AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Annual Report 2021 Contents Chairman’s and Managing Director’s Report Board Directors’ Report Renumeration Report Auditor Independence Declaration Audit Report Financial Statements Directors’ Declaration Additional Shareholder Information Corporate Directory 2 6 8 12 23 24 27 50 51 52 1 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Managing Director Andy Sales at the AML3D Technology Centre Launch 2 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Chairman’s & Managing Director’s Report Board Chairman, Stephen Gerlach AM It is with great pleasure that we present to you AML3D Traditional fabrication has served industry well for hundreds of Limited’s (AML3D or the Company) Annual Report years, however, today society is rightfully demanding businesses for the year ended 30 June 2021 (FY21). operate sustainably and with a smaller environmental footprint. FY21 was a very challenging year, however, we have delivered As with most new technologies, the acceptance time can be on a number of fronts and continue to build the AML3D team, lengthy, and no more so given the current travel restrictions. with some key appointments throughout the year geared toward Customers continue to undertake significant testing to validate taking AML3D to the next stage of its evolution in FY22. Some our products and process, many of which have been in review of the key milestones achieved during the year include: for over 18 months. An example of this was the recently • Completion of the Adelaide facility, which now provides capacity to print over 30 tonnes per annum. • Awarding of our Australian Patent 2019251514, and subsequent international patents in South Korea and New Zealand, validating the unique and market leading position of our technology. • Sale and installation of an ARCEMY® unit at Rowlands Metalworks. DNV verified Panama Chock which was manufactured for Keppel. These approvals are extremely positive with test results validating what we already knew; whilst being more environmentally friendly than traditional methods, we are able to deliver stronger products with longer useful lives. AML3D intend to build further on this competitive advantage with a push into increased energy efficiency on future ARCEMY® systems. • Custom print jobs completed for key customers including Financial Results ASC Shipbuilding, Lightforce, 3D Printing Corporation, AdditiveNow, Thyssenkrupp and ST Engineering. • Continued product validation from both customer testing and independent certifications obtained for our own artifact manufacture. We are proud of these achievements and we continue to be at the forefront of the emerging large-scale 3D metal printing industry, which is rapidly expanding and expected to have a market size of US$63 billion by 20261. Our technology combines welding science, robotics, metallurgy and software to produce automated wire fed 3D printing in a large free-form environment. We firmly believe our technology will transform the metal manufacturing and fabrication landscape forever. Our disruptive technology is the key to future manufacturing. With the global drive to (net) zero-emissions, our process minimises material waste and significantly lowers emissions and electricity consumption when compared with traditional casting and forging. Whilst COVID-19 continues to be a disrupting force in all of our lives, it has further highlighted the need for supply chain security. AML3D’s financial result for the year reflects the necessary upfront investment needed to establish the foundation for future success. These investments include the establishment of our Adelaide facility, the building of ARCEMY® units for customer manufacture purposes and ARCEMY® unit sales, production of one-off prototypes that go through extensive testing and certification, and research and development (R&D). We are now in the process of realigning the operations of the business in accordance with expected ongoing customer demand, whilst continuing to invest in innovation to ensure AML3D maintains its market leading position. When compared with our peers, receipts from customers for the year were a healthy $1.2 million, driven by the building of strong customer relations, excellent business collaborations and successful prototype testing results with new customers. As with many companies, revenue was negatively impacted by the ongoing COVID-19 pandemic preventing both potential and current customers from product inspection. However, our sales and marketing teams are building strong momentum which bodes well in terms of revenue generation for the future. Our offering provides the ability to promptly deliver an array of Ongoing Investment in Technology 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, Wire Additive Manufacturing (WAM®) delivers cost savings of up to 70%, while the manufacturing process is 75% faster and reduces waste by up to 80%. R&D continues to be a key focus of AML3D, with a strong level of investment in the development of the Company’s patented technology which drives process optimisation capability. Significant efficiency milestones were achieved regarding software enhancements and programmable logic controllers, leading to remote access “plug and play” solutions for our ARCEMY® units. 1. As per Mordor Intelligence Report : 3D Printing Market – Growth, Trends, COVID-19 Impact and Forecast (2019-2026)” Released November 2020 3 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Managing Director Andy Sales, Hon. Minister David Pisoni and Board Chairman Stephen Gerlach AM at the AML3D Technology Centre Launch Adrian Shore, Sales Manager for Robotics Manufacturing Industries at ABB Australia, with Andy Sales, Managing Director of AML3D at the official presentation ceremony. 4 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 AML3D’s industry scale welding trials are using innovative new alloy compositions for our WAM® technology, which is enabling access to new industry segments and exciting opportunities in terms of product diversification and improvement. Managing Director, Andy Sales These hybrid, or alternative use, application enhancements for our ARCEMY® units have been driven by customer inquiries, showing our desire to work with, and listen Overseas expansion remains a key focus, however, COVID-19 has effectively eliminated, for the time being, face to face customer interaction due to travel restrictions. In addition to the completion to, our customers to continually improve our offering. of the Singapore hub, we have identified the US and Europe as Recent work undertaken and ongoing includes: key markets that have already shown strong interest in our 3D • Completion of a robotically automated ARCEMY® system for large-scale additive manufacturing and joining of piping and structures. • Successful trials of 3D scanning technology, including the development of proprietary software, for the repair of large- scale metal objects. AML3D’s industry scale welding trials are using innovative new alloy compositions for our WAM® technology, which is enabling access to new industry segments and exciting opportunities in terms of product diversification and improvement. Off the back of Deakin University research investigating the effect of Scandium as a strengthening element for existing aluminium welding wire, trials at AML3D are targeting the creation of high strength commercially viable aluminium- scandium compounds, which remove the need for age hardening printing capability due to these markets being relatively mature in terms of understanding the advantages of additive manufacturing. We will shortly be installing an ARCEMY® unit in the state-of- the-art ‘Factory of the Future’, currently under development by Flinders University and BAE Systems Maritime Australia (BAE) at the Tonsley Innovation District in Adelaide. Installation of the unit will be used to demonstrate its capability to industry, as well as introduce the next generation of free thinkers to our technology. The trials and research projects to be undertaken at the ‘Factory of the Future’, in conjunction with BAE and Flinders University, will enable AML3D to further develop its large-scale metal additive manufacturing capabilities through adding features, such as process measurement, monitoring and adjustments, to improve quality. Closing heat treatment. The new alloy composition delivers high We would like to thank our very capable team that continues to strength, corrosion resistant wire arc additive manufacturing structures, bespoke to AML3D’s WAM® technology. work tirelessly through these challenging times to ensure AML3D remains on its path to success. They have demonstrated resilience As the project enters its final six months, we anticipate many new applications for WAM® already being shown by the automotive, resources (mining, oil and gas) and broader transport industries (such as shipbuilding). The company views the success of this project as presenting new target industries for AML3D’s current target markets of Asia Pacific (inc. Japan, South Korea), Europe (Germany, France & UK), and North America, with identified industry applications for the technology in these regions. Outlook We remain buoyed by the ongoing customer interaction and positive feedback that continues to flow. The timing of our commercial realisation is heavily dependent on the testing regimes of our customers and the ability to physically demonstrate our capabilities, however we remain focused on building the pipeline of sustainable revenue through: • Targeted unit sales in the upcoming financial year, and • Repeatable contract manufacturing for new and existing customers. 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 of becoming a leading diversified large- scale metal fabrication company in the Southern Hemisphere 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 2020. Stephen Gerlach AM Chairman Andy Sales Managing Director 5 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Board Stephen Gerlach AM // LLB, FAICD Chairman Member of Audit & Risk Committee Appointed 30 August 2019 Andrew Sales // MEng, MSc, CEng, CMatP Managing Director Appointed 14 November 2014 Sean Ebert // BEng Hons(Electrical), MAICD Non-Executive Director Appointed 30 August 2019 Andrew is a Chartered Engineer Sean has 25 years of executive with a Master of Engineering and experience in both public and private Master of Science and is a renowned sectors across high growth companies expert in welding technology with within the engineering, FMCG and over 28 years of global experience emerging technologies sectors in Australia, (Australia, Europe, South America, China, US and Europe. Sean is currently Africa and Asia). Andrew has held a Non-Executive Director of listed varying roles across upper management company Mighty Craft (ASX:MCL, and senior leadership within the oil appointed 19 July 2021), as well as Non- and gas, resources and mining sectors Executive Director on a range of privately as well as advanced manufacturing, owned Australian growth companies and heavy engineering and fabrication. Executive Director of Venture Corporate 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 Advisory. Sean was previously the Chief Executive Officer (CEO) of Beston Global Food (ASX:BFC), Global Director M&A of Worley, CEO of Camms Pty Ltd and CEO of Profit Impact Pty Ltd. Sean brings listed company and international experience to AML3D, is a Member of the Institute of Company Directors and holds a Bachelor Degree in Engineering with honours. Australia holding a CMatP, and also sits The Board considers that Mr Ebert on two Standards Australia committees is an independent Director. 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 and a Director of Beston Global Food Company 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, Penrice Ltd and Ebony Energy 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. 