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Annual Report
2019 20
Contents
CHAIRMAN’S LETTER
MANAGING DIRECTOR’S REPORT
BOARD
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
AUDITOR’S INDEPENDENCE DECLARATION
AUDIT REPORT
FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
ADDITIONAL SHAREHOLDER INFORMATION
CORPORATE DIRECTORY
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AML3D Limited is a company
established to commercialise WAM®
(Wire Additive Manufacturing),
an emerging innovative metal
additive manufacturing technology
for the cost-effective production
of large, high performance metal
components and structures.
WAM® brings together welding science,
metallurgy, CAD software design and robotics
technology to construct metal components and
structures via welding sequential layers of metal.
WAM® is a faster, stronger, more cost-effective
environmentally friendly approach to metal
fabrication that is transforming the metal
fabrication landscape.
Agreed scope and
purchase order
Development of CAD
design optimised
for WAM®
Prototype
manufacture and
internal testing
Customer evaluation
and testing
Product certification
and commercialisation
AML3D CUSTOMER JOURNEY
Chairman’s Letter
On behalf of the Board, it is with great
pleasure that I welcome you to AML3D’s
first annual report as a listed company.
S t e p h e n G e r l a c h // C h a i r m a n
Dear shareholder,
On behalf of the Board, it is with great pleasure that
I welcome you to AML3D’s first annual report as a
listed company.
The past financial year has set AML3D on course for what
will be an exciting and inevitably rewarding journey as we
seek to disrupt traditional metal fabrication, which has
been around in its current form for hundreds of years.
I have sat on many Boards over the years and observed
the internal machinations of numerous companies,
and I can say without a shadow of a doubt, that AML3D
has one of the strongest business cases for growth that
I have seen. AML3D is a disruptor in a world of advanced
manufacturing where disruption is the key to fast tracking
evolution and enabling Australian manufacturing to be
competitive.
AML3D successfully listed on the Australian Securities
Exchange in April 2020, raising $9 million with strong
support from both institutional and retail shareholders and
we have continued to receive strong support since listing.
Our lean and experienced management team has a
focused goal of becoming a leading diversified large-scale
metal fabrication company in the Southern Hemisphere,
capable of producing finished parts and components
to a certified standard under an accredited Quality
Management System, together with the important
credential of Lloyds registration. At this early stage
I am pleased to say that we are well on the way to
achieving this goal.
In our ASX announcement of 12 August 2020,
our Managing Director Andrew Sales articulated the
compelling value proposition of AML3D’s technology
and product offering. In a short period of time we have
become recognised as a global leader in the emerging
large-scale 3D metal printing industry. Our technology
combines welding science, robotics, metallurgy and
software to produce automated wire fed 3D printing
in a large freeform environment. We firmly believe our
technology will transform the metal manufacturing and
fabrication landscape forever.
Since listing, funds raised have been successfully directed
towards establishing manufacturing footprints here and
overseas. Our Singapore office has been established
and our Singapore Contract Manufacturing Centre is
in the process of becoming operational, with senior
appointments made to oversee growth in the region.
We also relocated our local operations to the key industry
precinct of Edinburgh in Adelaide. These activities have
delivered the physical presence AML3D requires to
progress the next phase of our growth strategy.
Our initial public offering would not have been possible
without the support of our shareholders, both existing
shareholders at the time and new shareholders
introduced through the IPO process. We have some of
Australia’s premier institutional investors on the register,
which is a clear ‘tick in the box’ in terms of their belief
in AML3D, our strategy and the market that we are
disrupting. Your company is now well capitalised with
cash flow to be generated from early orders that have
been secured.
AML3D’s financial results for FY20 reflect expenditure
in line with the Use of Funds set out in our Prospectus.
The Company incurred a loss before tax of $3,094,021
which was in line with expectations and attributable to
expenditure for our expansion, listing expenses and other
associated costs. The 2021 financial year will provide a
clearer picture of underlying business performance and
growth prospects.
At the time of writing this letter, the world is still working
through the challenges presented by COVID -19. At AML3D,
we are pleased to advise that we have not had any cases
internally, in part due to early and decisive actions taken
and enacting broad ranging procedures and protocols.
Such measures include the ability for staff to work
from home, regular testing and strict enforcement of
social distancing in the workplace. It is pleasing to say
that aside from some inevitable inconveniences caused
by COVID-19, it has been business as usual for AML3D,
and we plan on keeping it that way. We certainly do hope
that your families and loved ones are keeping safe and
healthy during these unsettling times.
Continued overleaf.
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Chairman’s Letter (continued)
OUTLOOK FOR FY21
CLOSING
The new financial year is shaping up as a very exciting one
for AML3D and will no doubt be a foundation year for the
company. The main areas of focus in FY21 will be to:
•
•
•
•
•
•
Grow the Contract Manufacturing Centre’s operations
in Singapore, as we have done in Adelaide;
Pursue global business opportunities, focusing initially
on creating customer and industry partnerships in
high margin sectors such as defence;
Expand our contract manufacturing base to drive
long-term repeat customers;
Build ARCEMY® modules for customers looking to
establish in-house 3D printing capability;
Grow recurring revenue via annual software licencing,
service and maintenance agreements and sale of wire
feedstock; and
Continue with our research and development activities
to refine and broaden our range of products and
processes.
AML3D now has the only diversified large-scale WAM®
metal fabrication facility in the Southern Hemisphere
that is capable of producing finished parts and
components to a certified standard under an accredited
Quality Management System. This is a clear first mover
advantage that we will look to capitalise on. Our pipeline
of opportunities continues to build in an industry with
exponential growth forecast over the coming years.
The result of all this is that we are well positioned to
sensibly grow our presence in the global metal fabrication
market. I believe that our proprietary software and
equipment will not only entice new customers to work
with us but will help us retain these customers over the
longer-term as we pursue sustainable value creation for
all stakeholders.
4
I would like to thank my fellow Board members for the
wide-ranging skills and expertise they have brought to
AML3D, and their support throughout our initial public
offering process. Recognition must also be given to our
management team and staff, who have demonstrated
resilience and dedication in what is a very challenging time.
We operate as one team, keeping safe from COVID-19,
and have not wavered from our overarching goal to
become a leading diversified large-scale metal fabrication
company in the Southern Hemisphere.
To our Managing Director, and founder, Andrew Sales,
it is very clear that AML3D would not be where it is today
without your vision, dedication and relentless pursuit of
3D metal printing. AML3D is uniquely and strategically
placed as a major disruptor in the US$10 billion global
metal fabrication market, which is still dominated by
antiquated and environmentally unfriendly metallurgical
casting and forging. Gaining market share in this
market is already happening and is a credit to Andrew
and his vision.
Finally, to our shareholders, thank you for choosing to
invest in AML3D. Your Board and management team are
committed to pursuing profitable and sustainable growth
for the benefit of all stakeholders, as we build upon the
foundation created from our initial public offering in April.
Stephen Gerlach AM
Chairman
Managing
Director’s Report
A n d r e w S a l e s // M a n a g i n g D i r e c t o r
Dear shareholder,
In what has been an exciting year of change for the
company, I would like to start by reiterating what I
recently conveyed via a letter to you in July, that it is a
privilege to be Managing Director of AML3D during what
will be a period of exciting growth for your company.
I have incredible support from an excellent team and
Board here at AML3D, and I am committed to delivering
sustainable value for our shareholders and stakeholders.
Wire arc additive manufacturing, or WAM®, came about
from my interest in welding technology and fabrication,
including the welding of high strength corrosion resistant
alloys, and the realisation of the trend in new technology
that traditional metal fabrication was not sustainable,
from a cost, efficiency and environmental perspective.
Traditional forging and casting takes a long time; supply
chain is extensive and at times problematic; a large-scale
industrial footprint is required; costs of labour throughout
the process are high; there is substantial waste; there
are significant emissions from the process itself and
from transportation; and there is a lack of quality in
finished cast and forged products. As a result, I formed
AML Technologies in late 2014 and built a team to
undertake research and development that led to the
delivery of WAM®.
WAM® is a disruptive technology that is already materially
transforming the metal fabrication landscape in what
is currently a US$10 billion global market. WAM® is
a cheaper, faster and more environmentally friendly
approach to metal fabrication, which is delivered via a
3D platform, not dissimilar to current 3D printers.
The metal printing process melts wire through a plasma
delivered by an electric arc, then forms beads layer
by layer which refines the metal geometry to produce
high specification metal components. This process is
undertaken by our own ARCEMY® module that is
driven by our proprietary WAM® software (WAMSoft®).
The process has received ISO9001 Quality Management
Certification, with AML3D becoming the world’s first
accredited Wire-feedstock Additive Manufacturing
Facility through the Lloyds Register (Singapore).
There are numerous competitive advantages of ARCEMY®,
WAM® and WAMSoft®, but key is the ability to promptly
deliver an array of high-quality, large-scale, custom built
components to customers at competitive prices. All of
this can be done with significantly shorter lead times,
less raw material input and waste, and greater end
product strength. In fact, when compared with traditional
fabrication processes, WAM® delivers cost savings of up
to 70%, while the manufacturing process is 75% faster
and reduces waste by up to 80%. Traditional fabrication
has served industry well for hundreds of years, however,
today society is rightfully demanding businesses operate
sustainably and with a smaller environmental footprint.
WAM® Process
Traditional Metal
Fabrication Process
Low cost, highly efficient
with few process steps
Considerable inefficiencies
and costs
Local feedstock – not
dependent on overseas
supply
Substantial order lead time
involved
Energy efficient
Considerable energy
resources
80% Less material waste
with near net shape
Wasted material
Certified and patented
process
Labour and time intensive
to construct
As a result of all this, we are now taking domestic orders
for components that were previously sourced overseas.
The driver of this shift is two-fold. Firstly, supply chains
are changing due to COVID-19, with a desire and need for
businesses to source locally if they can.
Continued overleaf.
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Managing Director’s Report (continued)
To ensure our revenue momentum is not only
maintained, but enhanced, we will continue to invest
in sales and marketing and research and development
initiatives, which will drive the expansion of our product
offering through focus on the application of new alloys
and exotic metals in the WAM® process. We must
continue to evolve our product offering so that we
remain a leader in this new wave of metal fabrication.
It is because of these compelling statistics that I believe
WAM® will ultimately be viewed as a driver of the fourth
industrial revolution, and AML3D is uniquely positioned
as a leader in this fast-growing sector. According to the
Wohlers Report of 2019, “the industry is expected to
grow by nearly 3.6 times to $US 35.6 billion in 2024”,
which represents a tremendous opportunity for AML3D.
PROGRESS TO DATE
The dedicated team at AML3D has been working hard
to deliver products to our customers as well as seeking
out new market opportunities. While COVID-19 has
had a negative impact on all of our lives in some way,
shape or form, for AML3D the impact has actually been
positive on a number of levels. With cross border trade
becoming an issue, we will be able to manufacture parts
all around the world, with our first ARCEMY® module in
place in Singapore. The plan moving forward is to have
our ARCEMY® units strategically located globally,
near customers and relevant industries to ensure we
can deliver products to them in a timely, cost effective
and environmentally efficient manner.
In January we delivered a Panama Chock weighing 1,400 kg
to Keppel Corporation in Singapore. This purchase
order was for a first-of-a-kind 3D print and will be load
tested to assess suitability for significant future orders.
The chock was recently independently validated by
DNV-GL in Singapore and results show it is 1 ½ times
stronger than cast equivalents used in the marine industry.
In April 2020 we proved that our steel products are
stronger than forged equivalents. Our printed high
strength steel was independently demonstrated to have
Ultimate Tensile Strength 30% higher than the applicable
global standard, with less metal usage. This is a great
endorsement for our technology and highlights the
potential for AML3D to be a disruptive force in the metal
fabrication industry.
Secondly, traditional fabrication costs in Australia were
higher than most, mainly driven by labour costs.
Our WAM® technology keeps labour costs to a minimum,
which is a monumental shift in terms of our ability
to outperform competition from pricing and time
perspectives, both internationally and here at home.
We were pleased to recently announce the signing of
a Global Collaboration Agreement with AdditiveNow,
which will involve end-to-end integrated additive
manufacturing advisory and printing services for a broad
range of global customers. AdditiveNow is a joint venture
between Advisian Digital, the data science, software and
technology business of Worley Limited, and Aurora Labs
Limited. Under this agreement, AML3D and AdditiveNow
will work towards a commercial framework to push the
take-up of our WAM® technology to the global energy,
chemicals, oil and gas and mining industries. I believe
the end result of this collaboration will deliver enhanced
capabilities to new global markets, with both companies
complementing each other. AdditiveNow will focus on
additive manufacturing consulting while AML3D will
deliver WAM® advisory services and WAM®’s product
performance, time and manufacturing efficiencies to
AdditiveNow’s customer base.
Other recent partnerships include the executed contract
with Austal Limited to co-develop components for
maritime defence applications, and the first stage product
testing with Lightforce Australia Pty Ltd to develop
next-generation ‘made-to-fit’ titanium body armour
(with a Memorandum of Understanding signed).
These types of agreements and business partnerships
are seeing good momentum starting to build within
our main revenue streams, these being:
Contract
manufacturing,
which is fulfilling
manufacturing
orders for
customers using
our ARCEMY®
module.
ARCEMY®
sales, with
customers
acquiring the
ARCEMY® module
for their own
fabrication needs.
Licencing
of software and
service and
maintenance
agreements.
6
In May 2020 we signed the lease for a new head office
and manufacturing space in Edinburgh Parks, Adelaide.
This is a shared facility, which allows us to keep costs to a
minimum, and provides for AML3D’s anticipated growth
with ~110m2 of office space and ~1,250m2 for inventory
and manufacturing. The premises will house seven
large-format proprietary production cells for contract
manufacturing and two ARCEMY® metal 3D printers to
meet industry demand for advanced manufacturing with
WAM® here in Australia.
In June, we delivered the first proprietary AML3D
ARCEMY® unit to our customer ST Engineering in
Singapore under a right to use with an option to buy
arrangement, with AML3D retaining the right to 50% of
the ARCEMY® unit’s printing capacity to manufacture
products for our customers. As detailed above, this is a
key factor in ensuring that we are able to service multiple
markets and relevant industries in an effective way.
CLOSING
In closing, I would like to mention our very capable team
that has worked tirelessly through these challenging
times to ensure AML3D continues on its path to success.
Furthermore, none of this would be possible without
the encouraging support that I receive from our
shareholder base. We are embarking on an exciting
period of growth for AML3D and I look forward to
providing regular updates during FY21.
1,400 kg Panama Chock
developed for Keppel
Corporation in
Singapore.
Andrew Sales
Managing Director
The new AML3D head office
and manufacturing space
in Edinburgh Parks,
Adelaide.
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Board
STEPHEN GERLACH AM // LLB, FAICD
Chairman // Member of Audit & Risk Committee
ANDREW SALES // MEng, MSc, CEng, CMatP
Managing Director
Andrew is a Chartered Engineer with a Master of
Engineering and Master of Science and is a renowned
expert in welding technology with over 27 years of global
experience (Australia, Europe, South America, Africa
and Asia). Andrew has held varying roles across upper
management and senior leadership within the oil
and gas, resources and mining sectors as well as
advanced manufacturing, heavy engineering and
fabrication.
He is also the author of numerous technical papers
in the field of welding high strength corrosion
resistant alloys. In addition to Science and Engineering
qualifications at Masters level, he also holds a Diploma
in Quality Management and Auditing. He is a Chartered
Engineer through ECUK and TWI (UK), a professional
member of Materials Australia holding a CMatP,
and also sits on two Standards Australia committees
including the newly established committee for
Additive Manufacturing.
Andrew founded AML Technologies in 2014 and has
been Managing Director since that time.
The Board considers that Mr Sales is not an
independent Director.
Stephen is a company director and corporate advisor.
He is Chancellor of Flinders University. He is also
the Chairman of Adelaide Capital Partners Pty Ltd,
Gerlach Asset Development Pty Ltd, Ebony Energy Ltd
and a Director of Beston Global Foods Ltd and Beston
Pacific Asset Management Pty Ltd.
He was formerly the Chairman of Santos Limited,
Futuris Corporation Ltd (subsequently known as
Elders Ltd), Equatorial Mining Ltd, Elders Australia Ltd,
Challenger Listed Investments Limited, Amdel Ltd,
and Penrice Ltd. He was also a Director of a number
of other public companies including Southcorp Ltd,
AMP Australia Ltd, Brunner Mond Holdings Ltd (UK)
and Elders Rural Bank and a member of other public
companies including companies located in the
United Kingdom, United States of America and Chile.
Stephen was a partner of the Adelaide legal firm
Finlaysons for 23 years and its Managing Partner
from 1985 to 1991.
He has also been actively involved in a number of
community and professional associations and is
currently a Trustee of the Australian Cancer Research
Foundation, a Director of The General Sir John
Monash Scholarship Foundation, Chairman of the
South Australian Cricket Association Nomination
Committee and Chairman of The Psychosis
Australia Trust.
