Redflow FY19 Results 30 th August 2019 redflow sustainable energy - - PowerPoint PPT Presentation

redflow sustainable energy storage

Redflow

FY19 Results 30th August 2019

Disclaimer

This presentation has been prepared by Redflow Limited (“Redflow”). It contains general information about Redflow as at the date of this presentation. The information in this presentation should not be considered to be comprehensive or to comprise all of the material which a shareholder or potential investor in Redflow may require in order to determine whether to deal in shares. The information in this presentation is of a general nature

• nly and does not purport to be complete.

This presentation does not take into account the financial situation, investment

• bjectives,

tax situation or particular needs of any person and nothing contained in this presentation constitutes investment, legal, tax or other advice, nor does it contain all the information which would be required in a disclosure document or prospectus prepared in accordance with the requirements

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the Corporations Act 2001 (Cth). Readers or recipients of this presentation should, before making any decisions in relation to their investment or potential investment in Redflow, consider the appropriateness of the information having regard to their own objectives and financial situation and seek their own professional legal and taxation advice appropriate to their particular circumstances. This presentation is for information purposes only and does not constitute or form part of any offer, invitation, solicitation or recommendation to acquire, purchase, subscribe for, sell or otherwise dispose of,

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investment decision. Certain statements in this presentation are forward- looking statements. You can identify these statements by the fact that they use words such as “anticipate”, “estimate”, “expect”, “project”, “intend”, “plan”, “believe”, “target”, “may”, “assume” and words of similar import. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Forward-looking statements, opinions and estimates provided in this presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward-looking statements, including projections, guidance on future earnings and estimates, are provided in this presentation as a general guide only and should not be relied on as an indication or guarantee of future performance. Forward-looking statements are based on current expectations and beliefs and, by their nature, are subject to a number

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could cause the actual results, performances and achievements to differ materially from any expected future results, performances or achievements expressed or implied by such forward-looking statements. No representation, warranty

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assurance (express or implied) is given or made by Redflow that the forward-looking statements contained in this presentation are accurate, complete, reliable or adequate or that they will be achieved or prove to be correct. Subject to any continuing obligation under applicable law or relevant listing rules of the ASX, Redflow disclaims any

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undertaking to disseminate any updates or revisions to any forward- looking statements in this presentation to reflect any change in expectations in relation to any forward- looking statements or any change in events, conditions or circumstances on which any such statements are based. Nothing in this presentation shall under any circumstances create an implication that there has been no change in the affairs of Redflow since the date of the presentation. Except for any statutory liability which cannot be excluded, Redflow and its respective officers, employees and advisers expressly disclaim all liability (including negligence) for any direct or indirect loss

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• 1. Company Summary
• 2. Fy19 Highlights
• 3. Manufacturing Update
• 4. Commercialisation Strategy
• 5. FY19 Financials
• 6. FY20 Priorities
• 7. Business Summary
• 8. Appendices

Table of contents

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Children and Family Centre at Wantirna South, Melbourne, Australia

Company Overview

Established in 2005. Listed on ASX in 2010 (ASX:RFX) Redflow designs and manufactures zinc bromine flow batteries Headquartered in

• Australia. Company
• wned manufacturing

facility in Thailand Over 60 deployments currently operational across multiple countries

South Africa New Zealand Thailand (plus the Manufacturing Plant) Fiji Jordan Germany Italy Poland Netherlands States in Australia: QLD (Corporate Head Office Brisbane) SA (Office in Adelaide) VIC, NSW, TAS

Redflow is positioned to redefine energy storage in our target markets

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China

FY19 Highlights

• Thailand factory now stable and producing high quality batteries
• Produced 150 batteries in Dec 18. Scalable model for immediate demand
• ISO9001 accreditation awarded in July 2019
• 30% Cost-down engineering program underway

Scalable Manufacturing

• Ongoing investment in R&D to maintain industry leadership and improve battery
• performance. Ongoing access to Australian government R&D rebate scheme
• Material progress on key projects include Gen3 stack, new electronics and tank design

