Redflow : Annual Report

Sustainable energy storage solutions

Annual

Report

BOARD OF DIRECTORS

Brett Johnson (Chairman) Timothy Harris (Managing Director and Chief Executive Officer) John Lindsay

David Brant

Adele Fraser

COMPANY SECRETARY

Trudy Walsh

BANKERS

Commonwealth Bank of Australia

1/9 Brookfield Rd

Kenmore Hills, QLD, 4069

PATENT ATTORNEYS

Spruson & Ferguson

Level 6, 175 Eagle Street

Brisbane, QLD, 4000

AUDITORS

PricewaterhouseCoopers

480 Queen Street

Brisbane, QLD, 4000

CONTACT DETAILS

www.redflow.com

[e-mail] Tel : [phone] Fax: [phone]

SOLICITORS

Thomson Geer Lawyers

Level 28, Waterfront Place,

1 Eagle Street

Brisbane, QLD, 4000

PRINCIPAL REGISTERED OFFICE IN AUSTRALIA

Redflow Limited

ACN 130 227 271

ABN 49 130 227 271

1/27 Counihan Road,

Seventeen Mile Rocks

Brisbane, QLD, 4073 Australia

SHARE REGISTRY

Boardroom Pty Limited

Contents

Highlights	1
CEO and Chairman's report	2
About us	6
Environment, social and governance	7
Directors' report	8
Remuneration report	15
Corporate governance report	25
Risk report	35
Auditor's independence declaration	43
Consolidated statement of comprehensive income	44
Consolidated balance sheet	45
Consolidated statement of changes in equity	46
Consolidated statement of cashflows	47
Notes to the consolidated financial statements	48
Directors' declaration	80
Independent auditor's report to the members	81
ASX additional information	87

Level 8, 210 George Street Sydney, NSW, 2000

REDFLOW LIMITED ANNUAL REPORT 2023

Highlights

270+	OVER
6 GWh
active deployments	sales pipeline

24

MWh battery	20 MWh
projects announced in	largest project
last 12 months	announced

Estimated	Cumulative hours	Total energy
tonnes amount	of field operations	delivered
of CO2 offset	since 2018	to date
2,080	24 Million	3.2 GWh

* Information current as of August 2023.

1

CEO and Chairman's report

We feel that Redflow has now reached a critical inflection point in its growth strategy, with over 25 MWh of purchase orders or battery commitments to be delivered in the next 12- 18 months, representing $23m of revenue.

The 2023 financial year has been pivotal for Redflow. We have achieved important commercial milestones that represent

a major step forward in the Company's strategic growth. In parallel, a number of market forces which will support the adoption of our technology and the medium- to long-duration energy storage market also accelerated.

These provide a strong basis for us to be confident of future demand for Redflow's world leading flow battery solution.

Key achievements and announcements throughout FY2023 and in recent months have included:

• The announcement of a 4 MWh energy storage system project with Energy Queensland in August 2023 as part of their network battery program, representing the next stage of the partnership between Redflow and Energy Queensland following the Memorandum of Understanding that was signed in February 2023;
• The announcement of Redflow's largest project to date in June 2023 - a 20 MWh battery system in California that will be one of the largest flow battery systems to be deployed in the US, funded by the Californian Energy Commission (CEC);
• • Redflow's zinc-bromine flow battery was approved by the California Public Utilities Commission as eligible for
    the state's Self-Generation Incentive Program (SGIP);

• In a strong endorsement of Redflow's technology in the US and the increasing

focus on non-lithium energy storage systems, Redflow signed partnerships with leading cleantech companies Black

• Veatch in August 2022 and Ameresco in March 2023 to supply

advanced non-lithium battery energy storage technology to the market;

• Redflow was shortlisted as an energy storage technology choice supplier for the Electric Mine Consortium in Australia in April 2023;
• In September 2022, Redflow announced a collaboration with The University of Queensland within the Australian Research Council (ARC) Research Hub for Safe and Reliable Energy Storage to develop a deeper understanding of the electrolyte chemistry and electrode materials to further extend the operational characteristics of the Zinc Bromine Module (ZBM);
• Implementation of key reference projects in Australia, including three sites for the Australian Government's Bureau of Meteorology emissions reduction and reliability project, delivery of the final shipment of ZBM3 batteries to Southern Ocean Lodge on Kangaroo Island, South Australia, and a third project for Knox City Council following on from successful deployments at two childcare centres in 2019;
• Redflow was referenced in the 2023 CSIRO Renewable Energy Storage Roadmap report recognising the role of zinc-bromine flow batteries and continues to work closely with industry alliance groups such as the Long Duration Energy Storage Council and International Zinc Association to raise awareness and the profile of our solution; and
• Achieved 18 months operational milestone in May 2023 for Redflow's flagship 2 MWh Anaergia installation in California, which continues to provide a critical reference site for US customers and partners.