He was the inaugural Chairman of Foodbank
South Australia Inc from 1999 to 2014, and a
Director of Foodbank Australia Ltd.
The Board considers that Mr Gerlach is an
independent Director.
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SEAN EBERT // BEng, Hons (Electrical), GAICD, MBA
Executive Director
LEONARD PIRO // BEc, DipCorpMgmt
Non-Executive Director // Member of Audit & Risk Committee
Sean has 25 years of executive and board level
experience across public and commercial sectors with
particular experience within the engineering sectors
of oil and gas, mining and resources and emerging
technologies in Australia, Middle East, South America,
US and Europe. Sean was previously the CEO of Beston
Pacific Asset Management, Global Director M&A of
WorleyParsons, CEO of Camms Pty Ltd and CEO Camms
Profit Impact Pty Ltd.
The Board considers that Mr Ebert is not an
independent Director.
Leonard is the former Deputy Chief Executive of the
SA Department of Trade and Economic Development,
Executive Director Manufacturing and Chief Executive
Automotive Industry Transformation Taskforce and
Group Executive Director and Chairman of the Tonsley
Re-development. Leonard has had exposure to
manufacturing trends and strategies in Europe
and the US.
The Board considers that Mr Piro is an independent
Director.
KEVIN REID // FCA GAICD
Non-Executive Director // Chairman of Audit
& Risk Committee
Kevin is a Chartered Accountant with 24 years’
experience as a partner with PwC and BDO practicing
as an assurance specialist. He has experience with
a wide range of listed companies. He has been an
independent accountant for initial public offers, capital
raisings and acquisitions and has extensive commercial
and corporate experience as a company director and
professional practice board member. Kevin is Chair of
MPH Architects and deputy chair of Can:Do Group.
Kevin is also a director of ACH Group Inc, Meals on Wheels
(South Australia) and the Maggie Beer Foundation.
He is a member of the Audit & Risk committee for the
Office of the National Rail Safety Regulator.
The Board considers that Mr Reid is an independent
Director.
CHRISTINE MANUEL // BMus, GradDipACG, DipCD,
DipInvRel, FGIA, FCG (CS, CGP), MAICD, MAITD, AAIPM
Company Secretary
Christine is an experienced Company Secretary and
corporate governance professional and has held
Company Secretary and executive roles in a range of
listed and unlisted entities over more than 20 years.
She was formerly Company Secretary of Santos Group
companies and People’s Choice Credit Union and is
currently Company Secretary of ASX listed Angel Seafood
Holdings Ltd.
Christine holds postgraduate qualifications in Applied
Corporate Governance and is a Chartered Secretary
and Chartered Governance Professional. She is
Vice-President of the Board and past SA/NT State
Council Chair of the Governance Institute of Australia.
She regularly facilitates Governance Institute
training courses.
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Directors’ Report
The Directors of AML3D Limited (Company or AML3D)
present their report, together with the financial
statements of the Company and its controlled entities
(the Group) for the financial year ended 30 June 2020.
DIRECTORS
The following persons were directors of the Company
during the financial year and to the date of this report:
Stephen Gerlach
Non-executive
Chairman
Appointed 30
August 2019
Andrew Sales
Sean Ebert
Managing
Director
Executive
Director
Appointed 14
November 2014
Appointed 30
August 2019
Leonard Piro
Non-executive
Director
Appointed 30
August 2019
Kevin Reid
Non-executive
Director
Appointed 3
December 2019
Directors have been in office since the start of the
financial period to the date of this report unless
otherwise stated.
AML3D’s WAM® technology combines electric arc
as a heat source with wire as a feedstock and welds
sequential layers of metal to produce near net-shape
metal components. The WAM® technology provides
an alternative manufacturing and fabrication method
for the production of components in industry sectors
such as aerospace, marine, defence, oil and gas, mining
and general manufacturing which vary from high-end
aerospace parts to general engineering, with the value
proposition being significant in the case of larger scale
industrial grade and complex parts.
In conjunction with its WAM® technology, AML3D has
developed its own proprietary software, WAMSoft®,
which combines metallurgical science and engineering
design to automate the 3D printing process utilising
advanced robotics technology. The WAMSoft® software
enables a highly tailored approach to the needs of
each client by enabling different pathways and welding
operations for different products and materials.
Depending on material type, thickness of part, geometry
and final size, the software identifies optimal path models
using an extensive library of weld bead geometries.
PRINCIPAL ACTIVITIES
INFORMATION RELATING TO DIRECTORS AND
COMPANY SECRETARY
The principal activities of AML3D during the financial
year were to:
Details of each Director’s experience, qualifications and
responsibilities are set out on pages 8 to 9. This includes
information on other listed company directorships
in the last three years. The Company Secretary is
Christine Manuel. Details of her experience and
qualifications are also set out on page 9.
COMPANY OVERVIEW
AML3D is an Australian public company incorporated
on 14 November 2014. The Company was admitted to
the Official List of ASX on 16 April 2020 and commenced
trading on ASX on 20 April 2020. AML3D is a welding,
robotics, metallurgy and software business which uses
automated wire-fed 3D printing in a large freeform
environment to produce metal components and
structures for commercial use.
AML3D has commercialised its wire arc additive
manufacturing technology (under the trademark WAM®),
an innovative metal additive manufacturing technology for
the cost-effective production of large, high performance
metal components and structures.
AML3D’s proprietary WAM® process is part of the
spectrum of 3D metal printing that focuses on larger
industrial applications with flexibility across multiple
classes of metals including titanium alloys, nickel alloys
and steel alloys.
10
a) Design and construct 3D parts using Wire Additive
Manufacturing technology and to develop that
technology.
b) Design and construct ARCEMY® 3D printing modules
for right to use with an option to buy by customers.
No significant changes in the nature of the Company's
activity occurred during the financial year.
OPERATING AND FINANCIAL REVIEW
REVIEW OF OPERATIONS
FY2020 has been a transformative year for the Company,
in particular, its listing on the ASX, providing a platform
for future growth. The Company has continued to
develop its technology and has printed a range of metal
pieces for use in a variety of industries, including marine
and defence.
The Company’s revenue has been derived from:
a) Contract manufacturing, which is fulfilling
manufacturing orders for customers using our
ARCEMY® 3D printing module; and
b) ARCEMY® right to use with an option to buy, with
customers acquiring the ARCEMY® 3D printing module
for their own fabrication needs.
In January 2020, AML3D delivered a Panama Chock
weighing 1,400 kg to Keppel Corporation in Singapore.
This was a trial purchase order to assess suitability for
future orders. The chock was independently confirmed as
stronger than forged equivalents.
In April 2020, it was proven that our steel products are
stronger than forged equivalents. AML3D’s printed high
strength steel was independently demonstrated to have
Ultimate Tensile Strength 30% higher than the applicable
global standard, with less metal usage.
In May 2020, the Company entered into a lease for a
new head office and manufacturing space in Edinburgh
Parks, Adelaide. This is a shared facility and provides for
AML3D’s anticipated growth. The premises will house up
to seven large-format proprietary ARCEMY® 3D printing
modules to meet market demand in Australia.
In June 2020, AML3D delivered the first proprietary
AML3D ARCEMY® 3D printing module to a customer,
ST Engineering, under a right to use with an option to
buy arrangement. The Company has retained the right
to 50% of the module’s printing capacity to manufacture
products for AML3D’s customers in the Asian region
and beyond.
Throughout the year, the Company has sought out new
customers and markets and developed a pipeline of
opportunities which will be built on in FY2021.
FINANCIAL RESULTS AND POSITION
The Company successfully listed on ASX on 20 April 2020,
raising $9,000,000 before costs by issuing 45,000,000
new shares at $0.20 per share in the Company’s Initial
Public Offer (IPO).
The funds raised by the Company are being deployed to
implement its business plan and take advantage of the
opportunities that exist for additive manufacturing in
Australia, South East Asia and other markets.
Equipment has been purchased and ordered to expand
production capacity at the Group’s new Adelaide facility
in Edinburgh Parks and, in due course, for the Group’s
facility in Singapore. The Company has recruited additional
staff to enhance its operations, sales, marketing and
technical capabilities in both Australia and Singapore.
Several test and demonstration pieces have been
prepared for marketing purposes, to demonstrate the
capability of the Company’s technology.
The Company achieved sales revenue of $288,156.
Total revenue for FY2020 was $735,350. This included
funds received in the form of an R&D Tax Incentive of
$309,054 and Government support in the form of Cash
Boost and Job Keeper payments of $126,000. Sales
revenue includes progress payments for the delivery
and installation of the first ARCEMY® 3D printing module
in Singapore in addition to revenue from the sale of
demonstration pieces.
The loss before and after tax for FY2020 of $3,094,021
was largely attributable to expenditure related to the
costs of listing, $584,056, and expansion of the Company,
in particular, an investment in people for our sales,
marketing, manufacturing and technology development
capabilities.
At the end of the financial year, the Company had
$8,227,986 in cash and cash equivalents after expending
$826,085 on additional new equipment.
USE OF IPO FUNDS
In the period from admission to ASX on 16 April 2020
and commencement of quotation of securities on ASX on
20 April 2020 until 30 June 2020, the Company has used
the cash and assets in a form readily convertible to cash
that it had at the time of admission in a way consistent
with the Company’s business objectives, as outlined in
the prospectus dated 10 February 2020.
BUSINESS STRATEGIES AND PROSPECTS
The Company plans to build on the successes achieved in
FY2020, summarised above in the Review of Operations.
The main areas of focus in FY2021 will be to:
•
•
•
•
•
•
Grow the Contract Manufacturing Centre’s operations
in Singapore, as we have done in Adelaide;
Pursue global business opportunities, focusing initially
on creating customer and industry partnerships in
high margin sectors such as marine and defence;
Expand our contract manufacturing base to drive
long-term repeat customers;
Build ARCEMY® modules for customers looking to
establish in-house 3D printing capability;
Grow recurring revenue through annual software
licencing, service and maintenance agreements and
sale of wire feedstock; and
Continue with our research and development activities
to refine and broaden our range of products and
processes.
AML3D currently has the only diversified large-scale
WAM® metal fabrication facility in the Southern
Hemisphere that can produce finished parts and
components to a certified standard under an accredited
Quality Management System. This is an advantage that
the Company will look to leverage.
The achievement of our strategies and prospects may be
impacted by the COVID-19 pandemic, the effect of which
cannot be foreseen.
11
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MATERIAL BUSINESS RISKS
ACCESS TO RAW MATERIALS
There are a number of material business risks which
could affect the Company’s ability to achieve its business
strategies as follows.
MARKET ACCEPTANCE OF NEW TECHNOLOGY
AML3D has commercialised its WAM® technology and
has established a number of important relationships
and research collaborations. However, there can be
no assurances that the market will accept the WAM®
technology, given that it is challenging traditional and
well-tried technologies such as machining and
forging. WAM® is a disruptive technology in traditional
manufacturing industries where many potential users
of WAM® have sunk investment in existing technologies.
Wire arc additive manufacturing is a new technology
in a relatively young industry of 3D metal printing.
Widespread awareness-raising of the advantages and
value proposition associated with the Company’s WAM®
technology will be required to lift the profile of the
technology and educate the market.
CUSTOMER CONVERSION
At present, the Company is at a paid trial stage with a
number of potential contract manufacturing clients.
There can be no guarantee that any of these paid trial
customers will convert into regular customer contracts.
Although the Company’s client base is expected to
diversify as a result of the expansion of the Company’s
revenue streams, the Company will initially be substantially
reliant on a select number of clients. The loss of any
of these clients may have a negative impact on the
Company’s revenues and profits unless they can be
replaced with new clients.
The Company’s future activities are specifically designed
around further business development activities in order
to grow the client base in Australia and Singapore,
and other markets.
RELIANCE ON KEY PERSONNEL
The responsibility of overseeing the day-to-day operations
and the strategic management of the Company depends
substantially on its senior management, technical experts
and its Directors. In particular, the technology and the
development of the ARCEMY® 3D printing modules is
largely due to the experience of the Managing Director
and the Company’s Technical Engineering Manager.
The Company is seeking to reduce this risk by the
appointment of additional technical staff.
12
The Company requires access to markets for its raw
materials including titanium alloys, nickel alloys, stainless
steel, aluminium alloys and bronze alloys in order to
manufacture components. If the Company is unable to
secure these materials, this would likely have a material
adverse effect on the business and financial performance
of the Company.
RESEARCH & DEVELOPMENT AND TECHNICAL RISK
The Company’s products and technology are the subject
of continuous research and development which will
likely need to be developed further in order to enable
the Company to remain competitive, increase sales and
improve the scalability of products and technology.
There are no guarantees that the Company will be able to
undertake such research and development successfully.
Failure to successfully undertake such research and
development, anticipate technical problems, or estimate
research and development costs or timeframes
accurately will adversely affect the Company’s results.
INTERNATIONAL OPERATIONS
AML3D is applying some of the funds raised from the
IPO to develop its international operations in Singapore
including through the establishment of the Singapore
Contract Manufacturing Centre. This will represent the
Company’s first international operation in a separately
regulated environment. This exposes the Company to
a risk that its execution may not result in the intended
outcome from the investment.
INTELLECTUAL PROPERTY
The Company is in the early stages of protecting its
process improvements through patents. The Company
has submitted patent applications for its wire arc additive
manufacturing process. The prospect of attaining patent
protection for products and the technology such as those
proposed to be used by the Company is highly uncertain.
As a result, the Company's patent applications may
not proceed to an issued patent and, if issued,
may not be of commercial benefit to the Company,
or may not afford the Company adequate protection
from competing products.
DATA LOSS AND CYBER SECURITY
The Company is reliant on the security of its network
environment, vendor environments and websites.
Breaches of security including hacking, denial of service
attacks, malicious software use, internal Intellectual
Property theft, data theft or other external or internal
security threats could put the integrity and privacy
of customers’ data and business systems used by
the Company at risk which could impact technology
operations and ultimately customer satisfaction with
the Company’s products and services, leading to lost
customers and revenue.
ACCREDITATION
SUSTAINABILITY
The growth of AML3D contract manufacturing services
is dependent on retaining Lloyds Register and ISO 9001
accreditation for the certification of parts produced for
its customers. The loss of these accreditations would
significantly impact the demand for AML3D’s contract
manufacturing services.
PANDEMIC
To the date of this report, the Company’s operations
have not been materially and directly adversely impacted
by COVID-19. However, uncertainty remains as to the
scope and length of the pandemic and the impact of
restrictions that will be imposed to combat the pandemic.
The pandemic may result in the loss of or delay in sales
to customers and potential customers. It may also
impact access to equipment and supplies, delaying
the delivery of products to customers. The Company is
actively monitoring risks associated with COVID-19 and
implementing risk management measures to mitigate
against potential impacts.
The recent IPO by the Company has resulted in significant
cash and cash equivalents which will assist the operations
of the Company whilst the pandemic subsists.
ENVIRONMENTAL AND SUSTAINABILITY RISK
The Board is not aware of any material exposure to
economic, environmental or social sustainability risks
to which the Company may be subject.
CLIMATE CHANGE RISK
AML3D is committed to developing and maintaining
sustainable and environmentally-conscious operations.
One of the benefits of AML3D’s manufacturing process
is that it generates considerably less waste material than
traditional casting and machining processes.
ENVIRONMENTAL REGULATION
The Group’s activities are subject to general environmental
laws and regulations relating to manufacturing operations,
in particular for the disposal and storage of scrap and
hazardous materials. No breaches of environmental
regulation occurred during the financial year and to the
date of this report.
SIGNIFICANT CHANGES IN THE STATE
OF AFFAIRS
The Company converted from a proprietary to a
public company effective 5 December 2019. Following
a successful IPO which raised gross funds of $9m,
the Company was admitted to the Official List of ASX
on 16 April 2020 and quotation of its securities on
ASX commenced on 20 April 2020. The funds raised
have contributed to the Group’s equity increasing by
$9,826,586. IPO proceeds have begun to be applied to
the development of the Company in accordance with the
Use of Funds set out in the Company’s prospectus.
There were no other significant changes in the state
of affairs of the company, other than as referred to in
this report.
The Board is not aware of any current material exposure
to risks brought about, or likely to be brought about,
by climate change.
SIGNIFICANT EVENTS AFTER THE
BALANCE DATE
RISK MANAGEMENT
The Board determines the Company’s risk profile
and is responsible for establishing, overseeing and
approving the company’s risk management framework,
strategy and policies, internal compliance and internal
control. The Board has delegated to the Audit and Risk
Committee the responsibility for implementing the risk
management system. The Company’s risk management
policy sets out the requirements for the Company’s risk
management framework, the process for identification
and management of risks and regular reviews.
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 other than:
•
On 17 July 2020, equipment orders to the value of
$669,000 were placed for the expansion of the new
Adelaide facility.
DIVIDENDS
No dividends were declared or paid during the year.
