Fluence Corporation Limited
ABN 52 127 734 196
Audited financial report
for the year ended 31 December 2021
Fluence Corporation Limited ABN 52 127 734 196
Annual Report - 31 December 2021
Contents
Corporate Directory
Directors' Report
Auditor's Independence Declaration
Financial Statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors' Declaration
Independent Auditor's Report
Page
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Fluence Corporation Limited
Corporate Directory
Directors
Company Secretary
Registered Office
Principal Place of Business
Share Registry
Auditors
Solicitors
Bankers
Securities Quoted
Website
Mr Richard Irving
Chairman and Chief Executive Officer (CEO)
Mr Paul Donnelly
Lead Independent Director, Non-Executive Director
Mr Ross Haghighat
Non-Executive Director
Dr Rengarajan Ramesh
Non-Executive Director
Ms Samantha Tough (appointed 1 June 2021)
Non-Executive Director
Ms Melanie Leydin (appointed on 1 January 2021)
Level 4, 96-100 Albert Road
South Melbourne VIC 3205
Australia
Phone: +61 (0)3 9692 7222
Fax: +61 (0)3 9692 7222
10 Bank Street
8th Floor
White Plains New York 10606
United States of America
Phone: +1 212 572 5700
Boardroom Pty Ltd
Level 12, 225 George Street,
Sydney, New South Wales, 2000, Australia
Phone: 1300 737 760 (local)
Fax: +61 (0)2 9290 9600 (international)
BDO Audit Pty Ltd
Tower 4, Level 18, 727 Collins Street,
Melbourne, Victoria, 3008, Australia
Lander & Rogers Lawyers
Level 12, Bourke place, 600 Bourke Street
Melbourne, Victoria, 3000, Australia
HSBC Bank Australia Limited
Melbourne, Victoria, Australia
Australian Securities Exchange
- Ordinary Fully Paid Shares (Code: FLC)
https://www.fluencecorp.com/investor-news/
Fluence Corporation Limited
1
Fluence Corporation Limited
Directors' Report
31 December 2021
The Directors present their report, together with the financial statements for the year ended 31 December 2021 of
Fluence Corporation Limited ("Fluence", the "Company" or the "Group").
Directors
The following persons held office as Directors of Fluence Corporation Limited during the financial year:
Mr Richard Irving, Chairman and Chief Executive Officer (CEO)
Mr Paul Donnelly, Lead Independent Director, Non-Executive Director
Mr Ross Haghighat, Non-Executive Director
Dr Rengarajan Ramesh, Non-Executive Director
Ms Samantha Tough, Non-Executive Director (appointed 1 June 2021)
Review of operations
In 2021 we continued to execute the plan of transforming the organisation towards sales of smart products and
building recurring revenue. During the year, despite the negative impact of the COVID-19 restrictions, Fluence
continued to grow Smart Product Solution (SPS) revenue in multiple geographies; in particular MABR wastewater
treatment solutions in China, NIROBOX™ desalination solution in the Middle East, and sales of both product lines in
North America and South East Asia.
We continued to focus on profitable growth in our 4 key market segments:
• MABR wastewater solutions in China and Southeast Asia;
• NIROBOX™ desalination solutions in the Middle East and Southeast Asia;
• Recurring revenue opportunities in North America and the Caribbean, targeting the sale of water as a service to
commercial customers; and
• The Ivory Coast Water Treatment Project
We have continued to secure profitable orders in other geographies and explore partnerships to grow sales and
share business costs.
The Ivory Coast project provides a valuable reference for complex water treatment and will continue to be an
important source of revenue, profit and cash flow through completion (expected mid-2023). However, the project's
lower gross margin will
impact the overall reported gross margin through 2023. While the Ivory Coast project is
executed we continue to transition Fluence to an SPS based business that generates a higher margin.
We expect that some SPS deployments will be on a recurring revenue or Build Own Operate Transfer (“BOOT”)
basis, where wastewater treatment or fresh water is sold by volume. BOOT projects and other sources of recurring
revenue, such as operations and maintenance contracts, remain a strategic target. Operating expenses are expected
to fall further when selling SPS as these are standardised products, reducing engineering costs and therefore
significantly lowering the cost of sales as a percentage of revenue, resulting in overall higher profitability for Fluence.
Fluence Corporation Limited
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Directors' Report
31 December 2021
(continued)
Review of operations (continued)
FY 2021 in Summary
During FY 2021 Fluence achieved positive underlying EBITDA. The Company continued to execute on the Ivory
Coast water treatment project, while recording strong revenue growth in SPS, in particular MABR, and sales growth
outside China. Strong SPS backlog entering 2022 underpins the Company's confidence for FY 2022. Key
achievements include:
• Revenue from Continuing Operations of $103.2 million in FY 2021, up 15% from $89.8 million in FY 20201.
• Guidance met for Smart Product Solution Revenue and Positive Underlying EBITDA2 - SPS revenues for FY 2021
from continuing and discontinued operations were $39.6 million versus guidance of $35-50 million. Underlying
EBITDA positive $1.0 million in FY 20213.
• SPS revenue from Continuing Operations of $36.9 million, up 22% on FY 2020, despite COVID-19 headwinds
significantly impacting the timing of sales in China.
• SPS backlog entering FY 2022 is 52% higher than that entering FY 2021.
• MABR Sold Capacity Increased 56% - 313 plants sold to date (up from 245) with a total treatment capacity to treat
wastewater for almost 1 million people (up from 600,000).