2

Well placed for commercial success in FY24 and beyond

We feel that Redflow has now reached a critical inflection point in its growth strategy. Over the last six months, Redflow has achieved the most advanced stage of commercial success than at any time in its history.

The strong business momentum that we are building on, coupled with our ambitious strategy, a dedicated team and evolving market, all combine to create an exciting outlook for us.

As at the middle of August 2023, Redflow now has over 25 MWh of purchase orders or battery commitments to be delivered over the next 12 - 18 months,

REDFLOW LIMITED ANNUAL REPORT 2023

Redflow batteries installed at a Bureau of Meteorology weather radar location.

which represent over $23m of revenue.

Redflow's continued focus on the commercial and industrial applications in the priority Australian and United States markets has also dramatically improved and expanded our sales pipeline, which now stands at over 6 GWh of qualified opportunities. Importantly, a number of opportunities which are at detailed customer engagement stage, representing approximately 70 MWh of total battery demand in addition to the orders already received for delivery in 2024 and early 2025.

After a number of frustrating supplier challenges in our Thailand manufacturing facility in early 2023, full production is now back on-line, and we are accelerating our scale up to meet this level of current orders and conversion of additional sales from our pipeline. The facility is now well placed to scale up to 80 MWh p.a. over the next 12 months as battery delivery requirements and timing is confirmed.

Significant stimulus and momentum in target markets

The demand for long-duration energy storage (LDES) solutions continue to accelerate. Stationary energy storage is now moving to the core of energy transition strategies as industry looks beyond lithium to meet their medium- to long-duration energy storage needs. Redflow is well placed to benefit from stimulus and regulatory changes in the US and Australia as the energy transition accelerates and market focus shifts

to LDES.

New legislation and regulatory stimulus announced by global governments throughout the year will transform the energy storage space making our technology a more viable solution. The US Inflation Reduction Act alone is set to accelerate the US LDES market dramatically, with major financial benefits available for energy storage projects.

By 2030 North America is projected to reach 88 GW/278 GWh1 of energy storage and in California alone, an estimated 45-55 GW of LDES is forecast to be required by 2045 to support grid reliability and the State's clean energy transition targets2. This level of market demand provides strong foundations for the opportunities that Redflow is currently progressing

and executing.

The Australia United States Climate, Critical Minerals, and Clean Energy Transformation Compact, signed in May 2023 affirms the position of climate and clean energy as the third pillar of

Redflow's EnergyPod 200.

1. https://pv-magazine-usa.com/2023/03/23/north-america-represents-21-of-global-energy-storage-market-by-2030/#:~:text=The%20energy%20storage%20market%20is,BNEF's%201H23%20energy%20storage%20outlook.
2. Long Duration Energy Storage for California's Clean, Reliable Grid, California Energy Storage Alliance, 2020 https://static1. squarespace.com/static/5b96538250a54f9cd7751faa/t/5fcf9815caa95a391e73d053/1607440419530/LDES_CA_12.08.2020.pdf

3

the Alliance and Redflow is uniquely positioned to benefit from the new clean energy focus.

Australia is also seeing a significant need for energy storage, with the Australian Energy Market Operator (AEMO) Integrated System Plan, released in July 2022, suggesting that the National Electricity Market will require by 2050 a total of 46 GW (640 GWh) of dispatchable storage in all forms and 16 GW capacity of utility scale battery and pumped hydro storage. Critically, AEMO's market update in February 2023 referenced growing system instability and the urgent need for Australia to invest in LDES.

Major reference projects

Redflow's $18m, 20 MWh project for the Paskenta band of Nomlaki Indians in California, announced in June 2023, represents a major step forward for the company. We expect to deliver this 20 MWh project over the next

12 - 16 months.