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CORPORATE GOVERNANCE
DIRECTORS’ SHAREHOLDINGS
The following table sets out each Director’s relevant
interest in shares, debentures, and rights or options in
shares or debentures of the Company or a related body
corporate, including securities held directly, indirectly or
by related parties, as at the date of this report:
Director
Fully paid
ordinary shares
Share Options
Stephen Gerlach
233,334
2,566,667
Andrew Sales
40,251,250
100,000
Sean Ebert
Leonard Piro
Kevin Reid
991,666
800,000
58,334
2,333,333
2,050,000
516,667
Further details of Directors’ security holdings, including
the numbers subject to escrow restrictions, are provided
in the Remuneration Report commencing on page 15.
DIRECTORS’ AND SENIOR EXECUTIVES’
REMUNERATION
Details of the Company’s remuneration policies and the
nature and amount of the remuneration for the Directors
and senior management (including shares, options and
rights granted during the financial year) are set out in the
Remuneration Report commencing on page 15 and in
Notes 9 and 10 to the financial statements.
The Board oversees the Company’s business and is
responsible for the overall corporate governance of the
Company. It monitors the operations, financial position
and performance of the Company and oversees its
business strategy, including approving the strategy
and performance objectives of the Company.
The Board is committed to maximising performance and
generating value and financial returns for Shareholders.
To further these objectives, the Board has created a
framework for managing the Company, including the
adoption of relevant internal controls, risk management
processes and corporate governance policies and
practices which the Board believes are appropriate for
the business and which are designed to promote the
responsible management and conduct of the Company.
To the extent relevant and practical, the Company has
adopted a corporate governance framework that is
consistent with the ASX Corporate Governance Council’s
Corporate Governance Principles and Recommendations
(4th Edition).
The Company’s Corporate Governance Plan, including
key policies, is available on the Company’s website at
www.aml3d.com
DIRECTORS’ MEETINGS
During the financial year, 8 meetings of Directors,
including Committees of Directors, were held.
Attendances by each Director during the year were
as follows:
Board Meetings
Audit and Risk
Committee
Meetings
Eligible
to attend
Meetings
attended
Eligible
to attend
Meetings
attended
7
7
7
7
7
7
7
7
7
6
1
-
-
1
1
1
-
-
1
1
Directors
Stephen
Gerlach
Andrew
Sales
Sean Ebert
Leonard
Piro
Kevin Reid
14
REMUNERATION REPORT (AUDITED)
b. Fairly and responsibly rewarding executives,
The Directors of the Company present this Remuneration
Report for the Group for the year ended 30 June 2020.
The information provided in this Report has been
audited as required by s 308(3C) of the Corporations
Act 2001 (Cth) (Corporations Act) and forms part of the
Directors’ Report.
The Remuneration Report outlines the Company’s key
remuneration activities during the financial year ended
30 June 2020 and remuneration information pertaining
to the Company’s Directors and senior management
personnel who are the key management personnel (KMP)
of the Group for the purpose of the Corporations Act and
Accounting Standards. These are the personnel who have
authority and responsibility for planning, directing and
controlling the activities of the Company.
The report is structured as follows:
1. Remuneration Governance
2. Directors and Key Management Personnel (KMP)
3. Remuneration Policy
4. Remuneration Components
5. Relationship between Remuneration and Group
Performance
6. Details of Directors’ and KMP Remuneration
7. Key Terms of Employment Contracts
8. Terms and Conditions of Share-based Payment
Arrangements
9. Directors and KMP Equity Holdings
10. Other Transactions with Directors and KMP
1. REMUNERATION GOVERNANCE
Consistent with the Board’s Charter, the Board has taken
the decision that at this early stage of the Company’s
growth a separate Remuneration and Nomination
Committee is not warranted. Accordingly, the Board as a
whole carries out the functions of the Remuneration and
Nomination Committee, as described in the Committee
Charter. Where appropriate, this is undertaken by
Non-executive Directors only, without the presence or
participation of the Executive Director/s.
Functions
The Board reviews any matters of significance
affecting the remuneration of the Board and employees
of the Company.
The primary remuneration purpose of the Board is to
fulfil its responsibilities to shareholders, including by:
a. Ensuring that the approach to executive remuneration
demonstrates a clear relationship between key
executive performance and remuneration;
having regard to the performance of the Company,
the performance of the executive and the prevailing
remuneration expectations in the market;
c. Reviewing the Company’s remuneration, recruitment,
retention and termination policies and procedures for
senior management;
d. Reviewing and approving any equity-based plans and
other incentive schemes;
e. Clearly distinguishing the structure of Non-executive
Director (NED) remuneration from that of executive
directors and senior executives, and recommending
NED remuneration to the Board;
f. Arrange the performance evaluation of the Board,
its Committees, individual Directors and senior
executives on an annual basis; and
g. Oversee the annual remuneration and performance
evaluation of the senior executive team.
The Board considered remuneration of the Non-executive
Directors in detail in the first half of the financial year
as part of the due diligence process of preparation of
the Prospectus for the Initial Public Offer (IPO) leading
to initial ASX listing of the Company on 20 April 2020.
A remuneration review for the Managing Director for
FY20 was undertaken in FY20 and implemented effective
from 1 July 2019 at the time of refreshing the Managing
Director’s employment agreement in preparation for
the IPO. The Board has adopted protocols for engaging
and seeking advice from independent remuneration
consultants. In FY20, some benchmarking of executive
remuneration was undertaken in consultation with
recruitment consultants however no remuneration
recommendations were provided by remuneration
consultants.
Further information about remuneration structures
and the relationship between remuneration policy and
company performance is set out below.
The Board Charter and the Remuneration and
Nomination Committee Charter, which outlines the
terms of reference under which the Committee
operates, are available in the Corporate Governance
Plan at www.aml3d.com/investors
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2. DIRECTORS AND KEY MANAGEMENT
PERSONNEL (KMP)
The directors and KMP of the Group during the
year were:
Period of
Responsibility
in FY20
Position
NON-EXECUTIVES
Stephen Gerlach
From 30
August 2019
Leonard Piro
From 30
August 2019
Kevin Reid
EXECUTIVES
From 3
December 2019
Andrew Sales
Full year
Independent
Non-executive
Chairman
Independent
Non-executive
Director
Independent
Non-executive
Director
Managing
Director
Executive
Director
Sean Ebert
Benjamin
Hodgson
From 30
August 2019
From 4
November 2019
Chief Financial
Officer (CFO)
3. REMUNERATION POLICY
The Company’s remuneration framework for Directors
and senior executives has been designed to remunerate
fairly and responsibly, balancing the need to attract
and retain key personnel with a prudent approach to
management of costs.
The Board’s policy for determining the nature and
amount of remuneration for Board members and senior
executives of the Company is as follows.
Non-Executive Director Remuneration
The Board aims to remunerate each Non-executive
Director (NED) for their time, commitment and
responsibilities at market rates for comparable
companies. The Board determines the annual level of
fees payable to Non-executive Directors and intends to
review their remuneration annually, based on market
practice, duties and accountability and subject to the
maximum aggregate amount per annum as approved
by shareholders. Fees for Non-executive Directors are
not linked to the performance of the Group, other than
participation in share options (refer to section 8 for
share option plans).
The Board approves a letter of appointment setting out
the key terms and conditions of appointment for each
Non-executive Director. Non-executive Directors receive
statutory superannuation guarantee payments and do
not receive any other retirement benefits.
16
Executive Remuneration
The Board reviewed the executive structure and
framework in FY20 in detail during the due diligence
process leading to the prospectus and IPO. A further
review of the employment arrangements for the CFO
and general staff, including newly recruited personnel,
was undertaken by the Managing Director in the post-
IPO period and reported to the Board. It is intended that
annual reviews will be undertaken by the Board to ensure
that the remuneration framework remains aligned to
business needs.
The Board aims to ensure that remuneration
practices are:
•
•
Competitive and reasonable, enabling the Company
to attract and retain key talent; and
Aligned to the Company’s strategic and business
objectives and the creation of shareholder value.
4. REMUNERATION COMPONENTS
Non-Executive Directors
Non-executive Directors receive a fixed fee for their
participation on the Board. No additional fee is paid for
service on Board sub-committees. Directors do not receive
performance-based incentives but they are eligible, subject
to shareholder approval, for the grant of options that do
not include performance-based vesting criteria.
Non-Executive Director fees are determined by the
Board within an aggregate fee pool limit as approved by
shareholders. The current aggregate fee pool, as set out
in the Constitution in Rule 14.8 detailing initial fees to
Directors, is $400,000.
In addition, Directors are eligible to participate in the
Concessional Option Plan and the Share Rights and
Option Plan, subject to approval by shareholders.
Executives
Executive remuneration comprises fixed remuneration
(salary) and may include short-term and long-term
incentive plan components. These are set with reference
to the Company’s performance and the market. Fixed
remuneration, which reflects the individual’s role and
responsibility as well as their experience and skills,
includes base pay and statutory superannuation.
Remuneration at risk may be provided through
short-term and long-term incentive plan components,
linked to performance measured against operational
and financial targets set by the Company, designed
to achieve operational and strategic targets for the
sustainable growth of the Company and long-term
shareholder value. No short-term or long-term incentive
elements were implemented for KMP in the financial
year ended 30 June 2020. The Board will review the
remuneration framework during the coming year.
5. RELATIONSHIP BETWEEN REMUNERATION AND
GROUP PERFORMANCE
The Board aims to align executive remuneration to the
Company’s strategic and business objectives and the
creation of shareholder wealth. The table below sets
out key metrics in respect of the Group’s performance
over the past five years. The remuneration framework is
designed to take account of a suitable level for
the fixed remuneration in the context of balancing the
requirements of a rapidly growing and newly ASX-listed
company and focussing on strategic and business
objectives to ensure shareholder value. There are
currently no short-term or long-term incentives on foot.
Cash and cash
equivalents ($)
Net assets/equity
Revenue
EBITDA
Underlying loss
before income tax
Loss from ordinary
activities after income
tax expense ($)
2020 ($)
2019 ($)
2018 ($)
2017 ($)
2016 ($)
8,227,986
1,158,109
404,136
25,344
6,052
9,712,920
288,516
(113,666)
36,057
(3,008,192)
(595,966)
480,145
4,065
(26,298)
-
(315,486)
(135,659)
(92,763)
(3,094,021)
(680,836)
(50,301)
(352,496)
-
(61,873)
(84,163)
(3,094,021)
(680,836)
(50,301)
(352,496)
(84,163)
No of issued shares
132,366,163
12,320,250
11,782,750
10,050,000
Basic earnings per
share (cents)1
Diluted earnings per
share (cents)1
Share price at start
of year2
Share price at end
of year
Market capitalisation
(Undiluted) ($)
Interim and final
dividend
(3.8)
(3.8)
0.20
0.155
20,516,755
N/A
(1.3)
(1.3)
N/A
N/A
N/A
N/A
(0)
(0)
N/A
N/A
N/A
N/A
(1)
(1)
N/A
N/A
N/A
N/A
1 Basic earnings per share and diluted earnings per share have
been retrospectively restated to account for a capital restructure
of shares. A capital reconstruction was undertaken on 29 July 2019
and 4.2348 shares were issued for every 1 share. The number of
shares issued in the previous financial periods have been multiplied
by 4.2348 for the purpose of EPS calculation.
2 The Company was incorporated in 2014 as a proprietary company
and was changed to an unlisted public company on 5 December
2019. Share price at start of FY20 is shown as at commencement
of ASX quotation on 20 April 2020 following admission to the official
list of ASX on 16 April 2020, based on the value of shares taken
up pursuant to the prospectus.
4
(4,969)
(4,969)
N/A
N/A
N/A
N/A
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6. DIRECTOR AND KMP REMUNERATION
Remuneration for the financial year ended
30 June 2020
Short-term employee benefits ($)
Post-employment ($)
Share-based payments ($)
Salary
& Fees
Short-term
incentive
Annual
leave
Other
Superannuation
Shares Options2
Total share-based
payments
NON-EXECUTIVE DIRECTORS1
Stephen Gerlach
Leonard Piro3
Kevin Reid
Subtotal
EXECUTIVES1
40,000
26,666
26,666
93,332
Andrew Sales
220,066
Sean Ebert4,5
96,666
Benjamin Hodgson6
121,200
Subtotal
TOTAL
437,932
531,264
-
-
-
-
-
-
-
-
-
-
-
-
-
5,502
-
-
5,502
5,502
-
-
-
-
-
-
-
-
-
3,800
-
150,470
2,533
105,000
120,376
2,533
-
30,094
8,866
105,000
300,940
150,470
225,376
30,094
405,940
20,906
-
-
-
2,533
50,000
120,376
170,376
-
-
-
23,439
50,000
120,376
32,305
155,000
421,316
-
170,376
576,316
Termination ($)
Other long-term benefits ($)
Total ($)
Total ‘at risk’ (%)
NON-EXECUTIVE DIRECTORS1
Stephen Gerlach
Leonard Piro3
Kevin Reid
Subtotal
EXECUTIVES1
Andrew Sales
Sean Ebert4,5
Benjamin Hodgson6
Subtotal
TOTAL
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
194,270
254,575
59,293
508,138
246,474
269,575
121,200
637,249
1,145,387
-
-
-
-
-
-
-
-
-
1 Refer to section 2 of this report for KMP commencement dates.
2 Options: In accordance with the requirements of the Accounting
Standards, remuneration includes the total value of equity-based
compensation as determined as at the grant date, as this
compensation is not performance-related and there is no residual
vesting period. The amount allocated as remuneration is not
relative to or indicative of the actual benefit (if any) that the KMP
may ultimately realise. The fair value of $0.060188 per option was
determined in accordance with AASB2 Share-based Payments,
applying the Black-Scholes method. Details of the assumptions
underlying the valuation are set out in note 10 to the financial
statements.
3 Shares were issued to Leonard Piro on 7 February 2020 as
consideration in lieu of cash for consulting services provided to
the Company. Details are provided at section 8 of this report.
4 Salary and fee remuneration for Sean Ebert comprised
Non-executive Director fees of $26,666 as well as $70,000
+ GST paid to his controlled entity, Ebert Industries Pty Ltd, for
consultancy services and his services as an Executive Director.
See details in section 7 of this report.
5 Shares were issued to Sean Ebert on 7 February 2020 as
consideration in lieu of cash for consulting services provided to
the Company. Details are provided at section 8 of this report.
6 Services were provided by Benjamin Hodgson through his
controlled entity, Philhodge Business Services Pty Ltd. See details
in section 7 of this report.
18
Remuneration for the financial year ended
30 June 2019
Short-term employee benefits ($)
Post-employment ($)
Share-based payments ($)
Salary
& Fees
Short-term
incentive
Annual
leave
Other
Superannuation
Shares Options2
Total share-based
payments
NON-EXECUTIVE DIRECTORS1
Graham
Durtanovich2
EXECUTIVES1
Andrew Sales3
TOTAL
30,000
153,818
183,818
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Termination ($)
Other long-term benefits ($)
Total ($)
Total ‘at risk’ (%)
NON-EXECUTIVE DIRECTORS1
Graham
Durtanovich2
EXECUTIVES1
Andrew Sales3
TOTAL
-
-
-
-
-
-
30,000
153,818
183,818
1 During the financial year ended 30 June 2019, Sean Ebert was paid
$5,000 for consulting services through his controlled entity Ebert
Industries Pty Ltd and Leonard Piro was paid $24,500 for consulting
services. Neither Sean Ebert nor Leonard Piro was considered to be
KMP in the financial year ended 30 June 2019. Refer to section 2 of
this report for commencement dates as KMP in the financial year
ended 30 June 2020 upon their appointments as Non-executive
Directors.
2 Graham Durtanovich was a KMP only during the period he was a
Non-executive Director between 4 January 2019 and 28 February
2019. No remuneration was paid specifically as Director’s fees in
respect of this role. During the financial year consulting fees were
paid for accounting and corporate advisory services provided
through his controlled entities Connected Energy Solutions Pty Ltd
trading as Chaperon Corporate ($10,000 + GST) and Energy Capital
Partners Pty Ltd ($20,000 + GST).
3 During the financial year ended 30 June 2019, remuneration for
Andrew Sales was paid to his controlled entity La Vida Investments
Pty Ltd under a consultancy agreement with the Company.
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19 A
7. KEY TERMS OF EMPLOYMENT CONTRACTS
Non-Executive Directors
The Company has entered into Non-Executive Director
letters of appointment with each of Stephen Gerlach,
Leonard Piro, Kevin Reid and Sean Ebert (Letters of
Appointment). Under temporary arrangements, Sean Ebert
has acted as an Executive Director (see below). Each of
the Letters of Appointment provide that amongst other
things, in consideration for their services, the Company
will pay the following fees, exclusive of statutory
superannuation:
Chairman
$60,000 per annum
Non-Executive Directors
$40,000 per annum1
1 Additional consulting fees are payable to Sean Ebert’s consulting
company under the agreement for services as an Executive Director
described above.
Each Non-Executive Director is also entitled to be
reimbursed reasonable expenses incurred in performing
their duties.
