Redflow Limited has released its financial results for 2018-19, a year during which it achieved several milestones and has put in place the foundations to underpin its growth including:
- manufacturing capabilities proven at volume and optimised to support sales;
- initial orders delivered;
- agreements signed with new partners to underpin future growth;
- raised $8.4 million (before costs) via Entitlement Offer; and
- enhanced Board and management team to drive commercialisation.
Redflow CEO and Managing Director Tim Harris said: “FY19 was a pivotal year for Redflow, significantly progressing our commercialisation strategy. Having moved our in-house manufacturing capabilities in Thailand the year before, our focus over the past 12 months was to re-engage with customers and partners. While some projects experienced customer delays, we received initial orders from several important projects and are confident that orders will scale in FY20 as we receive follow up orders and expand our customer base.”
Over the year, Redflow has undertaken a structured turnaround with a focus on ensuring its Thai manufacturing facility is well positioned to support Redflow’s growth strategy and deliver a growing number of batteries. At the same time, several critical partner and customer relationships were established that have the potential to drive sales volume.
Redflow anticipates the progress made in FY19 will deliver increasing sales orders in FY20. Revenue for FY19 reflected Redflow’s strategic reset, with revenue generated of $800k (FY18: $1.8 million) and a loss after income tax of $11.6 million (FY18: loss of $12.0 million) as capabilities and infrastructure were put in place to allow scaling of business activities.
Redflow’s balance sheet was strengthened following the $8.4 million capital raising. At 30 June 2019, the Company had a cash balance of $10.9 million.
Manufacturing capabilities optimised to support sales
Redflow focused on executing key engineering projects and implementing productivity improvements to increase yield and reduce manufacturing costs, so it is ready to meet customer orders. Over the month of December 2018, 150 batteries were produced – a key milestone for Redflow’s Thailand based manufacturing facility. Production output can be expanded to 250 batteries per month with limited additional capital expenditure. An appropriate level of inventory of batteries for sale now exists and production has been moderated while key engineering projects and productivity enhancements continue to be implemented.
Redflow successfully achieved ISO9001:2015 certification on 3 July 2019. This was an important milestone for the manufacturing facility and is an important demonstration of Redflow’s commitment to a high standard of quality assurance and auditable Quality Management Systems.
Initial orders delivered
During FY19, Redflow received sales orders from key customers in its target markets of Telco and Commercial & Industrial, including:
- In Australia (Telco): Optus deployed six batteries for a mobile phone tower at their Cape Tribulation site in the Daintree rainforest
- In South Africa (Telco): initial order for five batteries for remote mobile phone towers was secured, followed by a second order for 32 batteries, through tower infrastructure company Moropa for new mobile sites for a leading telco operator. Delivery commenced in December 2018 and will continue over the next 6 months
- In Australia (Commercial): supplied 36 batteries to two childcare centres for the Knox City Council through our local partner 720 Electrical, to dramatically reduce energy costs and support their renewable energy commitments
- In Thailand (Industrial): through local partner TSUS, Redflow deployed a 10 battery energy storage system to provide power for an isolated village, demonstrating the advantages of our batteries over traditional battery solutions in the global minigrid market.
Agreements signed with key infrastructure partners to underpin future growth
In line with its commercialisation strategy, Redflow established several key partnerships during FY19. The South African telco market is a key priority for Redflow and it was pleased to sign an agreement with Mobax South Africa and tower infrastructure company Moropa. Mobax is part of Mobax Group, a leading field service provider of engineering, project and technical services to telecommunication network operators across southern Africa. This partnership will continue to be supported by Redflow’s long-time South African distributor, Specialised Solar Systems. The announcement included news that up to 10 ZBM2 batteries will be supplied to a leading South African network provider to validate the technical and commercial benefits of the Redflow energy storage solution for future deployment in its existing mobile tower infrastructure.
Redflow secured preferred supplier status with New Zealand based green energy systems integrator Soul Energy, to provide energy storage batteries for infrastructure projects in Australasia. This gives Redflow the potential to generate significant sales over the long term. Their first customer has a requirement for up to 200 Redflow batteries and the initial order for part of that total requirement is expected to be received in September 2019.
Redflow strategically expanded into the China market, signing a collaboration agreement with ZbestPower Co, a Chinese zinc-bromine flow battery company. Redflow has supplied a large scale (100kwh) battery energy storage solution for a demonstration project relating to a key smart grid project in China, involving the deployment of 10 ZBM2 batteries for an initial six-month period. The high profile project is expected to be a critical springboard to develop further projects in China.
Capital raising and new Board and management team to drive commercialisation
In May 2019, Redflow successfully raised $8.4 million (before costs) via an Entitlement Offer to support the execution and acceleration of Redflow’s business plan in target markets. The raising reflected strong ongoing shareholder support for Redflow.
Executive management appointments have enhanced Redflow’s focus on building the sales pipeline and implementing operational improvements. During the year, Trudy Walsh was appointed Chief Financial Officer, Ben Shepherd as Chief Commercial Officer and Tim MacTaggart as Chief Deployment Officer.
In addition, Redflow’s Board was refreshed to ensure it has the expertise needed to guide and support the management team through its commercialisation phase. Tim Harris joined the Board as Managing Director in July 2018 and technology expert John Lindsay joined the Board in September 2018 as a Non-Executive Director. Mr Lindsay’s appointment allowed Simon Hackett to transition from the Board to a newly created role as System Integration Architect. David Brant joined the Board in October 2018, adding substantial strategic manufacturing expertise.
Outlook for FY20
Commenting on the outlook for FY20, Mr Harris said: “Redflow is at a critical point in its strategic reset, with a growing pipeline of opportunities to deploy our energy storage batteries at scale. Having received initial orders from key customers and having demonstrated that our batteries address our technical and commercial customers’ needs, we are ready to scale up manufacturing and sales as demand increases.
Having experienced some end customer delays on a few key projects in the final quarter of FY19, we expect further sales to materialise in early FY20 and contribute to strong growth.”
After releasing its 2018-19 financial results, Redflow held a group investor conference call at 11:00am AEST on Friday, August 30. Click here to listen to a recording of this call and view the accompanying PowerPoint presentation.
For further information contact:
07 3376 0008
03 9591 8901
08 8431 4000
Redflow Limited, a publicly listed Australian company (ASX: RFX), produces small 10kWh zinc-bromine flow batteries that tolerate daily hard work in harsh conditions. Marketed as ZCell and ZBM2, Redflow batteries are designed for high cycle-rate, long time-base stationary energy storage applications in the residential, commercial & industrial and telecommunications sectors, and are scalable from a single battery installation through to grid-scale deployments. Redflow batteries are sold, installed and maintained by an international network of energy system integrators. Redflow’s smart, self-protecting batteries offer unique advantages including secure remote management, 100 per cent daily depth of discharge, tolerance of high ambient temperatures, a simple recycling path, no propensity for thermal runaway and sustained energy delivery throughout their operating life.