rate per annum.

• Strategic unsecured rolling facility of up to ~$0.4M, proposed to be expanded as the Company progresses it commercial strategy and platform adoption. The facility advances funds to the Company upon the issue of invoices to clients, based on requirements.

• up to $2M expected during September quarter (30% non-repayable and 70% repayable after 10 years at nil interest).

Corporate Overview

Following the approval of Shareholders, the Company completed the acquisition of Mindesk Inc (ASX: 28 April 2020).

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3D VIRTUAL REALITY

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AUGMENTED REALITY INDUSTRIAL IoT CAD

In accordance with the terms of the acquisition, the Company issued 165,505,199 fully paid ordinary shares in the capital of the Company and up to 108,000,000 shares as deferred consideration subject to multiple revenue milestones.

Explanation of loss

The Company’s loss for the year of $1,163,637 (2019: loss of $4,502,612) is largely attributed to depreciation and amortisation non-cash expenses ($507,851) and one-off transaction costs attributable to the acquisition of Mindesk and several one-off costs relating to legacy assets ($513,294).

As the Company progresses its overarching growth strategy, it expects to continue to improve its Vection Technologies Ltd (ASX:VR1) ACN: 614 814 041underlying full financial year results.

Address: Suite 1, 437 Roberts Road Subiaco WA 6008, Australia Phone: +618 6380 2555

Europe North America Media Enquiries Address: Via Isonzo 61 Address: 785 Market Street, #600 AUpress@vection.com.au 40033 Casalecchio di Reno (BO), San Francisco CA 94103 EUpress@vection.com.au Italy USA

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8

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Cash Position

Cash at the end of the year was ~$1,584,715. The Company had significant receivables outstanding at 30 June 2020 of ~$2,129,666.

Outlook

During 1H FY21, Vection Technologies’ objectives will be:

• Strong focus on advancing the Company’s solutions across the healthcare, education and automotive sectors and entry into new verticals including the defence industry.

• Accelerating the North American and Australian market development.

• Continued growth in the European market segment.

• Executing commercial partnerships with existing and new Tier-1 global technology companies.

• Focus on development of the existing technology suite, with renewed emphasis on cloud and LAN collaboration.

• Integration of Mindesk suite with leading CAD and BIM software.

• Launching new products and third-parties software integrations towards the stated objective of building a 360° product suite.

• Further expanding and consolidating the global sales infrastructure and footprint to further advance the global client outreach.

• Strong acceleration of recurring revenue sales initiatives aligned with the Company’s goal to achieve 50% Annualised Recurring Revenue (ARR) by June 2022.

• Finalisation of smart capital initiatives and pursue of continued growth from a position of financial strength.

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3D VIRTUAL REALITY

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AUGMENTED REALITY INDUSTRIAL IoT CAD

Vection Technologies Ltd (ASX:VR1) ACN: 614 814 041

Media Enquiries AUpress@vection.com.au EUpress@vection.com.au

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Europe North America Address: Via Isonzo 61 Address: 785 Market Street, #600 40033 Casalecchio di Reno (BO), San Francisco CA 94103 Italy USA

Address: Suite 1, 437 Roberts Road Subiaco WA 6008, Australia Phone: +618 6380 2555

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13. report (attached), which has been prepared in accordance with Australian accounting standards.

14. Commentary on the results for the period.

Refer to explanation item 12.

15. Information on Audit

process of being audited.

16. Audit Opinion.

This report is based on accounts that are in the process of being audited, and are unlikely to be subject to dispute or qualification.

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3D

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VIRTUAL REALITY

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AUGMENTED REALITY INDUSTRIAL IoT CAD

Vection Technologies Ltd (ASX:VR1) ACN: 614 814 041

Media Enquiries AUpress@vection.com.au EUpress@vection.com.au

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10

Europe North America Address: Via Isonzo 61 Address: 785 Market Street, #600 40033 Casalecchio di Reno (BO), San Francisco CA 94103 Italy USA

Address: Suite 1, 437 Roberts Road Subiaco WA 6008, Australia Phone: +618 6380 2555

VECTION TECHNOLOGIES LIMITED

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ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2020 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Consolidated 30 June 20 30 June 19 Notes $ $ Revenue Revenue 2 3,147,111 1,362,124 Expenses Acquisition Costs - 155,625 Employee benefts expense 3 1,807,079 974,922 Consulting and professional fees 817,773 608,559 Finance costs 66,311 32,262 Depreciation and amortisation 507,851 146,249 Impairment 115,158 3,084,659 Other expenses 3 890,551 825,560 Share based payments 104,362 36,900 Total Expenditure 4,309,085 5,864,736 Loss before income tax expense (1,161,974) (4,502,612) Income tax expense 1,663 - Loss after income tax attributable to equity holders (1,163,637) (4,502,612) Discontinued Operations Proft (loss) for the year after income tax from discontinued operations (2,230) 82,510 Loss after income tax attributable to equity holders of Vection Technologies Limited (1,165,867) (4,420,102) Other comprehensive loss Items that may be reclassifed to proft or loss Exchange differences on translation of foreign operations 154,060 2,163 Total comprehensive loss for the period 154,060 2,163 Total comprehensive loss attributable to equity holders of Vection Technologies Limited (1,011,807) (4,417,939) Loss per share for the year attributable to the members of Vection Technologies Limited Discontinued operations proft (loss) per share for the year (per share) - 0.028 Continuing operations loss per share for the year (per share) (0.203) (1.540) Overall basic loss per share (0.203) (1.512) Overall diluted loss per share (0.203) (1.512)