6 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Leonard Piro // BEc, DipCorpMgmt Non-Executive Director Member of Audit & Risk Committee Appointed 30 August 2019 Kevin Reid // FCA GAICD Non-Executive Director Chairman of Audit & Risk Committee Appointed 3 December 2019 Len has extensive experience with major Kevin is a Chartered Accountant with 25 manufacturing projects in Australia, years’ experience as a partner with PwC including the establishment of the and BDO practicing as an assurance Tonsley site as a leading national and and translation service specialist. He has international Innovation Precinct. He is experience with a wide range of listed the former Deputy Chief Executive of the companies. He has been an independent SA Department of Trade and Economic accountant for initial public offers, Development, Executive Director capital raisings and acquisitions and Manufacturing and Chief Executive has extensive commercial and corporate Automotive Industry Transformation experience as a company director and Taskforce and Group Executive Director professional practice board member. Christine Manuel // BMus, GradDipACG, DipCD, DipInvRel, FGIA, FCG (CS, CGP), MAICD, MAITD, AAIPM Company Secretary Appointed 17 April 2019 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. and Chairman of the Tonsley Re- development. As Director of Len Piro Advisory, Len has consulted widely to an extensive range of companies and organisations in SA, from start-ups to global companies, particularly around business strategies and business planning and has had extensive exposure to global manufacturing trends. He is also a member of the Advisory Board of Supashock and Flinders University Institute for NanoScale Science and Technology. The Board considers that Mr Piro is an independent Director. Kevin is an advisor to 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 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. 7 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Directors’ Report The Directors of AML3D Limited (AML3D or the manufacturing which vary from high-end aerospace parts to Company) present their report, together with the financial general engineering, with the value proposition being significant statements of the Company and its controlled entities (the in the case of larger scale industrial grade and complex parts. Group) for the financial year ended 30 June 2021. 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 Andrew Sales Sean Ebert* Leonard Piro Kevin Reid Managing Director Non-executive Director Non-executive Director Non-executive Director Directors have been in office since the start of the financial period to the date of this report unless otherwise stated. *Mr Ebert was an executive director to 1 April 2021 and is considered a non-executive director as at the date of this report. Information Relating to Directors and Company Secretary Details of each Director’s experience, qualifications and responsibilities are set out on pages 6 to 7. This includes information on other listed company directorships in the last 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 The principal activities of AML3D during the financial year were to: a. Design and construct ARCEMY ® 3D printing modules for sale or right to use with an option to buy; b. Design and construct 3D parts using Wire Additive Manufacturing technology and to develop that technology; c. Research and development into the refinement of the companies products, including alternative applications. No significant changes in the nature of the Company’s activity occurred during the financial year. three years. The Company Secretary is Christine Manuel. Details Operating and Financial Review of her experience and qualifications are set out on page 7. Review of Operations Company Overview AML3D is an Australian public company incorporated on 14 November 2014. The Company was admitted to the The Company’s revenue was derived from: a. ARCEMY ® sales with customers acquiring the ARCEMY ® 3D printing module for their own fabrication needs; and Official List of ASX on 16 April 2020 and commenced trading b. Contract manufacturing, which is fulfilling manufacturing 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 free-form 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. 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. WAM ® technology provides an alternative manufacturing and fabrication method for the production of components in industry sectors such orders for customers using our ARCEMY ® 3D printing module. During the year the Company delivered its first locally sold ARCEMY ® 3D printing module to Rowland Metalworks (Rowlands). The unit is now fully functional and AML3D continues to work closely with Rowlands to enhance the unit’s capabilities in line with Rowland’s customer requirements. Preparation of a highly specialised ARCEMY ® module for iKAD Engineering commenced during the second half of FY21. At year end, further work was required to complete the unit with a commissioning date expected during the first half of FY22. The ARCEMY ® module delivered to ST Engineering in June 2020 remains under a right-to-use with an option to buy arrangement. The Company continues to retain the right to utilise 50% of the module’s printing capacity to manufacture products for AML3D’s customers in the Asian region and beyond. ST Engineering has, however, confirmed their intention to exercise their right to buy the unit outright during the 2022 financial year. as aerospace, marine, defence, oil and gas, mining and general The Company has continued to develop its technology 8 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 including the printing of a range of metal pieces for use • Build ARCEMY ® modules for customers looking to in a variety of industries such as marine and defence. establish in-house 3D printing capability; Approximately 60% of revenue from contract manufacture • Grow recurring revenue through annual software was obtained through local customers, with the remainder licencing, service and maintenance agreements and generated through the South East Asia region. sale of wire feedstock; Throughout the year, the Company has sought out new customers and markets and developed a pipeline of opportunities which will be built on in FY22. Financial Results and Position Revenue for the year was $644,000, up 123% on the Prior Corresponding Period (PCP). Total revenue for the year, inclusive of R&D tax offset and grants, was $1.2 million. EBITDA was a loss of $5.1 million (PCP: $3.0 million). Overhead expenses of $6.0 million were $2.3 million higher on PCP with the Company continuing to invest in activities in accordance with its business plan. Director and employee benefits were up $2.1 million on PCP through the bolstering of staff headcount, and research and development up $677,000 contributing to the enhancement of existing and new technologies. Having established the Adelaide facility during the year, depreciation and amortisation was $409,000, up $323,000 on PCP. The resulting net loss after tax was $5.5 million (PCP: $3.1 million) with carried forward tax losses not brought to account. The Company raised $7,000,000 before costs on 12 October 2020 through the private placement of 15,555,557 new shares at $0.45 per share. A further $761,000 was raised during the year on the exercising of 2,536,666 options at $0.30 per share. Funds raised continue to be deployed in the implementation of the Company’s business plan and to take advantage of the opportunities that exist for additive manufacturing in Australia, South East Asia and other markets. At the end of the financial year, the Company had $7.2 million in cash and cash equivalents on hand having spent $2.0 million on plant and equipment to establish the Adelaide facility and $1.9 million on additional inventory in anticipation of future customer orders. 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 2021, 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 FY21, summarised above in the Review of Operations. The main areas of focus in FY22 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; • Continue with our research and development activities to refine and broaden our range of products and processes, further developing our environmental sustainability credentials by reviewing options for use of renewable energy and lowering energy inputs with the aim of reducing the carbon footprint of the WAM® process; and • Build the global profile of AML3D and its products through collaborations with learning institutions and key industry players. The company will establish a Technology Advisory Group with participation from leading technical institutions, reviewing and advising on current, future trends and developments in 3D metal printing globally. 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. With the granting of Australian Patent 2019251514, this protection validates the Company’s market leadership in advanced 3D printing solutions and opens up new markets for our technology. These are the advantage that the Company will look to leverage. The achievement of our strategies and prospects may be impacted by the COVID19 pandemic, the effects of which cannot be foreseen. Material Business Risks 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, casting 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. 9 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 undertake physical product inspections. Uncertainty remains as to the scope and length of the pandemic has, and the impact of restrictions that will be imposed to combat the pandemic. The pandemic may result in the loss of or further 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. Environmental and Sustainability Risk Customer Conversion Research & Development Pandemic 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 and Technical Risk To the date of this report, the Company’s The Company’s products and technology operations have been directly adversely are the subject of continuous research impacted by COVID-19. Due to the and development which will likely need to restrictions imposed, the Company has be developed further in order to enable the Company to remain competitive, been unable to fully progress its overseas expansion plans. Furthermore, revenue the Company’s client base is expected increase sales and improve the scalability has been impacted by the inability of of products and technology. There are potential and current customers to to diversify as a result of the expansion of the Company’s revenue streams, the Company will initially be substantially no guarantees that the Company will be able to undertake such research reliant on a select number of clients. The and development successfully. Failure 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 to successfully undertake such research and development, anticipate technical problems, or estimate research and development costs or time frames accurately will adversely affect the Company’s results. business development activities in order International Operations to grow the client base in Australia, 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. The Company has reduced this risk by the appointment of additional technical staff. Access to Raw Materials 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 The Board is not aware of any material Company’s first international operation exposure to economic, environmental in a separately regulated environment. or social sustainability risks to which This exposes the Company to a risk the Company may be subject. that its execution may not result in the intended outcome from the investment. Risk Management Intellectual Property The Board determines the Company’s risk profile and is responsible for establishing, The Company has been granted Australian overseeing and approving the company’s Patent 2019251514 which provides coverage over the method and apparatus risk management framework, strategy and policies, internal compliance and The Company requires access to markets for manufacturing 3D metal parts. Despite internal control. The Board has delegated 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 the granting of the patent, it 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 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 adverse effect on the business and The Company is reliant on the security for identification and management financial performance of the Company. of its network environment, vendor of risks and regular reviews. Accreditation The growth of AML3D contract manufacturing services is dependent on retaining Lloyd’s 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. Climate Change Risk The Board is not aware of any current material exposure to risks brought about, or likely to be brought about, by climate change. 