VECTION TECHNOLOGIES LTD — Interim / Quarterly Report 2020

Feb 27, 2020

Appendix 4D

28 February 2020

Half year reporting period ending 31 December 2019

The following information is provided to ASX under listing rule 4.2A.3.

1. Reporting period

Current Period: 6 months ended 31 December 2019 Prior Period: 6 months ended 31 December 2018

2. Results for announcement to the market

	Item	31 December 2019 $	31 December 2018 $	Change %
Revenue from ordinary activities	2.1	$2,053,258	$478,597	329%
Profit/(Loss) after tax attributable to members	2.2	($280,714)	($374,758)	25%
Net Profit/(Loss) attributable to members	2.3	($280,714)	($374,758)	25%
Dividend	2.4	Vection Technologies Ltd (previously known as ServTech Global Holdings Limited) did not declare a dividend during the current reportingor corresponding previous reporting period.
The record date for determining entitlements to the dividend	2.5	Not applicable
Explanatory information 2.6 Overview The Half Year ended 31 December 2019 marked the first full period of activities of the current executive team of Vection Technologies Ltd (“VR1” or the “Company”). During the period the Company: - Focussed on development and commercialisation activities of real-time technologies for industrial companies’ digital transformation, including the convergence of Virtual Reality, Augmented Reality and internet of things (IoT) and computer aided design (CAD). - Significantly reduced its net cash outflow from operating activities compared to the prior corresponding period by ~58%. - Posted an underlying positive EBITDA after adding back several non-cash expenses recorded in the company’s account (1H FY20 EBITDA: ~$71k), despite significant upfront investments in its proprietary real- time technologies, expected to be commercialised during 2020. Underlying EBITDA is an unaudited, non-AIFRS financial measure which is not prescribed by Australian Accounting Standards�

In the lead up to the launch, Vection expanded its value-added resellers and distribution network in Italy, Canada, and Northern Europe, leveraging its unrivalled industrial network and client access to maximise returns for all stakeholders. The Company’s global distribution and partner network of 10 partners, will enable the continued collaboration to maximise market-penetration during calendar year 2020, with access to over 9,000 established European clients, including Altea Federation’s Gucci, Ferrari, Maserati, Duracell.

During the period ended 31 December 2019, the Company took a significant step forward in its global commercialisation strategy in the fast-growing real-time 3D, VR and AR technologies industry, with the launch of the FrameS SaaS platform.

The Company also announced significant moves into new markets and new technological integrations.

Revenue

Overall revenue from ordinary activities ($2,072,758) was up 329% on the prior period (2018: $478,597) mainly as a result of the Vection Italy operations.

Expenditure

Total expenditure from ordinary activities ($2,492,019) was significantly higher (139%) than prior period (2018: $1,043,530) but as above this is proportionately lower than the uplift in revenue.

Accumulated Losses

Accumulated losses of $15,935,828 are largely attributed to the historical real estate, finance and settlements discontinued operations, sold during calendar year 2017 (previous executive team). There is no obligation to cover these accumulated losses in the future.

Outlook

The Company is accelerating its overall evolution to a recurring revenue business model. Supported by a global distribution footprint and unrivalled client and partner access, Vection is confident in continuing its growth trajectory during calendar year 2020.

The establishment of a global SaaS product suite of real-time technologies for companies’ digital transformation continues to be paramount in the Company’s growth strategy across multiple market segments and areas of application. The Company continues to evaluate strong value accretive software integration opportunities in the virtual reality CAD market segment and will update the market in due course.

3. Net tangible assets per security

3. Net tangible assets per security
	31 December 2019	31 December 2018
Net tangible asset per share (cents per share)	(0.06) cents	0.11 cents

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

There were no entities over which control has been gained or lost during the period.

5. Details of individual and total dividends or distributions and dividends or distribution payments

Not applicable.

6. Details of any dividend or distribution reinvestment plans in operation and the last date for the receipt of an election notice for participation in any dividend or distribution reinvestment plan

Not applicable.

7. Details of associates and joint venture entities including the name of the associate or joint venture entity and details of the reporting entity’s percentage holding in each of these entities

Not applicable.

8. For foreign entities, which set of accounting standards is used in compiling the report

The Company is not a foreign entity.

9. For all entities, if the accounts contain an independent audit report or review that is subject to a modified opinion, emphasis of matter or other matter paragraph, a description of the modified opinion, emphasis of matter or other matter paragraph.

The 2019 Half-Year report is based upon accounts that were reviewed by the Company’s auditor and not subject to a modified opinion. The report does include an emphasis of matter regarding the going concern basis of preparation of the interim financial accounts.

Yours faithfully

ServTech Global Holdings Limited

Bert Mondello

Chairman

Tel: +618 6380 2555

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VECTION TECHNOLOGIES LTD

(FORMERLY KNOWN AS SERVTECH GLOBAL HOLDINGS LIMITED)

ABN 93 614 814 041

INTERIM FINANCIAL REPORT

For the six months ended 31 December 2019

This half-year financial report is to be read in conjunction with the financial report for the year ended 30 June 2019 and any announcements to the market during the half-year ended 31 December 2019.

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C O N T E N T S
	Page
Directors' Report	2
Auditor’s Independence Declaration	7
Interim Financial Report
Consolidated Statement of Profit or Loss and Other Comprehensive Income	8
Consolidated Statement of Financial Position	9
Consolidated Statement of Changes in Equity	10
Consolidated Statement of Cash Flows	11
Notes to the Interim Financial Report	12
Directors' Declaration	22
Independent Auditor’s Review Report	23

2

D I R E C T O R S ’ R E P O R T

The Directors of Vection Technologies Ltd (formerly known as ServTech Global Holdings Limited) (the Company , Group or VR1 ) present the Interim Financial Report for the period ended 31 December 2019 and the auditor’s review report.