– core to achievement of 30 % cost down target

• Additional innovation developed for telco sector – anti theft solution

Technology Leadership Customer & Markets

• Attractive set of end customers and initial deployments across target markets and

geographies – potential to scale to volume orders

• Growing order book
• Extended partner eco-system in core target markets – South Africa, NZ, Australia
• Reference deployment in China in partnership with Zbest Power
• Revamped Board and management team focused on commercialisation
• Chief Commercial Officer, CFO and Chief Deployment Officer recruited in last 12m
• Directors with deep technology and manufacturing experience recruited
• Investment in core customer facing capabilities required for sales growth & delivery

Board & Management

Manufacturing Update

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1. Awarded ISO 9001 accreditation in July 2019 2. Facility now proven at 150 batteries/month achieved in Dec 2018. Scale to 250 /month only requires double shift in selected processes (30 MWh) 3. Leveraged one of the key tenants of in-sourcing manufacturing by current significant scale down

• f production to match manufacturing with

demand and preserve working capital 4. Work has continued to improve core processes, quality metrics, undertaking necessary maintenance and ensuring the plant is ready for production ramp up. 5. Key engineering and productivity projects underway to deliver 30% cost down from pre- Thailand unit costs by end June 2020 6. Moderate levels of capex required to reach ~450 batteries /month (55 MWh) ($ 2-3M)

Successfully transitioned manufacturing in-house to our facility based in Thailand

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Production Yield Quality Assurance Health and Safety

Commercialisation Strategy

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Off-grid – Diesel Reduction

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Redflow Customer Value Propositions

Weak-grid Resilience & Productivity On & Off grid Renewable integration

On-grid Power Consumption Reduction

Battery Theft Avoidance Optimised minigrid operation

Targeting markets and applications where our unique battery technology has the strongest customer value proposition

Main Focus

Major target markets

• >4m cell towers globally
• Power costs a major cost factor
• Increase in infrastructure sharing

and tower companies

• Battery theft & commercial and

environmental concerns over diesel use are increasing issues Redflow offers a technical and commercial value proposition across Off-grid, Weak-grid and Back-up power supply applications

• Multiple industries where stable

and cost efficient power is critical

• Key issues include intermittent

power, high peak demand tariffs and maximising renewable use

• Address solar curtailment

Redflow can reduce energy costs by replacing / supplementing grid power and avoiding demand tariffs through storing off peak energy

• Battery Energy Storage System

(BESS) crucial to RAPS containing renewable energy sources & can improve fossil fuel gen. efficiency

• Ideal battery for this use has high

temperature tolerance, no capacity decline and 100% daily depth of discharge Redflow solution is technically well suited to these and our ten year life

• ffers an attractive commercial

proposition

Energy-focussed Applications Frequency Cycling Warm climates that rapidly degrade other Batteries Our sweet spots include…

RFX Investor Presentation Dec 2018 10

Telco Commercial, Industrial & Utility Remote Area Power Systems (RAPS)

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The telecommunications sector presents a large and growing market

• Major growth in markets and geographies with no or weak grid
• environments. Major growth in towers (outside of 5G) expected to happen

in areas of poor or limited grid connection and concentrated in Africa & Asia**

• Base stations energy use are a major cost component for Telcos. Vodafone

Group has 164,000 base stations across its global network which consumed 3.7GWh in 2019 or 66% of total Group energy consumption***

• Flat average revenue per user (ARPU) leading to focus on reduction in Opex

while ensuring network uptime (with a direct relationship to revenue)

• Expected increases in power consumption due to 5G. Dense electronics and

peak consumption profile expected to drive higher energy usage

• Growth of tower companies and infrastructure services. Focus on efficient

energy management and journey towards power as a service models

• Renewable Energy Commitments. Most large global telco operators have

clear & ambitious renewable energy goals. Vodafone Group has a goal to “replace use of diesel by increasing solar generation and deploying diesel- battery hybrids, although this can be limited at remote locations prone to vandalism”***

• Various government driven and funded initiatives to reduce Blackspots in

key countries. Programmes to fund, subsidise or mandate build out of towers in rural or remote locations