10 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. The Company is currently participating in a review of it’s Cyber Security systems. Sustainability 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. Additive Manufacturing, with wire feedstock, has also been shown to have a lower carbon foot-print and use less energy when compared to conventional manufacturing processes. AML3D Limited // ASX: AL3 // ABN 55 602 857 983 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 following significant changes in the state of affairs of the Parent Entity occurred during the financial year: i. On 12 October 2020, the Company issued 15,555,557 ordinary shares at $0.45 per share via a private placement to provide additional working capital. ii. On 28 October 2020, 1,666,666 ordinary shares were issued at $0.30 per share on the exercise of options. iii. On 26 February 2021, 370,000 ordinary shares were issued at $0.30 per share on the exercise of options. iv. On 1 April 2021, 333,333 ordinary shares were issued at $0.30 per share on the exercise of options. v. On 11 June 2021, 116,667 ordinary shares were issued on exercise of options at $0.30 per share to directors of the Company. vi. On 18 June 2021, 16,667 ordinary shares were issued on exercise of options at $0.30 per share to a director of the Company. vii. On 30 June 2021, 33,333 ordinary shares were issued on exercise of options at $0.30 per share to a director of the Company. 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 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, 18 meetings of Directors, including Committees of Directors, were held. Attendances by each Director during the year were as follows: Board Audit and Risk Meetings Committee Meetings Eligible Meetings Eligible Meetings to attend attended to attend attended 12 12 12 12 12 12 12 12 12 12 6 - - 6 6 6 - - 6 6 Directors Stephen Gerlach Andrew Sales Sean Ebert Leonard Piro Kevin Reid Significant Events after the Balance Date Directors’ Shareholdings 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: 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: i. To the date of signing this report, the Company’s operations have been directly adversely impacted by COVID-19. Director 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 further 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. Dividends Fully paid ordinary shares Share Options Stephen Gerlach 300,001 2,500,000 Andrew Sales Sean Ebert Leonard Piro Kevin Reid 40,311,250 1,024,999 850,000 75,001 - 2,000,000 2,000,000 500,000 Further details of Directors’ security holdings, including the numbers subject to escrow restrictions, are provided in the Remuneration Report commencing on page 12. No dividends were declared or paid during the year. Directors’ and Senior Executives’ Remuneration Corporate Governance 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. 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 12 and in Notes 9 and 10 to the financial statements. 11 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Remuneration Report (audited) The Directors of the Company present this Remuneration 1. Remuneration Governance Report for the Group for the year ended 30 June 2021. The information provided in this Report has been audited as required by s308(3C) of the Corporations Act 2001 (Cth) (Corporations Act) and forms part of the Director’s Report. The Remuneration Report outlines the Company’s key remuneration activities during the financial year ended 30 June 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, 2021 and remuneration information pertaining to the Company’s this is undertaken by Non-executive Directors only, without Directors and senior management personnel who are the Key the presence or participation of any Executive Director. 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, Functions The Board reviews any matters of significance affecting the directing and controlling the activities of the Company. remuneration of the Board and employees 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 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; b. Fairly and responsibly rewarding executives, having regard to the performance of the Company, the performance of the executive and the prevailing remuneration expectations in 6. Details of Directors’ and KMP Remuneration the market; 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 12 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. Arranging the performance evaluation of the Board, its Committees, individual Directors and senior executives on an annual basis; and g. Overseeing the annual remuneration and performance evaluation of the senior executive team. The Board has adopted protocols for engaging and seeking advice from independent 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 outline the terms of reference under which the Committee operates, are available in the Corporate Governance Plan at www.aml3d.com/investors. AML3D Limited // ASX: AL3 // ABN 55 602 857 983 2. Directors and Key Management Personnel (KMP) The Board approves a letter of appointment setting The directors and KMP of the Group during the year were: Period of Position Responsibility in FY21 Non-executives Stephen Gerlach Sean Ebert* Leonard Piro Kevin Reid Executives Andrew Sales Hamish McEwin Benjamin Hodgson Full year Full year Full year Full year Full year From 1 March 2021 To 1 March 2021 Independent non- executive chairman Independent non- executive director Independent non- executive director Independent non- executive director Managing Director, Chief Executive Officer (CEO) Chief Financial Officer (CFO) Chief Financial Officer (CFO) Karsten Bartnicki From 18 January 2021 to 26 May 2021 Chief Operating Officer (COO) *Mr Ebert was an executive director to 1 April 2021 and is considered a non-executive director as at the date of this report. 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. Executive Remuneration The Board reviews the executive structure and framework on an annual basis 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. 3. Remuneration Policy The Company’s remuneration framework for Directors and senior executives has been designed to remunerate fairly In addition, Directors are eligible to participate in the Concessional Option Plan and the Share Rights and Option Plan, subject to approval by shareholders. and responsibly, balancing the need to attract and retain key Executives 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 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. The Board aims to remunerate each Non-executive Director (NED) Remuneration at risk may be provided through short-term and for their time, commitment and responsibilities at market rates long-term incentive plan components, linked to performance for comparable companies. The Board determines and reviews measured against operational and financial targets set by the level of fees payable to Non-executive Directors annually, the Company, designed to achieve operational and strategic based on market practice, duties and accountability and subject targets for the sustainable growth of the Company and long- to the maximum aggregate amount per annum as approved by term shareholder value. No short-term or long-term incentive shareholders. Fees for Non-executive Directors are not linked elements were implemented for KMP in the financial year to the performance of the Group, other than participation in ended 30 June 2021 or to the date of this report. The Board will share options (refer to section 8 for share option plans). review the remuneration framework during the coming year. 13 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 5. Relationship between Remuneration and Group Performance The Board aims to align executive remuneration to the Company’s fixed remuneration in the context of balancing the requirements of strategic and business objectives and the creation of shareholder a rapidly growing and newly ASX-listed company and focussing wealth. The table below sets out key metrics in respect of the on strategic and business objectives to ensure shareholder value. Group’s performance over the past five years. The remuneration There are currently no short-term or long-term incentives on foot. framework is designed to take account of a suitable level for the Cash and cash equivalents Net assets/equity Revenue EBITDA Loss from ordinary activities after income tax expense No of issued shares Basic earnings per share (cents)2 Diluted earnings per share (cents)2 Share price at start of year (cents)1 Share price at end of year (cents) 2021 $’000 7,201 2020 $’000 8,228 11,528 9,7113 644 289 (5,108) (3,015) (5,515) (3,094) 2019 $’000 1,158 (114) 36 (596) (681) 2018 $’000 404 480 4 (26) (50) 2017 $’000 25 (136) - (315) (352) 150,458,386 132,366,163 12,320,250 11,782,750 10,050,000 (3.8) (3.8) 0.155 0.205 (3.8) (3.8) 0.20 0.155 (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 Market capitalisation (Undiluted) 30,844 20,517 Interim and final dividend (cents) N/A N/A 1. The Company was incorporated in 2014 as a proprietary company 2. Basic earnings per share and diluted earnings per share have and was changed to an unlisted public company on 5 December been retrospectively restated to account for a capital restructure of 2019. Share price at start of FY20 is shown as at commencement shares. A capital reconstruction was undertaken on 29 July 2019 of ASX quotation on 20 April 2020 following admission to the official and 4.2348 shares were issued for every 1 share. The number of list of ASX on 16 April 2020, based on the value of shares taken up shares issued in the previous financial periods have been multiplied pursuant to the prospectus. by 4.2348 for the purpose of EPS calculation. 14 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 6. Directors’ and KMP Remuneration Remuneration for the financial year ended 30 June 2021 Short-term employee benefits e v a e l l a u n n A r e h t O Post- employment - r e p u S n o i t a u n n a Share-based payments s e r a h S s n o i t p O l a t o T s t n e m y a p d e s a b - e r a h s r e h t O m r e t - g n o l n o i i t a n m r e T $ $ $ $ $ $ $ s t fi e n e b $ l a t o T l a t o T ’ k s i r t a ‘ $ % y r a l a S s e e F & m r e t - t r o h S e v i t n e c n i $ $ Non-executive Directors Stephen Gerlach Sean Ebert1 Leonard Piro Kevin Reid 60,000 178,335 40,000 40,000 Subtotal 318,335 Executives Andrew Sales Hamish McEwin2 Benjamin Hodgson3 Karsten Bartnicki4 219,278 75,518 164,626 118,385 Subtotal 577,807 TOTAL 896,142 - - - - - - - - - - - - - - - - 19,766 1,418 - - 21,184 21,184 - - - - - - - - - - - 5,700 3,800 3,800 3,800 17,100 20,831 7,174 - 11,035 39,040 56,140 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 65,700 182,135 43,800 43,800 335,435 259,875 84,110 164,626 129,420 638,031 973,466 1. Salary and fee remuneration for Sean 2. Appointed 1 March 2021. 4. Appointed 18 January 2021. Ebert comprised Non-executive Director fees of $40,000 as well as $138,335 (ex 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. 3. Services were provided by Benjamin Resigned 26 May 2021. Hodgson through his controlled entity, Philhodge Business Services Pty Ltd. See details in section 7 of this report. This agreement was terminated 1 March 2021 - - - - - - - - - - - 15 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Remuneration for the financial year ended 30 June 2020 Short-term employee benefits e v a e l l a u n n A r e h t O Post- employment - r e p u S n o i t a u n n a Share-based payments s e r a h S 1 s n o i t p O l a t o T s t n e m y a p d e s a b - e r a h s r e h t O m r e t - g n o l n o i i t a n m r e T $ $ $ $ $ $ $ y r a l a S s e e F & m r e t - t r o h S e v i t n e c n i $ $ Non-executive Directors1 Stephen Gerlach2 Leonard Piro2, 3 Kevin Reid4 40,000 26,666 26,666 Subtotal 93,332 Executives1 Andrew Sales Sean Ebert 2, 5, 6 Benjamin Hodgson7 220,066 96,666 121,200 Subtotal 437,932 TOTAL 531,264 - - - - - - - - - - - - - 5,502 - - 5,502 5,502 - - - - - - - - - 3,800 - 150,470 150,470 2,533 105,000 120,376 225,376 2,533 - 30,094 30,094 8,866 105,000 300,940 405,940 20,906 - - - 2,533 50,000 120,376 170,376 - - - - 23,439 50,000 120,376 170,376 32,305 155,000 421,316 576,316 - - - - - - - - - s t fi e n e b $ - - - - - - - - - l a t o T l a t o T ’ k s i r t a ‘ $ % 194,270 254,575 59,293 508,138 246,474 269,575 121,200 637,249 1,145,387 - - - - - - - - - 1. Options: In accordance with the 2. Appointed 30 August 2019. 6. Shares were issued to Sean Ebert 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. Appointed 3 December 2019. 5. 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. 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. Appointed 4 November 2019. 