• Ongoing partner engagement in China and Southeast Asia with continued partner development in the Middle East.
• MABR sold capacity excluding China exceeded sales within China - sales in Cambodia, the Caribbean, US, and
United Arab Emirates enabled sales outside of China in FY 2021 to outpace sales within China for the first time.
• Expanded NIROBOX™ Sales - 8 units (6 plants) sold in FY 2021, including 5 plants at Caribbean resorts and the
first multi-unit NIROBOX™ order in Taiwan.
• Increased debt facility with Upwell Water by $10 million to $30 million to further support growth in MABR and other
smart product solutions.
• Cash balance of $41.4 million as at 31 December 2021, up $10.4 million from $31.0 million as at 31 December
2020. In addition, short-term and long-term liquid investments amounted to $25 million.
• Cost Out Improvement - Continued operating efficiency gains with full year operating expenses down 8% in FY
2021 versus FY 2020.
.
Loss for the year
Add:
31 December
2021
$'000
(15,083)
Depreciation and amortisation
Share-based compensation
Other losses from continuing operations
Finance costs - net from continuing operations
Income tax from continuing operations
Loss from discontinued operations
Add:return of one-time items
Restructuring related costs
Non-Operating legal costs
EBITDA
1 Continuing operations exclude Italy classified as business held for sale.
2 Underlying EBITDA excludes any significant one-off items
3 Discontinued operations Include Italy classified as business held for sale
2,495
446
3,669
2,690
195
5,926
568
136
1,042
Fluence Corporation Limited
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Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Review of operations (continued)
1 Detailed review of key market segments
(i) Smart Products Solutions - MABR and NIROBOX
China
China region generated a 21% growth in new orders on the prior year, underpinned by five volume partnerships in
place, despite the FY 2021 challenges driven by the impact of COVID-19 and various lockdowns leading to a slowing
of orders over the year.
These included volume orders for Aspiral systems from China Three Gorges Group for the Great Protection of
Yangtze River ("Three Gorges"), new provincial partner Yangzhou Yijiang and the Company's existing three volume
partners Hunan Kaitian, Hubei ITEST, and Liaoning Huahong. Current partnerships and prospective new partners are
key to the future growth of Fluence and discussions, including potential new volume partnerships, continue.
The Company signed a Joint Development Agreement with Beijing Enterprises Water Group (China) Investment
Limited (“BEWG”) to focus on optimizing Aspiral MABR plants with the intent to jointly sell these globally. BEWG
manages 1,115 wastewater treatment plants.
Fluence received the Breakthrough Technology Award for its MABR technology and the Award For Operating
Stability for its SUBRE plant in Panjin, Liaoning province at the most recent China Rural Wastewater Union Annual
Conference. These awards, combined with Fluence’s market leading position, help to further underpin Fluence’s
strong and growing reputation in China and Southeast Asia.
Southeast Asia
Fluence now has 10 plants operating or being deployed in the Philippines, comprising eight (8) MABR plants and two
(2) desalination plants, in a wide variety of settings. Excellent operating results from existing plants coupled with
strong and significant local relationships are anticipated to lead to new business.
During FY 2021 the first two MABR plants in Sihanoukville, Cambodia were fully commissioned and are operating
well with the capacity to treat wastewater for 100,000 people. This enabled discussions about new projects resulting
in a new order in Cambodia of $8.5 million from the same client to supply the largest MABR plant in the world treating
wastewater from 160,000 people and providing an excellent reference at the larger plant size range globally. The
strong demand for efficient wastewater treatment in Cambodia and other Southeast Asian countries is driven both by
government enforcement of stricter wastewater treatment standards and steadily worsening water scarcity as local
economies develop.
Middle East
NIROBOX™ and related desalination products are well established with 30 plants (120 units) sold to date. Fluence
continues to develop strong partnerships to accelerate sales.
Securing an initial MABR sale in the United Arab Emirates will provide an important local demonstration of the
Company’s ability to safely recycle wastewater for irrigation in the Gulf Cooperation Council region where reuse is
gaining strong adoption.
Fluence Corporation Limited
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Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Review of operations (continued)
1 Detailed review of key market segments (continued)
Ivory Coast
Fluence continued to successfully execute the Ivory Coast project throughout FY 2021, achieving completion of
milestones 3, 4 and 5, securing $51.8 million in contractual payments, and negotiating the release of $15.8 million in
restricted funds from the escrowed advance payment received in Q4 2020.
Commissioning of the 150,000 m3/day surface water treatment plant is anticipated in mid-2023. Fluence’s focus
remains on delivering the project mid-2023, a few months later than originally planned but still in line with the client's
expectations.
North America and the Caribbean
In FY 2021 Rick Cisterna has joined the executive team as Chief Strategy Officer focusing on expanding the
wastewater solutions and BOOT projects in North America and the Caribbean.
The sale of 7 SPS plants to the Caribbean resorts in FY 2021 is anticipated to lead to further hospitality business in
the region where Fluence will prioritise recurring revenue around the sale of water versus equipment sales.
Fluence and the State Water Commission of Baja California ("CEA") continued to actively discuss the mutual
termination of the San Quintin water treatment project throughout FY 2021 in parallel with the discussions for a
potential sale of the project to a third party. Under either scenario, all capitalised costs will not be recoverable.
Accordingly, in FY 2020 the Company elected to write down the carrying value of the San Quintin related assets to
nil.