The appointment of the Non-Executive Directors is subject
to the provisions of the Constitution and the ASX Listing
Rules relating to retirement by rotation and re-election of
directors. The appointment of a Non-Executive Director
will automatically cease at the end of any meeting
at which the relevant Director is not re-elected as a
Director by shareholders. A Director may terminate their
directorship at any time by advising the Board in writing.
The Letters of Appointment otherwise contain terms and
conditions that are considered standard for agreements
of this nature and are in accordance with the ASX
Corporate Governance Council’s Corporate Governance
Principles and Recommendations (4th Ed).
Executives
Managing Director
The Company has entered into an executive
services agreement with Andrew Sales, whereby he
was engaged as the Managing Director and Chief
Executive officer (Managing Director) of the Company.
Andrew Sales receives a base salary of $220,000 per
annum (exclusive of superannuation) for services
rendered under the executive services agreement.
The Company will also, subject to certain conditions,
reimburse the Managing Director for all reasonable
travelling intra/interstate or overseas, accommodation
and general expenses incurred in the performance
of all duties in connection with the business of the
Company. There is no short-term or long-term
incentive component to his remuneration.
The termination provisions in the executive services
agreement are on standard commercial terms and
generally require a minimum period of notice prior to
20
termination. In the event that the Company elects to
terminate the executive services agreement without
reason, it must pay the Managing Director the salary
payable over a six-month period.
Executive Director
Sean Ebert was appointed as a Non-Executive
Director of the Company, however in order to assist
the Company in preparation for the lodgement
of the prospectus and immediate post-IPO tasks,
the Company entered into an Executive Services
Agreement with Ebert Industries Pty Ltd (an entity
controlled by Sean Ebert) for the provision of
executive services to the Company (Ebert Agreement)
from 4 November 2019 until a month following the
IPO. Sean Ebert, as the person nominated by the
contracted party is appointed as an Executive Director
of the Company by virtue of the Ebert Agreement.
This agreement was subsequently extended from
May 2020, to be reviewed by the Board on a monthly
basis, for executive services provided to the Company
in the post-IPO establishment and growth phase. The
services include representing AML3D as an Executive
Director, including for investor presentations, as well
provision of support in establishing the Company’s
post-IPO operations inclusive of support to the
Managing Director.
In addition to Sean Ebert’s Non-Executive Director’s
fee of $40,000 per annum (exclusive of statutory
superannuation), the Company paid a fee of $5,000
per month (inclusive of superannuation and leave
entitlements, if any) for the provision of executive
services to the Company for the period until 1
month after IPO. This was amended to $10,000
per month effective from May 2020. Sean Ebert is
entitled to reasonable expenses properly incurred
whilst undertaking his respective duties. There is no
short-term or long-term incentive component to this
remuneration. In accordance with Rule 14.9 of the
Company’s Constitution, the remuneration under the
Ebert Agreement is considered to be for extra services
in addition to his standard remuneration as part of the
aggregate director fee pool, for his role as a
Non-Executive Director.
The Ebert Agreement may be terminated by either
party with 1 month’s written notice and otherwise
includes standard commercial terms and conditions.
Under a separate arrangement for provision of
additional consulting services prior to IPO, Sean Ebert
was remunerated by the allotment of shares to
Ebert Industries Pty Ltd the value of $50,000.
Further details are provided in section 8 of this
Remuneration Report.
Chief Financial Officer
Concessional Incentive Option Plan
During FY20, Benjamin Hodgson’s services as Chief
Financial Officer (CFO) were undertaken in accordance
with a contractor agreement between the Company
and Philhodge Business Services Pty Ltd, an entity
controlled by Benjamin Hodgson (CFO Agreement).
Under the CFO Agreement, Philhodge Business
Services Pty Ltd provides the services of Benjamin
Hodgson in the position of CFO at an all-inclusive
hourly rate of $100 plus GST for such number of
hours per month as may be directed by the Company.
The contract is ongoing and subject to termination
by either party with a notice period of 1 day. No
short-term or long-term incentives are included in
the remuneration arrangements. A review of the
contractual arrangements was undertaken in July 2020
and the remuneration under the CFO Agreement
was amended to a rate of $158,000 plus GST per
annum, invoiced in equal monthly payments effective
from July 2020, based on a full-time position.
The CFO Agreement otherwise includes standard
commercial terms.
8. TERMS AND CONDITIONS OF SHARE-BASED
PAYMENT ARRANGEMENTS
Shares were issued to Directors Leonard Piro and
Sean Ebert on 7 February 2020 as consideration in lieu
of cash for consulting services provided to the Company.
700,000 fully paid ordinary shares were issued to
Leonard Piro at a share price of $0.15 each in settlement
of an amount of $105,000 for consulting services in the
period 13 April 2017 to 29 October 2019. 250,000 fully
paid ordinary shares were issued to Sean Ebert at a
share price of $0.20 each in settlement of an amount of
$50,000 for consulting services in FY20.
The key terms and conditions of the grant of share
options affecting the remuneration of Directors and
KMP in the current and future reporting periods are as
follows. These options are subject to ASX-imposed escrow
restrictions for a period of 24 months from the date of
IPO and subject to further restrictions for a period of
3 years from the date of issue in accordance with the
terms of the Concessional Incentive Option Plan under
which these options were issued.
The key terms of the Concessional Incentive Option
Plan are as follows:
Eligibility
Employees, contractors or directors (Participants)
Offers
Vesting
Conditions
The Board may in its absolute discretion make
a written offer to any Participant to apply for
options upon the terms set out in the Concessional
Incentive Option Plan and upon such additional
terms and conditions as the Board determines.
Options may be made subject to vesting
conditions. Options will only vest while the
Participant remains employed, engaged or is
an officer of the Company. Where a Participant
becomes a:
•
•
Good Leaver, unless the Board in its sole and
absolute discretion determines otherwise,
unvested options will lapse and vested
options that have not been exercised will
remain exercisable for a period of 3 months;
Bad Leaver, unvested options will lapse and
subject to the discretion of the Board, vested
options that have not been exercised will
lapse on the date of cessation of employment,
engagement or office of the Participant.
Disposal
Disposal restrictions apply, including either
3 years after the date of issue of the option or
when the optionholder ceases to be a Participant.
Details of the Concessional Incentive Option Plan were
included in the Company’s Prospectus and a copy of the
Plan was released to the ASX market announcements
platform on 16 April 2020. A copy of the Concessional
Incentive Option Plan is available on the Company’s
website at www.aml3d.com/investors
Performance Rights and Option Plan
A Performance Rights and Option Plan is also in place to
accommodate future long-term remuneration incentives
but as at the date of this report no grants of performance
rights or options have been made pursuant to this plan.
Details of the Performance Rights and Option Plan were
included in the Company’s Prospectus and a copy of the
Plan was released to the ASX market announcements
platform on 16 April 2020. A copy of the Performance
Rights and Option Plan is available on the Company’s
website at www.aml3d.com/investors
Grant Date
Vesting Date
Expiry Date
4 Dec 2019
4 Dec 2019
4 Dec 2024
Exercise Price
$0.30
Number Granted
7,000,000
Fair Value per option at grant
$0.06
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9. DIRECTOR AND KMP EQUITY HOLDINGS
Details of the number of ordinary shares held by
Directors and KMP in the Company are set out below.
This includes shares held directly, indirectly or beneficially
by Directors and KMP, including related party holdings.
NON-EXECUTIVE DIRECTORS
Stephen Gerlach1
Leonard Piro2
Kevin Reid3
EXECUTIVES
Andrew Sales4
Sean Ebert5
Benjamin Hodgson6
Balance at
1 Jul 2019
-
-
-
9,375,000
-
-
233,334
100,000
58,334
550,000
741,666
83,334
TOTAL
9,375,000
1,766,668
Details of the number of options held by Directors
and KMP in the Company are set out below.
This includes options held directly, indirectly or beneficially
by Directors and KMP, including their related parties.
Purchased
Sold
Other changes
Balance at
30 Jun 2020
233,334
800,000
58,334
-
700,000
-
30,326,250
40,251,250
250,000
-
991,666
83,334
31,276,250
42,417,918
-
-
-
-
-
-
-
Balance
at 1 July
2019
Granted
Purchased
Options
Exercised
Expired/
Lapsed
Balance
at 30 June
2020
Vested
Unvested
NON-EXECUTIVE DIRECTORS
Stephen Gerlach
Leonard Piro
Kevin Reid
EXECUTIVES
Andrew Sales
Sean Ebert
Benjamin Hodgson
Total
-
-
-
-
-
-
-
2,500,000
66,667
2,000,000
50,000
500,000
16,667
-
100,000
2,000,000
333,333
-
16,667
7,000,000
583,334
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,566,667
2,566,667
2,050,000
2,050,000
516,667
516,667
100,000
100,000
2,333,333
2,333,333
16,667
16,667
7,583,334
7,583,334
-
-
-
-
-
-
-
1 Stephen Gerlach: 33,334 shares are subject to escrow for
24 months from IPO.
2 700,000 shares were issued to Leonard Piro on 7 February 2020 as
non-cash consideration for consulting services. 725,000 shares are
subject to escrow for 24 months from IPO.
3 Kevin Reid: 8,334 shares are subject to escrow for 24 months
from IPO.
22
4 A capital reconstruction was undertaken on 29 July 2019 and
4.2348 shares were issued for every 1 share (rounded up to the
nearest whole share). The 9,375,000 shares held by Andrew Sales
at 1 July 2019 were converted to 39,701,250 shares. 39,751,233
shares are subject to escrow for 24 months from IPO.
5 250,000 shares were issued to Sean Ebert on 7 February 2020
as non-cash consideration for consulting services. 416,667 shares
are subject to escrow for 24 months from IPO.
6 8,334 shares held by Benjamin Hodgson are subject to escrow
to 19 December 2020.
Not all options were granted as part of KMP
remuneration. Options shown as purchased were
obtained upon purchase of shares in the pre-IPO seed
capital raising, which included attached options on the
basis of 1 option for every 2 shares; these shares and
options were purchased under the same terms and
conditions as all other investors in the pre-IPO seed
capital raising.
All options held by Directors are subject to escrow
restrictions for 24 months following the date of IPO.
Options held by Benjamin Hodgson are subject to escrow
restrictions until 19 December 2020. Options may
be exercised during the restriction period but shares
issued as a result of exercise will remain subject to the
restriction period applicable to the options. Terms of the
options granted to Directors are provided in section 8 of
this report.
10. OTHER TRANSACTIONS WITH DIRECTORS
AND KMP
A loan from the Managing Director to the Company was
repaid during the year ended 30 June 2020. No loans
were made to or from Directors or KMP and the Company
during the year ended 30 June 2020. In the previous
financial year a related party payable existed between
the Company and the Managing Director, to the value of
$33,931, as at 30 June 2019. No formal agreement was
in place and no interest was payable in respect of this
related party payable between the Company and the
Managing Director. The Managing Director provided a
letter of support that his Director Loans owing would not
be called on in full within 12 months of the date of signing
of the financial report for the year ended 30 June 2019
(which was signed on 23 December 2019); the amount
was in any case settled in full by the Company during the
financial year ended 30 June 2020.
There have been no transactions with Directors and KMP
other than those described in this Remuneration Report.
Related Party Transactions
Details of transactions with related parties including KMP
are provided at Note 26 to the financial statements.
- End of Remuneration Report -
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23 A
OPTIONS AND SHARE RIGHTS
Holders of options and share rights do not have any
rights to participate in any issue of shares or other
interests of the Company or any other entity.
During the financial year ended 30 June 2020, 17,166,179
options were issued (2019: Nil). No shares were issued
on the exercise of options during the financial year ended
30 June 2020 (2019: Nil).
No share rights were issued (2019: Nil).
As at the date of this report, the unissued ordinary
shares of the Company under option are as follows.
Grant date
Expiry Date
Exercise
Price
Number
of Options
30 July 2019
30 July 2023
$0.30
2,000,000
4 December 2019 4 December 2024
$0.30
7,500,0001
19 December 2019
30 June 2021
$0.30
6,297,846
30 January 2020
30 June 2021
$0.30
368,333
3 April 2020
30 June 2021
$0.30
1,000,000
Total
17,166,179
Details of options issued to Directors are provided in the
Remuneration Report commencing on page 15.
There have been no options or share rights granted
over unissued shares or interests of the controlled entity
within the Group during or since the reporting period.
CONVERTING LOAN AGREEMENTS
During the preceding financial year ended 30 June 2019,
the Company entered into Converting Loan Agreements
(CLAs) to a total value of $1,726,000, convertible to shares
at IPO on the basis of 50% of the IPO price of $0.20,
i.e. $0.10 each. During the financial year ended 30 June
2020, all CLAs converted to shares prior to IPO, resulting
in the issue of a total of 17,260,000 shares.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring
proceedings on behalf of the Company or intervene in
any proceedings to which the Company is party for the
purpose of taking responsibility on behalf of the company
for all or any part of those proceedings. The Company
was not a party to any such proceedings during the
financial year.
INDEMNIFICATION AND INSURANCE OF
OFFICERS OR AUDITOR
During the financial year, in accordance with the
provisions of the Company’s Constitution, the Company
paid a premium in respect of a contract insuring the
Directors of the Company, the Company Secretary and
all Executive Officers of the Company against a liability
incurred as such a director, secretary or executive officer
to the extent permitted by the Corporations Act 2001 (Cth).
The contract of insurance prohibits disclosure of the
nature of the liability and the amount of the premium.
In accordance with the Constitution, the Company has
entered into Deeds of Indemnity in favour of each
of the current Directors and Company Secretary.
The indemnities operate to the full extent permitted
by law. The Company is not aware of any liability having
arisen, and no claims have been made during or since
the financial year ending 30 June 2020 under the
Deeds of Indemnity.
The Company’s subsidiary, AML Technologies (Asia)
Pte Limited has provided a letter of indemnity to its
Company Secretary.
The Company has not otherwise, during or since the
end of the financial year, except to the extent permitted
by law, indemnified or agreed to indemnity an officer or
auditor of the Company or of any related body corporate
against a liability incurred as such an officer or auditor.
NON-AUDIT SERVICES
The Board is satisfied that the provision of non-audit
services by its auditor, William Buck, during the year is
compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001.
The Directors are satisfied that the non-audit services
provided by the auditors during the year did not
compromise the external auditor’s independence.
The fees paid or payable to William Buck for non-audit
services are set out in Note 11 of the financial report.
The non-audit services provided were the preparation
of an Investigating Accountant’s Report in respect of the
Company’s IPO Prospectus and tax compliance services.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is included on
page 25 of this annual report.
This Directors’ Report is signed in accordance with
a resolution of Directors made pursuant to s298(2)
of the Corporations Act 2001.
On behalf of the Directors
1 Comprises 7,000,000 options issued to Directors and 500,000
options issued to the Company Secretary.
24
Stephen Gerlach AM
Chairman
30 September 2020
Auditor’s Independence
Declaration
‒
Auditor’s Independence Declaration Under Section 307c Of
The Corporations Act 2001 To The Directors Of AML3D
Limited
I declare that, to the best of my knowledge and belief during the year ended 30 June 2020 there have been:
23.
— no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to
the audit; and
and the directorsʼ declaration.
and the directorsʼ declaration.
— no contraventions of any applicable code of professional conduct in relation to the audit.
(i) giving a true and fair view of the Groupʼs financial position as at 30 June 2020 and of its financial
(i) giving a true and fair view of the Groupʼs financial position as at 30 June 2020 and of its financial
boardʼs discretion and no individual has a
William Buck
ABN: 38 280 203 274
Accounting Professional and Ethical Standards Boardʼs APES 110
Accounting Professional and Ethical Standards Boardʼs APES 110
‒
M.D. King
Partner
Dated this 30th day of September, 2020 in Adelaide, South Australia.
‒
in
of
ide
notes 3(i) and 12.
Groupʼs annual report for the year ended 30 June 2020, but does not include the financial report and the auditorʼs
A detailed evaluation of the Groupʼs research
A detailed evaluation of the Groupʼs research
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25 A
Audit Report
AML3D Limited
Independent auditor’s report to members
‒
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of AML3D Limited (the Company and its subsidiary (the Group)),
which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies and other explanatory information,
23.
and the directorsʼ declaration.
and the directorsʼ declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i) giving a true and fair view of the Groupʼs financial position as at 30 June 2020 and of its financial
(i) giving a true and fair view of the Groupʼs financial position as at 30 June 2020 and of its financial
boardʼs discretion and no individual has a
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Boardʼs APES 110 Code of Ethics for Professional
Accounting Professional and Ethical Standards Boardʼs APES 110
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
‒
‒
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
in
our audit of the financial report of the current period. These matters were addressed in the context of
of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
ide
a separate opinion on these matters.
KEY AUDIT MATTER
Research and development expenditure -
existence and valuation. Refer also to
notes 3(i) and 12.
notes 3(i) and 12.
How our audit addressed it
Groupʼs annual report for the year ended 30 June 2020, but does not include the financial report and the auditorʼs
Our audit procedures included:
The group incurs significant amounts of
research and development costs each year. In
2020 these costs amounted to $799,659.
