Announcement PDF ENERGY TECHNOLOGIES LIMITED ABN 38 002 679 469 Annual Financial Report for the year ended 30 June 2024 Energy Technologies Limited – 2024 Annual Report Corporate Information ABN 38 002 679 469 Directors Matthew Driscoll (Chairman, Non-Executive Director) Alfred J Chown (Executive Director) Anthony L Smith (Non-Executive Director) Company Secretary Gregory R Knoke Registered Office Unit J, 134-140 Old Pittwater Road Brookvale NSW 2100 Telephone:- (02) 8978 2600 Bankers National Australia Bank Limited NAB House, 255 George Street Sydney NSW 2000 Share Register Computershare Investor Services Pty Ltd 6 Hope Street Ermington NSW 2115 Telephone:- (02) 8234 5000 Facsimile:- (02) 8235 8150 Auditors Crowe Audit Australia Level 42, 600 Bourke Street Melbourne VIC 3000 Telephone:- (03) 9258 6700 Facsimile:- (03) 9258 6722 2 Energy Technologies Limited – 2024 Annual Report Contents Chairman’s Report 4 Directors’ Report 6 Remuneration Report (audited) 13 Corporate Governance Statement 19 Auditor’s Independence Declaration 32 Consolidated Statement of Profit or Loss 33 Consolidated Statement of Comprehensive Income 34 Consolidated Statement of Financial Position 35 Consolidated Statement of Changes in Equity 36 Consolidated Statement of Cash Flows 37 Notes to the Financial Statements 38 Consolidated Entity Disclosure Statement 70 Directors’ Declaration 71 Independent Auditor’s Report 72 ASX Additional Information 75 3 Energy Technologies Limited – 2024 Annual Report Chairman’s Report Dear Shareholder, I am pleased to present the Chairman’s Report for Energy Technologies Limited (EGY) for the financial year ended 30 June 2024. This year has been pivotal for our company as we underwent a significant strategic realignment aimed at repositioning EGY for future growth and sustainability. Financial Performance For FY2024, the group reported a consolidated loss after tax and minorities of $10,537,212 (FY2023 loss after tax and minorities of $15,344,996). Our wholly owned subsidiary, Bambach Wires & Cables Pty Limited (Bambach), recorded a loss after tax of $9,002,326 (FY2023 loss of $14,127,919). While the overall losses reflect the challenges we faced, the year marked a decisive step toward strengthening our financial performance in the medium to long term. Strategic Shift During the year, we made a fundamental decision to change our business strategy after conducting a thorough review of our operations. Recognising the risks of relying heavily on manufacturing, we have begun de-risking the business by shifting our focus toward distribution and high-margin opportunities in the renewable energy and purchased sales sectors. As part of this strategic shift:  Bambach signed our first Wholesale Distribution Agreement with Gantner Instruments Environment Solutions GMBH, providing renewable energy solutions in Australia and New Zealand;  We engaged with overseas manufacturers and secured supply agreements for low-voltage cables and ancillary products; and  We concentrated our internal manufacturing operations on high-margin, low-voltage production, allowing us to better manage operational cash flow. These changes have already started to show results. While the restructuring led to a short-term revenue decline in the final quarter of FY2024, the company is now better positioned with improved financial controls and a clearer path to profitability. Operational Highlights Despite some short-term challenges, we are pleased with the early successes from our strategic initiatives. We have generated initial sales in both the Purchased Sales and Renewable Energy divisions. These divisions will now focus on larger scale tenders, with the goal of building substantial revenue streams alongside our core manufacturing business, which continues to provide stable cash flow. Key achievements during the period include:  The signing of our first Wholesale Distribution Agreement with Gantner Instruments, marking our entry into the renewable energy market;  Progress in securing further distribution agreements, which are currently under negotiation; and  The successful completion of a $3 million capital raising through a share placement, supporting our strategic pivot and growth initiatives. Additionally, the renewable energy division delivered its first sales, amounting to $328,000, to a prominent EPC firm for a utility-scale solar project in Western Australia. This achievement underpins our confidence in the growth potential of this new division. 