European Metals Holdings Regulatory News (EMH)

16 March 2021 For immediate release

EUROPEAN METALS HOLDINGS LIMITED

Unaudited Interim Financial Report

For the six months ended 31 December 2020

The Directors of European Metals Holdings Limited ("European Metals" or "the Company") (ASX & AIM: EMH), the specialty lithium exploration and development company with assets in the Czech Republic, are pleased to release its interim unaudited financial report for the half year ended 31 December 2020.

A copy of the European Metals Half Year Report is also available on the Company's website at www.europeanmet.com.

ENQUIRIES:

European Metals Holdings Limited

Keith Coughlan, Executive Chairman Tel: +61 (0) 419 996 333

Email: keith@europeanmet.com

Kiran Morzaria, Non-Executive Director Tel: +44 (0) 20 7440 0647

Dennis Wilkins, Company Secretary Tel: +61 (0) 417 945 019

Email: dennis@europeanmet.com

WH Ireland (Nomad & Broker) Tel: +44 (0) 20 7220 1666

James Joyce/James Sinclair-Ford (Corporate Finance)

Harry Ansell (Corporate Broking)

Shard Capital (Joint Broker) Tel: +44 (0) 20 7186 9950

Damon Heath

Erik Woolgar

Blytheweigh (Financial PR) Tel: +44 (0) 20 7138 3222

Tim Blythe

Megan Ray 

The information contained within this announcement is considered to be inside information, for the purposes of Article 7 of EU Regulation 596/2014, prior to its release. The person who arranged for the release of this announcement on behalf of the Company was Keith Coughlan, Director.

DIRECTORS' REPORT

Your Directors submit the financial report of the consolidated group for the half year ended 31 December 2020.

Directors

The names of the directors who held office during or since the end of the half-year.

Results of Operations

The consolidated loss for the half year ended 31 December 2020 amounted to $2,317,327 (2019: $1,591,389 loss).

Review of Operations

For the reporting period the Company continued to manage the advancement of the Cinovec Lithium/Tin Project in Czech Republic. The macro conditions relative to the Project have been very strong for the period. Global lithium prices steadily increased, with more dramatic increases seen immediately post the period. In addition to the global conditions, support within the European Union (the Company's region of operations) for battery metals project development has increased substantially.

Some significant highlights of the project development and EMH level initiatives for the period are as follows.

· Partnership with European Union body

The Company announced a support and financing agreement with KIC InnoEnergy SE ("EIT InnoEnergy") on 28 July 2020. The body is the principal facilitator and organiser of the European Battery Alliance. The purpose of the agreement is to facilitate the accelerated construction financing and ultimate commercialisation of Cinovec, by assisting in:

- Sourcing construction finance;

- Securing grant funding; and

- Assisting in offtake introductions and negotiations.

EIT InnoEnergy leads the European Battery Alliance which was initiated by the European Commission to create a competitive and sustainable battery cell manufacturing value chain in Europe. Since the initiation of this agreement, overall support for green energy initiatives, the development of a European Battery Industry and the continued growth of the Electric Vehicle industry has increased significantly.

• Measured Resource Drilling Commenced 

Measured Resource drilling commenced at the Cinovec Project in early August 2020, with the key aims of

- completing a total of nineteen resource drill holes for a total of 5,550 m;

- completing a further two hydro-geological drill holes and four geotechnical drill holes once resource drilling has been completed; and

- the provision of approximately 10t of drill core for further metallurgical testing and to generate samples.

Drilling is aimed at converting a sufficient portion of the existing Indicated Mineral Resource to the Measured Resource category and subsequently to a Mineral Reserve, to cover the first two years of the scheduled mining plan and obtaining a sufficient amount of ore samples for the next phase of metallurgical testing. The majority of the material will be utilised in the pilot scale testing for the Front End Engineering Design ("FEED") Study. A total of nineteen diamond drill holes will be completed for 5,550 metres. A further four geotechnical holes along the planned underground decline route will be drilled and logged subsequent to the completion of the resource drilling. This data will allow final development ready designs to be completed for the declines.

Post period, the Company reported positive results from that portion of this programme that had been completed. The programme has been slightly delayed due to a combination of COVID19 and weather events and is now expected to complete in April 21.

· Further International Listing Initiatives

On 6 December 2020 the Company commenced trading on the US OTC Pink Market (PKC: EMHLF) and on 15 December 2020 also announced that it had been accepted to trade on the globally renowned US based NASDAQ International program (Nasdaq: ERPNF).