7. Services were provided by Benjamin Hodgson through his controlled entity, Philhodge Business Services Pty Ltd. See details in section 7 of this report. 16 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 7. Key Terms of Employment Contracts Executives Non-Executive Directors Managing Director The Company has entered into Non-Executive Director letters of The Company has entered into an executive services agreement appointment with each of Stephen Gerlach, Leonard Piro, Kevin with Andrew Sales, whereby he was engaged as the Managing Reid and Sean Ebert (Letters of Appointment). Under temporary Director and Chief Executive Officer (Managing Director) of the arrangements, Sean Ebert has acted as an Executive Director (see Company. Andrew Sales receives a base salary of $220,000 per below). Each of the Letters of Appointment provide that amongst annum (exclusive of superannuation) for services rendered under other things, in consideration for their services, the Company will the executive services agreement. The Company will also, subject pay the following fees, exclusive of statutory superannuation: to certain conditions, reimburse the Managing Director for all Chairman: $60,000 per annum reasonable travelling intra/interstate or overseas, accommodation and general expenses incurred in the performance of all duties Non-Executive Directors: $40,000 per annum* in connection with the business of the Company. There is no * Additional consulting fees were payable to Sean Ebert’s consulting company under the agreement for services as an Executive Director described below. Each Non-Executive Director is also entitled to be reimbursed reasonable expenses incurred in performing their duties. 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 termination. In the event that the Company elects to terminate the executive services agreement without reason, it must pay the Managing The appointment of the Non-Executive Directors is subject to Director the salary payable over a six-month period. the provisions of the Constitution and the ASX Listing Rules relating to retirement by rotation and re-election of directors. The Chief Financial Officer appointment of a Non-Executive Director will automatically cease The Company has entered into an executive services agreement at the end of any meeting at which the relevant Director is not with Hamish McEwin, whereby he was engaged as the Chief re-elected as a Director by shareholders. A Director may terminate Financial Officer (CFO) of the Company. Hamish McEwin their directorship at any time by advising the Board in writing. receives a base salary of $250,000 per annum (inclusive of 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). superannuation) for services rendered under the executive services agreement. The Company will also, subject to certain conditions, reimburse the CFO 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 termination. In the event that the Company elects to terminate the executive services agreement without reason, it must pay the CFO the salary payable over a three-month period. 17 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Former Chief Financial Officer 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 provided the services of Benjamin Hodgson in the position of CFO agreement was subsequently extended from May 2020 for executive services provided to the Company in the post-IPO establishment and growth phase and terminated 28 February 2021. The services included 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. at an all-inclusive hourly rate of $100 plus GST for such number of In addition to Sean Ebert’s Non-Executive Director’s fee of hours per month as may be directed by the Company. The contract $40,000 per annum (exclusive of statutory superannuation), was subject to termination by either party with a notice period of the Company paid a fee of $5,000 per month (inclusive of 1 day. No short-term or long-term incentives were included in the superannuation and leave entitlements, if any) for the provision of remuneration arrangements. A review of the initial contractual executive services to the Company for the period until one month arrangements was undertaken in July 2020 and the remuneration after IPO. This was amended to $10,000 per month effective from under the CFO Agreement was amended to a rate of $158,000 May 2020 to October 2020, and further amended to $24,584 plus GST per annum, invoiced in equal monthly payments per month, from November 2020 to February 2021. Sean Ebert effective from July 2020. The CFO Agreement otherwise includes was entitled to reasonable expenses properly incurred whilst standard commercial terms and was terminated on 1 March 2021. undertaking his respective duties. There is no short-term or long- Executive Director term incentive component to this remuneration. In accordance with Rule 14.9 of the Company’s Constitution, the remuneration under Sean Ebert was appointed as a Non-Executive Director of the the Ebert Agreement was considered to be for extra services in Company, however in order to assist the Company in preparation addition to his standard remuneration as part of the aggregate for the lodgement of the prospectus and immediate post- director fee pool, for his role as a Non-Executive Director. 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 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. 18 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 8. Terms and Conditions of Share-based Payment Arrangements Concessional Incentive Option Plan The key terms of the Concessional Incentive Option Plan are No share-based payments were made during the current as follows: financial year. In the previous financial year, 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 prior 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 three years from the date of issue in accordance with the terms of the Concessional Incentive Option Plan under which these options were issued. Grant Date Vesting Date Expiry Date Exercise Price Number Granted 4 Dec 2019 4 Dec 2019 4 Dec 2024 $0.30 7,000,000 Fair Value per option at grant $0.06 Eligibility Employees, contractors or directors (Participants) The Board may in its absolute discretion make a written offer to any Participant to apply for options Offers upon the terms set out in the Concessional Incentive Option Plan and upon such additional terms and conditions as the Board determines. Vesting Conditions 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 three 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 restrictions apply, including either Disposal three years after the date of issue of the option or when the option holder 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. 19 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 9. Directors’ 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. Balance at 1 Jul 2020 Purchased Sold Other changes Balance at 30 Jun 2021 Non-executive Directors Stephen Gerlach1 Sean Ebert2 Leonard Piro3 Kevin Reid4 Executives 233,334 991,666 800,000 58,334 66,667 33,333 50,000 16,667 Andrew Sales5 40,251,250 80,000 Benjamin Hodgson 83,334 - TOTAL 42,417,918 246,667 - - - - - - - - - - - - - - 300,001 1,024,999 850,000 75,001 40,311,250 83,334 42,664,585 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. Balance at 1 July 2020 Granted Purchased Options Expired/ Balance at Exercised Lapsed 30 June 2021 Vested Unvested Non-executive Directors Stephen Gerlach 2,566,667 Sean Ebert 2,333,333 Leonard Piro 2,050,000 Kevin Reid 516,667 Executives Andrew Sales6 100,000 Benjamin Hodgson 16,667 TOTAL 7,583,334 - - - - - - - - - - - - - - 66,667 - 2,500,000 2,500,000 33,333 300,000 2,000,000 2,000,000 50,000 16,667 - - - - 2,000,000 2,000,000 500,000 500,000 100,000 - - - 16,667 16,667 166,667 400,000 7,016,667 7,016,667 - - - - - - - All options held by Directors are subject to escrow restrictions for 24 months following the date of IPO. 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, above. 1. Stephen Gerlach: 2. Sean Ebert: 416,667 3. Leonard Piro: 4. Kevin Reid: 8,334 5. Andrew Sales: 33,334 shares are subject to escrow for 24 months from IPO. 20 shares are subject 725,000 shares are shares are subject 39,751,233 shares to escrow for 24 months from IPO. subject to escrow for 24 months from IPO. to escrow for 24 months from IPO. are subject to escrow for 24 months from IPO. 6. Options held by related party. AML3D Limited // ASX: AL3 // ABN 55 602 857 983 10. Other Transactions with Directors and KMP No loans were made to or from Directors or KMP and the Company during the year ended 30 June 2021. A loan from the Managing Director to the Company was repaid during the year ended 30 June 2020. In FY19 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 -- 21 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 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 2021, no options were issued (2020: 17,166,179). 2,536,666 shares were issued on the exercise of options during the financial year ended 30 June 2021 (2020: nil). No share rights were issued during the financial year ended 30 June 2021 (2020: nil). 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 2021 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 As at the date of this report, the unissued ordinary shares of auditor of the Company or of any related body corporate the Company under option are as follows. against a liability incurred as such an officer or auditor. Grant date Expiry Date Exercise Number of Price Options 30 July 2019 30 July 2023 $0.30 2,000,000 4 December 4 December 2019 Total 2024 $0.30 7,500,000* 9,500,000 * Comprises 7,000,000 options issued to Directors and 500,000 options issued to the Company Secretary 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 tax compliance services. Details of options issued to Directors are provided in the Auditor’s Independence Declaration Remuneration Report commencing on page 12. The Auditor’s Independence Declaration is included on page 23, There have been no options or share rights granted 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 Stephen Gerlach AM Chairman 29 September 2021 over unissued shares or interests of the controlled entity within the Group during or since the reporting period. Converting Loan Agreements During the 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, ie $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. No such arrangements were in place for the current financial year. 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. 22 AML3D Limited // ASX: AL3 // ABN 55 602 857 983Auditor’s Independence Declaration Under Section307cOfThe Corporations Act 2001 To The Directors OfAML3DLimitedI declare that, to thebest ofmyknowledgeandbelief duringtheyear ended 30June2021 there have been:— nocontraventions of theauditor independence requirements asset out inthe Corporations Act 2001 in relation tothe audit; and— no contraventionsof any applicable codeof professionalconduct in relation to theaudit.William Buck (SA) ABN: 38 280203 274M.D. King Partner Datedthis 29thday of September,2021 in Adelaide, South Australia.Auditor’s Independence Declaration Under Section 307cOf The Corporations Act 2001 To The Directors OfAML3D Limited I declare that, to thebest of myknowledge and belief during theyear ended 30June 2021 there have been: — no contraventions of theauditor independence requirements as set out inthe Corporations Act 2001 in relation tothe audit; and — no contraventionsof any applicable codeof professional conduct in relation to the audit. William Buck (SA) ABN: 38 280203 274 M.D. King Partner Dated this 29thday of September, 2021 in Adelaide, South Australia.Auditor’s Independence Declaration Under Section307cOfThe Corporations Act 2001 To The Directors OfAML3DLimitedI declare that, to thebest ofmyknowledgeandbelief duringtheyear ended 30June2021 there have been:— nocontraventions of theauditor independence requirements asset out inthe Corporations Act 2001 in relation tothe audit; and— no contraventionsof any applicable codeof professionalconduct in relation to theaudit.William Buck (SA) ABN: 38 280203 274M.D. King Partner Datedthis 29thday of September,2021 in Adelaide, South Australia. Auditor Independence Declaration 23 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 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 2021 there have been: — no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and — no contraventions of any applicable code of professional conduct in relation to the audit. William Buck (SA) ABN: 38 280 203 274 M.D. King Partner Dated this 29th day of September, 2021 in Adelaide, South Australia. 