As well as being ten times the size of our current 2 MWh system in California, Redflow joins a very small number of LDES companies - and only Australian company - that the CEC has funded so far through their US$140m long duration storage program. CEC management have publicly stated they have a specific goal of helping to commercialise proven LDES solutions in the program to achieve 200

- 400 MWh projects in the future.

Closer to home, our 4 MWh project with Energy Queensland announced in August 2023 also represents a significant reference point in our commercial strategy and tangible proof of our growing value proposition in large MWh projects. As a proudly Queensland developed technology, we are well positioned to support Queensland's $62bn Energy and Jobs Plan which aims to achieve 70% renewables by 2032.

As Minister for Energy, Renewables and Hydrogen and Minister for Public Works

• Procurement, Mick De Brenni, noted in the announcement of our 4 MWh project; "Redflow's zinc-bromine batteries are an important part of the transformation of Queensland's energy and will enable

the State to transition to a low carbon energy future".

Critically, both of these projects have enabled us to accelerate current opportunities in our pipeline and has generated significant new interest for MWh scale projects in our US and Australian core markets as well as other locations.

Looking forward

With a series of high-profile MWh scale projects to deliver, a large and robust pipeline, and a scalable delivery capability, Redflow is in a strategically advantageous position. The Company is primed not only to achieve further commercial success but also to extend its global leadership in the medium- to long-duration energy storage market-a sector poised for explosive growth over the next decade.

As previously communicated to investors, our focus on larger systems within the commercial and industrial sector, along with our dedication to core markets in the

Brett Johnson

Chairman

US and Australia, represents a deliberate strategic choice. While this has led to a temporary impact on FY2023 revenue, we maintain strong confidence in the prudence of this decision, as it positions us favourably for the future. Our recently announced projects and the quality of the opportunities in our current pipeline are an initial testament to that decision.

Undoubtedly, there is substantial work ahead of us. However, we now stand at the most positive point in the company's history, poised to capitalise on the foundations we have diligently built over many years. We are confident that, with the right level of shareholder support, the platform we have established and the market momentum we have created in the last few months, we can play a pivotal role in the global energy transition, drive further commercial success, and ultimately deliver returns for our valued shareholders.

Tim Harris

CEO and Managing Director

4

REDFLOW LIMITED ANNUAL REPORT 2023

Artist's impression of the 20 MWh Paskenta microgrid project.

5

About us

Redflow is leading the renewable energy transition by delivering one of the world's safest and cleanest energy storage solutions.

With offices in Australia, Thailand and the US, Redflow designs and manufactures long-durationzinc-bromine flow batteries for stationary commercial, industrial, and utility applications.

Redflow batteries are modular, scalable, fire-safe, and capable of 100% depth of discharge. They can also operate in a wide range of environments without supplemental heating or cooling and offer an extended life with minimal degradation over time.

Our smart, self-protecting storage technology offers unique advantages, including a hibernation feature, secure remote management, a simple recycling path, and sustained energy delivery throughout its operating life.

Redflow proudly developed our technology in Australia, with the capability to deliver it globally. Our deployments

have been in use for more than a decade and are located throughout the world

at over 270 sites, so we can meet your energy storage needs.

We are dedicated to a sustainable, carbon-free future, and we are proud that our flow battery technology will help to build the energy storage systems of today, as well as tomorrow.

Our vision, mission and values describe what we stand for. Founded on authenticity and ambition, they shape our culture and guide our work every day.

They also help ensure we work well together, operate safely, minimise impacts on the environment and create value for our shareholders.

Our vision

To be a global leader in clean energy storage, paving the way to a sustainable future.

Our mission

Redflow is leading the renewable energy transition by delivering the world's safest and cleanest energy storage solution.

6

REDFLOW LIMITED ANNUAL REPORT 2023

Environment, social and governance

A sustainable, carbon-free future is at the heart of all that we do. We understand that as the world transitions to zero emissions our energy storage solution will play a vital role and we take our responsibilities seriously. We are proud that we can make a difference on a global scale by delivering a unique energy storage solution.

Environmentally responsible

We are proud to produce one of the most environmentally friendly energy storage solutions; our batteries are fully recyclable and manufactured from widely available, low-toxicity materials.