4 Energy Technologies Limited – 2024 Annual Report Chairman’s Report (continued) Financial Resilience and Outlook In line with our shift toward a margin-focused business model, we recorded cash receipts of A$2.7m for the final quarter, a reflection of the changes in our operating plan and we continue to prioritise financial resilience and operational efficiency. Looking ahead to FY2025, we are optimistic about the opportunities presented by our renewed focus on highmargin products and strategic partnerships. We are confident that the continued execution of our business plan will result in sustained growth and ultimately, a return to profitability. To this end the Company is anticipated to raise a further $12.7m through a non-renounceable rights issue as announced, with the proceeds expected to be received in the second quarter of FY2025. In closing, I would like to thank our shareholders, employees, and partners for their continued support throughout this period of transformation. We believe that the groundwork laid during FY2024 sets a solid foundation for future success, and we look forward to sharing the benefits of this strategy with all stakeholders in the years to come. Thank you for your continued trust and support. Matthew Driscoll Chairman 30 September 2024 5 Energy Technologies Limited – 2024 Annual Report Directors’ Report The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the ‘Group’) consisting of Energy Technologies Limited (referred to hereafter as the ‘Company’) and the entities it controlled at the end of, or during, the year ended 30 June 2024. DIRECTORS The names and details of the Company's Directors in office during the year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Names, qualifications, experience and special responsibilities Matthew Driscoll, (Chairman - Non-Executive Director) Appointed 20 December 2016 Mr Driscoll has significant experience across several industries, including online technologies, financial services, fintech, property and resources. He has more than 30 years’ experience in capital markets and the financial services industry and is an accomplished company director in roles across listed and private companies. He has significant experience in international business growth, mergers and acquisitions, equity and debt raisings and building strategic alliances, and remains committed to ethical, commercial and consumer-based outcomes. Other Current Directorships: Chair Carbonxt Group (CGI), Chair Smoke Alarms Holdings. Mr Driscoll is a member of the Audit and Risk Committee and the Remuneration and Nomination Committee. Anthony Lloyd Smith (Non-Executive Director) Appointed 24 December 2020 Mr Smith has over 30 years’ experience in finance with a variety of firms concentrating on small to medium sized companies in regard to corporate finance, institutional research sales and private wealth advice. During this time, he was charged with running these businesses along with titles of Head of Securities and Country Director of Austock Group and Phillip Capital. Mr Smith currently handles the investments at Cashel Family Office, a Melbourne based multi-family office company. Mr Smith is a member of the Audit and Risk Committee and the Remuneration and Nomination Committee. Alfred John Chown, B.Econ, (Executive Director) Appointed 10 August 2023. Mr Chown has extensive experience in building businesses across Australasia. He returned to Australia in 2012 after residing in Hong Kong from 1987-2012. In 1987 he co-founded E.L. Consult Ltd an executive search provider that prior to being sold to the Clarius group (ASX:CND) in 2007, had an extensive network of offices throughout Hong Kong, China, Singapore and Malaysia. In the early 1990’s Mr Chown co-founded what became the Dulhunty Power Group, under Dulhunty Power Limited (formerly ASX:DUL), a manufacturer of line fittings for the electric power transmission and distribution industry with factories in Australia, China, Malaysia and Thailand and offices in New Zealand and the USA. The Dulhunty Power Group was sold to Maclean Power Systems of the USA in 2012. Mr Chown is a former Chairman of the Australian Chamber of Commerce in Hong Kong and has extensive commercial experience in both Australia and Asia. Mr Chown was formerly Chairman and Director of Energy Technologies Limited (EGY), resigning on 24 December 2020 and remaining as CEO of the group and director of subsidiary Bambach Wires & Cables Pty Limited (Bambach). Following his re-appointment as a director of EGY, Mr Chown remains as CEO of the group and director of Bambach. Mr Chown is a member of the Audit and Risk Committee and the Remuneration and Nomination Committee. 