Ann: Appendix 4D and Half Year Accounts, page-5

The 2Q2024 4C statements and business activity updates announced at the end of July had already prepared us for this Shxty 1H2024 report. So it is kind of expected. I guess this is why we are back to sub-10 cents, some of us would throw in the towel for seeing the management losing the trust from the shareholders while some chooses to hang on for the 3Q report at the end of October.

Having said that, there are a few points in the 1H report that I would like to highlight and perhaps query.

1. Half year loses was $9.5M compared to 1H2023's $9M. Obviously IVC as a non contributor is one factor, but if we take into the account of "Write off of trade receivables and contract assets" of $1.5M in Note 6 (page 19 & 20), the half year performance had actually improved by $1M.

" As a result of the continued slowdown in China and an ongoing review of the collectability of accounts receivables, the Group has made the determination that several projects booked between 2021 to 2023 are at risk of cancelation or have been delayed indefinitely and, therefore, the Group has decided to write off $1,496,000 in trade receivables and contract assets."

2. I am puzzled on what the management had highlighted that the SG&A cost had reduced, but a reading on page 18, while it is true there is comparative reductions in the business segments, the Operating expenses under Corporate had increased from $2.548M (2023) to $5.391M (2024). Even if we consider a total of 39M options that were issued (at 10c strike) for the half year, the rest of the $2.8M increased in corporate operating expenses needs some explanations.

3. There was mention of the MABR production plant has moved from Israel to USA, and the commissioning will be in this half, there is no mention of the cessation of the sales operation in Israel. There is no mention of cost associated to this restructuring, but there is changes in the 2023 figures provided last year compared to the 2023 figures in this report, particularly on the MWW segment of the business.

Now, just a little bit of positive carrots to let us hang in there:
It seems like what we have been staying in this mental asylum all this while is in the wide adoption of MABR. In page 5 of this report, the activities in Municipal Water and Wastewater segment which I believe has a higher gross margin is expanding faster.

"The Company also continues to expand its independent municipal rep network. Fluence has added 8 new reps YTD 2024 for a total of 21 (62% growth). Almost all US states and Canadian provinces are now covered by Fluence reps. This is expected to lead to continued sales pipeline growth."

" In North America, the pipeline has grown from $38 million as at 30 June 2023 to $242 million as at 30 June 2024, an increase of 537%. H1 2024 orders in MWW were $9.2 million, an increase of $6.4 million or 230%. In North America alone, orders in H1 2024 were $3.5 million, an increase of $1.7 million or 100%.[4] Total backlog was $8.7 million as at 30 June 2024, an increase of $2.3 million or 36%."

So, I hope we will not get disappointed come end October.