Redflow : Appendix 4D and Interim Financial Report

For personal use only

Redflow Limited

ABN 49 130 227 271

Appendix 4D and Interim Financial Report

For the half-year ended 31 December 2021

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Directors' report

For the half-year ended 31 December 2021

Your Directors submit their report on the consolidated entity (referred to hereafter as the Group) consisting of Redflow Limited (the Company) and the entities it controlled for the half-year ended 31 December 2021.

Directors

The following persons were Directors of Redflow Limited during the half-year and up to the date of this report:

usePrinciple Activities

The principle activities of the Group consist of the development, manufacture and sale of its zinc-bromine flowing electrolyte battery module (ZBM).

Review of operations

Redflow has continued to make significant progress with its strategy in the first half of FY2022.

A number of achievements and milestones were achieved over the half-year period. These include:

• Recruitment of Redflow's US team, located in California;
• Commencement of the UL certification for the Redflow Gen3 battery which is a key element of market acceptance for key industries;
• Facilitated an independent testing program with the non-profit arm of Underwriter Laboratories, which is a recognised leader in independent testing laboratory in the United States;
• Independent validation of Redflow's low fire risk credentials with DNV, a leading independent consultancy focused on Assurance and Risk Management, plus independent performance testing of Gen3 batteries at DNV testing facilities in New York;
• Exhibited at a leading US renewable energy trade event in California with significant interest generated;
• Progress against a number of sales opportunities which have material sales potential; and
• Ongoing progress to diversify our supplier base for critical materials from US companies.

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Directors' report

For the half-year ended 31 December 2021

Over the period and into early 2022, Redflow has continued to progress its Gen3 battery developments despite ongoing COVID-19 challenges. The Gen3 battery will result in substantial cost benefits, while delivering the same level of performance to customers. It will also allow Redflow to implement automation in the manufacturing

onlyprocess. COVID-19 has continued to disrupt Redflow's Thailand production facility including travel restrictions and delays associated with material supply and global logistical challenges. Redflow continues to target introducing Gen3 into production in Q4 of FY22.

The loss of the Group after income tax on a consolidated basis for the half-year ended 31 December 2021 was $5,193,639 (2020: $2,949,454).

The Group's independent auditor's report for the half-year ended 31 December 2021, contains a material uncertainty section drawing members attention to the contents of Note 2(a) of the accompanying financial statements which deals with the Group's going concern assumptions and the basis upon which those financial

usestatements have been prepared. A copy of the independent auditor's report is included with the accompanying financial statements for the half-year ended 31 December 2021.

Other developments

As we continue to execute on Redflow's long term growth strategy, we are developing our sales pipeline, maintaining production and executing on our projects to reduce the cost of our batteries. This will see the business continue to be cash-flow negative for some time. The business will need additional working capital this

year. As noted in the 2021 AGM Chairman's address, Management and the Board continue to evaluate potential personalsources of working capital to support Redflow's long term growth strategy.

Auditor's independence declaration

A copy of the Auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 6.

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

Brett Johnson

Chairman

ForBrisbane

28 February 2022

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