6 Energy Technologies Limited – 2024 Annual Report Directors’ Report (continued) DIRECTORS (continued) Brian Jamieson (Chairman – Non-Executive Director) Appointed 24 December 2020. Deceased 7 August 2023. Mr Jamieson had over 40 years’ experience in the advisory, manufacturing, resources and technology industries in Australia and offshore. Mr Jamieson was Chief Executive of Minter Ellison Melbourne from 2002-2005. Prior to joining Minter Ellison, Mr Jamieson was Chief Executive Officer at KPMG Australia from 1998-2000, Managing Partner of KPMG Melbourne and Southern Regions from 1993-1998 and Chairman of KPMG Melbourne from 2001- 2002. Prior to the merger of Touche Ross & Co and Peat Marwick Hungerfords to form KPMG, Mr Jamieson was the Managing Partner for Australia for Touche Ross & Co. He had over 40 years’ experience in providing advisory and audit services to a diverse range of public and large private companies. He was also a Fellow of the Institute of Chartered Accountants in Australia and New Zealand and a Fellow of the Australian Institute of Company Directors. Mr Jamieson was also a Non-Executive Director of IODM Limited and a Non-Executive Director of Highfield Resources Limited. Mr Jamieson was formerly Non-Executive Chairman of Sigma Healthcare Limited (resigned 13 May 2020), Non-Executive Chairman of Mesoblast Limited (resigned 31 March 2019), Non-Executive Director of Oxiana/OZ Minerals Limited from 2005 to 2015 and served as Chairman of Audit Risk and Compliance, Nomination and Remuneration, and Due Diligence Committees. He was a Non-Executive Director of Tatts Group Limited from 2005 to December 2017 and served as the Chairman of Audit and Risk Committee, Chairman of the Due Diligence Committee and member of the Remuneration Committee. He was also a Non-Executive Director of ASX listed Tigers Realm Coal from 2010 to 2015 and chaired various committees. Mr Jamieson was a member of the Audit and Risk Committee, the Remuneration Committee and the Nomination Committee. COMPANY SECRETARY Gregory R Knoke, B. Com, CA (Company Secretary and Chief Financial Officer) Appointed 30 April 2003 Director of Cogenic Pty Limited. Mr Knoke was a director of Energy Technologies Limited from May 2000 until 30 April 2003, resigned upon acceptance of the position of CFO and Company Secretary. Born in 1952, educated at University of NSW and graduated in 1973 with major in accountancy, he holds a Bachelor of Commerce degree with merit. Mr Knoke is a Chartered Accountant and Associate member of Chartered Accountants Australia and New Zealand since 1979, and an affiliate member of Chartered Secretaries of Australia. Business consultant and advisor, with extensive work experience throughout Asia and Europe, Mr Knoke spent 13 years in Hong Kong as Asian Group Financial Controller and Director for BIL Asia Holdings Limited and subsidiaries of the Brierley Investments Limited Group. 7 Energy Technologies Limited – 2024 Annual Report Directors’ Report (continued) PRINCIPAL ACTIVITIES EGY’s principal activities during the year were:  The manufacture and sale of specialist industrial cables and ancillary products through wholly owned subsidiary Bambach Wires & Cables Pty Limited (Bambach);  Driving organic growth and organisational change in Bambach; and  Seeking other products, businesses and opportunities for the Group. REVIEW AND RESULTS OF OPERATIONS EGY has reported a consolidated loss after tax and minorities for FY2024 of $10,537,212 (FY2023 loss after tax and minorities $15,344,996). Wholly owned subsidiary Bambach Wires & Cables Pty Limited (Bambach) reported a loss after tax of $9,002,326 (FY2023 loss $14,127,919). The FY2023 result included a one-off amount of $5,194,327 to fully impair the FY2023 carrying value of intangible development assets and purchased intellectual property to NIL. The FY2024 result includes an inventory write down of $528,409 (2023: $798,286) as a result of a continued detailed review of inventory items by location and including slow moving stock. During the period, the company resolved to change the business strategy. Post a wide-ranging review, the company moved to de-risk the company away from its reliance on manufacturing. The company signed a distribution agreement with Gantner to provide renewable energy solutions in Australia and New Zealand, engaged with overseas manufacturers and agreed supply agreements for purchased sales of Low Voltage cables and ancillary products and implemented the internal manufactured strategy of concentrating the operations to high margin low-voltage production. While this has resulted in the short-term revenue decline as experienced in the last quarter of the Financial Year, it provides the company with better financial controls on outgoing operational cash flow. Pleasingly, albeit small, the company has now generated sales in both the Purchased Sales division and the Renewable Energy space. While the manufacturing division will continue to provide regular cash flow generation, the two new divisions will be concentrated around tender wins on larger scale contracts. The company is buoyed by these small, short-term results and looks forward to the second half of FY25 once the strategic pivot in operations is finalised. STATE OF AFFAIRS During the financial year, the Group repaid $2,533,979 (2023: $8,579,009) of both long and short-term interest bearing debt. In relation to the Going Concern position of the Group, please refer to the details set out in Note 1(c) to the Financial Statements and the Events After the Reporting Period Note 28. DIVIDENDS No dividends were paid or recommended by the parent company EGY this financial year. NON-AUDIT SERVICES During the year the Company’s auditor, Crowe Audit Australia, performed no other services in addition to their statutory duties. Details of the amounts paid to the auditors and their associates for audit services provided during the year are set out in note 6 to the financial statements. In addition, amounts paid to other auditors for other statutory audit services have been disclosed in that note. 8 Energy Technologies Limited – 2024 Annual Report Directors’ Report (continued) EVENTS SUBSEQUENT TO REPORTING DATE The following matters have occurred post reporting date: (i) Unsecured short-term loans of $2,450,000. These loans incur an interest rate of 18% per annum. Of these loans, $950,000 matures in October 2024 or such other date as agreed between the parties and $1,500,000 matures in December 2024 or such other date as agreed between the parties; (ii) A $6,000,000 line of credit has been provided, to be drawn upon as required, and is in place until 31 October 2025. This is dependent on there being no default on other short-term loans provided in (i) above; and (iii) The Company is undertaking a non-renounceable pro-rata rights issue, announced on the ASX platform on 12 September 2024, to eligible shareholders to raise up to approximately $12.7 million by the issue of up to 422,074,788 new shares at an offer price of $0.03 (3 cents) per new share. Shaw and Partners Limited is acting as lead manager to the Offer. Shareholders who subscribe for their full entitlement under the Rights Issue Offer will also be able to subscribe for additional shares at the same price. The Directors also reserve the right for up to 3 months after the close of the Offer to place the balance of any New Shares not taken up. The offer closing date is 2 October 2024. Other than what is noted per above, there have been no other matters that have arisen since the end of the financial period any other matter of circumstance which, in the opinion of the directors of the Company, significantly affects the operations of the Company, the results of those operations, or the state of affairs of the Company in subsequent financial years. LIKELY DEVELOPMENTS AND EXPECTED RESULTS Refer Events Subsequent to Reporting Date above. Future Developments and Risks Opportunities Energy Technologies Limited (EGY) 100% owned subsidiary, Bambach Wires & Cables Pty Limited (Bambach) manufactures Low Voltage electric cables at its 13,000 sqm Rosedale, Victoria facility. Bambach has a substantial range of cable making equipment manufacturing a large range of both specialised and nonspecialised low Voltage cables. The company also has warehouses in Dandenong, Victoria, Brookvale, New South Wales and Perth, Western Australia, as well as Sales Offices in Newcastle and Adelaide. The raising of capital by way of non-renounceable rights issue and placement, as well as the issue of convertible notes, with the prospect of a further capital as required, means that the business is adequately capitalised ensuring raw material supply to sustain growth which has been a failing of the company over recent years. Bambach has recently undertaken a significant strategy pivot, this new direction is heavily focused on providing end to end solutions into the renewables space, primarily utility scale solar. As recently announced, the company has signed a distribution agreement with Gantner, a leading supplier of measurement & control systems in this space as well as a further agreement with Tratos Group, a leading European cable manufacturer, thus expanding our portfolio into the MV, HV & distribution arena. Bambach has more new products to launch over the coming twelve months and is also well placed with appropriate approvals to take advantage of the expected infrastructure projects throughout Australia, alongside the emerging renewables market. The fact that Bambach manufactures in Australia, places it at the forefront of local content suppliers for low voltage cable. Recent global strategic considerations and supply chain dislocation due to the pandemic have benefited the company and this is expected to continue as both State and Federal governments become ever more demanding in their quest to support local industry both to ensure jobs and to build sovereign capability. Strategically, the company at all levels is well placed to take advantage of growing interest in Australian manufacturing and regionalisation and has the necessary contacts and skills to build on its capabilities to rival the best specialist cable manufacturers in the region. 