The decision to not proceed with the project is expected to bring positive cash flow to the Company from the return of
the $3 million currently held as a security deposit.
Other markets
The Company successfully commissioned a desalination plant built for ArcelorMittal
in Brazil which enables the
international steel group to avoid using municipal water in steel production. This is the first desalination plant of any
kind implemented for Arcelor Mittal, the second largest steel producer in the world with plants in 17 countries.
Sustainability
Fluence’s innovative solutions contribute to resource conservation, energy savings, and enabling water reuse.
Fluence’s MABR and NIROBOX™ installations around the world collectively save an estimated 32 GWh of energy
(23,100 tons of CO2) annually compared to conventional technologies. Even more importantly, many wastewater
technologies emit Nitrous Oxide (N2O): 300 times worse than CO2 from an atmospheric warming
treatment
perspective. Fluence MABR systems currently save 314 tons/year of N2O emissions, equivalent to a further 93,600
tons of CO2. Treated wastewater from Fluence’s MABR installations collectively removes 2,100 tons of nutrients that
would otherwise damage the environment.
Fluence water and wastewater solutions meet 9 out of 17 United Nations Sustainable Development Goals.
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Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Review of operations (continued)
1 Detailed review of key market segments (continued)
Outlook for FY 2022
For FY 2022, Fluence is providing annual guidance of SPS revenue of at least $45 million and underlying EBITDA
positive of $3 million on a full year basis.
the growth is expected to come from MABR sales,
• Building off FY 2021 sales and backlog, SPS products continue to see strong interest in Southeast Asia, the Middle
including existing volume
East, and elsewhere. Much of
partnerships.
• Fluence expects continuing new orders from each of its 5 strategic partners in China.
• The Ivory Coast project is expected to be executed according to the plan, and will continue to be a significant
contributor to the Company's EBITDA and Cash Flow.
• The new CEO appointment in March 2022 will accelerate the development of North America and Australia markets.
• While Fluence is not providing guidance on recurring revenue at this time, it remains an important aspect of the
business by virtue of both operations and maintenance contracts and BOOT projects.
• Fluence is guiding to underlying EBITDA of $3 million positive for FY 2022 on a full year basis, with a specific focus
on maximising profitable growth of MABR and other SPS products.
Significant events after balance date
On 14 March 2022, the Group appointed Thomas Pokorsky as CEO and Managing Director. Richard Irving will retain
his position as Chairman of the Board.
No other matter or circumstance has occurred subsequent to year end that has significantly affected, or may
significantly affect, the operations of the Group, the results of those operations or the state of affairs of the Group or
economic entity in subsequent financial years.
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Directors' Report
31 December 2021
(continued)
Information on directors
Richard Irving Chairman and Chief Executive Officer
Qualifications
BSC (First class honours) in Electrical Engineering, Manchester University, UK
MSC Electrical Engineering, Manchester University, UK
Experience and
expertise
Richard Irving is the Chairman of Fluence Corporation. Mr Irving has served as Chairman
and Chief Executive Officer, Executive Chairman and Non-Executive Chairman of
Fluence Corporation Limited and its predecessor (Emefcy Group Limited) since 2010.
Based in Silicon Valley, Richard co-founded Pond Venture Partners in 1997 and brings
over 30 years of experience in venture capital, business management, marketing and
engineering in technology companies including AT&T Bell Labs, AMD, and Brooktree.
Richard has helped create over $3 billion in shareholder value through IPOs, acquisitions
and private financings.
Past exits include LiveRail (Facebook), Gigle Networks (Broadcom), 4Home (Motorola
Mobility), Transitive (IBM), and Microcosm Communications (Conexant).
Richard also serves as a Venture Advisor to Samsung.
Other current public
company directorships
Former public company
directorships in last 3
years
None
None
Special responsibilities Chairman and Chief Executive Officer
Interest in shares
Interest in options
Richard has an indirect interest through Pond Venture Nominees III Limited in
36,264,579 shares and a direct interest in 1,000,000 shares, for a total of 37,264,579
shares in the Group.
Direct interest in:
1,500,000 Director options with an exercise price of A$0.29; and
1,000,000 Director options with an exercise price of A$0.23.
Contractual rights to
shares
None
Fluence Corporation Limited
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Directors' Report
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(continued)
Information on directors (continued)
Paul Donnelly Lead Independent Director and Non-Executive Director
Qualifications
BSc (Hons) Chemistry, University of Southampton
Advanced Management Programme, Harvard Business School
Member of Institute of Chartered Accountants in England & Wales
Graduate Australian Institute of Company Directors
Experience and
expertise
Paul Donnelly is the Lead Independent Director and Non-Executive Director for Fluence
Corporation Limited. Mr. Donnelly is an accomplished financial services executive with
international experience across all aspects of capital markets.
Mr Donnelly is Chief Executive Office of Flagstaff Partners, an independent corporate
advisory firm.
Previously, Mr Donnelly was an Executive Director at Macquarie Capital, where he
worked for 25 years in various roles, including President and CEO of Macquarie’s
Canadian operations and Global Head of Equity and Debt Capital Markets.
Mr Donnelly has a broad range of investment banking experience in Australia and
internationally, with particular expertise in capital markets. Over the course of his 30-year
career, he has gathered deep transactional experience advising on significant and
complex transactions for leading Australian and international companies.