Copyright © 2020 Vection Technologies

11

	Consolidated	Consolidated	Consolidated	Consolidated
		30 June 20		30 June 19
	Notes	$ $ 1,584,715 796,569 2,129,666 1,457,990
Current Assets
Cash and cash equivalents	4,6	1,584,715
Receivables	5,6	2,129,666
Total Current Assets		3,714,381		2,254,559
				90,075 3,589,171 -
Non-Current Assets
Property, plant & equipment	6	76,859
Intangible assets	6	9,841,178
Intangible assets		52,130
Total Non-Current Assets		9,970,167		3,679,246
Total Assets		13,684,548		5,933,805
				967,959 246,085 -
Current Liabilities
Trade and other payables	6	2,728,770
Provisions	7	865,353
Interest bearing liabilities		393,420
Total Current Liabilities		3,987,543		1,214,044
				- 705,321
Non-Current Liabilities
Deferred tax liability		604,233
Provisions	7	3,006,682
Total Non-Current Liabilities		3,610,915		705,321
Total Liabilities		7,598,458		1,919,365
Net Assets/(Liabilities)		6,086,090		4,014,440
				19,397,897 271,657 (15,655,114)
Equity
Issued capital		22,376,991
Reserves		257,580
Accumulated losses		(16,548,481)
Total Equity / (Defciency in Equity)		6,086,090		4,014,440

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VECTION TECHNOLOGIES LIMITED

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ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2020 CONSOLIDATED STATEMENT OF CASH FLOWS

Consolidated 30 June 20 30 June 19 $ $ Cash fows from operating activities Receipts from customers 2,348,403 1,450,452 Payments to suppliers and employees (2,266,860) (2,914,459) Interest received 517 440 Interest paid / Finance costs (57,846) (39,710) Tax incentives/ (Tax paid) (8,952) (15,646) Net cash infow (outfow) from operating activities 15,263 (1,518,923) Cash fows from investing activities Purchase of plant and equipment (79,446) (49,729) Purchase of subsidiary (net cash acquired) 1,137,866 (324,412) Proceeds from sale of/ (Payments for) intangible assets (693,593) 56,154 Proceeds (Payments) for disposal of discontinued operations - 245,599 Proceeds from sale of investment 1,251 - Net cash infow (outfow) from investing activities 366,078 (72,388) Cash fow from fnancing activities Proceeds from issues of fully paid shares - 2,000,000 Payment of transaction costs - (128,037) Proceeds from borrowings 486,819 - Prepayment of borrowings (93,400) - Net cash infow (outfow) from fnancing activities 393,420 1,871,963 Net increase / (decrease) in cash and cash equivalents 774,760 280,652 Cash and cash equivalents at the beginning of the fnancial year 796,569 513,754 Effect of movement in exchange rates on cash held 13,386 2,163 Cash and cash equivalents at the end of the fnancial year 1,584,715 796,569

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VECTION TECHNOLOGIES LIMITED

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ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2020 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

		Consolidated Issued Capital Accumulated Losses Reserves Foreign Currency Translation Reserve Total $ $ $ $ $ Balance at 1 July 2019 19,397,897 (15,655,114) 272,500 (843) 4,014,440 Loss for the period - (1,165,867) - - (1,165,867) Other comprehensive (loss) / income - - - 154,060 154,060 Total comprehensive loss for the period - (1,165,867) - 154,060 (1,011,807) Transactions with owners in their capacity as owners Share based payments - - 104,363 - 104,363 Expiry of options - 272,500 (272,500) - - Issue of share capital 2,979,094 - - - 2,979,094 Balance at 30 June 2020 22,376,991 (16,548,481) 104,363 153,217 6,086,090 Balance at 1 July 2018 10,44,332 (11,235,012) 272,500 (3,006) (561,186) Loss for the period - (4,420,102) - - (4,420,102) Other comprehensive (loss) / income - - - 2,163 2,163 Total comprehensive loss for the period - (4,420,102) - 2,163 (4,417,939) Transactions with owners in their capacity as owners Share based payments 36,900 - - - 36,900 Issue of share capital 8,956,665 - - - 8,956,665 Balance at 30 June 2019 19,397,897 (15,655,114) 272,500 (843) 4,014,440

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NOTE 1: BASIS OF PREPARATION OF THE FINAL REPORT

BASIS OF PREPARATION

Technologies Limited (formerly known as Servtech Global Holdings Ltd) (“Vection Technologies”, “Vection” or “the Group”) and its controlled entities.

and non-current assets and financial instruments which are measured at fair value or where otherwise stated.