9 Energy Technologies Limited – 2024 Annual Report Directors’ Report (continued) LIKELY DEVELOPMENTS AND EXPECTED RESULTS (continued) Risks Bambach must continue to develop and upgrade its manufacturing facilities to enable it to meet efficiency and productivity requirements and produce locally a continually expanding range and size of cables. Failure to do so will substantially limit growth and will not allow anticipated margin improvement. A rise in the AUD against the USD will impact negatively on the competitiveness of the business. At AUD/USD 0.80 the business may be less competitive with imports of like quality. A fall from this level is favourable to the business whilst a rise is unfavourable. Bambach is a small player in a market where there are several very large competitors and management are very aware that to compete Bambach must maintain a point of difference. To this end it must continue with a very active research and development agenda, developing new cables and continuously upgrading existing cables. It must also continue to develop its manufacturing processes and adopt a continuous upgrade program. It must also continue to excel in the level of service that it provides. Any failure in any of these areas will bring significant risk to the business. Bambach continues to report a loss and has not been profitable for an extended period. This weakness has been supported financially by significant fund raising and investment, which has been successfully undertaken in the past and continued in FY2024. The company must deliver to maintain the support of its shareholders and financiers, and in this respect, it must deliver on the small objectives as well as the larger objective of returning to profitability. Thus, it must continue to deliver on bringing new products to market and on increasing productivity to build a robust sustainable business. Failure to meet accepted milestones on this path will pose a risk to continued financial support. The Group has based its business plan on the belief that both Federal and State governments will proceed with planned infrastructure, energy and defence spending. Now significant projects are proceeding. Any cancellation of these plans or continued delay will impact negatively on the opportunities that lie ahead for the company. The Group has developed products some of which still require final testing and approval. Any failure to pass testing in a timely manner or not obtain approval will impact negatively on the company’s performance. Like all businesses globally the threat of further waves of the Covid-19 pandemic pose significant risk to the economy and to the group. Rising geopolitical tensions also pose a significant risk. ENVIRONMENTAL REGULATION AND PERFORMANCE The group operates a factory in Rosedale, Victoria which is required to comply with local planning laws, and with State and Commonwealth Environmental laws. The company considers that the factory operations are currently compliant and is not expecting any adverse impact as a result of the environmental regulation. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS Indemnification The Company has entered into Deeds of Indemnity and Access with persons who are an Officer or Director of the Company or a related body corporate, indemnifying such persons against a liability incurred by them in their capacity as an Officer or Director, including costs and expenses of defending legal proceedings and providing them with access to company records where a claim is made or threatened against such Officer or Director. Insurance Premiums The Company has not, during or since the end of the financial year, in respect of any person who is or has been an auditor of the Company or a related body corporate paid or agreed to pay a premium in respect of a contract insuring against a liability for costs or expenses of defending legal proceedings. The Company has paid insurance premiums in respect of Directors' and Officers' liability and legal expense insurance for Directors and Officers of the Company. In accordance with subsection 300(9) of the Corporations Act 2001, further details have not been disclosed due to confidentiality provisions contained in the insurance contract. 