Each year the Group makes an assessment as
to the amount it expects to claim from the
Australian Government by the way of a
Research & Development Tax Offset Refund.
At 30 June 2020 the amount disclosed as a
current trade and other receivable in relation to
the refund is $310,000.
26
‒
‒
‒
‒
‒
‒
A detailed evaluation of the Groupʼs research
A detailed evaluation of the Groupʼs research
and development strategy;
Testing the costs incurred;
Engaging our own taxation specialists to
o
s
consider the appropriateness of the Group's
substantiation for the claim;
‒ Reviewing the historical accuracy by comparing actual Tax
‒
offset refunds with the original estimations.
We assessed the adequacy of the Group's disclosures in
respect of the transactions.
How our audit addressed it
Our audit procedures included:
— Evaluating the grant dates based on the terms and
conditions of the share-based payment arrangements;
— Evaluating the fair values of the share-based payment
arrangements by understanding and documenting the
assumptions used; and
— For the specific application of the Black Scholes model,
we consulted with our internal experts, retested the
assumptions used in the model and recalculated fair
values using assumptions that are appropriately
reasonable and within industry norms.
We also reconciled the vesting of the share-based payment
arrangements to disclosures made in both the key management
personnel compensation note and the disclosures in the
Remuneration Report.
Overall due to the high level of judgement
involved, and the significant carrying amount
involved, we have determined that this is a
key audit matter area that our audit
concentrated on.
KEY AUDIT MATTER
Valuation of Share based payments. Refer
also to notes 10 and 23.
23.
The Group has entered into share-based
payment arrangements during the year.
Options were issued to provide long term
incentives for Directors, executives and
consultants to deliver long term shareholder
returns. Participation in the plan was at the
boardʼs discretion and no individual has a
boardʼs discretion and no individual has a
contractual right to participate in the plan or
to receive any guaranteed benefits.
This was a key audit matter because the
arrangements required significant judgments
and estimations by management, including
the following:
‒
‒
‒
The evaluation of the grant date of each
arrangement, and the evaluation of the
fair value of the underlying share price
of the Company as at the grant date;
‒
The evaluation of key inputs into the
Black Scholes option pricing model,
including the significant judgment of the
forecast volatility of the share option
over its exercise period.
The results of these share-based payment
arrangements materially affect the financial
statements and disclosures.
Other Information
The directors are responsible for the other information. The other information comprises the information in the
Groupʼs annual report for the year ended 30 June 2020, but does not include the financial report and the auditorʼs
Groupʼs annual report for the year ended 30 June 2020, but does not include the financial report and the auditorʼs
report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
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27 A
Audit Report (continued)
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true and
fair view and is free from material misstatement, whether due to fraud or error.
‒
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
23.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditorʼs report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the
Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of this financial report.
boardʼs discretion and no individual has a
A further description of our responsibilities for the audit of these financial statements is located at the Auditing and
Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our independent auditorʼs report.
‒
Report on the Remuneration Report
Opinion on the Remuneration Report
‒
We have audited the Remuneration Report included in pages 15 to 23 of the directorsʼ report for the year ended 30
June 2020.
In our opinion, the Remuneration Report of AML3d Limited, for the year ended 30 June 2020, complies with section
300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Groupʼs annual report for the year ended 30 June 2020, but does not include the financial report and the auditorʼs
William Buck
ABN: 38 280 203 274
M.D. King
Partner
Dated this 30th day of September, 2020 in Adelaide, South Australia.
28
Financial
Statements
STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
STATEMENT OF FINANCIAL POSITION
STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CASHFLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
30
31
32
32
33
52
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29 A
STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
For the year ended 30 June 2020
The Consolidated Statement of Profit or Loss and Other
Comprehensive Income should be read in conjunction with
the accompanying notes, which form an integral part of the
financial report.
Revenue
Cost of goods sold
Gross profit
R&D Tax Offset
Government grants
Interest received
Depreciation and amortisation expense
Directors and employees benefit expense
Professional fees
Insurance
Travel
Website costs
Equity settled share-based payments
Other expenses
Loss before income tax expense
Income tax
Loss after tax attributable to the owners of
the Company
Other comprehensive (loss) net of tax
Total comprehensive loss for the year attributable
to the owners of the Company
Loss per share (cents)
Basic and diluted loss per share (cents)
Note
6
7
7
7
10
7
8
25
25
30
Consolidated 2020 ($)
Consolidated 2019 ($)
288,516
(69,254)
219,262
309,054
126,000
11,780
(85,829)
(1,016,806)
(1,274,755)
(53,784)
(35,273)
-
(966,740)
(326,930)
(3,094,021)
-
(3,094,021)
-
(3,094,021)
(3.8)
(3.8)
36,057
(108,254)
(72,197)
252,000
168,446
759
(84,870)
(356,959)
(370,287)
(5,034)
(77,006)
(26,125)
-
(109,563)
(680,836)
-
(680,836)
-
(680,836)
(1.3)
(1.3)
STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
The Consolidated Statement of Financial Position should be read
in conjunction with the accompanying notes, which form an integral
part of the financial report.
Note
Consolidated 2020 ($)
Consolidated 2019 ($)
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventory
Other assets
Total current assets
Non-current assets
Financial assets
Property, plant and equipment
Right of use assets
Intangible assets
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Employee benefits
Total current liabilities
Non-current liabilities
Lease liabilities
Total non-current liabilities
Total liabilities
NET ASSETS/(LIABILITIES)
EQUITY
Issued capital
Accumulated losses
Reserves
TOTAL EQUITY
30
12
13
14
15
16
17
18
19
20
21
22
21
23
24
23
8,227,986
706,735
112,375
235,240
9,282,336
36,000
1,121,552
411,478
41,002
1,610,032
10,892,368
738,392
-
125,098
27,953
891,443
288,005
288,005
1,179,448
9,712,920
13,310,772
(4,270,817)
672,965
9,712,920
1,158,109
306,415
-
2,225
1,466,749
-
308,069
-
35,839
343,908
1,810,657
145,740
1,759,931
-
18,652
1,924,323
-
-
1,924,323
(113,666)
1,063,130
(1,176,796)
-
(113,666)
31
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A
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2020
The Consolidated Statement of Changes in Equity should be read
in conjunction with the accompanying notes, which form an integral
part of the financial report.
Issued Capital ($)
Share Options
Reserve ($)
Accumulated
Losses ($)
Total Equity ($)
CONSOLIDATED
Balance at 1 July 2018
Loss after income tax expense for the year
Shares issued during the year, net of transaction costs
Balance at 30 June 2019
CONSOLIDATED
Balance at 1 July 2019
Loss after income tax expense for the year
976,105
87,025
1,063,130
1,063,130
-
Shares issued during the year, net of transaction costs
12,247,642
-
-
-
-
-
-
Share options issued during the year
-
672,965
(495,960)
480,145
(680,836)
(680,836)
-
87,025
(1,176,796)
(113,666)
(1,176,796)
(113,666)
(3,094,021)
(3,094,021)
-
-
12,247,642
672,965
Balance at 30 June 2020
13,310,772
672,965
(4,270,817)
9,712,920
STATEMENT OF CASHFLOWS
For the year ended 30 June 2020
The Consolidated Statement of Cash Flows should be read in
conjunction with the accompanying notes, which form an integral
part of the financial report.
Note
Consolidated 2020 ($)
Consolidated 2019 ($)
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Receipts from Government grants
Receipts from R&D Tax Incentive
Payments to suppliers and employees
Interest received
Net cash (used in) operating activities
30
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for intangible assets
Payment for financial asset – Term deposit
Purchase of plant and equipment
Net cash (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issues of shares, net of costs
Proceeds from the issue of convertible notes
Repayment of borrowings
Net cash provided by financing activities
Net increase in cash and cash equivalents held
Cash and cash equivalents at the beginning of year
Cash and cash equivalents at end of financial year
30
129,806
119,225
250,353
(2,692,923)
8,330
(2,185,209)
(26,685)
(36,000)
(826,085)
(880,770)
10,227,867
-
(84,011)
10,143,856
7,069,877
1,158,109
8,227,986
39,663
153,720
103,288
(985,285)
759
(687,855)
(18,848)
-
(200,711)
(219,559)
87,025
1,726,000
(151,638)
1,661,387
753,973
404,136
1,158,109
NOTES TO THE FINANCIAL STATEMENTS
(i) Subsidiaries
1. GENERAL INFORMATION
AML3D Limited (“AML3D” or the “Company”) is a limited
liability company incorporated in Australia, whose shares
are listed on the ASX.
The financial statements were authorised for issue by the
directors on 30 September 2020. The Directors have the
power to amend and reissue the financial statements.
The financial statements comprise the consolidated
financial statements of the Company and its controlled
entity (the “Group”). The principle accounting policies
adopted in the preparation of these consolidated
financial statements are set out below or included in
the accompanying notes. Unless otherwise stated,
these policies have been consistently applied to all
the years presented.
2. STATEMENT OF SIGNIFICANT ACCOUNTING
POLICIES
(a) Basis of Preparation
These general purpose financial statements have been
prepared in accordance with Australian Accounting
Standards and Interpretations of the Australian
Accounting Standards Board and the Corporations
Act 2001 (Cth). The Company is a for profit entity for
the purpose of preparing the financial statements.
The consolidated financial statements of AML3D comply
with International Financial Reporting Standards issued by
the International Accounting Standards Board (IASB).
The consolidated financial statements have been
prepared on an accruals basis, except for cashflow
information and are based on historical costs, except for
the circumstances where the fair value method has been
applied as detailed in these accounting policies.
The financial statements have been prepared on a going
concern basis which contemplates the continuity of
normal business activity and the realisation of assets
and the settlement of liabilities in the ordinary course
of business.
Comparatives are consistent with prior years, unless
otherwise stated.
(b) Principles of consolidation
As at reporting date, the assets and liabilities of all
controlled entities have been incorporated into the
consolidated financial statements as well as their results
for the year then ended. Where controlled entities have
entered (left) the Consolidated Group during the year,
their operating results have been included (excluded)
from the date control was obtained (ceased).
Subsidiaries are entities controlled by the Group.
A list of subsidiaries is provided in Note 33.
(ii) Transactions eliminated on consolidation
All intra-group balances and transactions, and any
unrealised income and expenses arising from
intra-group transactions, are eliminated in preparing
the consolidated financial statements.
(c) Taxation
(i) Income tax
The income tax expense/(income) of the year
comprises current income tax expense/(income)
and deferred tax expense/(income).
Current income tax expense/(income) charged to the
profit or loss is the tax payable on taxable income
calculated using applicable income tax rates enacted,
or substantially enacted, as at reporting date. Current
tax liabilities (assets) are therefore measured at the
amounts expected to be paid to (recovered from)
the relevant taxation authority.
Deferred income tax expense reflects movements in
deferred tax assets and deferred tax liabilities during
the year as well as unused tax losses.
Deferred tax assets and liabilities are ascertained
based on temporary differences arising between the
tax bases of assets and liabilities and their carrying
amounts in the financial statements. Deferred tax
assets also result where amounts have been fully
expensed but future tax deductions are available.
No deferred income tax will be recognised from the
initial recognition of an asset or liability, excluding a
business combination, where there is no effect on
accounting or taxable profit and loss.
Deferred tax assets and liabilities are calculated at
the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled,
based on tax rates enacted or substantially enacted
at reporting date. Their measurement also reflects
the manner in which management expects to
recover or settle the carrying amount of the related
asset or liability.
Where temporary differences exist in relation to
investments in subsidiaries, branches, associates,
and joint ventures, deferred tax assets and liabilities
are not recognised where the timing of the reversal
of the temporary difference can be controlled and
it is not probable that the reversal will occur in the
foreseeable future.
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33 A
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only if
it is probable that future tax amounts will be available
to utilise those temporary differences and losses.
Current tax assets and liabilities are offset where
a legally enforceable right of offset exists and it
is intended that net settlement or simultaneous
realisation and settlement of the respective asset and
liability will occur. Deferred tax assets and liabilities
are offset where a legally enforceable right of set-off
exists, the deferred tax assets and liabilities relate to
income taxes levied by the same taxation authority
on either the same taxable entity or different taxable
entities where it is intended that net settlement
or simultaneous realisation and settlement of the
respective asset and liability will occur in future periods
in which significant amounts of deferred tax assets or
liabilities are expected to be recovered or settled.
(ii) Goods and Services Tax (GST)
Revenues, expenses, and assets are recognised net
of the amount of GST, except where the amount of
GST incurred is not recoverable from the taxation
authority. In these circumstances, the GST is
recognised as part of the cost of acquisition of the
asset or as part of an item of expense. Receivables
and payables in the Statement of Financial Position
are shown inclusive of GST.
The net amount of GST recoverable from, or payable to,
the Australian Taxation Office is included as a current
asset or liability in the Statement of Financial Position.
Cash flows are presented in the statement of cash
flows on a gross basis, except for the GST component
of investing and financing activities, which are disclosed
as operating cash flows included in cash inflows from
operations or payments to suppliers and employees.
(d) Plant and equipment
(i) Recognition and measurement
Items of plant and equipment are measured on
the cost basis and carried at cost less accumulated
depreciation and impairment losses. In the event the
carrying amount of plant and equipment is greater
than the estimated recoverable amount, the carrying
amount is written down immediately to the estimated
recoverable amount and impairment losses are
recognised either in profit or loss or as a revaluation
decrease if the impairment losses relate to a revalued
asset. A formal assessment of recoverable amount is
made when impairment indicators are present.
34
Cost includes expenditure that is directly attributable
to the acquisition of the asset.
The carrying amount of plant and equipment is
reviewed annually by Directors to ensure it is not
more than the recoverable amount from these assets.
The recoverable amount is assessed based on the
expected net cash flows that will be received from
the asset’s employment and subsequent disposal.
The expected net cash flows have not been
discounted to their present values in determining
recoverable amounts.
Where parts of an item of plant and equipment
have different useful lives, they are accounted for
as separate items of plant and equipment.
(ii) Subsequent costs
The cost of replacing part of an item of plant and
equipment is recognised in the carrying amount of
the item if it is probable that the future economic
benefits embodied within the part will flow to
the Group and its cost can be measured reliably.
Any costs of the day-to-day servicing of plant and
equipment are recognised in the Statement of Profit
or Loss and Other Comprehensive Income as an
expense as incurred.
(iii) Depreciation
Depreciation is charged to the statement of profit
or loss and other comprehensive income on a
straight-line basis over the asset’s useful life to the
Group commencing from the time the asset is held
ready for use.
Depreciation rates and methods are reviewed annually
for appropriateness. The straight-line depreciation
rates used for the current period are as follows:
Class of fixed asset
Depreciation rate (%)
Office and Computer
equipment
Plant and Equipment
Motor Vehicles
20 - 33
10 - 20
22.5
Leasehold improvements
over the term of the lease
The assets’ residual values and useful lives are
reviewed, and adjusted if appropriate, at the end of
each reporting period. An asset’s carrying amount is
written down immediately to its recoverable amount
if the asset’s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposal of an item of plant
and equipment are determined by comparing the
proceeds from disposal with the carrying amount of
plant and equipment and are recognised net within
“other income” in the Statement of profit or loss and
other comprehensive income.
(e) Impairment of non-financial assets
The carrying amounts of the Group’s non-financial
assets, other than deferred tax assets (see accounting
policy 2(c) are reviewed at each reporting date
to determine whether there is any indication of
impairment. If any such indication exists, then the
asset’s recoverable amount is estimated.
An impairment loss is recognised if the carrying
amount of an asset or its cash-generating unit
exceeds its recoverable amount. A cash-generating
unit is the smallest identifiable asset group that
generates cash flows that largely are independent
from other assets and asset groups. Impairment
losses are recognised in the statement of profit or
loss and other comprehensive income, unless the
asset has previously been revalued, in which case the
impairment loss is recognised as a reversal to the
extent of that previous revaluation with any excess
recognised through the statement of profit or loss
and other comprehensive income. Impairment
losses recognised in respect of cash-generating
units are allocated to the other assets in the unit
on a pro rata basis.
The recoverable amount of an asset or cash generating
unit is the greater of its fair value less costs to sell and
value in use. In assessing value in use, the estimated
future cash flows are discounted to their present
value using a pre-tax discount rate that reflects
current market assessments of the time value of
money and the risks specific to the asset. For an asset
that does not generate largely independent cash
flows, the recoverable amount is determined for the
cash-generating unit to which the asset belongs.
Impairment losses recognised in prior periods are
assessed at each reporting date for any indications
that the loss has decreased or no longer exists.
An impairment loss is reversed if there has been
a change in the estimates used to determine
the recoverable amount. An impairment loss is
reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that
would have been determined, net of depreciation
and amortisation, if no impairment loss had been
recognised.