The Company anticipates that these initiatives will help grow its global brand, increase liquidity and shape its message to the US investment community. This program will also accelerate the Company's exposure to US shareholders and offers a cost-effective method to access US investment, providing a nexus to the largest capital markets globally. Entry to US markets will increase the ease with which North American investors can purchase European Metals securities. The ASX will continue to be the Company's main listing, with investors able to purchase shares through NASDAQ, OTC Pink, UK-based AIM market and Germany's Frankfurt Börse.

The Company also advised during the period its intention to list on The Prague Stock Exchange to provide the opportunity for Czechs to invest directly via their domestic exchange. A PSE listing would further leverage substantial national interest in the Cinovec project. These discussions are ongoing.

Corporate and Administration

• Funding agreements

The Company entered into two separate funding agreements with 6466 Investments Pty Ltd during the period. The funds were sourced to assist in financing European Investor Relations initiatives, proposed listing in Czech and its ongoing operations. Any funds drawn down were converted to CDI's in the Company at a 15% discount to the 10-day VWAP in the Company's securities. The Company made its first drawdown of A$250k on 17 July 2020 and completed the issue of 1,049,825 CDIs. On 27 August 2020, the Company announced that it has completed the issue of 927,300 CDIs in respect to the second draw down of the funding facility. The Company received $250k in respect of the second draw down. The Company made its third drawdown of A$250k on 23 October 2020 and completed the issue of 723,323 CDIs. On 13 November 2020, the Company completed the issue of 719,821 CDIs in respect of the fourth and final draw down.

The second agreement was entered into on 30 December 2020. This facility was also for $ 1 million and on largely the same terms. The funds the subject of the second agreement were drawn down post the reporting period.

• Senior Management Changes

On 2 November 2020, the Company announced the appointment of Mr. Dennis Wilkins as Company Secretary. Mr. Wilkins replaced Julia Beckett. Mr. Wilkins is the founder and principal of DWCorporate Pty Ltd, a corporate advisory firm servicing the natural resources industry.

Significant events after the reporting date

On 4 January 2021, the Company announced the appointment of Ambassador Lincoln Palmer Bloomfield, Jr as a Non-Executive Director of the Company. Ambassador Bloomfield is based in Washington, DC, and brings governance and regulatory experience, years of international diplomacy and security expertise to the EMH Board, along with a North American presence while his private sector experience is centered on sustainability, resilience and renewable energy.

On 6 January 2021, the Company completed the issue of 1,463,734 CDIs in respect of the full drawdown of the Fund Facility Agreement between 6466 Investments Pty Ltd and the Company of $1 million.

On 18 January 2021, the Company completed the cancellation of 2,000,000 unlisted options (exercise price $0.25 expiring 31 December 2022) and the issue of 1,613,708 CDIs in lieu of these options in accordance with the terms and conditions of the consultant options held by European Energy and Infrastructure Group Limited. The CDIs have been issued for nil consideration per the terms and conditions of the options.

On 8 February 2021, the Company completed the issue of 6,454,546 CDIs to institutional and sophisticated investors at $1.10 per CDI to raise $7.1 million. The Placement was well supported, especially by Thematica Future Mobility, a Luxembourg-based green energy fund. The proceeds of the Placement will assist in the further development of the Cinovec Lithium Project, the largest hard rock lithium resource in Europe, and further general working capital.

On 5 March 2021, the Company cancelled 3,000,000 unlisted options (exercise price $0.25 expiring 31 December 2022) and the issue of 2,435,880 CDIs in lieu of these options in accordance with the terms and conditions of the consultant options held by European Energy and Infrastructure Group Limited. The CDIs have been issued for nil consideration.

On 5 March 2021, the Company issued 300,000 CDIs in satisfaction of a $330,000 fee for the provision of digital marketing services and 1,200,000 warrants, exercise price of $1.10 per warrant expiring on 31 January 2023, to an investor relations consultant.

Other than as outlined above, there were no other significant events after the reporting period.

Geomet Tenement Schedule

Auditor's Independence Declaration

The auditor's independence declaration for the half year ended 31 December 2020 has been received and can be found on page 6 of the financial report.

This report of the Directors is signed in accordance with a resolution of the Board of Directors.

Keith Coughlan

EXECUTIVE CHAIRMAN

15 March 2021

15 March 2021

Board of Directors

European Metals Holdings Limited

Suite 2, 11 Ventnor Avenue

West Perth WA 6005

Dear Sirs

RE: EUROPEAN METALS HOLDINGS LIMITED

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of European Metals Holdings Limited.

As Audit Director for the review of the financial statements of European Metals Holdings Limited for the half year ended 31 December 2020, I declare that to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

(ii) any applicable code of professional conduct in relation to the review.