DIRECTORS

The Directors of the Company at any time during or since the end of the interim period and until the date of this report are noted below:

Mr Gianmarco Biagi

Managing Director

Mr Bert Mondello

Non-Executive Chairman

Mr Lorenzo Biagi

Executive Director

Mr Gianmarco Orgnoni

Non-Executive Director

PRINCIPAL ACTIVITIES

During the period, the principal continuing activity of the Group consisted of providing software services and administrative support for real estate and finance related operations.

RESULTS OF OPERATIONS

Revenue for the Group was $2.1M for the half year ending 31 December 2019, representing an increase of ~350% over the prior corresponding period (31 December 2018). The Company anticipates that this revenue will grow with the launch of the FrameS SaaS product. FrameS is expected to have comparatively lower operating costs than the Company’s other activities. During the period, the Company made significant investments in its proprietary real-time technologies, expected to be commercialised during 2020.

The Company significantly reduced its net cash outflow from operating activities compared to the prior corresponding period by ~58%. The Group posted an after-tax loss attributed to members of $280,714 for the half year ending 31 December 2019, representing a decrease of ~25% over the prior corresponding period (31 December 2018: loss $374,758). Several non-cash expenses are recorded in the Company’s accounts.

Profit (Loss) after income tax Add back: Finance costs Depreciation and amortisation Impairment Share based payments Income Tax benefit Exchange differences on translation of foreign operations Underlying EBITDA*	Half Year ended 31 December 2019 $ (280,714) 39,467 219,248 19,748 3,152 (6,305) 76,693
	71,290

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

3

D I R E C T O R S ’ R E P O R T (C O N T I N U E D )

REVIEW OF OPERATIONS

During the period ended 31 December 2019, the Company took a significant step forward in its global commercialisation strategy in the fast-growing real-time 3D, VR and AR technologies industry, with the European launch of the FrameS SaaS platform.

Strategic milestones achieved during the period:

International Expansion

Vection expanded its value-added resellers and distribution network in Italy, Canada, and Northern Europe, leveraging its unrivalled industrial network and client access to maximise returns for all stakeholders. The Company’s global distribution and partner network of 10 partners, will enable the continued collaboration to maximise marketpenetration during calendar year 2020, with access to over 9,000 established European clients, including Altea Federation’s Gucci, Ferrari, Maserati, Duracell.

Partnerships

Vection commenced an early stage collaboration with the Motorvehicle University of Emilia Romagna (MUNER), an association that synergistically connects universities that are synonymous with advanced training with the automakers that represent the excellence of Made in Italy in the world: Automobili Lamborghini, Dallara, Ducati, Ferrari, Haas F1 Team, HPE Coxa, Magneti Marelli, Maserati e Toro Rosso. The Company anticipates that this collaboration will be formalised with the admission of Vection into MUNER’s association and represents an endorsement of FrameS as a software with widespread applicability to the automotive and engineering sector for collaborative design, prototyping and development.

Commercial Activities

Smart Factory proof of concept

On 17 December 2019, the Company announced that Coesia Group member, G.D. SpA (GD) had engaged Vection to provide a Smart Factory Platform Proof of Concept (PoC). GD is the world's leading supplier of high-tech machinery for cigarette making and packing, filter production and other tobacco-based and special products. GD is part of the Coesia Group, a Group of innovation-based industrial and packaging solution companies operating globally with €1.8B in revenues and a presence in 35 countries. Vection’s Smart Factory Platform is a 3D, real-time solution to guide factory personnel in critical tasks with step-bystep instructions for manufacturing processes.

• Vection Car Sales Platform with Volvo Car Italy

On 12 December 2019, the Company announced the roll-out and commencement of subscription sign-ups for its Vection Car Sales Platform with Volvo Car Italy. The Vection Car Sales Platform is a SaaS software based on recurring subscriptions of ~$AUD 1,252 (€770) per dealer per annum for the first 12 months, and ~$AUD 1,620 (€996) per dealer per annum from the second year onwards. Full subscription is expected in the first months of 2020.

• FrameS European Launch

On 2 December 2019, the Company announced the European launch and immediate customer availability of FrameS, the Company’s proprietary VR SaaS platform, across its European distribution network. FrameS is a collaborative immersive design platform, enabling photorealistic representations of 3D models and designs in Virtual Reality, resulting in cost reductions, faster decision making and increased problem solving.

4

D I R E C T O R S ’ R E P O R T (C O N T I N U E D )

• FrameS Training

• On 29 October 2019, the Company announced the completion of the initial roll-out of its FrameS VR Training solution for leading Oil & Gas international general contractor, Bonatti S.p.A. (Bonatti). The FrameS VR Training solution is an educational tool which provides personnel worksite inductions and reduces injuries related to unsafe situations and man/machine interactions. Bonatti registered a nil incident rate for the activities related to the FrameS VR Training solution compared to a total recordable incident rate (TRIR) of 1.40 in 2018.

• Vection’s Optimised Picking for Logistics

• On 13 August 2019, the Company entered the logistics industry with a proof of concept of its augmented reality powered ‘Optimised Picking’ software enabling increased process efficiency and quality in complex logistics activities. On 29 January 2020, the Company announced the successful completion of the first stage of the agreement and the progression to the second stage.

• In-Store 3D/AR Configurator

• On 5 August 2019, the Company announced further development on its proprietary In-Store 3D/AR Configurator, commercialised across a number of client’s showrooms worldwide.