(f) Financial instruments
(i) Initial recognition and measurement
Financial assets and financial liabilities are recognised
when the entity becomes a party to the contractual
provisions to the instrument. For financial assets,
this is equivalent to the date that the entity commits
itself to either the purchase or sale of the asset
(i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair
value plus transaction costs, except where the
instrument is classified “at fair value through profit
or loss”, in which case transaction costs are expensed
to profit or loss immediately. Where available, quoted
prices in an active market are used to determine fair
value. In other circumstances, valuation techniques
are adopted. Trade receivables are initially measured
at the transaction price if the trade receivables do
not contain significant financing component or if the
practical expedient was applied.
(ii) Classification and Subsequent Measurement
Financial Liabilities
A financial liability is measured at fair value through
profit and loss if the financial liability is:
•
•
•
A contingent consideration of an acquirer in a
business combination to which AASB 3: Business
Combinations applies;
Held for trading; or
Initially designated as “at fair value through
profit or loss”.
All other financial liabilities are subsequently
measured at amortised cost using the effective
interest method.
The effective interest method is a method of
calculating the amortised cost of a debt instrument
and of allocating interest expense in profit or loss
over the relevant period. The effective interest rate
is the internal rate of return of the financial asset
or liability. That is, it is the rate that discounts the
estimated future cash flows through the expected
life of the instrument to the net carrying amount at
initial recognition.
Any gains or losses arising on changes in fair value
are recognised in profit or loss to the extent they are
not part of a designated hedging relationship are
recognised in profit or loss.
The change in fair value of the financial liability
attributable to changes in the issuer’s credit risk is
taken to other comprehensive income and are not
subsequently reclassified to profit or loss. Instead,
they are transferred to retained earnings upon
derecognition of the financial liability. If taking the
change in credit risk in other comprehensive income
enlarges or creates an accounting mismatch,
then these gains or losses should be taken to profit
or loss rather than other comprehensive income.
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35 A
A financial liability is derecognised when it is
extinguished (i.e. when the obligation in the contact
is discharged, cancelled or expires). An exchange
of an existing financial liability for a new one with
substantially modified terms, or a substantial
modification to the terms of a financial liability is
treated as an extinguishment of the existing liability
and recognition of new financial liability. The difference
between the carrying amount of the financial liability
derecognised and the consideration paid and payable,
including any non-cash assets transferred or liabilities
assumed, is recognised in the Statement of Profit
or Loss, and other comprehensive income.
Financial Assets
A financial asset that meets the following conditions is
subsequently measured at amortised cost:
•
•
The financial asset is managed solely to collect
contractual cash flows; and
The contractual terms within the financial asset
give rise to cash flows that are solely payments
of principal and interest on the principal amount
outstanding on specified dates.
A financial asset that meets the following conditions
is subsequently measured at fair value through other
comprehensive income:
•
•
The contractual terms within the financial asset
give rise to cash flows that are solely payments
of principal and interest on the principal amount
outstanding on specified; and
The business model for managing the financial
assets comprises both contractual cash flows’
collection and the selling of the financial asset.
By default, all other financial assets that do not meet
the measurement conditions of amortised cost and
fair value through other comprehensive income
are subsequently measured at fair value through
profit or loss.
The initial designation of the financial instruments to
measure at fair value through profit or loss is a one-
time option on initial classification and is irrevocable
until the financial asset is derecognised.
A financial asset is derecognised when the holder’s
contractual rights to its cash flows expires, or the
asset is transferred in such a way that all the risks and
rewards of ownership are substantially transferred.
On derecognition of a financial asset measured at
amortised cost, the difference between the asset’s
carrying amount and the sum of the consideration
received and receivable is recognised in profit or loss.
Cash and cash equivalents
For the purpose of presentation in the statement
of cash flows, cash and cash equivalents includes
cash on hand, deposits held at call with banks,
36
other short-term highly liquid investments with
original maturities of three months or less, and bank
overdrafts. Bank overdrafts, if any, are shown within
short-term borrowings in current liabilities on the
Statement of financial position.
Trade and other receivables
Receivables are usually settled within 60 days.
Receivables expected to be collected within
12 months of the end of the reporting period are
classified as current assets. All other receivables
are classified as non-current assets.
Trade and other receivables are initially recognised
at fair value and subsequently measured at amortised
cost using the effective interest method, less any
provision for impairment. Collectability of trade and
other receivables are reviewed on an ongoing basis.
An impairment loss is recognised for debts which are
known to be uncollectable. An impairment provision is
raised for any doubtful amounts.
Trade and other payables
These amounts represent liabilities for goods and
services provided to the Group prior to the end of
financial year which are unpaid and stated at their
amortised cost. The amounts are unsecured and are
generally settled on 30 day terms.
(iii) Impairment of financial assets
Impairment of financial assets is recognised on an
expected credit loss (ECL) basis for the following assets:
•
•
financial assets measured at amortised cost
debt investments measured at FVOCI
When determining whether the credit risk of a
financial asset has increased significantly since initial
recognition and when estimating ECL, the Group
considers reasonable and supportable information
that is relevant and available without undue cost or
effort. This includes both quantitative and qualitative
information and analysis based on the Group’s
historical experience and informed credit assessment
and including forward looking information.
The Group uses the presumption that an asset which
is more than 30 days past due has seen a significant
increase in credit risk.
The Group uses the presumption that a financial asset
is in default when:
•
the other party is unlikely to pay its credit
obligations to the Group in full, without recourse
to the Group to actions such as realising security
(if any is held); or
•
the financial assets is more than 90 days past due.
Impairment of trade receivables is determined using
the simplified approach in AASB 9 which uses an
estimation of lifetime expected losses.
For financial assets carried at amortised cost
(including loans and receivables), a separate
allowance account is used to reduce the carrying
amount of financial assets impaired by credit losses.
After having taken all possible measures of recovery,
if management establishes that the carrying amount
cannot be recovered by any means, at that point the
written-off amounts are charged to the allowance
account or the carrying amount of impaired financial
assets is reduced directly if no impairment amount
was previously recognised in the allowance account.
When the terms of financial assets that would
otherwise have been past due or impaired have
been renegotiated, the Group recognises the
impairment for such financial assets by taking into
account the original terms as if the terms have not
been renegotiated so that the loss events that have
occurred are duly considered.
(iv) Finance income and expenses
Finance income comprises interest income on funds
invested, gains on the disposal of financial assets and
changes in the fair value of financial assets at fair
value through profit or loss. Interest income is
recognised as it accrues in profit or loss, using the
effective interest method.
as an expense in the statement of profit or loss and
other comprehensive income as incurred.
(iv) Equity-settled compensation
The Group operates an employee share option plan.
The fair value of options granted is recognised as
an employee benefit expense with a corresponding
increase in equity. The fair value is measured at
grant date and spread over the period during which
the employees become unconditionally entitled to
the options. The fair value of the options granted is
measured using the Black-Scholes pricing model,
considering the terms and conditions upon which
the options were granted. The amount recognised is
adjusted to reflect the actual number of share options
that vest except where forfeiture is only due to market
conditions not being met.
(h) Provisions
Provisions are recognised when the Group has a legal
or constructive obligation, as a result of past events, for
which it is probable that an outflow of economic benefits
will result and that outflow can be reliably measured.
Provisions are measured using the best estimate of the
amount required to settle the obligation at the end of the
reporting period.
(g) Employee benefits
(i) Short-term employee benefits
(i) Leases
The Group as Lessee
Provision for employee benefits for wages, salaries,
annual leave and long service leave that are expected
to be settled wholly within 12 months of the reporting
date represent obligations resulting from the
employee’s services provided to the reporting date
and are calculated at undiscounted amounts based on
remuneration wage and salary rates that the Group
expects to pay at the reporting date including related
payroll on-costs, such as worker’s compensation
insurance and payroll tax.
(ii) Other long-term employee benefits
The Group’s obligation in respect of long-term
employee benefits is the amount of future benefit that
employees have earned in return for their service in
the current and prior periods plus related on-costs;
that benefit is discounted to determine its present
value. The discount rate applied is determined by
reference to market yields on high quality corporate
bonds at the reporting date that have maturity dates
approximating the terms of the Group’s obligations.
(iii) Retirement benefit obligations:
Defined contribution superannuation funds
A defined contribution plan is a post-employment
benefit plan under which an entity pays fixed
contributions into a separate entity and will have
no legal or constructive obligation to pay further
amounts. Obligations for contributions to defined
contribution superannuation funds are recognised
At inception of a contract, the Group assesses if the
contract contains or is a lease. If there is a lease present,
a right of use asset and a corresponding lease liability
are recognised by the Group where the Group is a
lessee. However, all contracts that are classified as short
term leases (i.e. a lease with a remaining lease term of
12 months or less) and leases of low value assets are
recognised as an operating expense on a straight line
basis over the term of the lease.
Initially the lease liability is measured at the present
value of the lease payments still to be paid at the
commencement date. The lease payments are
discounted at the interest rate implicit in the lease. If this
rate cannot be readily determined, the Group uses the
incremental borrowing rate.
Lease payments included in the measurement of the
lease liability are as follows:
• Fixed lease payments less any lease incentives;
•
•
•
Variable lease payments that depend on an index or
rate, initially measured using the index or rate at the
commencement date;
The amount expected to be payable by the lessee
under residual value guarantees;
The exercise price of purchase options, if the lessee
is reasonably certain to exercise the options;
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37 A
Lease payments under extension options,
if the lessee is reasonably certain to exercise
the options; and
and the machine itself. The customer has the option
to make a further payment in order to take ownership
of the machine.
•
•
Payments of penalties for terminating the lease,
if the lease term reflects the exercise of an option to
terminate the lease.
The right of use assets are recognised at an amount
equal to the lease liability at the initial date of application,
adjusted for previously recognised prepaid or accrued
lease payments. The subsequent measurement of the
right of use asset is at cost less accumulated depreciation
and impairment losses.
Right of use assets are depreciated over the lease term
or useful life of the underlying asset, whichever is the
shortest.
Where a lease transfers ownership of an underlying
asset or the cost of the right of use asset reflects that
the Group anticipates to exercise a purchase option, the
specific asset is depreciated over the useful life of the
underlying asset.
(j) Revenue and other income
(i) Revenue from Contracts with Customers
The core principle of AASB 15: Revenue from Contracts
with Customers is that revenue is recognised on a
basis that reflects the transfer of promised goods
or service to customers at an amount that reflects
the consideration the Group expects to receive in
exchange for those goods or services.
Revenue is recognised by applying a five-step process
outlined in AASB 15 which is as follows:
Step 1: Identify the contract with a customer;
Step 2: Identify the performance obligations in the
contract and determine at what point they
are satisfied;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the
(ii) Grant revenue
Government grants are recognised at fair value where
there is reasonable assurance that the grant will be
received and all grant conditions will be met. Grants
relating to expense items are recognised as income
over the periods necessary to match the grant to the
costs they are compensating. Grants relating to assets
are credited to deferred income at fair value and are
credited to income over the expected useful life of the
asset on a straight-line basis.
All revenue is stated net of the amount of GST.
(k) Segment reporting
An operating segment is a component of the Group
that engages in business activities from which it may
earn revenues and incur expenses. Currently, the group
comprises one operating segment. Further details of the
segment reporting are disclosed in Note 28.
(l) Intangible assets
(i) Patents and Trademarks
Costs incurred for patents and trademarks are
capitalised and amortised over the life of the patent
or trademark. The residual value and useful life
are reviewed at each balance date and adjusted
if appropriate. Amortisation is calculated on a
straight-line basis over periods ranging from
1 to 5 years.
(ii) Software and website development costs
Costs incurred in acquiring software and licences
that will contribute to future period financial benefits
through revenue generation and or cost reduction
are capitalised. Amortisation is calculated on a
straight-line basis over periods ranging from
1 to 3 years.
performance obligations;
(m) Foreign currency translation
Step 5: Recognise revenue as the performance
(i) Functional and presentation currency
obligations are satisfied.
Following the adoption of AASB 15, the Group’s
revenue recognition accounting policy is that:
The Group derives revenue from the sale of 3D
printed metal structures and the sale or right to use
of 3D metal printing machines. Revenue from the
sale of manufactured metal structures and sale of 3D
metal printing machines is recognised upon delivery
to the customer. Revenue from right to use 3D metal
printing machines is recognised once performance
milestones in the contract are satisfied. Broadly, these
milestones relate to the delivery of software, training
38
Items included in the financial statement of each
of the Group’s entities are measured using the
currency of the primary economic environment in
which the entity operates (‘the functional currency’).
The consolidated financial statements are presented
in Australian dollars, which is AML3D’s functional and
presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated
into the functional currency using the exchange
rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from
the settlement of such transactions and from the
translation at year end exchange rates of monetary
assets and liabilities denominated in foreign
currencies, are recognised in the income statement
or deferred in equity if the gain or loss relates to a
qualifying cash flow hedge.
(iii) Foreign operations
The results and financial position of all the foreign
operations that have a functional currency different
from the presentation currency are translated into the
presentation currency as follows:
(a) Assets and liabilities for each balance sheet
presented are translated at the closing rate at the
date of that balance sheet;
(b) Income and expenses for each income statement
and statement of comprehensive income are
translated at average exchange rates (unless
this is not a reasonable approximation of the
cumulative effect of the rates prevailing on the
transaction dates, in which case income and
expenses are translated at the dates of the
transactions); and
(c) All resulting exchange differences are recognised
in other comprehensive income.
(n) Inventory
Inventories consists of raw materials and consumables
which are measured at the lower of cost and net
realisable value.
(o) Earnings per share
Both the basic and diluted earnings per share have been
calculated using the loss attributable to shareholders
of the parent company as the numerator, i.e. no
adjustments to loss were necessary in respect of the
reported figures, which is divided by the weighted
average number or ordinary shares outstanding during
the year.
(p) Share-based payments
All goods and services received in exchange for the
grant of any share-based payment are measured at their
fair values.
Where employees are rewarded using share-based
payments, the fair values of employees’ services are
determined indirectly by reference to the fair value
of the equity instruments granted. This fair value is
appraised at the grant date and excludes the impact of
non-market vesting conditions (for example profitability
and earnings per share growth targets and performance
conditions).
3. CRITICAL ACCOUNTING ESTIMATES AND
ASSUMPTIONS
The Group makes estimates and assumptions in
preparing the financial statements. The resulting
accounting estimates will, by definition, seldom equal the
related actual results. This note provides an overview
of the areas that involve a higher degree of judgement
or complexity and of items which are more likely to be
materially adjusted due to estimates and assumptions
differing to actual outcomes.
The areas involving significant estimates and
assumptions are:
(i) Key Estimate – R&D Tax Incentive
Where the Group expects to receive the Australian
Government’s Research and Development Tax
Incentive, the Group accounts for the amount
refundable on an accruals basis. In determining the
amount of the R&D Tax Offset Incentive at year end,
there is an estimation process to determine what
expenditure will qualify for the incentive. External
advice is sought to provide assurance that the
estimates are reasonable.
(ii) Key Estimate – Lease term
The lease term is defined as the non-cancellable
period of a lease together with both periods covered
by an option to extend the lease if the lessee
is reasonably certain to exercise that option;
and also periods covered by an option to terminate
the lease where the lessee is reasonably certain not
to exercise that option. The decision on whether or
not the options to extend are reasonably going to be
exercised is a key management judgement that the
entity will make. The Group determines the likeness to
exercise on a lease-by-lease basis looking at various
factors such as which assets are strategic and which
are key to future strategy of the entity.
(iii) Key Estimate – Share-based Payments
The Group operates equity-settled share-based
payment and option schemes. The fair value of the
equity to which option holders become entitled
is measured at grant date and recognised as an
expense over the vesting period, with a corresponding
increase to an equity account. The fair value of shares
is ascertained as the market bid price. The fair value
of options is ascertained using the Black-Scholes
pricing model, which incorporates all market vesting
conditions. The amount to be expensed is determined
by reference to the fair value of the options or shares
granted. This expense takes in account any market
performance conditions and the impact of any
non-vesting conditions but ignores the effect of any
service and non-market performance vesting conditions.
Non-market vesting conditions are taken into account
when considering the number of options expected to
vest. At the end of each reporting period, the Group
revises its estimates of the number of options which
are expected to vest based on the non-market vesting
conditions. Revisions to prior period estimate are
recognised in profit or loss and equity.
Any changes to the estimation are adjusted in the
subsequent financial year.
Fair value of options issued for services from suppliers
is determined with reference to the supplier’s
invoice value.
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4. NEW, REVISED OR AMENDED ACCOUNTING
STANDARDS
6. REVENUE
The Group has adopted all the new, revised or
amended Accounting Standards issued by the Australian
Accounting Standards Board (AASB) which are effective
for the current reporting period.
Revenue from
contracts with
customers
Consolidated
2020 ($)
Consolidated
2019 ($)
288,516
36,057
Initial Application of AASB 16: Leases
TIMING OF REVENUE RECOGNITION:
The Group has adopted AASB 16: Leases from
1 July 2019. There were no leases to be accounted
for under the new standard as at 1 July 2019. The first
lease agreement to be accounted for under the new
standard was entered into on 10 July 2019, being the
Company’s new premises at Edinburgh, Adelaide.