>1.1 million off-grid

and bad-grid towers by 2020 with >90% using diesel as main power source**

4m telco base stations

globally with 4.6% CAGR growth 2019-2024*

120,000 new base

stations are deployed yearly – mostly in countries with poor grid infrastructure** Telco presents the most immediate volume opportunity for Redflow

* Mordor Intelligence, Telecom Towers Market, Growth, Trends and Forecast (2019 - 2024) ** GSMA Report, Green Power for Mobile, December 2014 *** Vodafone Group Sustainability Report, 2019

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South Africa Update

Cell tower battery theft a major headache for MTN, Vodacom

Iol.co.za – July 2019 Recent News Headlines

MTN South Africa logs theft of 733 batteries from tower sites in April Telecompaper.com – July 2019 Hundreds of security guards are now guarding South African cellphone towers from criminals

Businesstech.co.za – August 2019

• Redflow batteries deployed in South Africa since 2016 and long

standing partnership with Specialised Solar Systems

• Ongoing national grid issues and endemic battery theft across

telcos provide a significant opportunity for Redflow

• Nov 2018 - New partnership with Moropa Site Solutions

announced for 37 batteries for new telco tower build for a leading telco operator

• May 2019 – New partnership with Mobax announced. Mobax

Group is a leading field service provider of engineering, project and technical services to telco operators across southern Africa

• May 2019 – Announcement of a leading telco operator testing

ZBM batteries with focus on reducing the high cost of

running diesel generators as well as being a less attractive target for theft (ongoing)

• Expanded engagement with other African telco operators

Sales Pipeline – generating momentum in target markets

 Major recent activity in FY18/19

Selected Highlights - Updated 30th August 2019 Region Initial Customer Engagement Initial Orders/ Trial Commercial Negotiations Commercial Deployment

Telco

TV network upgrade in Fiji NZ/Pacific     Mobile Operator (Optus) Australia    Mobile Operator in South Africa Africa    Telco Infrastructure provider in South Africa Africa     Telco Infrastructure provider NZ     Telco Infrastructure Provider Australia    Mobile Operator Australia  Mobile Operator in Indonesia Asia  Mobile Operators outside South Africa Africa 

• Misc. infrastructure and mobile operators

Asia  Mobile Operator in NZ/Pacific NZ/Pacific  Emergency Services Operator Australia 

C&I

Small Commercial (Knox City Council) Australia     Remote Power System (RAPs) Australia  Medium Industrial in South Africa Africa   Medium Commercial - Thailand Asia  RAPs Minigrid in Thailand Asia     Small Scale system – Demo with Zbest in China Asia   Multi-site Small Commercial (RAPs) Asia 

Residential

Various Residential Australia    

Progress in the last 6 months  Major activity previous to FY18/19

FY19 Financials

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Revenue for the period was $800k down 54% on the prior corresponding period (pcp) with a reported Loss after Income Tax of $11,570k down 4% on pcp. The results were driven primarily by:

• Ongoing rebuild of customer engagements and

sales activity taking longer than anticipated

• Revenue does not include previously announced
• rders not yet delivered due to customer

readiness (~32 batteries as of 30th June 2019)

• Ramp-up in production to achieve 150 batteries in

December 2018 and subsequent moderation to align to customer demand

• The investment in executives and personnel to

drive the next stage of business growth

• Continued investment in R&D activities and IP

protection to ensure ongoing market leadership and delivery of cost down targets

Profit & Loss

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A$’000 FY19 FY18 Revenue 800.1 1,728.0 Other Income 1,938.1 2,159.3 Expenses Raw Materials and Consumables Used 3,413.1 5,655.8 Other Expenses 10,823.2 10,205.1 Loss before Income Tax (11,498.1) (11,973.6) Income Tax Expense 71.9 21.4 Loss after Income Tax (11,570.0) (11,995.0) Other Comprehensive Income (25.5) 10.9 Total Comprehensive Loss Year (11,595.5) (11,984.1)

Current Assets: The Net cash position of $10,902k is down 38.5% from prior comparison period (pcp) This is partially offset by the Increase in Inventory, both Raw Materials $3,764k on par with 30 June 2018 and Finished Goods $4,103k up from $308k from 30 June 2018 Finished Goods include batteries for orders previously announced where the customer is not ready for delivery yet. It is anticipated these will be delivered this calendar year Non Current Assets: Are $1,696k on par with pcp being the investment in production equipment for the Thailand facility offset by depreciation incurred.