Yours faithfully

STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LIMITED

(Trading as Stantons International)

(An Authorised Audit Company)

Samir Tirodkar

Director

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2020

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

CONSOLIDATED STATEMENT OF changes in equity

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

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

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

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

 CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

NOTE 1: BASIS OF PREPARATION

Statement of compliance

The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 'Interim Financial Reporting'. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'. The half-year report does not include notes of the type normally included in an annual financial report and shall be read in conjunction with the most recent annual financial report.

Basis of preparation

The consolidated financial statements have been prepared on the basis of historical cost, except where applicable for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the Group's 2020 annual financial report for the financial year ended 30 June 2020, except for the impact of the Standards and Interpretations described below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

This report was authorised on 15 March 2021.

Going concern

As per the interim financial statements, the consolidated financial statements have been prepared on the going concern basis. At 31 December 2020, the Group had cash and cash equivalents of $431,450 and incurred a loss after income tax of $2,317,327.

On 6 January 2021, the Company completed the issue of 1,463,734 CDIs in respect of the full drawdown of the Fund Facility Agreement between 6466 Investments Pty Ltd and the Company of $1 million. On 8 February 2021, the Company completed a placement to institutional and sophisticated investors at $1.10 per CDI to raise $7.1 million. The Directors have prepared a cash flow forecast, which indicates that the Group will have sufficient cash flows to meet all commitments and working capital requirements for the 12-month period from the date of signing this financial report.

Based on the cash flow forecasts, the Directors are satisfied that the going concern basis of preparation is appropriate. The Directors are also confident the Group has the ability to raise further funds through capital raisings as and when required to satisfy its operational expenditure commitments.

In determining the appropriateness of the basis of preparation, the Directors have considered the impact of the COVID-19 pandemic on the position of the Group at 31 December 2020 and its operations in future periods.

Changes in accounting policies, accounting standards and interpretations 

The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 30 June 2020. All applicable new standards and interpretations effective since 1 January 2020 have been adopted. There was no significant impact on the Group.

Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are discussed below.

Share-based payments

The value attributed to share options, warrants, performance rights, performance shares, loan CDIs and remuneration shares issued is an estimate calculated using where applicable, a mathematical formula based on the Black-Scholes option pricing model. The choice of models and the resultant values require assumptions to be made in relation to the likelihood and timing of the conversion of the options, warrants, performance rights, performance shares, loan CDIs to shares and the value and volatility of the price of the underlying shares. Details of share-based payments assumptions are detailed in Note 8.

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

NOTE 2: OPERATING SEGMENTS

The accounting policies used by the Group in reporting segments are in accordance with the measurement principles of Australian Accounting Standards.

The Group has identified its operating segments based on the internal reports that are provided to the Board of Directors, according to AASB 8 Operating Segments.

Effective 28 April 2020, the Group has 49% equity investment in Geomet s.r.o. The principal activity of Geomet s.r.o is exploration of Lithium. Accordingly, management has identified one operating segment based on the location of the project, that being the Czech Republic and two geographical segments.

Effective 28 April 2020, Geomet was equity accounted (ie 49% of share of the profit or loss of the investee after that date) for as Investment in Associate by EMH.

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

CDIs entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. On a show of hands every holder of a CDI present at a meeting in person or by proxy, is entitled to one vote, and in a poll each share is entitled to one vote.

European Metals Holdings limited is a company limited by shares incorporated in the British Virgin Islands with an authorised share capital of 200,000,000 no par value shares of a single class. Pursuant to the prospectus dated 26 April 2012, the Company issued CDIs in July 2012. The holder of the CDIs has beneficial ownership in the underlying shares instead of legal title. Legal title and the underlying shares is held by Chess Depository Nominees Pty Ltd.

Holders of CDIs have the same entitlement benefits of holding the underlying shares. Each Share in the Company confers upon the Shareholder:

1. the right to one vote at a meeting of the Shareholders of the Company or on any Resolution of Shareholders;

2. the right to an equal share in any dividend paid by the Company; and

the right to an equal share in the distribution of the surplus assets of the Company on its liquidation.

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

The following options and warrants were exercised during the period:

· 3,750,000 unlisted options exercisable at 16.6 cents on or before 17 August 2020 issued to key management personnel on 17 August 2015.

· 200,000 unlisted options exercisable at 35 cents on or before 1 January 2021 issued to consultant on 12 July 2019.

· 100,000 unlisted options exercisable at 40.18 cents on or before 1 June 2021 issued to consultants on 12 July 2019.