The Group has recognised a lease liability and right of
use asset for all leases where the Group is the lessee.
Lease liabilities are measured at the present value of
the remaining lease payments. The Group has used a
weighted average incremental borrowing rate of 5% to
discount the lease payments.
Details of the Group’s accounting policy is disclosed
in note 2(i).
5. NEW ACCOUNTING STANDARDS AND
INTERPRETATIONS NOT YET MANDATORY OR
EARLY ADOPTED
AASB Standards that have recently been issued or
amended but are not yet mandatory have not been early
adopted by the Group for the annual reporting period
ended 30 June 2020. The Group does not anticipate that
any standards or interpretations not yet mandatory will
have a material impact.
Conceptual Framework for Financial Reporting
(Conceptual Framework)
The revised Conceptual Framework is applicable to
annual reporting periods beginning on or after
1 January 2020, but early adoption is permitted.
The Conceptual Framework contains new definition
and recognition criteria as well as new guidance on
measurement that affects several Accounting Standards.
Where the consolidated entity has relied on the existing
framework in determining its accounting policies for
transactions, events or conditions that are not otherwise
dealt with under the Australian Accounting Standards,
the Group may need to review such policies under the
revised framework. The Conceptual Framework has not
been adopted for these FY2020 financial statements and
at this time, the application of the Conceptual Framework
is not expected to have a material impact on the Group’s
financial statements.
40
At a point in time
Over time
7. EXPENSES
288,516
-
288,516
36,057
-
36,057
Loss before income tax has been arrived at after
charging the following losses and expenses from
continuing operations:
Depreciation and
amortisation of
non-current assets
Depreciation of
right of use assets
Consolidated
2020 ($)
Consolidated
2019 ($)
34,124
84,870
51,705
85,829
-
84,870
8. INCOME TAX
(a) Income tax expense
Current tax expense
Deferred tax
expense
Total tax benefit
Consolidated
2020 ($)
Consolidated
2019 ($)
-
-
-
-
-
-
(b) The prima facie tax on loss from ordinary
activities before income tax is reconciled to the
income tax expense as follows:
Prima facie tax
payable on (loss)
from ordinary
activities before
income tax at 27.5%
ADD TAX EFFECT OF:
Permanent
Differences
LESS TAX EFFECT OF:
Temporary
Differences
Add: Tax losses not
recognised
Income Tax
Expense/(Benefit)
Consolidated
2020 ($)
Consolidated
2019 ($)
(840,795)
(187,230)
336,818
75,003
74,274
429,703
-
37,923
74,304
-
(c) Tax losses and unrecognised temporary
differences
Due to inherent uncertainty surrounding forward
forecasts, and therefore the Group’s ability to fully utilise
tax losses in the future, a deferred tax asset for tax
losses and deferred tax assets for temporary differences
have only been recognised to the extent that they offset
deferred tax liabilities. The tax losses and temporary
differences for which no deferred tax assets have
been recognised are as follows:
Available tax losses
for which no
deferred tax asset
is recognised
Potential tax
benefit at 27.5%
Net deductible
temporary
differences for
which no deferred
tax asset has been
recognised
Potential tax
benefit at 27.5%
2020 ($)
2019 ($)
1,832,754
270,197
504,007
74,304
316,430
42,752
87,018
11,757
The taxation benefits of utilised tax losses and temporary
difference not brought to account will only be obtained if:
•
•
•
the group derives assessable income of a nature
and an amount sufficient for tax losses and future
deductions to be offset against;
the group continues to comply with the condition for
utilisation of tax loses imposed by law; and
no change in tax legislation affecting the availability
of utilisation losses.
9. KEY MANAGEMENT PERSONNEL DISCLOSURES
a) Details of key management personnel
The Directors and Executives of AML3D Limited
during the financial year were:
b) Key management personnel compensation
The aggregate compensation made to key management
personnel of the company is set out below:
Short-term
employee benefits
Post-employment
benefits
Share-based
payments
Total
Consolidated
2020 ($)
Consolidated
2019 ($)
466,766
153,818
32,305
421,316
-
-
920,387
153,818
The aggregate compensation above does not include
compensation paid to relevant key management
personnel under separate consulting arrangements.
Refer to Note 26(b) for other related party transactions.
The compensation of each member of the key
management personnel of the Company is set out
in the Remuneration Report.
10. EQUITY SETTLED SHARE-BASED PAYMENTS
During the financial year, the Company issued the
following shares and options in satisfaction of services
provided by suppliers and directors.
Shares
(a) The Company issued 2,750,000 shares at an issue
price of $0.10 per share to suppliers on 30 July 2019
in consideration for corporate advisory services.
The cost of $275,000 was calculated using a directors’
valuation of $0.10 per share and has been expensed
in the Company’s consolidated statement of profit
and loss and other comprehensive income as a
share-based payment.
(b) The Company issued 950,000 shares to Directors
on 9 February 2020 for the provision of professional
services rendered at commercial rates. 700,000
shares were issued at $0.15 per share and
250,000 shares were issued at $0.20 per share.
Appointed
Options
Names
DIRECTORS
Andrew Sales
(Managing Director)
Stephen Gerlach
(Chairman)
Sean Ebert
(Executive Director)
14 November 2014
30 August 2019
30 August 2019
Leonard Piro
30 August 2019
Kevin Reid
EXECUTIVES
3 December 2019
Benjamin Hodgson
(Chief Financial Officer)
4 November 2019
The Company issued Options during the financial
year as follows:
(a) The Company issued 2,000,000 fully vested options on
30 July 2019 to suppliers as consideration or corporate
advisory services. The options are exercisable at
$0.30 each on or before four years from the date of
issue. The Black-Scholes valuation method determined
a fair value of $49,474, which has been expensed as
a share-based payment.
(b) The Company issued 7,500,000 fully vested options
to the Directors and Company Secretary, which are
exercisable at $0.30 each between three years and
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five years from the date of issue (4 December 2019).
The Black-Scholes valuation method determined a fair
value of $451,408, which has been expensed as
a share-based payment. The options were issued
under the Company’s Concessional Incentive
Option plan, which was approved by the Board on
4 December 2019.
(c) The Company issued 1,000,000 fully vested options
to a former advisor as a fee in connection with the
Converting Loan raising and listing of the Company.
These options are exercisable at $0.30 each on or
before 30 June 2021. The Black-Scholes valuation
method determined a fair value of $35,858, which
has been expensed as a share-based payment.
Each option issued under the foregoing agreements
converts into one ordinary share of AML3D Limited on
exercise. No amounts are paid or payable by the recipient
on receipt of the option. Options neither carry rights to
dividends nor voting rights. Options may be exercised
at any time from the date of vesting to the date of their
expiry. Vesting dates and conditions are dependent on
each arrangement as agreed to by the directors.
The number of options granted is at the sole discretion
of the directors.
The following table summarises the foregoing
share-based payments:
Number of
Shares
Grant date
Expiry date
Share Price at
Grant Date
Exercise Price
Fair value at
grant date
2,750,000
30 July 2019
700,000
250,000
9 February 2020
9 February 2020
NUMBER OF OPTIONS
2,000,000
30 July 2019
30 July 2023
7,500,000
4 December 2019
4 December 2024
1,000,000
3 April 2020
30 June 2021
Total share-based payments
$0.10
$0.15
$0.20
$0.10
$0.15
$0.20
$0.30
$0.30
$0.30
$0.024737
$0.060188
$0.035858
Value ($)
275,000
105,000
50,000
49,474
451,408
35,858
966,740
42
11. REMUNERATION OF AUDITORS
During the year, the following fees were paid or
payable for services provided by the auditor of the
parent entity and non-related audit firms:
(i) Audit and other assurance services
Consolidated
2020 ($)
Consolidated
2019 ($)
(A) WILLIAM BUCK ADELAIDE
(i) Audit and other assurance services
Trade receivables are non-interest bearing and generally
on terms of 14-90 days. The receivables at reporting date
have been reviewed to determine whether there are any
expected credit losses. An allowance for credit loss is
included for any receivable where the entire balance is
not considered collectible. No allowance for credit loss in
required as at 30 June 2020 (2019: Nil).
Additional information in relation to financial risks
concerning or with a potential impact on financial assets
and liabilities is disclosed in Note 31 – Financial Risk
Management.
Audit and review of
the financial report
Other assurances services
Investigating
Accountant’s
Report
Total
(ii) Taxation services
Tax compliance
services
Total
(B) FIDUCIA LLP AUDIT FEES
Audit and review
of financial
report
20,000
19,000
13. INVENTORY
43,870
-
Raw materials and
consumables
63,870
19,000
Total
14. OTHER ASSETS
Consolidated
2020 ($)
Consolidated
2019 ($)
112,375
112,375
-
-
36,920
36,920
2,500
-
-
-
Bond
Prepayments
Deposit Paid
Total
Consolidated
2020 ($)
Consolidated
2019 ($)
2,225
103,955
129,060
235,240
2,225
-
-
2,225
The prior year audit fee expense of $19,000 relates to the
audits of FY2017, FY2018 and FY2019. The Group had
three financial periods audited for the purposes of the
Company’s Prospectus.
12. TRADE AND OTHER RECEIVABLES
15. FINANCIAL ASSETS
Consolidated
2020 ($)
Consolidated
2019 ($)
Term deposit
Total
36,000
36,000
-
-
R&D Tax Offset
Refund Due
Goods and
Services Tax
Trade accounts
receivable
Government wage
subsidies
Interest accrued
Total
Consolidated
2020 ($)
Consolidated
2019 ($)
310,000
252,000
187,874
162,412
43,000
3,449
706,735
29,225
25,190
-
-
306,415
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16. PLANT AND EQUIPMENT
Consolidated:
Office and
computer
Equipment ($)
Plant and
Equipment ($)
Motor Vehicle ($)
Leasehold
Improvements ($)
Total ($)
COST
Balance 1 July 2018
Additions
Balance 1 July 2019
Additions
Balance at
30 June 2020
-
9,470
9,470
27,508
36,978
ACCUMULATED DEPRECIATION AND IMPAIRMENT
-
3,884
3,884
2,643
6,527
Balance 1 July 2018
Net depreciation
expense
Balance 1 July 2019
Net depreciation
expense
Balance at
30 June 2020
NET BOOK VALUE
At 30 June 2019
At 30 June 2020
198,313
191,241
389,554
720,067
1,109,621
16,970
70,101
87,071
8,013
95,084
5,586
30,451
302,483
1,014,537
17. RIGHT OF USE ASSETS
The Group’s lease portfolio comprises leased buildings.
The leases have an average term of 3 years.
An option to extend or terminate is contained in the
lease agreements of the Group. These clauses provide
the Group opportunities to manage leases in order to
align with its strategies. All the extension or termination
options are only exercisable by the Group. The extension
options, or termination options, which management were
reasonably certain to be exercised have been included in
the calculation of the lease liability.
44
-
-
-
69,674
69,674
-
-
-
6,360
6,360
-
63,314
-
-
-
13,250
13,250
-
-
-
-
-
-
198,313
200,711
399,024
830,499
1,229,523
16,970
73,985
90,955
17,016
107,971
308,069
13,250
1,121,552
(i) AASB 16 related amounts recognised in the
statement of financial position:
Right-of-use assets
Consolidated 30 June 2020 ($)
Leased buildings
Accumulated depreciation
Net carrying amount
MOVEMENT IN CARRYING AMOUNTS
Leased buildings:
Recognised on initial
application of AASB 16
Additions during the year
Depreciation expense for the
year ended 30 June 2020
Net carrying amount
463,183
(51,705)
411,478
-
463,183
(51,705)
411,478
(ii) AASB 16 related amounts recognised in the
statement of loss:
19. TRADE AND OTHER PAYABLES
Depreciation charge related
to right of use assets
Interest expense on lease
liabilities
18. INTANGIBLE ASSETS
30 June 2020 ($)
51,705
4,054
Trade payables
Unearned income
Accrued expenses
Total
Consolidated
2020 ($)
Consolidated
2019 ($)
354,059
1,122
383,212
738,392
77,561
-
68,179
145,740
Consolidated
2020 ($)
Consolidated
2019 ($)
Trade and other payables are unsecured, non-interest
bearing and normally settled within 30 days.
Patents and
Trademarks
– at cost
Accumulated
amortisation
Net carrying
value
Software – at cost
Accumulated
amortisation
Net carrying
value
Website – at cost
Accumulated
amortisation
Net carrying
value
TOTAL
INTANGIBLES
34,549
11,622
(7,379)
(2,768)
27,170
92,909
8,854
92,909
(79,077)
(73,150)
13,832
17,226
19,759
17,226
(17,226)
(10,000)
-
7,226
41,002
35,839
RECONCILIATION OF MOVEMENTS IN INTANGIBLE ASSETS:
35,839
27,876
22,927
18,848
Balance at the
beginning of the
year
Additions to
intangible assets
Amortisation
charged to
intangible assets
Balance at the
end of the year
20. BORROWINGS
Current
Convertible loan
agreements
Related party
payable –
Managing Director
Total current
borrowings
Consolidated
2020 ($)
Consolidated
2019 ($)
-
-
-
1,726,000
33,931
1,759,931
RECONCILIATION OF MOVEMENTS IN BORROWINGS
Balance at the
beginning of the
year
Additional
borrowings
Conversion of
Convertible notes
to equity
Repayment of
borrowings
Balance at the
end of the year
1,759,931
185,569
-
1,726,000
(1,726,000)
-
(33,931)
(151,638)
-
1,759,931
Convertible notes were converted into equity prior to
and upon the Company’s listing on the ASX, further detail
is included in Note 23(b)(vi).
(17,764)
(10,885)
21. LEASE LIABILITIES
41,002
35,839
Consolidated
2020 ($)
Consolidated
2019 ($)
Intangible assets have finite useful lives. The current
amortisation charges for intangible assets are included
under depreciation and amortisation expense in
the statement of profit and loss and other
comprehensive income.
At each reporting date the directors review intangible
assets for impairment. No impairment was assessed as
necessary in the 2020 financial year (2019: Nil).
Lease liability
(current)
Lease liability
(non-current)
Total
125,098
288,005
413,093
-
-
-
22. EMPLOYEE BENEFITS PROVISIONS
Current
Annual Leave
Total
Consolidated
2020 ($)
Consolidated
2019 ($)
27,953
27,953
18,652
18,652
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23. EQUITY
(a) Issued capital
132,366,163 fully
paid ordinary
shares
(2019: 12,320,250)
Consolidated
2020 ($)
Consolidated
2019 ($)
13,310,772
1,063,130
Ordinary shares participate in dividends and the proceeds
on winding of the Company in proportion to the number
of shares held.
On a show of hands, every holder of ordinary shares
present at a meeting or by proxy is entitled to one vote,
and on a poll each share is entitled to one vote.
The Company does not have authorised capital or par
value in respect of its shares.
(b) Movement in ordinary shares:
Balance at
1 July 2019
Capital
reconstruction
Shares issued
during the year
Consolidated
Number
2020 ($)
12,320,250
1,191,105
39,853,546
-
80,192,367
13,336,252
Total shares issued
132,366,163
14,527,357
(ii) The Company issued 2,750,000 shares to former
corporate advisors on 30 July 2019. These shares were
valued at $275,000 ($0.10 per share) as per Directors’
valuation.
(iii) The Company issued 12,150,000 shares on conversion
of Convertible Note Agreements on 6 December 2019.
The shares were valued at $1,215,000 ($0.10 per share).
(iv) The Company issued 13,332,367 shares to Investors
in a pre-IPO capital raising in two tranches. The first
tranche of 12,595,701 shares was issued on 19
December 2019 and the second tranche of 736,666
shares was issued 30 January 2020. The total value of
the shares issued was $1,999,855 at $0.15 per share.
(v) The Company issued 950,000 shares to Directors
on 9 February 2020 as non-cash consideration for
the provision of professional services rendered at
commercial rates. These services related to the
development of the Company’s prospectus. 700,000
shares were issued at $0.15 per share and 250,000
shares were issued at $0.20 per share.
(vi) The Company issued 5,110,000 shares on conversion
of Convertible Note Agreements on 3 April 2020.
The shares were valued at $511,000 ($0.10 per share).
(vii) The Company issued 450,000 shares to each of the
Lead Manager and Corporate Advisor for the IPO, as
remuneration and success fees under their mandates
related to the IPO. The shares, issued on 3 April 2020,
were valued at $180,000 in total and included in the
cost of IPO shares issued at $0.20 per share.
(1,216,585)
(viii) The company issued 45,000,000 IPO shares on
3 April 2020. The shares were valued at $9,000,000
at $0.20 per share.
132,366,163
13,310,772
(c) Capital Management
Consolidated
Number
2019 ($)
11,782,750
976,105
537,500
215,000
Management controls the capital of the Company in
order to generate long-term shareholder value and
ensure that the company can fund its operations and
continue as a going concern.
The Company is not subject to any externally imposed
capital requirements.