Other current public
company directorships
Former public company
directorships in last 3
years
None
None
Special responsibilities Lead Independent Director, Non-Executive Director
Chair of the Audit and Risk Committee
Interest in shares
Indirect interest in 500,000 shares held by Tres Petitbijou Pty Ltd ATF
Interest in options
Indirect interest through Tres Petitbijou Pty Ltd ATF in:
250,000 Director options with an exercise price of A$0.60;
250,000 Director options with an exercise price of A$0.80; and
1,000,000 Director options with an exercise price of A$0.23.
Contractual rights to
shares
None
Fluence Corporation Limited
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Directors' Report
31 December 2021
(continued)
Information on directors (continued)
Ross Haghighat Non-Executive Director
Qualifications
Experience and
expertise
BSC and a Masters in Material Science in Organometallic Chemistry, Rutgers University.
MBA, Boston College - Carroll School of Management
Ross Haghighat serves as a Non-Executive Director for Fluence Corporation Limited. He
has over 30 years of experience in the technology sector as founder or co-founder of six
companies with a combined shareholder value exceeding $4.5 billion.
With over 20 years of operating and strategic roles and a decade in the investment
arena, he has helped to create a number of global enterprises in the private and public
space in the US, China, Australia and Europe. Mr. Haghighat has been a Non-Executive
Director of Fluence Corporation Limited and its predecessor (Emefcy Group Limited)
since 2015.
He serves as Chairman of Triton Systems Group - a Global Investment and Product
Venturing firm. He serves as CEO and Managing Director of BIOS Acquisition Corp
(NASDAQ: BIOS), a listed biotech investment company; as non executive director of
Chinook Therapeutics (NASDAQ: KDNY) a late clinical stage precision medicine entity;
as Chairman of FRX Polymers, a listed Toronto Stock Exchange listed company, and as
Chairman of AngleMedical, a PreIPO commercial stage MedTech company.
Other current public
company directorships
Former public company
directorships in last 3
years
NASDAQ: BIOS; NASDAQ: KDNY; TSX: FRX
NYSE listed CITIC Acquisition Corp; NASDAQ listed Aduro Biotech
Special responsibilities Chair of the Remuneration and Nomination Committee
Interest in shares
Direct interest in 600,000 shares
Interest in options
Direct interest in:
1,000,000 Director options with an exercise price of A$0.23.
Contractual rights to
shares
None
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Directors' Report
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(continued)
Information on directors (continued)
Dr Rengarajan Ramesh Non-Executive Director
Qualifications
Experience and
expertise
Bachelor in Chemical Engineering from Annamalai University (India)
Masters in Chemical Engineering from University of Akron (USA)
Doctorate in Chemical Engineering from University of Akron (USA)
Dr Ramesh serves as Non-Executive Director for Fluence Corporation Limited. He is an
Operating Partner at Eagletree Capital since 2010. Previously, Dr Ramesh supported
RWL Water’s efforts to evaluate the best water treatment technologies and companies
around the world.
Dr Ramesh has held senior management positions at GE Water and Process
Technologies, including Chief Technology Officer (CTO), a role which he held for more
than four years. As CTO, Dr Ramesh played a key role in the development and
implementation of the strategy that led to the creation of GE’s $2.5 billion global water
platform. While at GE, he also led the technology and engineering organisations for GE
Sensing, GE Security and GE Fanuc. He also served on the board of GE’s Asia Pacific
American Forum.
In addition to his role at GE, Dr Ramesh served in numerous senior management roles
over a two-decade career with A. Schulman, Inc., a global multi-billion-dollar specialty
chemicals manufacturer. He also served on the International Advisory Board for the
Ministry of Environment and Water, Government of Singapore from 2006-2016.
He currently serves on the board of advisors for City College of New York for Zahn
Innovation Center and also a visiting scholar at Princeton University.
Other public company
current directorships
None
Former public company
directorships in last 3
years
Liqtech - (NYSE:LIQT)
Special responsibilities Member of the Audit and Risk Committee
Member of the Remuneration and Nomination Committee
Interest in shares
None
Interest in options
Direct interest in 1,000,000 Director options with an exercise price of A$0.23.
Contractual rights to
shares
None
Fluence Corporation Limited
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Directors' Report
31 December 2021
(continued)
Information on directors (continued)
Samantha Tough Non-Executive Director
Qualifications
B Juris; LLB; FAICD
Experience and
expertise
Samantha Tough was appointed as the Non-Executive Director of Fluence Corporation
on 1 June 2021.
Ms Tough brings over 20 years of experience in public and private companies as both an
executive and director in a range of industry sectors including energy, oil and gas,
resources, engineering, health, venture capital, data analytics, law and tertiary education.
Ms. Tough is a Fellow of the AICD.
Ms Tough is currently Chair of Horizon Power, Chair National Energy Selection
Committee and Director of the Clean Energy Finance Corporation. Ms. Tough is also Pro
Vice Chancellor Engagement at the University of Western Australia leading the
Innovation and Industry Engagement group.
Other current public
company directorships
None
Former public company
directorships in last 3
years
30 Metal Forge Ltd.
Special responsibilities Member of the Audit and Risk Committee
Interest in shares
None
Interest in options
Direct interest in:
1,000,000 Director options with an exercise price of A$0.23.
Contractual rights to
shares
None
Fluence Corporation Limited
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Directors' Report
31 December 2021
(continued)
Company Secretary
Melanie Leydin is the Company Secretary. Melanie was appointed to this position on 1 January 2021. Melanie is a
Director and co-founder of Leydin Freyer, a professional company secretarial and accounting firm. Melanie earned a
Bachelor of Business degree in Accounting and Corporate Law from Swinburne University (AU). She is also a Fellow
of the Governance Institute of Australia.