Cost is based on the fair value of consideration given in exchange for assets.

Accordingly, this report should be read in conjunction with the annual financial report of the year ended 30 June 2020 and any public announcements made by Vection during the year in accordance with the continuous disclosure requirements of the Corporations Act 2001.

consolidated entity.

STATEMENT OF COMPLIANCE

Australian Accounting Standards, other pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001. The preliminary final report is also in compliance with ASX listing Rule 4.3A and the disclosure requirements of ASX Appendix 4E. Australian Accounting Standards include Australian equivalents of International Reporting Standards (“AIFRS”).

NOTE 2: REVENUE

The following is an analysis of the Group’s revenue for the year.

The following is an analysis	of the Group’s	revenue for the year.
			30 June 20	30 June 19
			$	$
REVENUE
Software technology development services			2,123,879	539,509
Outsourced services			423,000	457,409
Interest received			16,857	21,374
R&D Tax refund			160,653	149,442
Foreign exchange gain			91,767	-
Other revenue			330,955	194,390
TOTAL REVENUE			3,147,111	1,362,124

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||||
|---|---|---|
|NOTE 3: EXPENSES|
|30 June 20|30 June 19|
|$|$|
|EMPLOYEE BENEFITS|
|Director Fees|480,750|248,358|
|Staff Wages & Amenities|1,326,329|726,564|
|TOTAL EMPLOYEE BENEFITS|1,807,079|974,922|
|30 June 20|30 June 19|
|$|$|
|OTHER EXPENSES|
|Advertising & Marketing expense|180,130|116,222|
|Rent|129,526|283,622|
|Administration expense|580,895|425,716|
|TOTAL CONSULTING AND PROFESSIONAL FEES|890,551|825,560|
|NOTE 4: CASH AND CASH EQUIVALENTS|
|30 June 20|30 June 19|
|$|$|
|Cash and bank balances|1,584,715|796,569|
|RECONCILIATION TO CONSOLIDATED STATEMENT OF CASHFLOWS:|
|Balances as above|1,584,715|796,569|
|Bank overdraft|-|-|
|BALANCES PER STATEMENT OF CASHFLOWS|1,584,715|796,569|
|NOTE 5: TRADE AND OTHER RECEIVABLES|
|30 June 20|30 June 19|
|$|$|
|Trade and other receivables|2,121,149|1,028,212|
|Trade and other receivables from sale of business|35,583|514,250|
|Provision for doubtful debts|(32,971)|(100,058)|
|2,123,761|1,442,404|
|Prepayments|5,905|15,586|
|2,129,666|1,457,990|

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NOTE 6: ACQUISITION OF MINDESK

On 29 April 2020, the Group completed the acquisition of 100% of the issued capital and voting rights in Mindesk Inc (“ Mindesk ”).

(a) Acquisition Consideration

The consideration for the acquisition comprised the issue to the Vection vendors of: ● 165,505,199 fully paid ordinary shares to the Mindesk vendors

• up to 108,000,000 shares as deferred consideration to the Mindesk vendors

Under the principles of AASB 3, the assets and liabilities of Mindesk are measured at fair value on the date of acquisition.

(b) Goodwill

Goodwill is calculated as the difference between the fair value of consideration transferred less the fair value of the identified net assets of Mindesk. Details of the transaction are as follows:

																			Fair Value $
	Consideration
	165,505,199 fully paid ordinary shares																			2,979,094
	108,000,000 performance							rights												3,280,000
	Total consideration																			6,259,094
	Fair value of assets					and liabilities at							acquisition date:
	Cash																			1,137,866
	Trade and other receivables																			25,936
	Property, plant and equipment																			10,646
	Software																			2,307,269
	Trade and other payables																			(810,310)
	Fair value of identifable						assets				and liabilities acquired									2,671,407
	Consideration			paid																6,259,094
	Less: Fair value of identifable									assets and liabilities assumed										(2,671,407)
	Provisional assessment of goodwill																			3,587,687

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NOTE 7: PROVISIONS

		~~30 June 20~~		~~30 June 19~~
		~~$~~		~~$~~
Provision for onerous lease commitments - Current		94,322		246,085
Provision for contingent consideration - Current		771,031		-
		94,322		246,085
Provision for onerous lease commitments – Non-current		487,713		705,321
Provision for contingent consideration - Non-Current		2,518,969		-
		487,713		705,321

NOTE 8: SEGMENT REPORTING

An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. This includes start-up operations which are yet to earn revenues. Management will also consider other factors in determining operating segments such as the existence of a line manager and the level of segment information presented to the board of directors. During the year the Group’s executive directors examine the Group’s performance from a core operations perspective and have identified two reportable segments of its continuing business, being IT development and outsourced services.

NOTE 9: SUBSEQUENT EVENTS

may significantly affect the operations of the Company and the results of those operations or the state of the affairs of the Company in the financial period subsequent to 30 June 2020.

ASX release authorised by the Board of Directors of Vection Technologies Ltd.

Copyright © 2020 Vection Technologies

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