Technological Developments

• FrameS 20: Introducing Augmented Reality

• On 19 December 2019, the Company announced the release of FrameS 20 set for 2Q2020. FrameS 20 introduces new features that enable effortless design visualisation and interaction, from concept to production. FrameS 20 takes the design experience to a new level by introducing Augmented Reality features and mobile devices integration, expanding from the existing 3D, Virtual Reality and Desktop solutions.

• FrameS: Rhinoceros Integration (CAD Strategy)

• On 17 October 2019, the Company announced the completion of a plug-in integration enabling all Rhinoceros (Rhino) users to seamlessly upload their 3D Computer-Aided Design (CAD) models directly into ServTech’s Immersive VR Design Platform ‘FrameS’. This plug-in establishes FrameS’ VR technology as a high performing tool for technical procedures where speed and accuracy are paramount. Rhino is a CAD software with an estimated 1.5m paying users and counts more than 700 resellers, distributors, OEMs, and training centres around the world.

Outlook

The Company is accelerating its overall evolution to a recurring revenue business model. Supported by a global distribution footprint and unrivalled client and partner access, Vection is confident in continuing its growth trajectory during calendar year 2020. The establishment of a global SaaS product suite of real-time technologies for companies’ digital transformation continues to be paramount in the Company’s growth strategy across multiple market segments and areas of application. The Company continues to evaluate strong value accretive software integration opportunities in the virtual reality CAD market segment and will update the market in due course.

5

D I R E C T O R S ’ R E P O R T (C O N T I N U E D )

EVENTS OCCURING AFTER THE REPORTING PERIOD

On 20 February 2020, the Company has sought a trading halt and subsequently a suspension in the trading of its securities on the ASX pending a proposed material transaction. As at the date of this Report, the Company is yet to advise whether this proposed transaction will proceed.

Apart from the above, no matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Other than disclosed elsewhere in this Directors report, there have been no significant changes in the state of affairs of the Group which occurred during the period.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

Other than information disclosed elsewhere in this interim report, information on likely developments in the operations of the Group and the expected results of those operations in future financial years has not been included in this Directors' Report because the Directors believe, on reasonable grounds, that to include such information would be likely to result in unreasonable prejudice to the Group.

AUDITOR’S INDEPENDENCE DECLARATION

Section 307C of the Corporations Act 2001 requires our auditors, Criterion Audit Pty Ltd, to provide the Directors of the Company with an Independence Declaration in relation to the review of the interim financial report. This Independence Declaration is set out on page 6 and forms part of this Directors’ Report for the half-year ended 31 December 2019.

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

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Mr Bert Mondello

Chairman

Dated at Perth, Western Australia this 28[th] day of February 2020.

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Criterion Audit Pty Ltd

ABN 85 165 181 822

PO Box 2138 SUBIACO WA 6904 Suite 1 GF, 437 Roberts Road SUBIACO WA 6008

Phone: 6380 2555 Fax: 9381 1122

To The Board of Directors

Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

As lead audit director for the review of the financial statements of Vection Technologies Ltd and its controlled entities for the half year ended 31 December 2019, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• any applicable code of professional conduct in relation to the review.

Yours faithfully

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CHRIS WATTS CA Director

CRITERION AUDIT PTY LTD

DATED at PERTH this 28[th ] day of February 2020

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‘Liability limited by a scheme approved under Professional Standards Legislation’

VECTION TECHNOLOGIES LTD (FORMERLY KNOWN AS SERVTECH GLOBAL HOLDINGS LIMITED) HALF-YEARLY REPORT FOR THE PERIOD TO 31 DECEMBER 2019 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Notes	Consolidated Period Ended 31 Dec 2019 Period Ended 31 Dec 18 $ $ 2,053,258 478,597 414,592 - 881,411 466,694 463,296 206,807 39,467 15,479 219,248 51,869 19,748 - 297,133 265,781 3,152 36,900 2,338,047 1,043,530 (284,789) (564,933) 6,305 - (278,484) (564,933) (2,230) 190,175 (280,714) (374,758) 76,693 (1,860) 76,693 (1,860) (204,021) (376,618) 0.00 0.10 (0.042) (0.30) (0.042) (0.20)	Consolidated Period Ended 31 Dec 2019 Period Ended 31 Dec 18 $ $ 2,053,258 478,597 414,592 - 881,411 466,694 463,296 206,807 39,467 15,479 219,248 51,869 19,748 - 297,133 265,781 3,152 36,900 2,338,047 1,043,530 (284,789) (564,933) 6,305 - (278,484) (564,933) (2,230) 190,175 (280,714) (374,758) 76,693 (1,860) 76,693 (1,860) (204,021) (376,618) 0.00 0.10 (0.042) (0.30) (0.042) (0.20)
Revenue Revenue 2(ii) Expenses Administration expense Employee benefits expense Consulting and professional fees Finance costs Depreciation and amortisation Impairment Other expenses 2(i) Share based payments 11 Total Expenditure Loss before income tax expense Income tax benefit Loss after income tax attributable to equity holders Discontinued Operations Loss for the year after income tax from discontinued operations 14 Loss after income tax attributable to equity holders of Vection Technologies Ltd Other comprehensive loss Items that may be reclassified to profit or loss Exchange differences on translation of foreign operations Total comprehensive loss for the period Total comprehensive loss attributable to equity holders of Vection Technologies Ltd Loss per share for the year attributable to the members of Vection Technologies Ltd Discontinued operations profit (loss) per share for the year (per share) 12 Continuing operations loss per share for the year (per share) 12 Overall basic and diluted loss per share 12		478,597 - 466,694 206,807 15,479 51,869 - 265,781 36,900
		1,043,530
		(564,933)
		-
		(564,933)
		190,175
		(374,758)
		(1,860)
		(1,860)
		(376,618)
		0.10 (0.30) (0.20)