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 2021 there have been: — no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and — no contraventions of any applicable code of professional conduct in relation to the audit. William Buck (SA) ABN: 38 280 203 274 M.D. King Partner Dated this 29th day of September, 2021 in Adelaide, South Australia. 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 2021 there have been: — no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and — no contraventions of any applicable code of professional conduct in relation to the audit. William Buck (SA) ABN: 38 280 203 274 M.D. King Partner Dated this 29th day of September, 2021 in Adelaide, South Australia. 24 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 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 2021, 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, and the directors’ 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 Group’s financial position as at 30 June 2021 and of its financial 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 Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We 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 our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. KEY AUDIT MATTER Research and development expenditure - existence and valuation. Refer also to notes 3(i) and 12. How our audit addressed it The Group incurs significant amounts of research and development costs each year. In 2021 these costs amounted to $728,000. 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 2021 the amount disclosed as a current trade and other receivable in relation to the refund is $410,000. Our audit procedures included: ‒ A detailed evaluation of the Group’s research and development strategy; ‒ Testing the costs incurred; ‒ Engaging our own taxation specialists to consider the appropriateness of the Group's substantiation for the claim; AML3D Limited Independent auditor’s report to members 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 2021 there have been: — no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and — no contraventions of any applicable code of professional conduct in relation to the audit. William Buck (SA) ABN: 38 280 203 274 M.D. King Partner Dated this 29th day of September, 2021 in Adelaide, South Australia. 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 2021 there have been: — no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and — no contraventions of any applicable code of professional conduct in relation to the audit. William Buck (SA) ABN: 38 280 203 274 M.D. King Partner Dated this 29th day of September, 2021 in Adelaide, South Australia. 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. ‒ 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. KEY AUDIT MATTER Revenue recognition. Refer also to notes 2(j) and 6. How our audit addressed it The Group derives income from the following: Our audit procedures included: - Sale of the ARCEMY 3D printing module - Contract manufacturing for customers using owned ARCEMY 3D printing modules — determining whether revenue recognised is in accordance with the Group’s accounting policies; — Identifying and verifying the achievement of performance milestones and recognition of revenue relative to that achievement; Each revenue stream requires a bespoke revenue recognition model to ensure that revenue is only recognised — Examining the existence of revenue by testing both the contract and subsequent receipt of invoicing of the revenue to the customer; — When a performance milestone is achieved; and — It can reliably be measured; The application of AASB 15 Revenue from Contracts with Customers can require judgement, thus we considered this area to be a key audit matter. — Substantively testing revenue cut-off and the income in advance balance to ensure revenue has been recognised in the correct period. We also assessed the appropriateness of disclosures attached to revenues as required by Accounting Standard AASB 15 Revenue from Contracts with Customers. Other Information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2021, but does not include the financial report and the auditor’s 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. 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. 25 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 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 2021, 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, and the directors’ 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 Group’s financial position as at 30 June 2021 and of its financial 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 Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We 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 our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. KEY AUDIT MATTER Research and development expenditure - existence and valuation. Refer also to notes 3(i) and 12. How our audit addressed it The Group incurs significant amounts of research and development costs each year. In 2021 these costs amounted to $728,000. 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 2021 the amount disclosed as a current trade and other receivable in relation to the refund is $410,000. Our audit procedures included: ‒ A detailed evaluation of the Group’s research and development strategy; ‒ Testing the costs incurred; ‒ Engaging our own taxation specialists to consider the appropriateness of the Group's substantiation for the claim; AML3D Limited Independent auditor’s report to members 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 2021 there have been: — no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and — no contraventions of any applicable code of professional conduct in relation to the audit. William Buck (SA) ABN: 38 280 203 274 M.D. King Partner Dated this 29th day of September, 2021 in Adelaide, South Australia. 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 2021 there have been: — no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and — no contraventions of any applicable code of professional conduct in relation to the audit. William Buck (SA) ABN: 38 280 203 274 M.D. King Partner Dated this 29th day of September, 2021 in Adelaide, South Australia. 26 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of these financial statements is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our independent auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 12 to 21 of the directors’ report for the year ended 30 June 2021. In our opinion, the Remuneration Report of AML3D Limited, for the year ended 30 June 2021, 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. William Buck (SA) ABN: 38 280 203 274 M.D. King Partner Dated this 29th day of September, 2021 in Adelaide, South Australia. 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 2021 there have been: — no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and — no contraventions of any applicable code of professional conduct in relation to the audit. William Buck (SA) ABN: 38 280 203 274 M.D. King Partner Dated this 29th day of September, 2021 in Adelaide, South Australia. Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income 28 Consolidated Statement of Financial Position 29 Consolidated Statement of Changes in Equity 30 Consolidated Statement of Cashflows Notes to Financial Statement Directors Declaration 30 31 50 27 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 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 2021 there have been: — no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and — no contraventions of any applicable code of professional conduct in relation to the audit. William Buck (SA) ABN: 38 280 203 274 M.D. King Partner Dated this 29th day of September, 2021 in Adelaide, South Australia. Consolidated Statement of Loss and Other Comprehensive Income For the year ended 30 June 2021 Revenue Cost of goods sold Gross profit R&D Tax Offset Government grants Interest received Depreciation and amortisation Director and employee benefits Interest expense Marketing expenses Occupancy costs Professional fees expense Research and development Workshop expenses 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) The Consolidated Statement of Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes, which form an integral part of the financial report. Note 6 7 10 7 8 25 25 2021 $'000 644 (357) 287 417 183 20 (409) (3,116) (18) (163) (197) (838) (728) (344) - (609) (5,515) - (5,515) - (5,515) (3.8) (3.8) 2020 $'000 289 (69) 220 309 126 12 (86) (1,017) (5) (14) (13) (1,275) (51) (93) (967) (240) (3,094) - (3,094) - (3,094) (3.8) (3.8) 28 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Consolidated Statement of Financial Position As at 30 June 2021 ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventory Other financial assets Other assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other 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 Contract liabilities Lease liabilities Employee benefits TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Lease Liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Accumulated losses Reserves TOTAL EQUITY 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 30 12 13 14 15 14 16 17 18 19 20 21 22 21 23 24 23 2021 $'000 7,201 523 2,031 56 224 2020 $'000 8,228 707 112 - 235 10,035 9,282 - 2,771 538 62 3,371 13,406 777 451 179 110 1,517 361 361 1,878 11,528 20,641 (9,786) 673 11,528 36 1,122 411 41 1,610 10,892 738 - 125 28 891 288 288 1,179 9,713 13,311 (4,271) 673 9,713 29 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Consolidated Statement of Changes in Equity For the year ended 30 June 2021 Issued Capital $’000 Share Options Reserve $'000 Accumulated Losses $'000 Total Equity $’000 Balance at 1 July 2019 Loss after income tax expense for the year Shares issued during the year, net of transaction costs Share options issued Balance at 30 June 2020 Balance at 1 July 2020 Loss after income tax expense for the year Shares issued during the year, net of transaction costs Options exercised during the year Balance at 30 June 2021 1,063 - 12,248 - 13,311 13,311 - 6,569 761 20,641 - - - 673 673 673 - - - (1,177) (3,094) - - (4,271) (4,271) (5,515) - - 673 (9,786) 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. Consolidated Statement of Cash Flows For the year ended 30 June 2021 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 Finance costs Note Net cash (used in) operating activities 30 CASH FLOWS FROM INVESTING ACTIVITIES Payments for intangible assets Payment for financial assets 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 Repayment of borrowings Repayment of lease liabilities Net cash provided by financing activities Net (decrease) 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 The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes, which form an integral part of the financial report. 30 2021 $'000 1,248 547 565 (8,519) 23 (18) (6,154) (32) (20) (1,981) (2,033) 7,289 - (129) 7,160 (1,027) 8,228 7,201 (114) (3,094) 12,248 673 9,713 9,713 (5,515) 6,569 761 11,528 2020 $'000 130 119 250 (2,692) 8 - (2,185) (27) (36) (826) (889) 10,228 (84) - 10,144 7,070 1,158 8,228 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Notes to the Financial Statements For the year ended 30 June 2021 1. General Information c. Taxation i. Income Tax The income tax expense/(income) of the year comprises current income tax expense/(income) and deferred tax AML3D Limited (AML3D or the Company) is a limited liability company expense/(income). incorporated in Australia, whose shares are listed on the ASX. Current income tax expense/(income) charged to the profit The financial statements were authorised for issue by the directors or loss is the tax payable on taxable income calculated on 29 September 2021. The Directors have the power to amend using applicable income tax rates enacted, or substantially and reissue the financial statements. The financial statements comprise the consolidated financial statements of the Company and its controlled entity (the Group). 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. The principle accounting policies adopted in the preparation Deferred income tax expense reflects movements in of these consolidated financial statements are set out below deferred tax assets and deferred tax liabilities during the or included in the accompanying notes. Unless otherwise year as well as unused tax losses. 