Meetings of directors
The number of meetings of the Group's Board of Directors (the "Board") and of each Board Committee held during
the year ended 31 December 2021, and the number of meetings attended by each Director were:
Full
Board
Meetings of committees
Remuneration
and
Nomination
Fluence - for the year ended 31 December 2021
Audit and Risk
Mr Richard Irving
Mr Paul Donnelly
Mr Ross Haghighat
Dr Rengarajan Ramesh
Ms Samantha Tough (1)
A
10
10
10
10
5
B
10
10
10
10
5
A
-
11
-
11
4
B
-
11
-
11
4
A
-
-
5
5
-
B
-
-
5
5
-
A = Number of meetings attended
B = Number of meetings held during the time the Director held office or was a member of the committee during the
year
1 = Ms Samantha Tough was appointed Non-Executive Director and Member of the Audit and Risk Committee from 1
June 2021.
Environmental regulation
As a provider of water and wastewater treatment solutions, the Group is subject to environmental regulations in each
jurisdiction in which it operates. MABR has demonstrated compliance with China Class 1A effluent standards as well
as with Title 22 Certification in California, USA. The consolidated entity is not subject to any significant environmental
regulation under Australian Commonwealth or State law.
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Directors' Report
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(continued)
Remuneration report (Audited)
(a) Principles used to determine the nature and amount of remuneration
The objective of the Group's executive compensation framework is to ensure remuneration is competitive to attract
and retain talent while at the same time being appropriate relative to Group's results. The framework aligns executive
compensation with the achievement of strategic objectives and the creation of value for shareholders and conforms to
generally accepted industry standards for remuneration. The Board ensures that executive compensation satisfies
the following key criteria in accordance with good reward governance practices:
• Competitiveness to attract and retain talent;
• Reasonableness in terms of industry benchmarks;
•
•
•
Acceptability to shareholders;
Alignment of compensation incentives to business performance goals; and
Transparency.
Remuneration is aligned to shareholders’ interests and program participants’ interests as follows:
(a)
Alignment to shareholders' interests:
•
•
•
•
Achievement of strategic goals as a core component of plan design;
The Chairman and Chief Executive Officer has added focus on growth in shareholder value, as
measured by growth in the share price;
Focusing the executives on key financial and non-financial drivers of value; and
Attracts and retains high caliber executives.
(b)
Alignment to program participants' interests:
•
•
•
Rewards capability and experience;
Reflects competitive reward for successful execution of the business strategy and business
performance; and
Provides a clear structure for earning rewards.
In accordance with recommended corporate governance, the structure of Non-Executive Directors' remuneration is
determined separately to the structure of executives' remuneration.
Directors remuneration
Fees and payments to Non-Executive Directors reflect the demands and responsibilities of their role. Non-Executive
Directors'
fees and payments are reviewed annually by the Remuneration and Nomination Committee with
recommendations made to the full Board.
the Board has determined that
there will be no increase in base
In response to the COVID-19 pandemic,
Non-Executive Director fees from prior year levels for 2021. The previous level of Non-Executive Directors' fees was
in line with earlier benchmarking recommendations provided by Mercer Consulting Australia, one of the world’s
largest remuneration benchmarking and consulting services companies. The firm was engaged by the Remuneration
and Nomination Committee to recommend Executive Chair and Non-Executive Directors' fees, including Board
Committee fees, appropriate for the demands on being on the Board of a developing and global technology business,
and as benchmarked against market rates for comparable positions for peer companies.
Mr. Richard Irving continued to hold the combined role of Chairman and CEO, and Mr. Paul Donnelly continued to
hold the role of Lead Independent Director.
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Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
(a) Principles used to determine the nature and amount of remuneration (continued)
Directors remuneration (continued)
Directors engaged on Committees of the Board are also entitled to receive Board Committee fees. Such Committee
fees have remained unchanged since 2017.
In view of the growing and developing nature of the Company, Non-Executive Directors may also be engaged on
specific projects, on commercial arm’s length terms, where the executive team either does not have the same skill
sets or capacity. All such special purpose project arrangements are approved by the full Board with the relevant
Director abstaining.
Other than Director Fee and Board Committee Fees, Directors may receive share options and strategic bonuses.
ASX listing rules require the aggregate Non-Executive Directors' remuneration to be determined periodically by a
general meeting. The most recent determination on 12 July 2017 was that shareholders approved an aggregate
remuneration of AU$ 1,000,000 (the equivalent of US$ 767,000 at that time).
Executive remuneration
The Group aims to reward executives with a level and mix of remuneration based on their position and responsibility,
which has both fixed and variable components.
The executive remuneration and reward framework has four components which collectively comprise the executive's
total remuneration:
Base pay, deferred compensation and allowance;
Short-term performance incentives;
Share-based payments; and
•
•
•
• Other remuneration such as superannuation and long service leave.
Executive remuneration levels are referenced to a detailed benchmarking review of peer companies undertaken by
Mercer Consulting in mid-2017 updated for subsequent increases for cost of living adjustments and any changes in
the scope of responsibilities.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by
the Remuneration and Nomination Committee and then the Board of Directors. Such review also takes into account
individual responsibilities, performance and business unit performance.