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

8

VECTION TECHNOLOGIES LTD (FORMERLY KNOWN AS SERVTECH GLOBAL HOLDINGS LIMITED) HALF-YEARLY REPORT AS AT 31 DECEMBER 2019 CONSOLIDATED STATEMENT OF FINANCIAL POSITION

HALF-YEARLY REPORT AS AT 31 DECEMBER 2019 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Notes	Consolidated As at 31 Dec As at 30 June 2019 2019 $ $ 343,053 796,569 1,814,700 1,457,990 2,157,753 2,254,559 111,090 90,075 3,836,238 3,589,171 7,757 - 72,686 - 4,027,771 3,679,246 6,185,524 5,933,805 1,241,289 967,959 288,636 246,085 268,772 - 1,798,697 1,214,044 573,256 705,321 573,256 705,321 2,371,953 1,919,365 3,813,571 4,014,440 19,397,897 19,397,897 351,502 271,657 (15,935,828) (15,655,114) 3,813,571 4,014,440
Current Assets Cash and cash equivalents 3 Receivables 4 Total Current Assets Non-Current Assets Property, plant & equipment 5 Intangible assets 6 Deferred tax assets Financial assets 7 Total Non-Current Assets Total Assets Current Liabilities Trade and other payables 8 Other provisions 9 Borrowings 10 Total Current Liabilities Non-Current Liabilities Other provisions 9 Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital 11 Reserves 12 Accumulated losses 13 Total Equity		796,569 1,457,990
		2,254,559
		90,075 3,589,171 - -
		3,679,246
		5,933,805
		967,959 246,085 -
		1,214,044
		705,321
		705,321
		1,919,365
		4,014,440
		19,397,897 271,657 (15,655,114)
		4,014,440

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

9

VECTION TECHNOLOGIES LTD (FORMERLY KNOWN AS SERVTECH GLOBAL HOLDINGS LIMITED) HALF-YEARLY REPORT FOR THE PERIOD TO 31 DECEMBER 2019 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Balance at 1 July 2019 Loss for the period Other comprehensive (loss)/income Total comprehensive loss for the period Transactions with owners in their capacity as owners Share based payments Balance at 31 December 2019 Balance at 1 July 2018 Loss for the period Other comprehensive income Total comprehensive loss for the year Transactions with owners in their capacity as owners Share based payments Issue of share capital Balance at 31 December 2018	Consolidated Period Ended 31 December 2019
	Issued Capital Accumulated Losses Share Based Payments Reserve Foreign Currency Translation Reserve Total $ $ $ $ 19,397,897 (15,655,114) 272,500 (843) 4,014,440
	- (280,714) - - (280,714) - - - 76,693 76,693
	- (280,714) - 76,693 (204,021)
	- - 3,152 - 132,866
	19,397,897 (15,935,828) 275,652 75,850 3,813,571
	10,404,332 (11,235,012) 272,500 (3,006) (561,186) - (374,758) - - (374,758) - - - (1,860) (1,860)
	- (374,758) - (1,860) (376,618)
	36,900 - - - 36,900 1,140,078 - - - 1,140,078
	11,581,310 (11,609,770) 272,500 (4,866) 239,174

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

10

VECTION TECHNOLOGIES LTD (FORMERLY KNOWN AS SERVTECH GLOBAL HOLDINGS LIMITED) HALF-YEARLY REPORT FOR THE PERIOD TO 31 DECEMBER 2019 CONSOLIDATED STATEMENT OF CASH FLOWS

	Consolidated Period Ended 31 Dec 2019 Period Ended 31 Dec 2018 $ $ 1,699,387 584,184 (1,899,197) (1,136,185) 248 266 (37,951) (20,506) (1,453) - (238,966) (572,241) (75,415) - (411,915) - - 195,599 (487,330) 195,599 268,772 - 268,772 195,599 796,569 513,754 (457,524) (376,642) 4,008 (25,467) 343,053 111,645	Consolidated Period Ended 31 Dec 2019 Period Ended 31 Dec 2018 $ $ 1,699,387 584,184 (1,899,197) (1,136,185) 248 266 (37,951) (20,506) (1,453) - (238,966) (572,241) (75,415) - (411,915) - - 195,599 (487,330) 195,599 268,772 - 268,772 195,599 796,569 513,754 (457,524) (376,642) 4,008 (25,467) 343,053 111,645
Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Interest paid Tax incentives received/ (Taxes paid) Net cash outflow from operating activities Cash flows from investing activities Payments for plant & equipment Payments for intangible assets Proceeds (Payments) for disposal of discontinued operations Net cash inflow/(outflow) from investing activities Cash flows from financing activities Proceeds from borrowings Net cash inflow from investing activities Cash and cash equivalents at the beginning of the financial year Net increase/(decrease) in cash and cash equivalents Effect of movement in exchange rates on cash held Cash and cash equivalents at the end of the financial year		584,184 (1,136,185) 266 (20,506) -
		(572,241)
		- - 195,599
		195,599
		-
		195,599
		513,754 (376,642) (25,467)
		111,645

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

11

VECTION TECHNOLOGIES LTD (FORMERLY KNOWN AS SERVTECH GLOBAL HOLDINGS LIMITED) HALF-YEARLY REPORT FOR THE PERIOD TO 31 DECEMBER 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The half-yearly report of Vection Technologies Ltd (formerly known as ServTech Global Holdings Limited) (the Company, Group or VR1 ) for the period ended December 2019 was authorised for issue in accordance with a resolution of directors on 28 February 2020.

The Company is a public company limited by shares incorporated on 14 September 2016 and domiciled in Australia.

The nature of the operations and principal activities of the Company are described in the Directors’ report.