10 Energy Technologies Limited – 2024 Annual Report Directors’ Report (continued) 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 a 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 year. EMPLOYEES The Group employed 73 employees as at 30 June 2024 (2023: 91 employees). REMUNERATION REPORT The remuneration report is set out on page 13 and forms part of the Directors’ Report for the financial year ended 30 June 2024. DIRECTORS' MEETINGS The numbers of meetings of Directors (including meetings of Committees of Directors) held during the year and the number of meetings attended by each director were as follows: Board of Directors Audit and Risk Committee Remuneration and Nomination Committee 26 5 - Matthew Driscoll 26 5 - Anthony L Smith 26 5 - Alfred J Chown Brian Jamieson (deceased 7 August 2023) 24 5 - - - - Number of meetings held: Number of meetings attended: Committee Membership Audit and Risk Committee: Matthew Driscoll Alfred J Chown Anthony L Smith Remuneration and Nomination Committee: Anthony L Smith Alfred J Chown Matthew Driscoll INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY AND RELATED BODIES CORPORATE The relevant interest of each director in the shares, and options over such instruments, issued by the companies within the Group and other related bodies corporate, as notified by the directors to the Australian Securities Exchange in accordance with S205G(1) of the Corporations Act 2001, at the date of this report is as follows: Dulhunty Engineering Limited Energy Technologies Limited Ordinary Shares Listed Options Unlisted Options Ordinary Shares Matthew Driscoll 6,560,277 889,921 - - Alfred J Chown 8,243,575 - - 59,724 Anthony L Smith 1,241,147 169,036 - - Gary A Ferguson – director of Bambach 1,154,044 - - - 11 Energy Technologies Limited – 2024 Annual Report Directors’ Report (continued) SHARES UNDER OPTION Unissued ordinary shares of EGY under share option at the date of this report are as follows: Grant date 14 October 2021 Expiry date Exercise price 31 October 2024 $0.200 Number under option 9,000,000 Shares issued under the non-renounceable rights issue 14 October 2021 had 25,000,058 attaching listed share options expiring 31 October 2024. The offer price for these options was $NIL and the options have an exercise price of $0.20. No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the company or of any other body corporate. Shares issued on the exercise of options There were no ordinary shares of EGY issued on the exercise of options during the year ended 30 June 2024 and up to the date of this report. AUDITOR’S INDEPENDENCE DECLARATION A copy of the Auditor’s Independence Declaration as required under s307C of the Corporations Act 2001 is included on page 32 of this financial report and forms part of this Directors’ Report. CORPORATE GOVERNANCE STATEMENT Energy Technologies Limited and the Board of Directors are committed to achieving and demonstrating the highest standards of corporate governance. Energy Technologies Limited has reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations (4th Edition) published by the ASX Corporate Governance Council. Details of the corporate governance report is available on the Group website at https://www.energytechnologies.com.au Signed in accordance with a resolution of the Directors. Alfred J Chown Director 30 September 2024 12 Energy Technologies Limited – 2024 Annual Report Remuneration Report (audited) The Remuneration Committee of the Board of Directors is responsible for determining and reviewing compensation arrangements for the directors and the executive team. Remuneration levels are set to attract and retain appropriately qualified and experienced Directors and senior executives. The Remuneration Committee obtains independent advice on the appropriateness of remuneration packages, given trends in comparative companies both locally and internationally. The Remuneration Committee also assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high-quality Board and executive team. Such officers are given the opportunity to receive their base emolument in a variety of forms including cash and fringe benefits such as motor vehicles. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the company. Executive remuneration packages include a mix of fixed remuneration and performance-based remuneration. Fixed Remuneration Fixed remuneration consists of base remuneration as well as employer contributions to superannuation funds. Remuneration levels are reviewed annually by the Remuneration Committee through a process that considers individual, segment and overall performance of the consolidated and operating entity. A senior executive’s remuneration is also reviewed on promotion. Performance – linked Remuneration The Remuneration Committee links the nature and amounts of executives’ emoluments to the company’s financial and operational performance. All senior executives have the opportunity to qualify for participation in the Employee Bonus Plan, which currently provides incentives where specified criteria are met including criteria relating to profitability. Performance linked remuneration includes both short term and long-term incentives and is designed to reward executive directors and senior executives for meeting or exceeding financial and personal objectives. The short-term ince