Balance Sheet

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A$’000 30 June 19 30 June 18 Current assets Cash and cash equivalents 10,902.5 17,732.8 Trade and other receivables 61.3 253.9 Inventories 7,866.9 4,066.2 Other current assets 316.0 520.6 Total current assets 19,146.7 22,573.6 Non-current assets Property plant and equipment 1,089.7 1,024.2 Intangible assets 606.6 629.1 Total non-current assets 1696.3 1,653.3 Total Assets 20,843.0 24,227.0 Current liabilities Trade and other payables 1054.6 848.1 Other current liabilities 759.4 465.1 Provisions 1,313.4 1,938.9 Total current liabilities 3,127.4 3,252.1 Non-current liabilities Provisions 118.1 187.8 Total non-current liabilities 118.1 187.8 Total liabilities 3,245.5 3,439.9 NET ASSETS 17,597.5 20,787.0 Equity Contributed equity 119,586.2. 111,300.9 Reserves 3,410.0 3,314.8 Accumulated losses (105,397.7) (93,828.7) TOTAL EQUITY 17,597.5 20,787.0

Net cash (outflows) from operations was $14,492k, and increase of $3,337k from the prior comparison period (pcp) and is reflective of the change in the business from the pcp, being:

• Moving from outsourced/

contract manufacture to in- house manufacturing and the required increase in Inventory, both raw materials and finished goods;

• The investment in procurement
• f long lead time raw materials.

Net cash (outflows) from investing activities was $595.5k compared to $645.1k for the pcp reflecting our

• ngoing commitment to building

and improving our in-house manufacturing capability in preparation for an increase in production volumes.

Cash Flow

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A$’000 FY19 FY18 Cashflows from operating activities Receipts from customers 1,001.0 1,222.3 Payments to suppliers and employees (17,360.2) (14,493.7) Grants R&D tax incentive received 1,751.6 2,2112.2 Interest received 178.5 47.0 Interest and finance charges paid (17.2) (21.9) Income tax paid (46.3) (21.4) Net cash (outflows) from operating activities (14,492.6) (11,155.5) Cashflows from investing activities Payment for property plant and equipment (479.4) (468.6) Payments for intangible assets (138.1) (176.5) Proceeds from sales of property plant and equipment 22.0 Net cash(outflows) from investing activities (595.5) (645.1) Cashflows from financing activities Proceeds from capital raising 8,240.4 26,861.3 Net cash (outflows) from financing activities 8,240.4 26,861.3 Net increase / (decrease) in cash and cash equivalents (6,847.7) 15,060.7 Effects of currency translation 17.3 (27.4) Cash and cash equivalents at beginning of half year 17,732.8 2,699.5 Cash and cash equivalents at end of half year 10,902.4 17,732.8

Sales and Business Development

• Develop and secure regular volume orders for the telco sector in target

markets

• Launch marketing program to enhance market visibility and positioning
• Progress Australian market around Remote Area Power Systems
• Target further lighthouse projects for commercial and industrial sectors
• Expand partner base across Australia, Africa and Asia Pacific target markets

Manufacturing

• Continue to align manufacturing with sales demand
• Execute productivity improvement plans to increase yield and quality
• Finalise demand driven scale plan for up to 55 MWh per annum
• Develop plan and options to achieve volume production to 120 MWh

Engineering

• Execute on cost reduction programme to June 2020
• Roll out key innovations to end customers – telco anti theft solution, high

voltage solution

Strategic Opportunities

• Progress strategic market opportunities in China
• Explore and progress strategic partnerships
• Position Redflow for step change in sales and required capability
• Ensure business capitalised to execute on growth strategy

Key Priorities for FY20

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Daintree Forest deployment for Optus, Australia Mobile tower deployment for Moropa, South Africa

Our FY19 results reflect a two-year turnaround journey for Redflow. We now have the technology, commercial capabilities and emerging sales momentum to position the Company for future commercial success in FY20

• 1. Material progress made on required sales renewal with growing set of reference deployments, new partners

and end customers capable of volume orders. Momentum growing but taking longer than anticipated.