There have been no changes in the strategy adopted by
management to control the capital of the group since
the issue of the prospectus.
Total shares issued
12,320,250
1,191,105
(127,975)
12,320,250
1,063,130
(d) Reserves
(i) The Company issued 6,666,179 Options to Investors
in a pre-IPO capital raising on the basis of one
Option for every two shares issued, in two tranches.
The first tranche of 6,297,819 options was issued on
19 December 2019 and the second tranche of 368,333
options was issued on 30 January 2020. The options
are exercisable at $0.30 each on or before 30 June 2021.
The Black-Scholes valuation method determined a fair
value of $136,225, which has been included as part of
the cost of the shares issued.
The Group’s reserves comprise a share-based
payments reserve. A summary of the movements
in the reserve is as follows:
Consolidated
2020 ($)
Consolidated
2019 ($)
Balance at
beginning of
financial year
Share-based
payment expense -
Options issued
Balance end of
financial year
-
672,965
672,965
-
-
-
46
The reserve records the value of share-based payments provided.
Costs of the shares
issued
Balance at
30 June 2020
Balance at
1 July 2019
Shares issued
during the year
Costs of the shares
issued
Balance at
30 June 2020
The following table details the tranches of options
issued. Details of each of these tranches are
recorded in Note 10.
Number of
Options
Grant date
Expiry date
Share Price at
Grant Date
Exercise Price
Fair value at
grant date
2,000,000
30 July 2019
29 July 2023
7,500,000
4 December 2019
5 December 2024
6,297,846
19 December 2019
30 June 2021
368,333
30 January 2020
30 June 2021
1,000,000
3 April 2020
30 June 2021
$0.10
$0.15
$0.15
$0.15
$0.20
17,166,179
Value ($)
49,474
451,408
$0.30
$0.024737
$0.30
$0.060188
$0.30
$0.0204352
128,698
$0.30
$0.0204352
$0.30
$0.035858
7,527
35,858
672,965
(e) Movement in options on issue
2020
No. of Options
2019
No. of Options
Balance at
1 July 2019
-
Options granted
17,166,179
Balance at
30 June 2020
17,166,179
24. ACCUMULATED LOSSES
-
-
-
Consolidated
2020 ($)
Consolidated
2019 ($)
(1,176,796)
(495,960)
Basic earnings per share and diluted earnings per share
have been retrospectively restated to account for a
capital restructure of shares. A capital reconstruction
was undertaken on 29 July 2019 and 4.2348 shares were
issued for every one share. The number of shares issued
in 2019 has been multiplied by 4.2348 for the purposes
of the EPS calculations.
The rights of options are non-dilutive as the Company has
incurred a loss for the year.
26. RELATED PARTY DISCLOSURES
The following paragraphs provide details of transactions
and balances with related parties.
(a) Compensation of Key Management Personnel
Details of key management personnel compensation are
recorded in Note 9 (b)
Balance at
beginning of
financial year
Loss attributable
to members of
the entity
Balance at end of
financial year
25. LOSS PER SHARE
Basic (loss) per
share (cents):
Loss used in
calculating basic
earnings per share
Weighted average
number of
ordinary shares
for the purposes
of basic earnings
per share
(3,094,021)
(680,836)
(b) Other transactions with Key Management
Personnel
(4,270,817)
(1,176,796)
a. Mr Andrew Sales
2020
Cents per share
2019
Cents per share
During the financial year, the Company engaged the
services of a company controlled by Mr Sales’ sister to
provide IT services. These services were conducted on
standard commercial terms. The value of the services
for the financial year was $2,048 (2019: $710).
(3.8)
(1.3)
b. Mr Sean Ebert and his related entities
Consolidated
2020 ($)
Consolidated
2019 ($)
(3,094,021)
(680,836)
2020 (No.)
2019 (No.)
81,201,246
52,001,298
In addition to his services as a director, during the
financial year the Company engaged the services
of a company controlled by Mr Ebert to provide
executive services to the Company. The services
were conducted on standard commercial terms.
Part settlement was made by way of issue of shares in
the Company to the value of $50,000. The total value
of the services for the financial year was $120,000
(2019: $5,000).
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c. Mr Leonard Piro and his related entities
(ii) Geographic area
In addition to his services as a director, during the
financial year the Company engaged the services of
Mr Piro to provide consulting services to the Company.
The services were conducted on standard commercial
terms. The value of the services in the financial year,
in respect of consulting services provided in the
period April 2017 to October 2019 and settled with
the issue of shares in the Company, was $105,000
(2019: $24,500).
d. Mr Graham Durtanovich and his related entities
During the previous financial year ended 30 June
2019 the Company engaged the services of entities
controlled by Mr Durtanovich to provide accounting
and corporate advisory services to the value of
$30,000 on standard commercial terms.
There were no outstanding related party balances as
at 30 June 2020.
(c) Controlled entities
During the financial year, the Company provided loan
funds to its Singaporean subsidiary, AML Technologies
(Asia) Pte Ltd to enable its subsidiary to meet start-up
expenses. The transactions were conducted on
commercial terms and conditions.
Revenues from external customers attributed to
Australia and other countries is as follows:
Consolidated
2020 ($)
Consolidated
2019 ($)
Australia
Singapore
Japan
Europe
27,278
248,233
6,479
6,526
Total Revenue
288,516
(i) Major customers
4,053
29,513
2,491
-
36,057
The Group has certain customers which represent
more than 10% of the Group’s revenue from contracts
with customers. Each customer is a customer of the
3D printing services and machine sales operating
segment. Revenue for those customers is as follows:
Consolidated
2020 (%)
Consolidated
2019 (%)
2 Customers
1 Customer
84%
-
-
82%
27. CONTINGENCIES
29. SUBSEQUENT EVENTS
In the opinion of the Directors, besides the guarantee
disclosed in note 34, the Group did not have any
contingent liabilities or assets as 30 June 2020 (2019: Nil).
28. SEGMENT REPORTING
(i) Operating segments
The Company operates in the additive manufacturing
sector in Australia and South East Asia. For management
purposes, the Group has one main operating segment
which involves the provision of 3D printing services and
machinery sales in all territories in which it operates.
All of the Group’s activities are inter-related and discrete
financial information is reported to the (Chief Operating
Decision Maker), being the Managing Director, as a single
segment. Accordingly, all significant operating decisions
are based upon analysis of the Group as one segment.
The financial results for this segment are equivalent to
the financial statements of the Group as a whole.
All amounts reported to the Managing Director, being the
chief operating decision maker with respect to operating
segments, are determined in accordance with accounting
policies that are consistent with those adopted in the
annual financial statements of the Group.
48
No matters or circumstances have arisen since the end
of the financial year which significantly affected or could
significantly affect the operations of the Company,
the results of those operations and the state of affairs
of the Company in future financial years except for:
(i) On 17 July 2020, equipment orders to the value of
$669,000 were placed for the expansion of the new
Adelaide facility.
(ii) To the date of signing this report, the Company’s
operations have not been materially and directly
adversely impacted by COVID-19. However, uncertainty
remains as to the scope and length of the pandemic
and the impact of restrictions that will be imposed to
combat the pandemic. The pandemic may result in
the loss of or delay in sales to customers and potential
customers. It may also impact access to equipment and
supplies, delaying the delivery of products to customers.
The Company is actively monitoring risks associated
with COVID-19 and implementing risk management
measures to mitigate against potential impacts.
The recent IPO by the Company has resulted in significant
cash and cash equivalents which will assist the operations
of the Company whilst the pandemic subsists.
30. NOTES TO THE STATEMENTS OF CASHFLOWS
(a) Reconciliation of cash and cash equivalents
Consolidated
2020 ($)
Consolidated
2019 ($)
Cash and cash
at bank
8,227,986
1,158,109
(b) Reconciliation of loss for the year to net cash
flows used in operating activities
(Loss) for the year
after income tax
Depreciation and
amortisation of
non-current assets
Share based
payments
Consolidated
2020 ($)
Consolidated
2019 ($)
(3,094,021)
(680,836)
85,829
84,870
966,740
-
CHANGES IN ASSETS AND LIABILITIES
(Increase) in
debtors
(Increase) in
prepayments and
other assets
(Increase) in
inventories
Increase in
payables
Increase in
employee benefits
Net cash (used)
in operating
activities
(400,320)
(186,802)
(233,015)
(112,375)
592,652
9,301
-
-
84,022
10,891
(2,185,209)
(687,855)
31. FINANCIAL RISK MANAGEMENT
The Group’s financial risk management is predominantly
controlled by the Managing Director and Chief Financial
Officer with the oversight of the Board and the Audit and
Risk Committee.
(a) Financial risk management
The Group enters into financial instruments which consist
of deposits with banks, accounts receivable and payables.
The totals for each category of financial instrument is
shown at Note 29(e). The Group has not entered into
any derivative financial instruments.
(b) Significant accounting policies
Details of significant accounting policies and methods
adopted, including the criteria for recognition, the basis
of measurement and the basis on which income and
expenses are recognised, in respect of each class of
financial asset, financial liability and equity instrument
are disclosed in Note 2 to the financial statements.
(c) Interest rate risk management
The Group is exposed to interest rate risk as it places
funds at floating interest rates. In the current low interest
environment, the Group is exposed to minimal interest
rate risk.
(d) Credit risk management
Credit risk refers to the risk that a counterparty will
default on its contractual obligations resulting in financial
loss to the Group. The Group has adopted a policy of
dealing only with creditworthy counterparties (where such
information is available) and obtaining sufficient collateral
(such as up front deposits before commencing work),
as a means of mitigating the risk of financial loss from
defaults. The Group’s exposure is constantly monitored.
Except for one customer, the Group does not have
any significant credit risk exposure to any one single
counterparty or any group of counterparties having
similar characteristics. Sales to that customer are
denominated in Singapore dollars and the Group has
not hedged the receivable.
The credit risk on liquid funds is limited because the
counterparties are banks with high credit-ratings
assigned by international credit-rating agencies.
The quality of debtors if monitored by the ageing of open
invoices in accounts receivable. Trade receivables are
analysed as follows:
Consolidated
2020 ($)
Consolidated
2019 ($)
NOT IMPAIRED
Within trade terms
131,265
25,190
Past due but not
impaired
Total trade
receivables
31,147
-
162,412
25,190
Receivables that are past due but not impaired comprise
customers which do not have any objective evidence that
the receivable may be impaired. The Company knows why
certain customers are past due and expects that they
will be paid. No allowance for expected credit losses is
required at 30 June 2020.
Analysis of trade receivables:
Consolidated:
Per aged debtors report.
Not past
Due
60-90
days
>90 days
Total
2020
Trade
receivables
131,265
3,190
27,957
162,412
Total
131,265
3,190
27,957
162,412
2019
Trade
receivables
Total
25,190
25,190
-
-
-
-
25,190
25,190
As at 30 June 2020, there were no expenses recognised
during the financial year then ended for the write-off
of receivables or provision for expected credit losses
(2019: Nil).
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(e) Liquidity risk management
Liquidity risk arises from the possibility that the Group
may encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities.
The Group manages liquidity risk by maintaining
adequate cash reserves and monitoring its actual and
forecast cashflows and financial obligations. The Group
endeavours to pay its creditors within agreed trade terms.
Maturity profile of financial instruments
The amounts listed below equate to fair value.
The cashflows in the maturity analysis below are not
expected to occur significantly earlier than disclosed.
Weighted Average
Interest rate (%)
INTEREST BEARING
Expected Maturity dates
Less than 1 year ($)
1-5 years ($)
Non Interest
bearing ($)
Total ($)
1%
8,227,986
36,000
36,000
8,227,986
706,735
706,735
8,227,986
36,000
706,735
8,970,721
125,098
125,098
288,055
288,055
738,392
738,392
413,093
738,392
1,152,485
1%
1,158,109
1,158,109
1,158,109
306,415
1,464,524
306,415
306,415
145,740
145,740
1,759,931
1,905,671
1,759,931
1,905,671
2020
Financial Assets
Other financial
assets
Cash and cash
equivalents
Trade and other
receivables
Total
Financial Liabilities
Trade and other
payables
Lease liabilities
Total
2019
Financial Assets
Cash and cash
equivalents
Trade and other
receivables
Total
Financial Liabilities
Trade and other
payables
Borrowings
Total
50
(f) Currency Risk
33. INTEREST IN CONTROLLED ENTITIES
The Group operates in international markets, however,
products and services are invoiced in Australian dollars
where possible, in order to eliminate the risk of exposure
to foreign currency rate risks.
The consolidated financial statements incorporate
the assets, liabilities and results of the following
subsidiaries:
32. INFORMATION RELATING TO AML3D GROUP
LIMITED (THE PARENT)
Name of
entity
Country of
incorporation
Percentage Owned
2020
2019
The following information has been extracted from the
books and records of the parent and has been prepared
in accordance with Australian Accounting Standards.
AML
Technologies
(Asia) Pte Ltd
Singapore
100%
100%
Statement of Financial Position
34. GUARANTEES
ASSETS
Current assets
Non-current assets
2020 ($)
2019 ($)
9,315,723
1,610,032
1,466,749
343,908
Total assets
10,925,755
1,810,657
LIABILITIES
Current liabilities
888,246
1,924,323
Non-current
liabilities
Total liabilities
Net assets
EQUITY
288,005
-
1,176,251
1,924,323
9,749,504
(113,666)
Issued capital
13,310,772
1,063,130
Reserves
672,965
-
Accumulated losses
(4,234,233)
(1,176,796)
Total equity
9,749,504
(113,666)
Statement of Profit or Loss and Other
Comprehensive Income
Total loss for
the year
Total
comprehensive
loss for the year
2020 ($)
2019 ($)
3,057,437
680,836
3,057,437
680,836
The parent entity entered into a bank guarantee
represented by a term deposit of $36,000 in respect
of the newly leased premises at Edinburgh, Adelaide.
Other than this guarantee, the parent entity had no
contingent liabilities at 30 June 2020.
At 30 June 2020, the parent entity had commitments
for capital equipment ordered but not yet received of
$301,140 (2019: Nil).
AML3D has one guarantee secured by a bank term
deposit of $36,000 for the lease of its premises at
35 Woomera Avenue Edinburgh SA 5111.
35. CAPITAL COMMITMENTS
At 30 June 2020, AML3D had commitments for capital
equipment ordered but not yet received of $301,140
(2019: Nil).
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DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors
of AML3D Limited (Company), the Directors of the
Company declare that:
1. In the opinion of the Directors, the financial statements
and notes for the year ended 30 June 2020 are in
accordance with the Corporations Act 2001 and:
a. comply with Accounting Standards, which, as stated
in basis of preparation Note 2 to the financial
statements, constitutes explicit and unreserved
compliance with International Financial Reporting
Standards (IFRS); and
b. give a true and fair view of the consolidated
entity’s financial position as at 30 June 2020 and its
performance for the year ended on that date;
2. In the opinion of the Directors, there are reasonable
grounds to believe that the Company will be able to
pay its debts as and when they become due and
payable, and
3. The Directors have been given the declarations
required by Section 295A of the Corporations
Act 2001 from the Chief Executive Officer and
Chief Financial Officer.
Stephen Gerlach AM
Chairman
Dated this 30th day of September 2020
52
Additional Shareholder Information
The following information is current as at
24 September 2020:
SHAREHOLDING
Following are details of classes of fully paid ordinary
shares on issue:
Fully Paid
Ordinary Shares
on Issue
Number of
holders
Number of
shares
Quoted on ASX
2,882
78,558,557
VOTING RIGHTS
The voting rights attached to each class of equity
security are as follows:
Ordinary Shares:
•
Each ordinary share is entitled to one vote when a poll
is called, otherwise each member at a meeting or by
proxy has one vote on a show of hands.
Other:
•
Options do not confer upon the holder an entitlement
to vote on any resolutions proposed by the Company
except as required by law.
Unquoted and
restricted until
19/12/20
Unquoted and
restricted until
30/01/20
Unquoted and
restricted until
20/04/22
46
1
26
2,785,135
STOCK EXCHANGE LISTING
17,500
Admitted to the Official List of ASX on 16 April 2020;
quotation commenced on 20 April 2020.
51,004,971
ASX: AL3
20 LARGEST SHAREHOLDERS –
ORDINARY SHARES
The restricted shares are subject to ASX escrow.
There are no securities subject to voluntary escrow.
There are 60 holders of 17,166,179 unquoted options
each of which converts to 1 share upon exercise.
DISTRIBUTION OF SHAREHOLDERS
Range of Units
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Number of
Holders
Percentage of
total securities
144
1,144
593
883
118
0.09%
2.49%
3.54%
20.36%
73.52%
Total
2,559
100.00%
UNMARKETABLE PARCELS
The number of shareholders holding less than a
marketable parcel is 57.
1
2
3
4
5
6
7
8
9
10
11
Name
Number of
Shares held
%
Mr Andrew Michael Clayton Sales
39,701,250
29.99
National Nominees Limited
Global Asset Solutions
Mr Kenneth Joseph Hall
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