In the latter part of 2018 ClearBridge Compensation Group was engaged to design an Executive remuneration
system. The resulting recommendation adopted by the Board comprised a fixed base, a short-term incentive ("STI")
program incorporating Company and individual
targets and the continuing long-term incentive (“LTI”) program
incorporating equity-based compensation.
The STI program for 2021 comprised specific Company-wide targets to align to specific areas of responsibility. Key
Performance Indicators ("KPIs") include meeting or exceeding budget goals for the year.
The Board also reserves the right to award discretionary bonuses to executives for exceptional achievements which
may relate to specific transactions.
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Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
(a) Principles used to determine the nature and amount of remuneration (continued)
Executive remuneration (continued)
The LTI program comprised equity-based remuneration in the form of unlisted share options. An updated employee
share option plan was approved by shareholders on 4 June 2020. Options are awarded to executives as long-term
incentives aligned to shareholder wealth through the exercise price being calculated at a premium to the 20-day
volume weighted average market price prior to the date of grant. Appropriately structured LTI's also provide
incentives to retain talent.
Certain executive options comprised a 50%-time vesting element and a 50% performance-based vesting element.
The performance-based element requires KPIs set annually to be achieved for these options to vest.
Business performance in 2021 and executive remuneration
Fluence undertakes its activities on a global basis and employs staff across multiple geographies. As part of its
practice of recruiting and retaining staff of the highest caliber on a long-term basis, the Company is constantly
monitoring and developing compensation practices. As noted above, international benchmarking is used as an
important tool in setting remuneration practices. In reflection of the business achievements during 2021, executive
STI bonuses for 2021 were generally towards the mid-range of the available bonus quantum.
Consolidated entity performance and link to remuneration
The Remuneration and Nomination Committee is of
compensation will continue to increase shareholder wealth if maintained over the coming years.
the opinion that
the adoption of performance-based
Key management personnel bonuses for the year 2022 will be considered by the Remuneration and Nomination
Committee and the Board on the basis of the consolidated entity’s performance relative to pre-determined KPI's
during the financial year and exceptional achievements.
Directors consider that the options program and the exercise prices provide incentives to management and Directors
which are aligned with the interests of shareholders to lift the value of the company in the medium term. Any
remuneration derived by employees from the employee option program is directly linked to the improved share price
performance of the consolidated entity relative to the exercise price determined at the time of the issue of the options.
The Directors' report presents the Fluence Corporation Limited 2021 remuneration report, outlining key aspects of our
remuneration policy and framework, and remuneration awarded this year.
(b) Details of remuneration
Amounts of remuneration (shown in USD)
The following tables show details of the remuneration expense recognised for the Group's Directors and Executive
Key Management Personnel
the current and previous financial year measured in accordance with the
requirements of the accounting standards.
for
Fluence Corporation Limited
15
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
(b) Details of remuneration (continued)
Amounts of remuneration (shown in USD) (continued)
Directors and other key management personnel for 2021 consisted of:
• Richard Irving - Chairman and Chief Executive Officer
• Paul Donnelly - Lead Independent Director, Non-Executive Director
• Ross Haghighat - Non-Executive Director
• Dr Rengarajan Ramesh - Non-Executive Director
• Samantha Tough - Non-Executive Director (appointed on 1 June 2021)
• Francesco Fragasso - Chief Financial Officer
• Anthony Hargrave - Chief Operating Officer
• Spencer Smith - Chief Legal Officer
• Richard Cisterna - Chief Strategy Officer (appointed on 13 December 2021)
• Erik Arfalk - Chief Marketing Officer (retired on 31 March 2021)
Directors and other key management personnel for 2020 consisted of:
• Richard Irving - Chairman and Chief Executive Officer (appointed CEO on 13 November 2020)
• Henry Charrabe - Managing Director and Chief Executive Officer (retired on 13 November 2020) and Non-Executive
Director (retired on 1 December 2020)
• Paul Donnelly - Lead Independent Director (appointed on 16 November 2020), Non-Executive Director
• Ross Haghighat - Non-Executive Director
• Dr Rengarajan Ramesh - Non-Executive Director
• Peter Marks - Non-Executive Director (retired on 31 March 2020)
• Arnon Goldfarb - Non-Executive Director (retired on 7 January 2021)
• Francesco Fragasso - Chief Financial Officer
• Anthony Hargrave - Chief Operating Officer
• Spencer Smith - Chief Legal Officer
• Erik Arfalk - Chief Marketing Officer
Fluence Corporation Limited
16
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
(b) Details of remuneration (continued)
Amounts of remuneration (shown in USD) (continued)
Short-term benefits
Base
salary
$
Deferred
compensation
$
Cash salary and fees
Total salary
and fees
$
Bonus
$
Allowance*
$
Post-employment
benefits
Superannuation
Long
service
leave
Long-term
benefits
Equity
settled
shares
Share-based
payment
Equity settled
options
Total
$
$
$
$
$
410,417
410,417
91,345
84,133
90,143
47,325
312,946
-
-
-
-
-
-
-
410,417
410,417
75,000
75,000
91,345
84,133
90,143
47,325
312,946
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
71,058
71,058
556,475
556,475
27,743
119,087
37,978
122,112
58,173
148,316
40,627
164,521
87,952
477,467
2021
Executive
directors:
Richard Irving
Total
Non-executive
directors:
Paul Donnelly
Ross
Haghighat
Rengarajan
Ramesh
Samantha
Tough (a)
Total
Fluence Corporation Limited
17
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
(b) Details of remuneration (continued)
Amounts of remuneration (shown in USD) (continued)
Short-term benefits
Base
salary
$
Deferred
compensation
$
Cash salary and fees
Total salary
and fees
$
Bonus
$
Allowance*
$
Post-employment
benefits
Superannuation
Long
service
leave
Long-term
benefits
Equity
settled
shares
Share-based
payment
Equity settled
options
Total
$
$
$
$
$
289,636
325,000
319,000
12,500
58,350
1,004,486
1,727,849
-
-
-
-
-
-
-
289,636
70,613
325,000
319,000
59,426
48,607
12,500
58,350
1,004,486
1,727,849
-
-
178,646
253,646
-
-
59,613
-
26,977
86,590
86,590
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17,898
378,147
43,527
26,411
427,953
453,631
-
-
-
85,327
87,836 1,357,558
323,415 2,391,500
2021
Other key
management
personnel:
Francesco
Fragasso
Anthony
Hargrave
Spencer Smith
Richard
Cisterna (b)
Erik Arfalk (c)
Total
Grand total
* Mr Smith's and Mr Arfalk's allowance includes a portion of unused vacation allowance paid during the year 2021.