• 2. Batteries produced are ready to meet current sales pipeline and our targeted order ramp up
• 3. ISO accredited Thai facility ready for production ramp up to align to emerging sales demand
• 4. Ongoing R&D investment and delivery of key engineering programs is critical to ensure competitiveness
• 5. Management team now in place with improved sales and customer delivery capabilities
• 6. Prudent cash management remains a key priority
• 7. Significant global addressable market opportunity available – immediate focus on conversion of current sales

prospects

• 8. Engagement for potential strategic partners and investors that can deliver step change in growth

Momentum building to deliver on growth strategy

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Children and Family Centre , Bayswater Melbourne, Australia

• Min. of Energy visiting

village minigrid deployment, Thailand Demonstration 100kWh project, Qinghai, China

Appendices

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Board of Directors

Brett Johnson Non-Executive Chairman Over 14 years Director experience of listed companies including Scott Corp Ltd and Helloworld Ltd. Over 25 years experience as General Counsel of listed Australian companies, including Qantas Airways. David Knox Non-Executive Director Previous CEO and MD of Santos Ltd. from 2008-

• 2015. David was also

previously MD for BP Developments in Australasia from 2003 to 2007 and worked for BP in the U.K. and Pakistan. John Lindsay Non-Executive Director Previously held senior technology leadership roles including CTO at iiNet Ltd, CTO at Internode and GM of Chariot Internet. John is a Board member of the Australian Telecommunication Industry Ombudsman and is a Non-Executive Director of Uniti Group Ltd. Jenny Macdonald Non-Executive Director & Chair of Audit Committee Extensive experience working with ASX listed and global companies at CFO and general management level. Jenny currently serves as a Non-Executive Director

• n the Boards of API

Ltd., Redbubble Ltd. and Bapcor Ltd. David Brant Non-Executive Director An experienced businessman with strategic manufacturing expertise, is a Fellow of the Australian Institute

• f Company Directors

with more than two decades of manufacturing and corporate experience in Australia and countries in Asia.

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Management Team and Technical Experts

Tim Harris Chief Executive Officer & Managing Director Richard Aird Chief Operating Officer Trudy Walsh Chief Financial Officer

• Dr. Alex Winter

Consulting Engineer

• Dr. Mike Giulianini

Chief Technology Officer Ben Shepherd Chief Commercial Officer Simon Hackett System Integration Architect

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• Dr. Tim McTaggart

Chief Deployment Officer

ZBM2 Technical Specifications

* 1 Values reported for ZBM2 at 100% state of health (SOH) and room temperature * 2 Redflow internal testing shows a 5kW supply for approximately 45 minutes before disconnection, for a ZBM2 starting at 100% state of charge (SOC) * 3 See full warranty document for details, Terms and Conditions apply ZBM2 Technical Specifications Voltage 48 Volt DC nominal batteries (typical operating range 40- 60V) Capacity Maximum 10kWh energy output per daily cycle No reserved battery capacity requirement – full 10kWh cycle depth available Dimensions 845 L x 823 H x 400 W (mm) 33 L x 32 H x 16 W (in) Weight 240 kg (530 lb) with electrolyte 90 kg (198 lb) without electrolyte Electrolyte volume 100 L (26Gal) Energy efficiency 80% DC-DC Max Internal (electrolyte)

• perating temperature

Operating electrolyte temperature range of 15°C to 50°C (59°F to 122°F), ZBM2 can typically operate at ambient temperatures outside this range for extended periods Communication MODBUS RS485 Safety data sheet DG Class 8 for electrolyte Power rating 3kW (5kW peak) 3kW continuous: current up to 75A (40V disconnection point) *1 5kW duration depending on the State of Charge (SOC): current up to 125A (40V disconnection point) *1, 2 Regulatory compliance marks CE and RCM Warranty 36,500 kWh of energy delivered or 10 years (whichever comes first) *3 No cycle depth limitations – battery performance and lifetime is not sensitive to cycle depth Source: https://redflow.com/products/redlow-zbm2/

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