(a) Basis of preparation

The principle accounting policies adopted for the preparation of the interim financial report are set out below. These accounting policies have been applied consistently to all periods presented unless otherwise stated.

(i) Statement of compliance

This interim financial report for the half-year reporting period ended 31 December 2019 have been prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting (AASB 134) and the Corporations Act 2001 . Compliance with AASB 134 ensures compliance with the International Financial Reporting Standard IAS34 ‘Interim Financial Reporting’.

The interim financial report does not include full disclosures of the type normally included in an annual financial report. Therefore, it cannot be expected to provide as fill an understanding of the financial performance and cash flows of the Company as in the full financial report.

It is recommended that this interim financial report be read in conjunction with the Company’s 2019 annual financial report.

(ii) Basis of preparation

The interim financial report has been prepared on the basis of historical cost, except for certain financial instruments that are measured at fair values at the end of each reporting period, as disclosed in the accounting policies below. Historical cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the Company’s 2019 annual financial report for the financial year ended 30 June 2019. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

In the half-year ended 31 December 2019, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2019.

(iii) Going Concern

The financial report has been prepared on the going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. For the period ended 31 December 2019 the Group recorded a loss of $280,714 (2018: $374,758), negative cash flows from operating activities of $238,967 (2018: $572,241) and a current net asset position of $359,056 as at 31 December 2019 (2018: $1,040,515).

These conditions indicate a material uncertainty that may cast a significant doubt about the Group’s ability to continue as a going concern, and therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.

The Group is continually assessing its ongoing cash requirements. As part of this process the Group maintains a strict internal cash flow management process which is based on numerous revenue and other assumptions. Should these assumptions not be achieved the directors believe the Group will reduce the cost base in line with revenue as required and attempt to raise additional capital or enter other funding arrangements as required.

The Directors are satisfied they will be able to raise additional working capital as required and thus it is appropriate to prepare the financial statements on a going concern basis. In arriving at this position the Directors have considered the following matters:

• Maintenance of low-cost structure in the lead up to revenue generation from operations;

• Ability to raise further capital based on historical success and an available capital placement facility;

• The recent launch of its FrameS platform which is anticipated to generate significant revenues;

• Net assets of $3,813,571 as at 31 December 2019.

12

VECTION TECHNOLOGIES LTD (FORMERLY KNOWN AS SERVTECH GLOBAL HOLDINGS LIMITED) HALF-YEARLY REPORT FOR THE PERIOD TO 31 DECEMBER 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(iii) Going Concern (continued)

The financial statements have been prepared on the basis that the Group is a going concern, which contemplates the continuity of normal business activity, realisation of assets and settlement of liabilities in the normal course of business for the reasons outlined above.

Should the Group not be able to continue as a going concern, it may be required to realise its assets and discharge its liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements and that the financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or liabilities that might be necessary should the Group not continue as a going concern.

(b) Segment Information

Operating Segments – AASB 8 requires a management approach under which segment information is presented on the same basis as that used for internal reporting purposes. This is consistent to the approach used for the comparative period. Operating segments are reported in a uniform manner to which is internally provided to the chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors.

An operating segment is a component of the Group that engages in business activity from which it may earn revenues or incur expenditure, including those that relate to transactions with other Group components. Each operating segment’s results are reviewed regularly by the Board to make decisions about resources to be allocated to the segments and assess its performance, and for which discrete financial information is available.

The Board monitors the operations of the Company based on 2 segments; its IT development division and its outsourced services division.

The financial results of each segment are reported to the board to assess the performance of the Group. The Board has determined that strategic decision making is facilitated by evaluation of the operations of the legal parent and subsidiaries which represent the operational performance of the Group’s revenues and the research and development activities as well as the finance, treasury, compliance and funding elements of the Group.

(c) Estimates and judgements

The preparation of the interim financial report requires the use of accounting estimates and judgements which, by definition, will seldom equal the actual results. This note provides an overview of the areas that involve a degree of judgement or complexity in the preparing the annual financial report. Facts and circumstances may come to light after the event which may have significantly varied the assessment used which result in a materially different value being recorded at the time of preparing this interim financial report.

Deferred tax assets - The Group has not recognised deferred tax assets relating to carried forward tax losses or timing differences. These amounts have not been recognised given the recognition requirements of AASB 112 Income Taxes .

Share-based payments - The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or BlackScholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Refer to notes 10 and 11 for details of inputs utilised in calculating the fair value of the equity instrument.

Estimation of useful lives of assets - The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

13

VECTION TECHNOLOGIES LTD (FORMERLY KNOWN AS SERVTECH GLOBAL HOLDINGS LIMITED) HALF-YEARLY REPORT FOR THE PERIOD TO 31 DECEMBER 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(c) Estimates and judgements (continued)

Goodwill and other indefinite life intangible assets - The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in note 2(r). The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated pre-tax discount rates based on the current cost of capital and growth rates of the estimated future cash flows.

(d) Principles of consolidation

Subsidiaries

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

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

(e) Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to the owners of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial period, adjusted for bonus elements in ordinary shares issued during the financial period.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(d) New accounting standards and interpretations that are not yet mandatory

In the half-year ended 31 December 2019, the Directors have reviewed all the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2019.

It has been determined by the Directors that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change is necessary to Group accounting policies as a result of the adoption of new and revised accounting standards. The Directors have reviewed all new Standards and Interpretations that have been issued but are not yet effective for the half-year ended 31 December 2019. The Directors have decided against early adoption of any new Standards and Interpretations. As a result of this review the Directors have determined that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change is necessary to Group accounting policies as a result of accounting standards issued not yet effective.

