Ann: Redflow FY2021 Appendix 4E and Financial Report, page-32

Had a chat to RFX today …

Revenue - recognised over time + recognised revenue that not yet invoiced relates to the Anaergia contract. Contract allows for progress payments (invoiced) but RFX has also recognised some revenue for work done that can’t yet be invoiced. Based on earlier market releases, cells should be installed and invoiced by end 1H.

Write off of $454K on the Anaergia contract is the total loss they expected to make on the contract (not just the loss on work done up to 30/6/21). They expected to lose money on the contract when they agreed to it … but thought the exposure would be worth it. They still believe this given the amount of exposure they’re getting.

The ~$1M of raw materials is an accumulated impairment (only ~$66K relates to FY21). I’ll have to find where I saw the $s written off on labour (RFX wasn’t sure if they’d disclosed it and I couldn’t remember where I got the number from).

Consumables and raw materials includes Phillipines manufacturing labour and appears close to a COGS once adjusted for inventory gain/draw. But it also includes some consumables (but not labour) used in R&D.

Re: larger batteries. They believe 10kwhr cells are optimal for now despite not being able to compete in the domestic market for which the cell size was originally determined … reasons include that larger cells won’t fit inside telecommunications towers and customers are better served with multiple cells due to cells having to go offline for their maintenance cycles (unique issue with RFX batteries) … therefore a commercially installation is best served with multiple cells. They’re also optimistic of scale/automation cost downs as per previous releases.

So, personally a bit more comfortable with them after the chat. I’ll still sit on the bench and watch from the sidelines tho - 1HF22 results may get me on the field.