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 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 Standards Board and the Corporations Act 2001 (Cth). The accounting or taxable profit and loss. 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 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 where the fair value method has been applied as detailed in in subsidiaries, branches, associates, and joint ventures, 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 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. 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 consolidated financial statements as well as their results for respective asset and liability will occur. Deferred tax assets the year then ended. Where controlled entities have entered and liabilities are offset where a legally enforceable right of (left) the Consolidated Group during the year, their operating set-off exists, the deferred tax assets and liabilities relate to results have been included (excluded) from the date control income taxes levied by the same taxation authority on either was obtained (ceased). i. Subsidiaries Subsidiaries are entities controlled by the Group. A list of subsidiaries is provided in Note 5. 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 ii. Transactions eliminated on consolidation or settled. All intra-group balances and transactions, and any unrealised ii. Goods and Services Tax (GST) income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Revenues, expenses, and assets are recognised net of the amount of GST, except where the amount of GST incurred 31 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost Class of fixed asset Office and Computer equipment Depreciation rate (%) 20 - 33 of acquisition of the asset or as part of an item of expense. Plant and Equipment Receivables and payables in the Statement of Financial Motor Vehicles 10 - 20 22.5 Position are shown inclusive of GST. Leasehold improvements Over the term of the lease The net amount of GST recoverable from, or payable to, the The assets’ residual values and useful lives are reviewed, Australian Taxation Office is included as a current asset or and adjusted if appropriate, at the end of each reporting liability in the Statement of Financial Position. period. An asset’s carrying amount is written down 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 immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. cash flows included in cash inflows from operations or Gains and losses on disposal of an item of plant 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. 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 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. reliably. Any costs of the day-to-day servicing of plant and Impairment losses recognised in prior periods are assessed at equipment are recognised in the Statement of Profit or each reporting date for any indications that the loss has decreased Loss and Other Comprehensive Income as an expense as or no longer exists. An impairment loss is reversed if there has 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. 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 Depreciation rates and methods are reviewed annually for i. Initial Recognition and Measurement appropriateness. The straight-line depreciation rates used Financial assets and financial liabilities are recognised for the current period are as follows: when the entity becomes a party to the contractual 32 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 provisions to the instrument. For financial assets, this is paid and payable, including any non-cash assets transferred equivalent to the date that the entity commits itself to either or liabilities assumed, is recognised in the Statement of Profit the purchase or sale of the asset (i.e. trade date accounting or Loss, and other comprehensive income. 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 Other Financial Assets A financial asset that meets the following conditions is subsequently measured at amortised cost: transaction costs are expensed to profit or loss immediately. • The financial asset is managed solely to collect Where available, quoted prices in an active market are used contractual cash flows; and 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 a 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 rate method. • 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 The effective interest rate method is a method of calculating measured at fair value through profit or loss. 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 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, derecognition of the financial liability. If taking the change deposits held at call with banks, other short-term highly in credit risk in other comprehensive income enlarges liquid investments with original maturities of three months or or creates an accounting mismatch, then these gains or less, and bank overdrafts. Bank overdrafts, if any, are shown losses should be taken to profit or loss rather than other within short-term borrowings in current liabilities on the comprehensive income. Statement of financial position. A financial liability is derecognised when it is extinguished (i.e. Trade and Other Receivables 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 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. financial liability. The difference between the carrying amount Trade and other receivables are initially recognised at of the financial liability derecognised and the consideration fair value and subsequently measured at amortised cost 33 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 using the effective interest method, less any provision for iv. Finance Income and Expenses 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 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. g. Employee Benefits i. Short-term Employee Benefits 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. asset has increased significantly since initial recognition ii. Other Long-Term Employee Benefits 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’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 The Group uses the presumption that a financial asset is in A defined contribution plan is a post-employment benefit 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 asset 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 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 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 point the written-off amounts are charged to the allowance conditions not being met. account or the carrying amount of impaired financial assets is reduced directly if no impairment amount was previously h. Provisions recognised in the allowance account. Provisions are recognised when the Group has a legal or 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 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. by taking into account the original terms as if the terms have Provisions are measured using the best estimate of the not been renegotiated so that the loss events that have amount required to settle the obligation at the end of the occurred are duly considered. reporting period. 34 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 i. Leases The Group as Lessee 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 Revenue is recognised by applying a five-step process outlined in ASSB 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; are recognised by the Group where the Group is a Step 3: Determine the transaction price; 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 Step 4: Allocate the transaction price to the performance obligations; Step 5: Recognise revenue as the performance obligations are satisfied. Following the adoption of AASB 15 the Group’s revenue recognition accounting policy is that: date. The lease payments are discounted at the interest rate The Group derives revenue from the sale of 3D printed implicit in the lease. If this rate cannot be readily determined, metal structures and the sale or right to use of 3D metal the Group uses the incremental borrowing rate. printing machines. Revenue from the sale of manufactured Lease payments included in the measurement of the lease liability are as follows: • Fixed lease payments less any lease incentives; 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. • Variable lease payments that depend on an index or Broadly, these milestones relate to the delivery of software, rate, initially measured using the index or rate at the commencement date; training and the machine itself. The customer has the option to make a further payment in order to take ownership of • 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; the machine. ii. Grant Revenue Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and • Lease payments under extension options, if the all grant conditions will be met. Grants relating to expense lessee is reasonably certain to exercise the items are recognised as income over the periods necessary options; and • 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. 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 Right of use assets are depreciated over the lease term or useful life of the underlying asset, whichever is Note 28. the shortest. Where a lease transfers ownership of an underlying l. Intangible Assets i. Patents and Trademarks asset or the cost of the right of use asset reflects that Costs incurred for patents and trademarks are the Group anticipates to exercise a purchase option, the capitalised and amortised over the life of the patent or specific asset is depreciated over the useful life of the trademark. The residual value and useful life are reviewed 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. at each balance date and adjusted if appropriate. Amortisation is calculated on a straight-line basis over periods ranging from one to five 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 one to three years. 35 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 m. Foreign Currency Translation reference to the fair value of the equity instruments i. Functional and Presentation Currency 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 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). q. Rounding of Amounts The parent entity has applied the relief available under ASIC Corporations (Rounding in Financial/Director’s Reports) Instrument 2016/191. Accordingly, amounts in the financial statements have been rounded off to the nearest $1,000. functional currency using the exchange rates prevailing at 3. Critical Accounting Estimates and Assumptions 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 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 statement and statement of comprehensive estimates are reasonable. 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 finished goods, work in progress and raw materials which are measured at the lower of cost and net realisable value. 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 likelihood to exercise on a lease-by-lease basis looking at various factors such as which assets are strategic and which are key to the future strategy of the entity. Cost comprises direct materials, direct labour and an appropriate portion of variable and fixed overhead expenditure. iii. Key Estimate – Share-based Payments 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 36 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. AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Non-market vesting conditions are taken into account when 6. Revenue 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. Revenue from contracts with customers Timing of revenue recognition: - At a point in time - Over time iv. Key Judgements – Performance obligations relating to revenue recognition under AASB 15 7. Expenses 2021 $’000 2020 $’000 644 289 644 - 644 289 - 289 Loss before income tax has been arrived at after charging the following losses and expenses from continuing operations: To identify a performance obligation under AASB 15, the promise must be sufficiently specific to be able to determine when the obligation is satisfied. Management exercises judgement to determine whether the promise is sufficiently specific by taking into account any conditions specified in the arrangement, explicit or implicit, regarding the promised goods and services. In making this assessment, management includes the nature/type, cost/value, quantity and the period of transfer related to the goods or services promised. 