· 100,000 unlisted options exercisable at 31.11 cents on or before 1 December 2021 issued to consultants on 6 December 2019.

· 250,000 options exercisable at 25.0 cents on or before 15 June 2022 issued to consultants on 17 July 2020.

· 89,375 warrants exercisable at 20 pence (36.3 cents) on or before 22 November 2021 issued to brokers on 22 November 2018.

The following options were issued during the period:

· On 23 October 2020, 1,000,000 unlisted options exercisable at 45 cents on or before 23 October 2023 were issued to consultants. On 23 October 2020, 2,500,000 unlisted options exercisable at 42 cents on or before 23 October 2023 were issued to consultants. The unlisted options were valued using a Black & Scholes option pricing model. The share-based expense of $750,303 was recognised in the statement of profit or loss and other comprehensive income for the period.

· On 17 July 2020, the Company issued 250,000 options exercisable at $0.25 on or before 15 June 2022 to a consultant in accordance with the consultancy agreement dated 15 June 2020. The unlisted options were valued using a Black & Scholes option pricing model. The share-based expense of $36,331 was recognised in the statement of profit or loss and other comprehensive income for the period. These options were exercised during the period.

No options lapsed during the period.

At 31 December 2020, the following options and warrants are outstanding:

· 27,500 warrants exercisable at 20 pence (36.3 cents) on or before 22 November 2021 granted to brokers.

· 15,000,000 unlisted options exercisable at 25 cents on or before 31 December 2022 granted to consultants.

· 1,000,000 unlisted options exercisable at 45 cents on or before 23 October 2023 granted to consultants.

· 2,500,000 unlisted options exercisable at 42 cents on or before 23 October 2023 granted to consultants.

The 3,000,000 A Class Performance Shares will convert in accordance with the below:

3,000,000 A Class Performance Shares will convert into Shares and an equivalent number of CDIs upon the completing of a definitive feasibility study (DFS). For clarity, the DFS must be: (i) of a standard suitable to be submitted to a financial institution as the basis for lending of funds for the development and operation of mining activities contemplated in the study; (ii) capable of supporting a decision to mine on the Permits; and (iii) completed to an accuracy of +/- 15% with respect to operating and capital costs and display a pre-tax net present value of not less than US$250,000,000. The A Class Performance Shares shall convert into the number of Shares and equivalent number of CDIs equal to 3,000,000 multiplied by 0.5 and divided by the greater of: (A)$0.50 per CDI; and (B) the volume weighted average price of CDIs (expressed as a decimal of $1.00) as calculated over the 5 ASX trading days prior to date of receipt of the completed DFS. For avoidance of doubt, the number of Shares and equivalent number of CDIs which will be issued on conversion of the A Class Performance Shares will not exceed a ratio of 1 for 1.

(c) Performance Rights

1 On 17 December 2020, the shareholders approved the grant of 2,400,000 Performance Rights to Mr. Keith Coughlan and 1,200,000 Performance Rights to Mr. Richard Pavlik. The share-based expense of $132,218 was recognized in the statement of profit or loss and other comprehensive income for the period. The Performance Rights have yet to be issued as at 31 December 2020. Please refer note 8 for the terms and conditions of the Performance Rights.

(d) Loan CDIs Reserve

The CDIs reserve records the fair value of the Loan CDIs issued.

As at 31 December 2020, total CDIs issued was 1,750,000 (30 June 2020: 1,750,000).

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

(e) Foreign Currency Translation Reserve

The foreign currency translation reserve records exchange differences arising on translation of foreign controlled subsidiaries.

NOTE 8: SHARE BASED PAYMENT EXPENSE

(i) Share based payments during the period:

On 23 October 2020, 1,000,000 unlisted options exercisable at 45 cents on or before 23 October 2023 were issued to a consultant. The options were valued under the Black and Scholes at $256,390 with the share based payment expense of $64,098 recognised in the current period. The key inputs to the models used were as follows.

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2020

(i) Share based payments during the period:

On 23 October 2020, 2,500,000 unlisted options exercisable at 42 cents on or before 23 October 2023 were issued to a consultant. The options vest immediately. The options were valued under the Black and Scholes at $686,205 as share based payment expense. The key inputs to the models used were as follows.

On 17 July 2020, the Company issued 250,000 options exercisable at $0.25 on or before 15 June 2022 to a consultant in accordance with the consultancy agreement dated 15 June 2020. The unlisted options vest immediately. The options were valued at $36,331 using a Black & Scholes option pricing model with the share based payment recognised as share based payment expense. The key inputs to the models used were as follows.