We are dedicated to a sustainable, carbon-free future, and we are proud that our flow battery technology will help to build the energy storage systems of today, as well as tomorrow.

• Battery is made from HDPE plastic which is commonly recycled into plastic bottles.
• Electronics - follows standard pathway for electronics recycling.
• Electrolyte - R&D program to recondition electrolyte for reuse.

• Minerals sourced from non-conflict areas.
• No CO2 emitted from operation.

Social standards

We are a tightknit team of passionate people from diverse cultural backgrounds who are all committed to delivering a solution that we believe will change the world. We embrace cultural and gender diversity and promote these values within the business.

We are committed to ensuring that our business is undertaken in accordance with international standards. Our approach to sustainability aligns with the United Nations Sustainable Development Goals, which are recognised as the global blueprint for a sustainable future.

Our business approach contributes to five goals that we feel are most relevant to operating our business responsibly and where we can have the biggest impact:

No conflict

minerals

Fully recyclable
plastics and
construction
materials	Build

Simple recovery
& reuse of	Re-use	Use
chemistry at
end of life

Potential for late-life refurbishment & reconditioning to extend life

Low embedded energy

(i.e. less energy

required to

manufacture than other

electrochemistries)

Maximise use of renewable energy generation

No CO2 emitted from operation

7

Redflow Limited

Directors' report

For the year ended 30 June 2023

The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Group') consisting of Redflow Limited (referred to hereafter as the 'Company') and the entities it controlled at the end of, or during, the year ended 30 June 2023.

Directors

The following persons were Directors of Redflow Limited during the whole of the financial year and up to the date of this report, unless otherwise stated:

Directors	Position	Date of	Date of
Appointment	Resignation
Brett Johnson	Chairman (Non-executive)	27 September 2017
Timothy Harris	Managing Director & Chief	2 July 2018
	Executive Officer (CEO)
David Knox	Director (Non-executive)	2 March 2017	28 February 2023
John Lindsay	Director (Non-executive)	11 September 2018
David Brant	Director (Non-executive)	19 October 2018
Adele Fraser	Director (Non-executive)	23 February 2023

Principal activities

The principal activity of the Group consists of the sale, manufacture and ongoing development of its zinc- bromine flowing electrolyte battery.

A review of the operations of the Group for the financial year is included in the Directors' Report.

Dividends

No dividend has been paid and the Directors do not recommend the payment of a dividend. (2022: nil).

Issue of shares

During the year, issued capital increased by $13,006,996 (from $140,702,054 to $153,709,050). A total of 33,080,979 ordinary shares were issued during the year. Details of the changes in issued capital are disclosed in Note 22 of the financial statements.

Review of operations and financial position

During the year the Company executed on key elements of its strategy. Milestones achieved include:

• Announcement of our largest project to date, a 20 MWh project in California for the Paskenta Band of Nomlaki Indians, funded through the California Energy Commissions Long Duration Storage Program;
• Launch of the 200kWh Energy Pod for large scale energy storage solutions. This product will be the core to our delivery of our 20 MWh project in California and 4 MWh Project for Energy Queensland announced in August 2023, and has garnered strong interest in Australia and other parts of the world with a number of other smaller orders being received with anticipated deliveries over the next 12 to 18 months;
• The successful installation and commissioning of Redflow batteries for key projects in Australia. This includes the Australian Government's Bureau of Meteorology emission reduction and reliability project as well as the sale of new 3rd generation batteries (ZBM3) to MyENERGY for the 560kWh Southern Ocean Lodge project in South Australia;
• The compact version of the Energy Pod, the QuadPod 40 kWh solution was also launched and has also generated strong interest in the commercial and industrial segments of the market in Australia;
• Strategic relationships established with leading Engineering Procurement and Construction (EPC) companies Ameresco and Black & Veatch to provide advanced non-lithium energy storage solutions to customers across North America and Europe;
• Achievement of our 1.5-year operational milestone in May 2023 for Redflow's reference 2 MWh installation for Anaergia in California, which continues to generate significant industry interest;
• Redflow's zinc-bromine flow battery has been approved by the California Public Utilities Commission as eligible for the state's Self-Generation Incentive Program (SGIP);
• Launched a new $5 million research collaboration with The University of Queensland within the Australian Research Council (ARC) Research Hub administered by Deakin University to extend
  Redflow's technology leadership.

8