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VECTION TECHNOLOGIES LTD (FORMERLY KNOWN AS SERVTECH GLOBAL HOLDINGS LIMITED) HALF-YEARLY REPORT FOR THE PERIOD TO 31 DECEMBER 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2. LOSS FOR THE PERIOD Loss for the year included the following items: (i) Other expenses Advertising and marketing Corporate and administrative expenses (ii) Revenue Software technology development services Outsourced services Interest received R&D tax refund Other revenue 3. CASH Cash at bank Balance per statement of cash flows 4. RECEIVABLES - CURRENT Trade and other receivables Trade and other receivables from sale of business (i) Provision for doubtful debts Prepayments TOTAL RECEIVABLES - CURRENT

Consolidated Period Ended 31 Dec 2019 Period Ended 31 Dec 2018 $ $ 28,264 50,876 268,869 214,905 297,133 265,781 1,305,119 228,509 252,000 203,232 13,524 253 151,786 46,402 330,829 - 2,053,258 478,597 Consolidated As at 31 Dec 2019 As at 30 June 2019 $ $ 343,053 796,569 343,053 796,569 Consolidated As at 31 Dec 2019 As at 30 June 2019 $ $ 1,850,250 1,028,212 - 514,250 (35,550) (100,058) 1,814,700 1,442,404 - 15,586 1,814,700 1,457,990

(i) This outstanding balance was partially settled via the issuance of equity in ASX listed The Agency Group Australia Limited (ASX:AU1). The value of the equity held at the reporting date is shown in Note 7.

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VECTION TECHNOLOGIES LTD (FORMERLY KNOWN AS SERVTECH GLOBAL HOLDINGS LIMITED) HALF-YEARLY REPORT FOR THE PERIOD TO 31 DECEMBER 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5. PROPERTY, PLANT & EQUIPMENT OFFICE & COMPUTER EQUIPMENT Office & computer equipment at cost Less accumulated depreciation LEASEHOLD IMPROVEMENTS Leasehold improvements at cost Less accumulated depreciation _TOTAL_PROPERTY,PLANT & EQUIPMENT 6. INTANGIBLE ASSETS GOODWILL Acquired Goodwill Less impairment INTELLECTUAL PROPERTY Intellectual property at cost RIGHTS OF USE INTANGIBLE ASSET Rights of use intangible asset at cost Less impairment expense Less accumulated amortisation OTHER INTANGIBLE ASSETS (PATENTS AND DEVELOPMENT COSTS) Other intangible assets (patents and development costs) at cost Less accumulated amortisation		Consolidated As at 31 Dec 2019 As at 30 June 2019 $ $ 175,757 115,259 (93,844) (33,454) 81,913 81,805 181,153 186,969 (151,976) (178,699) 29,177 8,270 111,090 90,075 Consolidated As at 31 Dec 2019 As at 30 June 2019 $ $ 3,084,659 3,084,659 (3,084,659) (3,084,659) - - 2,811,417 2,811,417 758,499 681,938 (19,748) - (86,285) (15,874) 652,466 666,064 579,693 238,679 (207,338) (126,989) 372,355 111,690 3,836,238 3,589,171	Consolidated As at 31 Dec 2019 As at 30 June 2019 $ $ 175,757 115,259 (93,844) (33,454) 81,913 81,805 181,153 186,969 (151,976) (178,699) 29,177 8,270 111,090 90,075 Consolidated As at 31 Dec 2019 As at 30 June 2019 $ $ 3,084,659 3,084,659 (3,084,659) (3,084,659) - - 2,811,417 2,811,417 758,499 681,938 (19,748) - (86,285) (15,874) 652,466 666,064 579,693 238,679 (207,338) (126,989) 372,355 111,690 3,836,238 3,589,171
			3,084,659 (3,084,659)
			-
			2,811,417
			681,938 - (15,874)
			666,064
			238,679 (126,989)
			111,690
			3,589,171

16

VECTION TECHNOLOGIES LTD (FORMERLY KNOWN AS SERVTECH GLOBAL HOLDINGS LIMITED) HALF-YEARLY REPORT FOR THE PERIOD TO 31 DECEMBER 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7. FINANCIAL ASSETS Other Investments	Consolidated As at 31 Dec 2019 As at 30 June 2019 $ $ 72,686 - 72,686 -	Consolidated As at 31 Dec 2019 As at 30 June 2019 $ $ 72,686 - 72,686 -
		-
		-

Balance represents equity in ASX listed The Agency Group Australia Limited (ASX:AU1) issued in partial settlement of amounts owing from that entity (Note 4)

8. TRADE AND OTHER PAYABLES Unsecured liabilities: Trade payables Sundry creditors and accruals	Consolidated As at 31 Dec 2019 As at 30 June 2019 $ $ 1,110,835 560,167 130,454 407,792 1,241,289 967,959	Consolidated As at 31 Dec 2019 As at 30 June 2019 $ $ 1,110,835 560,167 130,454 407,792 1,241,289 967,959
		560,167 407,792
		967,959

Payables (current and non-current) are non-interest bearing. There are no payables where the fair value would be materially different from the current carrying value.

9. PROVISIONS – CURRENT Current portion lease liabilities (i) Provision for onerous lease commitments (ii) PROVISIONS – NON-CURRENT Non-current portion lease liabilities (i) Provision for onerous lease commitments (ii)	Consolidated As at 31 Dec 2019 As at 30 June 2019 $ $ 118,469 45,441 170,167 200,644 288,636 246,085 546,559 610,292 26,697 95,029 573,256 705,321	Consolidated As at 31 Dec 2019 As at 30 June 2019 $ $ 118,469 45,441 170,167 200,644 288,636 246,085 546,559 610,292 26,697 95,029 573,256 705,321
		45,441 200,644
		246,085
		610,292 95,029
		705,321

(i) The lease liabilities are related to the Rights of Use for assets acquired by the Company through lease agreements for its Italian office. In calculating these amounts, the Company applied to the lease contract an Incremental Borrowing Rate within a range of 1.26% to 2.14%.