On 17 December 2020, the shareholders approved the grant of 2,400,000 Performance Rights to Mr. Keith Coughlan and 1,200,000 Performance Rights to Mr. Richard Pavlik, with the vesting terms as below:

1. Class A shall vest upon an announcement by the Company to the ASX stating that the Company has executed an offtake agreement for at least 25% of the product planned to be produced from the Cinovec Project.  

2. Class B shall vest upon the attainment of Project Finance for the Cinovec Project.

3. Class C shall vest upon an announcement by the Company to the ASX stating that the Company has made a Decision to Mine in respect of the Cinovec Project.

The Performance Rights will expire three years from the date of issue, after which the Performance Rights lapse and may no longer be exercised or converted. These Performance Rights have yet to be issued as at 31 December 2020.

The total fair value of the Performance Rights is expensed over the estimated vesting periods. The share-based expense of $132,218 was recognized in the statement of profit or loss and other comprehensive income for the period.

NOTE 9: RELATED PARTY TRANSACTIONS

There have been no significant related party transactions since the last annual reporting date.

NOTE 10: CONTINGENT LIABILITIES AND COMMITMENTS

There has been no change in contingent liabilities and commitments since the last annual reporting date.

NOTE 11: EVENTS SUBSEQUENT TO REPORTING DATE

Ambassador Lincoln Palmer Bloomfield, Jr was appointed as a Non-Executive Director of the Company on 4 January 2021.

On 6 January 2021, the Company completed the issue of 1,463,734 CDIs in respect of the full drawdown of the Fund Facility Agreement between 6466 Investments Pty Ltd and the Company of $1 million.

On 18 January 2021, the Company completed the cancellation of 2,000,000 unlisted options (exercise price $0.25 expiring 31 December 2022) and the issue of 1,613,708 CDIs in lieu of these options in accordance with the terms and conditions of the consultant options held by European Energy and Infrastructure Group Limited. The CDIs have been issued for nil consideration per the terms and conditions of the options.

On 8 February 2021, the Company completed the issue of 6,454,546 CDIs to institutional and sophisticated investors at $1.10 per CDI to raise $7.1 million.

On 5 March 2021, the Company cancelled 3,000,000 unlisted options (exercise price $0.25 expiring 31 December 2022) and the issue of 2,435,880 CDIs in lieu of these options in accordance with the terms and conditions of the consultant options held by European Energy and Infrastructure Group Limited. The CDIs have been issued for nil consideration.

On 5 March 2021 the Company issued 300,000 CDIs in satisfaction of a $330,000 fee for the provision of digital marketing services and 1,200,000 warrants, exercise price of $1.10 per warrant expiring on 31 January 2023, to an investor relations consultant.

Other than as outlined above, there were no other significant events after the reporting period.

DIRECTORS' DECLARATION

The Directors of the Company declare that:

1. The financial statements and notes set out on pages 7 to 18:

(a) comply with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Act 2001, and

(b) give a true and fair view of the Consolidated entity's financial position as at 31 December 2020 and of its performance for the half-year ended on that date.

2. In the Directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors made pursuant to section 303(5) of the Corporations Act 2001 and is signed for and on behalf of the Directors by:

Keith Coughlan

EXECUTIVE CHAIRMAN

15 March 2021

INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF EUROPEAN METALS HOLDINGS LIMITED

INDEPENDENT AUDITOR'S REVIEW REPORT

TO THE MEMBERS OF

EUROPEAN METALS HOLDIGS LIMITED

Report on the Half-Year Financial Report

Conclusion

We have reviewed the accompanying half-year financial report of European Metals Holdings Limited ('the Company') and the entities it controlled ('the Group'), which comprises the consolidated statement of financial position as at 31 December 2020, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, a summary of significant accounting policies and other explanatory information, and the directors' declaration.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the accompanying half-year financial report of the Group does not comply with the Corporations Act 2001 including:

(a) giving a true and fair view of the Group's financial position as at 31 December 2020 and of its performance for the half-year ended on that date; and

(b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

Basis for Conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity. Our responsibilities are further described in the Auditor's Responsibilities for the Review 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 annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001 has been given to the directors of the Company on 15 March 2021.

Responsibility of the Directors for the Financial Report

The directors of the Company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with the 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 half-year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor's Responsibility for the Review of the Financial Report

Our responsibility is to express a conclusion on the half-year financial report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group's financial position as at 31 December 2020 and its performance for the half-year ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

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

STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD

(Trading as Stantons International)

(An Authorised Audit Company)

Samir Tirodkar

Director

15 March 2021

West Perth, Western Australia