4. New, Revised or Amended Accounting Standards 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. 5. Interest in Controlled Entities The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries: Depreciation of non- current assets Amortisation of intangible assets Depreciation of right of use assets 8. Income Tax a. Income Tax Expense Current tax expense Deferred tax expense Name of entity Country of incorporation Percentage Owned Total tax benefit AML Technologies (Asia) Pte Ltd 2021 $’000 2020 $’000 286 11 112 409 16 18 52 86 2021 $’000 2020 $’000 - - - - - - 2021 2020 b. The prima facie tax on loss from ordinary activities before income tax is reconciled to the income tax Singapore 100% 100% expense as follows: 2021 $’000 2020 $’000 Prima facie tax payable on (loss) from ordinary activities before (1,366) (841) income tax at 26% (2020: 27.5%) Add tax effect of: Permanent Differences Less tax effect of: Temporary Differences Add: Tax losses not recognised Income Tax Expense/(Benefit) 132 49 1,184 - 337 74 430 - 37 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 9. Key Management Personnel Disclosures a. Details of Key Management Personnel The directors and executives of AML3D Limited during the Appointed Resigned 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: 2021 $’000 2020 $’000 financial year were: Names Directors Andrew Sales (Managing Director) Stephen Gerlach (Chairman) Sean Ebert 14 November 2014 30 August 2019 30 August 2019 30 August 2019 3 December 2019 - - - - - - Available tax losses for which no deferred tax asset is recognised Potential tax benefit at 26% (2020: 27.5%) Net deductible temporary 6,327 1,833 Leonard Piro 1,645 504 Kevin Reid Executives Hamish McEwin (Chief Financial Officer) 1 March 2021 differences for which no deferred 508 316 Karsten Bartnicki tax asset has been recognised Potential tax benefit at 26% (2020: 27.5%) Income Tax Expense/(Benefit) 132 - 87 - (Chief Operating Officer) Benjamin Hodgson (Chief Financial Officer) 18 January 2021 26 May 2021 4 November 2019 1 March 2021 b. Key Management Personnel Compensation The taxation benefits of utilised tax losses and temporary The aggregate compensation made to Key Management difference not brought to account will only be obtained if: Personnel of the company is set out below: • 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 Short-term employee benefits Post-employment benefits Share-based payments of utilisation losses. Total 2021 $’000 917 56 - 973 2020 $’000 537 32 576 1,145 The compensation of each member of the Key Management Personnel of the Company is set out in the Remuneration Report. 38 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 10. Equity Settled Share-based Payments b. The Company issued 7,500,000 fully vested options to the No shares or options where issued in satisfaction of services provided by suppliers or Directors during the current financial year. Directors and Company Secretary, which are exercisable at $0.30 each between three years and five years from the date of issue (4 December 2019). The Black Scholes During the prior financial year, the Company issued the following valuation method determined a fair value of $451,408, shares and options in satisfaction of services provided by which has been expensed as a share-based payment. suppliers and directors. Shares The options were issued under the Company’s Concessional Incentive Option plan, which was approved by the Board on 4 December 2019. 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 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. 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. Options The Company issued Options during the prior financial year 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. as follows: The number of options granted is at the sole discretion a. The Company issued 2,000,000 fully vested options on of the directors. 30 July 2019 to suppliers as consideration for corporate The following table summarises the foregoing advisory services. The options are exercisable at $0.30 share-based payments: 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. 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 7,500,000 1,000,000 30 July 2019 30 July 2023 4 December 2019 4 December 2024 3 April 2020 30 June 2021 $0.10 $0.15 $0.20 $0.10 $0.15 $0.20 Total share-based payments made during the year ended 20 June 2020 $0.30 $0.30 $0.30 $0.02 $0.06 $0.04 Value $ 275,000 105,000 50,000 49,474 451,408 35,858 966,740 39 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 11. Remuneration of Auditors 13. Inventory 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: a. William Buck Adelaide i. Audit and other assurance services Audit and review of the financial report Other assurances services Investigating Accountant’s Report Total ii. Taxation services Tax compliance and advisory services b. Fiducia LLP audit fees Audit and review of subsidiary financial report 12. Trade and Other Receivables 2021 $’000 2020 $’000 Finished goods Work in progress Raw materials Total 32 - 32 30 20 44 64 37 14. Other Financial Assets Term deposit (current) Term deposit (non-current) Total 15. Other Assets 3 3 2021 $’000 2020 $’000 Bond Prepayments Deposit Paid Total 2021 $’000 1,284 578 169 2,031 2020 $’000 - - 112 112 2021 $’000 2020 $’000 56 - 56 2021 $’000 - 224 - 224 - 36 36 2020 $’000 2 104 129 235 Trade receivables Less: Allowance for expected credit loss R&D Tax Offset Refund Due Other receivables Total 106 (26) 80 410 33 523 162 - 162 310 235 707 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. 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. 40 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 16. Plant and Equipment Cost Balance 1 July 2019 Additions Balance 1 July 2020 Additions Assets under construction Balance at 30 June 2021 Accumulated depreciation and impairment Balance 1 July 2019 Net depreciation expense Balance 1 July 2020 Net depreciation expense Balance at 30 June 2021 Net book value At 30 June 2020 At 30 June 2021 Office and Computer Equipment $’000 9 28 37 127 - 164 Office and Computer Equipment $’000 4 3 7 25 32 30 132 Plant and Equipment $’000 Motor Leasehold Vehicle Improvements $’000 $’000 390 720 1,110 507 1,052 2,669 - 70 70 51 - 121 - 13 13 198 - 211 Plant and Equipment $’000 Motor Vehicle $’000 Leasehold Improvements $’000 87 8 95 237 332 1,015 2,337 - 6 6 19 25 64 96 - - - 5 5 13 206 Total $’000 399 831 1,230 883 1,052 3,165 Total $’000 91 17 108 286 394 1,122 2,771 17. Right of Use Assets i. AASB 16 related amounts recognised in the statement of The Group’s lease portfolio comprises a single leased building. The lease has an remaining term of two years and ten months. An option to extend or terminate is contained in the lease agreement. These clauses provide the Group opportunities to manage the lease in order to align with its strategies. All the extension or termination options are only exercisable by the Group. The extension options, which management were financial position: Right-of-use assets Leased buildings Accumulated depreciation Net carrying amount reasonably certain to be exercised, have been included in the Movement in carrying amounts calculation of the lease liability. Leased buildings: Opening balance Additions during the year Restatement of carrying amount on renegotiation of lease Depreciation expense for the year ended Net carrying amount 2021 $’000 585 (47) 538 411 - 239 (112) 538 2020 $’000 463 (52) 411 - 463 - (52) 411 41 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 42 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 ii. AASB 16 related amounts recognised in the 20. Contract Liabilities statement of loss: 2021 $’000 112 18 2020 $’000 52 5 2021 $’000 2020 $’000 Customer deposits Total 2021 $’000 451 451 2020 $’000 - - Contract liabilities represent non-interest bearing customers deposits for which not all contractual performance obligations have been met. 21. Lease Liabilities Depreciation charge related to right of use assets Interest expense on lease liabilities 18. Intangible Assets 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 (14) 20 125 (83) 42 17 (17) - 62 34 (7) 27 93 (79) 14 17 Lease liability (current) Lease liability (non-current) Total 22. Employee Benefits (17) Current - 41 Annual Leave Total Reconciliation of movements in Intangible Assets: Balance at the beginning of the year Additions to intangible assets Amortisation charged to intangible assets Balance at the end of the year 2021 $’000 2020 $’000 41 32 (11) 62 36 23 (18) 41 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 2021 financial year (2020: Nil). 19. Trade and Other Payables Trade payables Other payables and accrued expenses Total 2021 $’000 512 265 777 2020 $’000 354 384 738 Trade and other payables are unsecured, non-interest bearing and normally settled within 30 days. 2021 $’000 179 361 540 2021 $’000 110 110 2020 $’000 125 288 413 2020 $’000 28 28 43 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 23. Equity a. Issued Capital 150,458,386 fully paid ordinary shares (2020: 132,366,163) 2021 $’000 2020 $’000 20,641 13,311 Ordinary shares participate in dividends and the proceeds on winding of the Company in proportion to the number of shares held. iv. 333,333 shares were issued on 1 April 2021 on the exercise options at an exercise price of $0.30 for a total consideration of $100,000. v. 66,667 shares were issued on 11 June 2021 on the exercise options at an exercise price of $0.30 for a total consideration of $20,000. vi. 50,000 shares were issued on 11 June 2021 on the exercise options at an exercise price of $0.30 for a total consideration of $15,000. vii. 16,667 shares were issued on 18 June 2021 on the exercise options at an exercise price of $0.30 for a total consideration of $5,000. viii. 33,333 shares were issued on 30 June 2021 on the exercise options at an exercise price of $0.30 for a total On a show of hands, every holder of ordinary shares present at consideration of $10,000. a meeting or by proxy is entitled to one vote, and on a poll each share is entitled to one vote. c. Capital Management The Company does not have authorised capital or par value in respect of its shares. 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 b. Movement in Ordinary Shares: a going concern. Balance at beginning of financial year 2021 Number $’000 The Company is not subject to any externally imposed capital requirements. 132,366,163 13,311 There have been no changes in the strategy adopted by management to control the capital of the Group since the Shares issued during the year 15,555,557 7,000 Options exercised during the year 2,536,666 761 issue of the prospectus. d. Reserves The Group’s reserves comprise a share-based payments reserve. Total shares issued 150,458,386 21,072 A summary of the movements in the reserve is as follows: (431) Current 150,458,386 20,641 2020 Balance at beginning of financial year Share-based payment Number $’000 expense - Options issued 12,320,250 1,063 Balance end of financial year 2021 $’000 2020 $’000 673 - 673 - 673 673 Capital reconstruction 39,853,546 Shares issued during the year 80,192,367 Total shares issued 132,366,163 The reserve records the value of share-based payments provided. - 13,336 14,399 (1,088) Costs of the shares issued Balance at end of financial year Balance at beginning of financial year Costs of the shares issued Balance at end of financial year 132,366,163 13,311 i. The Company issued 15,555,557 shares on 12 October 2020 via a private placement at an issue price of $0.45 per share for a total consideration of $7,000,001. ii. 1,666,666 shares were issued on 28 October 2020 on the exercise options at an exercise price of $0.30 for a total consideration of $500,000. iii. 370,000 shares were issued on 26 February 2021 on the exercise options at an exercise price of $0.30 for a total consideration of $111,000. 44 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 The following table details the tranches of options issued, druing the year ended 30 June 2020. Details of each of these tranches are recorded in Note 10. Number of Options Grant Date Expiry Share Price Exercise Fair value Date at Grant Date Price at Grant Date 2,000,000 30 July 2019 30 July 2023 7,500,000 4 December 2019 4 December 2024 6,297,846 19 December 2019 30 June 2021 368,333 30 January 2020 30 June 2021 1,000,000 3 April 20 30 June 2021 $0.10 $0.15 $0.15 $0.15 $0.20 $0.30 $0.30 $0.30 $0.30 $0.30 $0.02 $0.06 $0.02 $0.02 $0.04 17,166,179 e. Movement in Options on Issue Value $ 49,474 451,408 128,698 7,527 35,858 672,965 Balance at beginning of financial year Options granted Options exercised Options lapsed Balance at end of financial year 24. Accumulated Losses 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 2021 2020 26. Related Party Disclosures Number of Options Number of Options The following paragraphs provide details of transactions and balances with related parties. 