(ii) Due to the Company’s change in direction, some of the leased offices have not been used for the operations of the Company. As a result, a provision for an onerous lease has been recognised to reflect the present value of future lease costs which are required to be made in respect of these offices. The benefits expected to be generated by the lease contract are outweighed by the future costs.

17

VECTION TECHNOLOGIES LTD (FORMERLY KNOWN AS SERVTECH GLOBAL HOLDINGS LIMITED) HALF-YEARLY REPORT FOR THE PERIOD TO 31 DECEMBER 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

10. Borrowings Borrowings Unsecured bank financing facility, 8% interest payable on balance advanced. 11. ISSUED CAPITAL As at 31 Dec 2019 Share Capital Shares No. Ordinary Shares 657,171,676	10. Borrowings Borrowings Unsecured bank financing facility, 8% interest payable on balance advanced. 11. ISSUED CAPITAL As at 31 Dec 2019 Share Capital Shares No. Ordinary Shares 657,171,676	Consolidated As at 31 Dec 2019 As at 30 June 2019 $ $ 268,772 - As at 30 Jun 2019 As at 31 Dec 2019 As at 30 Jun 2019 Shares No. $ $
	657,171,676	657,171,676 19,397,897 19,397,897

12. RESERVES Share based payment reserve Foreign currency translation reserve Movements in share based payment reserve Opening balance Recognition of share-based payments Closing balance	Consolidated As at 31 Dec 2019 As at 30 June 2019 $ $ 275,652 272,500 75,850 (843) 351,502 271,657 272,500 272,500 3,152 -	Consolidated As at 31 Dec 2019 As at 30 June 2019 $ $ 275,652 272,500 75,850 (843) 351,502 271,657 272,500 272,500 3,152 -
		272,500 (843)
		271,657
		272,500 -
	275,652	272,500

During the period, the Company issued 22,500,000 performance rights in 3 tranches at 7,500,000 per tranche to the directors and advisor for services rendered. The performance rights will vest upon satisfaction of market conditions.

The fair value at grant date of the performance rights issued has been determined using a Black-Scholes pricing model that takes into account the exercise price, the term of the performance rights, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the performance rights. The total fair value of the performance rights was $132,866. The total share based payment expense recognised for the period ended 31 December 2019 was $3,152 (2018: $nil).

18

VECTION TECHNOLOGIES LTD (FORMERLY KNOWN AS SERVTECH GLOBAL HOLDINGS LIMITED) HALF-YEARLY REPORT FOR THE PERIOD TO 31 DECEMBER 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Consolidated	Consolidated
As at	As at
31 Dec 2019	30 June 2019
$	$
(15,655,114)	(11,235,012)
(280,714)	(4,420,102)
(15,935,828)	(15,655,114)

	Consolidated As at 31 Dec 2019 As at 30 June 2019 $ $	Consolidated As at 31 Dec 2019 As at 30 June 2019 $ $
13. ACCUMULATED LOSSES Opening balance Loss for the period Closing balance 14. EARNING PER SHARE Loss attributable to ordinary shareholders (overall) Loss attributable to ordinary shareholders (continuing operations) Profit/(Loss) attributable to ordinary shareholders (discontinued operations) Weighted average number of ordinary shares Basic loss per share calculation (loss / weighted avg shares) Basic loss per share calculation (continuing operations) Basic profit/(loss) per share calculation (discontinued operations) Loss attributable to ordinary shareholders (overall)	(15,655,114) (280,714) (15,935,828)	(11,235,012) (4,420,102)
		(15,655,114)
	Consolidated As at 31 Dec 2019 As at 31 Dec 2018 $ $ (280,714) (374,758) (280,714) (564,933) (2,230) 190,175 657,171,676 191,722,916 (0.000) (0.20) (0.042) (0.29) (0.042) 0.10
		(374,758) (564,933) 190,175
		191,722,916
		(0.20) (0.29) 0.10

15. SEGMENT REPORTING Half -Year ended 31 December 2019 Segment Revenue Segment expenses Segment net operating profit/(loss) after tax Half -Year ended 31 December 2018 Segment Revenue Segment expenses Segment net operating profit/(loss) after tax Segment assets At 31 December 2019 At 30 June 2019 Segment liabilities At 31 December 2019 At 30 June 2019	Discontinued Operations IT Development Outsourced Services Corporate Total $ $ $ $ $
	- 1,787,734 252,000 13,524 2,053,258 (2,229) (1,531,395) (476,277) (324,071) (2,333,972)
	(2,229) 256,339 (224,277) (310,545) (280,714)
	264,368 228,509 203,232 46,856 742,965 (74,193) (215,089) (266,508) (561,932) (1,117,722)
	190,175 13,420 (63,276) (515,077) (374,758)
	- 3,061,875 154,898 2,968,751 6,185,524 - 1,646,376 196,272 4,091,157 5,933,805
	19,906 1,941,773 5,706 404,569 2,371,954 - 1,169,637 54,327 695,401 1,919,365

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VECTION TECHNOLOGIES LTD (FORMERLY KNOWN AS SERVTECH GLOBAL HOLDINGS LIMITED) HALF-YEARLY REPORT FOR THE PERIOD TO 31 DECEMBER 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

15. SEGMENT REPORTING (CONTINUED)

(1) DESCRIPTION OF SEGMENTS

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.