(a) Ms Tough was appointed as Non-Executive Director on 1 June 2021.
(b) Mr Cisterna was appointed as the Chief Strategy Officer on 13 December 2021.
(c) Mr Arfalk resigned from the position of the Chief Marketing Officer on 31 March 2021.
Fluence Corporation Limited
18
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
(b) Details of remuneration (continued)
Amounts of remuneration (shown in USD) (continued)
Short-term benefits
Base
salary
$
Deferred
compensation
$
Cash salary and fees
Total salary
and fees
$
Bonus
$
Allowance*
$
Post-employment
benefits
Superannuation
Long
service
leave
Long-term
benefits
Equity
settled
shares
Share-based
payment
Equity settled
options
Total
$
$
$
$
$
244,115
638,750
882,865
22,106
97,311
26,371
36,275
84,912
266,975
-
244,115
-
-
562,500
562,500
1,201,250
1,445,365
150,000
150,000
408,468
408,468
-
-
-
-
-
-
22,106
97,311
26,371
36,275
84,912
266,975
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
65,707
309,822
602,084 2,361,802
667,791 2,671,624
48,415
70,521
48,415
145,726
83,417
109,788
24,530
24,698
229,475
60,805
109,610
496,450
2020
Executive
directors:
Richard Irving
(a)
Henry
Charrabé (a)
Total
Non-executive
directors:
Peter Marks (b)
Ross
Haghighat
Rengarajan
Ramesh (c)
Arnon Goldfarb
(b), (c)
Paul Donnelly
Total
Fluence Corporation Limited
19
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
(b) Details of remuneration (continued)
Amounts of remuneration (shown in USD) (continued)
Short-term benefits
Base
salary
$
Deferred
compensation
$
Cash salary and fees
Total salary
and fees
$
Bonus
$
Allowance*
$
Post-employment
benefits
Superannuation
Long
service
leave
Long-term
benefits
Equity
settled
shares
Share-based
payment
Equity settled
options
Total
$
$
$
$
$
281,200
309,000
233,400
319,000
1,142,600
2,292,440
-
281,200
72,229
-
-
-
35,000
35,000
597,500
309,000
233,400
354,000
1,177,600
2,889,940
57,487
34,575
40,798
205,089
355,089
-
-
26,418
26,418
434,886
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
37,836
391,265
30,460
27,853
39,901
396,947
295,828
461,117
136,050 1,545,157
1,033,316 4,713,231
2020
Other key
management
personnel:
Francesco
Fragasso
Anthony
Hargrave
Erik Arfalk
Spencer Smith
Total
Grand total
* Mr Charrabé's allowance includes housing allowance and unused vacation allowance paid during 2020. Mr Smith's allowance includes a portion of unused
vacation allowance paid during the year 2020.
(a) Mr Irving was appointed as CEO on 13 November 2020. Mr Charrabé retired as Managing Director and CEO on 13 November 2020 and as Non-Executive
Director on 1 December 2020.
(b) Mr Marks retired as Non-Executive Director on 31 March 2020. Mr Goldfarb retired as Non-Executive Director on 7 January 2021.
(c) Compensation deferred during 2020 was paid at the beginning of 2021.
Fluence Corporation Limited
20
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
(b) Details of remuneration (continued)
Amounts of remuneration (shown in USD) (continued)
Remuneration subject to performance in 2021:
Some cash compensation is dependent on meeting defined performance measures. The amount of the cash compensation is determined having regard to the
satisfaction of performance measures. The amounts payable are determined at the end of each fiscal year by the Nomination and Remuneration Committee.
Name
Richard Irving
Francesco Fragasso
Anthony Hargrave
Spenser Smith
Richard Cisterna (1)
Name
Richard Irving
Francesco Fragasso
Anthony Hargrave
Spenser Smith
Richard Cisterna (1)
Maximum potential
compensation
Maximum potential
compensation subject
to performance
Percentage of
compensation subject
to performance
500,000
405,491
422,500
398,750
250,000
75,000
115,854
97,500
79,750
-
15.0%
28.6%
23.1%
20.0%
-
Compensation
subject to
performance
paid/payable
2021
Compensation
subject to
performance
not earned
2021
100.0%
60.9%
60.9%
60.9%
-
0.0%
39.1%
39.1%
39.1%
-
(1) Richard Cisterna was appointed Chief Strategy Officer on 13 December 2021, hence not subject to performance based bonus in 2021.