17,166,179 - a. Compensation of Key Management Personnel - 17,166,179 in Note 9 (b) Details of Key Management Personnel compensation are recorded (2,536,666) (5,129,513) - - 9,500,000 17,166,179 2021 $’000 2020 $’000 b. Other transactions with Key Management Personnel i. Mr Andrew Sales 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 $11,296 (2020: $2,048). ii. Mr Sean Ebert and his related entities (4,271) (1,177) year the Company engaged the services of a company In addition to his services as a director, during the financial controlled by Mr Ebert to provide executive services to (5,515) (3,094) the Company. The services were conducted on standard commercial terms. The total value of the services for the (9,786) (4,271) financial year was $138,335 (2020: $120,000). 2021 $’000 (3.8) 2020 $’000 (3.8) (5,515) (3,094) 2021 No. 2020 No. iii. Mr Leonard Piro and his related entities In addition to his services as a director, during the previous 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 previous 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 (2021: Nil). There were no outstanding related party balances as at 30 June 2021. c. Controlled Entities Weighted average number of ordinary shares for the purposes of basic earnings per share 144,822,684 81,201,246 its Singaporean subsidiary, AML Technologies (Asia) Pte Ltd to During the financial year, the Company provided loan funds to enable its subsidiary to meet start-up expenses. The transactions were conducted on commercial terms and conditions. The rights of options are non-dilutive as the Company has incurred a loss for the year. 45 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 2021 $’000 7,201 2020 $’000 8,228 27. Contingencies 29. Subsequent Events In the opinion of the Directors, besides the guarantees disclosed No matters or circumstances have arisen since the end of the in Note 33, the Group did not have any contingent liabilities or financial year which significantly affected or could significantly assets as 30 June 2021. 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. 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. To the date of signing this report, the Company’s operations have been directly adversely impacted by COVID-19. 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 further 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. 30. Notes to the Statements of Cashflows a. Reconciliation of Cash and Cash Equivalents ii. Geographic area Cash and cash at bank Revenues from external customers attributed to Australia and other countries is as follows: b. Reconciliation of loss for the year to net cash flows used in operating activities Australia Singapore Japan Other Total Revenue iii. Major customers 2021 $’000 534 85 24 1 644 2020 $’000 27 248 7 7 289 (Loss) for the year after income tax Non-cash items Depreciation and amortisation of non-current assets Doubtful debts expense Share based payments The Group has certain customers which represent more Changes in assets and liabilities than 10% of the Group’s revenue from contracts with Decrease / (increase) in trade customers. Each customer is a customer of the 3D printing and other receivables services and machine sales operating segment. Revenue for those customers is as follows: 4 Customers 2 Customers 2021 % 94% - 2020 % - 84% Decrease / (increase) in prepayments and other assets (Increase) in inventories Increase in trade and other payables Increase in contract liabilities Increase in employee benefits Net cash (used) in operating activities 2021 $’000 2020 $’000 (5,515) (3,094) 409 26 - 86 - 967 202 (400) 11 (1,919) 99 451 82 (233) (112) 592 - 9 (6,154) (2,185) 46 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 31. Financial Risk Management The Group’s financial risk management is predominantly An allowance for expected credit losses has however been recognised at 30 June 2021 for balances past due. controlled by the Managing Director and Chief Financial Officer Analysis of trade receivables: with the oversight of the Board and the Audit and Risk Committee. Per aged debtors report 2021 Trade receivables Total 2020 Trade receivables Total Not past Due $’000 60-90 days $’000 >90 days $’000 Total $’000 80 80 131 131 - - 3 3 26 26 28 28 106 106 162 162 For the year ended 30 June 2021, an expense has been recognised during the financial year then ended for the allowance for expected credit losses of $26,000 (2020: Nil). 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 in this Note. 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 is monitored by the ageing of open invoices in accounts receivable. Trade receivables are analysed as follows: Not impaired - Within trade terms - Past due but not impaired Impaired - Past due and impaired Total trade receivables 2021 $’000 2020 $’000 80 - 26 106 131 31 - 162 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. 47 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 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 Expected Maturity dates Weighted average interest Interest Bearing rate (%) Less than 1 year 1 - 5 years $'000 $'000 Non interest bearing $'000 1% 1% 5% 1% 1% 5% 56 7,201 - 7,257 - 179 179 - 8,228 - 8,228 - 125 125 - - - - - 361 361 36 - - 36 - 288 288 - - 523 523 777 - 777 - - 707 707 738 - 738 2021 Financial Assets Other financial assets Cash and cash equivalents Trade and other receivables Total Financial Liabilities Trade and other payables Lease liabilities Total 2020 Financial Assets Other financial assets Cash and cash equivalents Trade and other receivables Total Financial Liabilities Trade and other payables Lease liabilities Total Total $'000 56 7,201 523 7,780 777 540 1,317 36 8,228 707 8,971 738 413 1,151 The amounts listed above equate to fair value. The cashflows in the maturity analysis above are not expected to occur significantly earlier than disclosed. f. Currency Risk 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. 48 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 32. Information relating to AML3D Limited 33. Guarantees (the Parent) AML3D has the following guarantee in place: The following information has been extracted from the books and records of the parent and has been prepared in accordance with Australian Accounting Standards. Statement of Financial Position • A guarantee secured by a bank term deposit of $36,000 for the lease of its premises at 35 Woomera Avenue, Edinburgh SA 5111. • A guarantee secured by a bank term deposit of $20,000 for a corporate credit card facility provided by the Group’s banker Commonwealth Bank of Australia. 34. Capital Commitments At 30 June 2020, AML3D had commitments for capital equipment ordered but not yet received of $301,140. No such commitments were in place as at 30 June 2021. 2021 $’000 10,324 3,371 2020 $’000 9,316 1,610 13,695 10,926 35. Borrowings 1,508 361 1,869 11,826 888 288 1,176 9,750 20,641 13,311 673 (9,488) 11,826 673 (4,234) 9,750 2021 $’000 5,254 5,254 2020 $’000 680 680 2021 $’000 2020 $’000 Convertible loan agreements Related party payable – Managing Director Total borrowings 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 - - - - - - - - - - - 1,760 - (1,726) (34) - Convertible notes were converted into equity prior to and upon the Company’s listing on the ASX. Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity Statement of Profit or Loss and Other Comprehensive Income Total loss for the year Total comprehensive loss for the year The parent entity has entered into two bank guarantees represented by term deposits, the first for $36,000 in respect of the leased premises at Edinburgh, Adelaide, and the second for $20,000 in respect of a corporate credit card facility provided by the Group’s banker Commonwealth Bank of Australia. Other than these guarantees, the parent entity had no contingent liabilities at 30 June 2021. At 30 June 2020, the parent entity had commitments for capital equipment ordered but not yet received of $301,140. No such commitments were in place as at 30 June 2021. 49 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Directors’ Declaration 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 2021 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 2021 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 29 day of September 2021 50 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Additional Shareholder Information The following information is current as at 23 September 2021: Voting Rights Shareholding Following are details of classes of fully paid ordinary shares on issue: The voting rights attached to each class of equity security are as follows: Ordinary Shares: Fully Paid Number of Number of • Each ordinary share is entitled to one vote when a poll is called, otherwise Each member at a meeting or by proxy Ordinary Shares on Issue holders shares has one vote on a show of hands. Quoted on ASX 3,119 99,286,748 Other: Unquoted and restricted until 20/04/22 26 51,171,638 on any resolutions proposed by the Company except as • Options do not confer upon the holder an entitlement to vote The restricted shares are subject to ASX escrow. There are no securities subject to voluntary escrow. required by law Stock Exchange Listing There are 8 holders of 9,500,000 unquoted options each of which converts to 1 share upon exercise. commenced on 20 April 2020. ASX:AL3 Admitted to the Official List of ASX on 16 April 2020; quotation Distribution of Shareholders 20 Largest Shareholders – Ordinary Shares Number of Percentage of Holders total securities Name Number of Shares held % 1 Mr Andrew Michael Clayton Sales 39,701,250 26.39 Range of Units 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total 107 1,183 596 1,097 155 3,138 0.05% 2.31% 3.08% 23.88% 70.68% 100.00% Unmarketable Parcels The number of shareholders holding less than a marketable parcel is 884. Substantial Shareholders Substantial shareholders as disclosed by notices received by the Company as at 23 September 2021 are: 2 3 4 National Nominees Limited Global Asset Solutions\C Mr Kenneth Joseph Hall5 Mewtwo Global Investments 6 Citicorp Nominees Pty Limited 7 Mr Benjamin Fegan 8 9 Hsbc Custody Nominees (Australia) Limited Disruptive Investments Pty Ltd 10 Udefine Pty Ltd 11 Silver Crown Technology Limited 12 Mr Kiril Dennis Boitcheff + Mrs Suzanne Janet Boitcheff Shareholder Andrew Michael Clayton Sales Perennial Value Management Limited Juhee Seo and Global Asset Solutions Number of 13 Mr Leonard Albert Piro ordinary shares 39,701,250 9,107,223 6,987,420 14 15 16 Bnp Paribas Nominees Pty Ltd Wolseley Road #1 Pty Limited Cs Third Nominees Pty Limited 9,107,223 6,987,420 6.05 4.64 6,117,850 4.07 3,000,000 2,421,800 2,162,250 1.99 1.61 1.44 1,025,076 0.68 1,000,000 0.66 1,000,000 898,200 0.66 0.60 897,125 0.60 850,000 0.56 836,416 0.56 824,166 0.55 778,783 0.52 17 Connected Energy Solutions Pty Ltd 750,000 0.50 18 Providential Group Pty Ltd 700,000 0.47 19 Silver Crown Technology Limited 600,000 0.40 20 Hoperidge Enterprises Pty Ltd Total 567,369 0.38 802,24,928 53.32 51 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Corporate Directory AML3D Limited ABN 55 602 857 983 Directors Stephen Gerlach AM Chairman Andrew Sales Managing Director Leonard Piro Kevin Reid Sean Ebert Non-executive Director Non-executive Director Non-executive Director Company Secretary Christine Manuel Registered Office and Principal Place of Business 35 Woomera Avenue Edinburgh SA 5111 Ph: +61 8 8258 2658 Share Register Computershare Investor Services – Australia Level 5, 115 Grenfell Street Adelaide SA 5000 Ph: (08) 8236 2300 / 1300 850 505 Website: www.computershare.com.au Auditor William Buck Chartered Accountants Level 6, 211 Victoria Square Adelaide SA 5000 52 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 53 AML3D Limited // ASX: AL3 // ABN 55 602 857 983 Australia 35 Woomera Avenue, Edinburgh SA 5111 Australia +61 8 8258 2658 Singapore 24 Ang Mo Kio Street 65, Singapore 569061 info@aml3d.com www.aml3d.com Australian Patent 2019251514 D E I F I T R E C ADDITIVE MANUFACTURING FACILITY QUALIFICATION WAM ®: Wire Additive Manufacturing. AML3D ®, WAM ®, WAMSoft ®, ARCEMY ® are all registered trademarks for AML3D ®.