(2) SEGMENT REVENUE AND RESULTS

Segment revenue reported above represents revenue generated from external customers. The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note 1. Segment profit represents the profit before tax earned by each segment without allocation of central corporate and administration costs, employee benefits, depreciation and amortisation, and finance costs.

This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

(3) SEGMENT ASSETS AND LIABILITIES

All assets are allocated to reportable segments other than cash, GST receivables, office equipment, and certain other receivables. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments.

All liabilities are allocated to reportable segments other than corporate creditors. Liabilities for which reportable segments are jointly liable are allocated in proportion to segment assets

16 DISCONTINUED OPERATIONS

The Group is in the process of de-registering all dormant group entities related to the legacy real estate business which the Company previously operated. These entities are considered discontinued operations. The following is an analysis of the results of the discontinued operations for the financial year.

Profit for the year from discontinued operations Revenue Employee benefits expense Other administrative expenses Gain (loss) for the year from discontinued operations Cashflows from discontinued operations Cashflows used in operating activities Cashflows from investing activities Cashflows (used in)/from financing activities Net cash (outflow)/inflow from discontinued operations	Results of Discontinued Operations Half-Year Ended Half-Year Ended 31 Dec 2019 31 Dec 2018 $ $
	- 264,368 - (47,327) (2,229) (26,866)
	(2,229) (190,175)
	Cashflow from (used in) Discontinued Operations Half-Year Ended Half-Year Ended 31 Dec 2019 31 Dec 2018 $ $
	- (345,635) - 195,599 - -
	- (150,036)

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VECTION TECHNOLOGIES LTD (FORMERLY KNOWN AS SERVTECH GLOBAL HOLDINGS LIMITED) HALF-YEARLY REPORT FOR THE PERIOD TO 31 DECEMBER 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

17. CONTINGENT LIABILITIES AND COMMITMENTS

Shares issue to Corporate Advisor

On 1 March 2019, the Company has entered into an agreement with a corporate advisor whereby the Company will, subject to shareholder approval, issue 2,000,000 shares to the corporate advisor within 12 months from the commencement date of the agreement and upon satisfaction of stipulated market conditions. The agreement may be terminated by either party by providing 14 days’ notice at any time.

Lease expenditure commitments

The Group has entered into the following commercial lease for office accommodation:

Perth office: The property lease is a non‐cancellable lease with a three year term to 14 August 2020, with rent payable monthly in advance. On 12 February 2018, the Company entered into a sublease agreement for the Perth Office and subsequently onerous lease provision has been provided. (refer to note 9).

Philippines office: The property lease is a non‐cancellable lease with a two term to 31 March 2021, with rent payable monthly in advance. Contingent rental provisions within the lease agreement require the minimum lease payments shall be increased by 3% per annum. The lease can be renewed subject to mutual agreement by the lessor and lessee.

India office: The property lease is a non‐cancellable lease with a monthly term extended by mutual agreement by the lessor and lessee.

Italy office: The property lease is a non‐cancellable lease with a six year term, with rent payable quarterly in advance.

18. SUBSEQUENT EVENTS

On 20 February 2020, the Company has sought a trading halt and subsequently a suspension in the trading of its securities on the ASX pending a proposed material transaction. As at the date of this Report, the Company is yet to advise whether this proposed transaction will proceed.

Apart from the above, no matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.

21

D IR E C T O R S ’ D E C L A R A TI O N

In the opinion of the directors of Vection Technologies Ltd (formerly known as ServTech Global Holdings Limited):

• (a) the financial statements and notes are in accordance with the Corporations Act 2001 , including:

• (i) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2019 and of its performance for the Half-Year ended on that date; and

• (ii) complying with Australian Accounting Standards, AASB 134 Interim Financial Reporting, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

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

Signed in accordance with a resolution of the directors.

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Mr Bert Mondello

Chairman

Dated at Perth, Western Australia this 28[th] day of February 2020.

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Criterion Audit Pty Ltd ABN 85 165 181 822 PO Box 2138 SUBIACO WA 6904 Suite 1 GF, 437 Roberts Road SUBIACO WA 6008

Independent Auditor’s Review Report

Phone: 6380 2555 Fax: 9381 1122

To the Members of Vection Technologies Ltd

We have reviewed the accompanying half-year financial report of Vection Technologies Ltd (“the Company”) and Controlled Entities (“the Consolidated Entity”) which comprises the consolidated statement of financial position as at 31 December 2019, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, a statement of accounting policies, other selected explanatory notes and the directors’ declaration of the Consolidated Entity, comprising the Company and the entities it controlled during the half-year.

Directors Responsibility for the Half-Year Financial Report

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

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2019 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Vection Technologies Ltd, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

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

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.

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‘Liability limited by a scheme approved under Professional Standards Legislation’

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the halfyear financial report of Vection Technologies Ltd and Controlled Entities is not in accordance with the Corporations Act 2001 including:

• a. Giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2019 and of its performance for the half-year ended on that date; and

• b. Complying with Accounting Standard AASB 134: Interim Financial Reporting and Corporations Regulations 2001.

Material Uncertainty Regarding Continuation as a Going Concern

Without modifying our opinion above, we draw attention to Note 1(a)(iii) to the financial report, which indicates that the Consolidated Entity incurred a loss of $280,714, negative cash flows from operating activities of $238,966 and has a current net asset position of $359,056 as at 31 December 2019. These conditions, along with other matters as set forth in Note 1(a)(iii) indicate the existence of a material uncertainty that may cast significant doubt about the ability of the Consolidated Entity to continue as a going concern and whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.

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CRITERION AUDIT PTY LTD

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CHRIS WATTS CA Director

DATED at PERTH this 28[th] day of February 2020