Fluence Corporation Limited
21
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
(b) Details of remuneration (continued)
Issue of shares
The number of shares in the Group held during the period by each Director and other Key Management Personnel,
including their personally related parties, are set out below.
2021
Executive Directors
Richard Irving
Non-Executive Directors
Ross Haghighat
Rengarajan Ramesh
Paul Donnelly
Samantha Tough
Key Management Personnel
Francesco Fragasso
Anthony Hargrave
Spencer Smith
Richard Cisterna
Erik Arfalk
Total
Balance at the
start of the
year
Received as
compensation
Options
exercised
Net change
exercised /
purchased
37,264,579
37,264,579
600,000
-
500,000
-
1,100,000
-
-
-
-
-
-
38,364,579
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
37,264,579
37,264,579
600,000
-
500,000
-
1,100,000
-
-
-
-
-
-
38,364,579
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Fluence Corporation Limited
22
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
(b) Details of remuneration (continued)
Issue of shares (continued)
2020
Executive Directors
Richard Irving
Henry Charrabé
Non-Executive Directors
Peter Marks (*)
Ross Haghighat (**)
Rengarajan Ramesh
Arnon Goldfarb
Paul Donnelly
Key Management Personnel
Francesco Fragasso
Anthony Hargrave
Erik Arfalk
Spencer Smith
Total
Balance at the
start of the
year
Received as
compensation
Options
exercised
Net change
exercised /
purchased
37,264,579
-
37,264,579
2,754,403
500,000
-
-
500,000
3,754,403
-
-
-
-
-
41,018,982
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
-
-
-
37,264,579
-
37,264,579
(2,554,403)
100,000
-
-
-
(2,454,403)
-
-
-
-
-
(2,454,403)
200,000
600,000
-
-
500,000
1,300,000
-
-
-
-
-
38,564,579
* Peter Marks sold 2,554,403 shares between 2 June 2020 and 24 November 2020 after he retired as a Director.
* Ross Haghighat acquired 100,000 Fluence shares on 20 August 2020.
Fluence Corporation Limited
23
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
(b) Details of remuneration (continued)
Issue of options
The number of options over ordinary shares in the Group held during the period by each Director and other Key Management Personnel, including their personally
related parties, are set out below. An Employee Option Plan was approved by shareholders on 17 November 2015. Refer to description of Long-Term Incentives
under executive remuneration for details.
2021
Executive Directors
Richard Irving
Non-Executive Directors
Paul Donnelly
Ross Haghighat
Rengarajan Ramesh
Samantha Tough
Key Management Personnel
Francesco Fragasso
Anthony Hargrave
Spencer Smith
Richard Cisterna
Total
Balance at the
start of the
year
Granted as
compensation
Option
expired /
exercised
Net change
other
Balance at
end of year
Vested &
Exercisable
Escrowed /
Unvested
1,900,000
1,900,000
500,000
1,400,000
1,500,000
-
3,400,000
1,005,000
793,594
865,000
-
2,663,594
7,963,594
2,500,000
2,500,000
(1,900,000)
(1,900,000)
1,000,000
1,000,000
1,000,000
1,000,000
4,000,000
700,000
750,000
700,000
-
2,150,000
8,650,000
-
(1,400,000)
(1,500,000)
-
(2,900,000)
(50,000)
(31,250)
(140,000)
-
(221,250)
(5,021,250)
-
-
-
-
-
-
-
-
-
-
-
-
-
2,500,000
2,500,000
1,500,000
1,000,000
1,000,000
1,000,000
4,500,000
1,655,000
1,512,344
1,425,000
-
4,592,344
11,592,344
-
-
500,000
-
-
500,000
1,000,000
656,875
606,719
593,750
-
1,857,344
2,857,344
2,500,000
2,500,000
1,000,000
1,000,000
1,000,000
500,000
3,500,000
998,125
905,625
831,250
-
2,735,000
8,735,000
Fluence Corporation Limited
24
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
(b) Details of remuneration (continued)
Issue of options (continued)
2020
Executive Directors
Richard Irving
Henry Charrabé
Non-Executive Directors
Peter Marks
Ross Haghighat
Rengarajan Ramesh
Arnon Goldfarb
Paul Donnelly
Key Management Personnel
Francesco Fragasso
Anthony Hargrave
Erik Arfalk
Spencer Smith
Total
Balance at the
start of the
year
Granted as
compensation
Option
expired /
exercised
Net change
other
Balance at
end of year
Vested &
Exercisable
Escrowed /
Unvested
1,900,000
13,751,855
15,651,855
1,400,000
1,400,000
1,500,000
1,500,000
500,000
6,300,000
775,000
496,094
484,375
565,000
2,320,469
24,272,324
-
-
-
-
-
-
-
-
-
-
(1,890,000)
(1,890,000)
-
-
-
-
-
-
330,000
360,000
300,000
300,000
1,290,000
1,290,000
(100,000)
(62,500)
(62,500)
-
(225,000)
(2,115,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,900,000
11,861,855
13,761,855
1,900,000
11,861,855
13,761,855
1,400,000
1,400,000
1,500,000
1,500,000
500,000
6,300,000
1,005,000
793,594
721,875
865,000
3,385,469
23,447,324
1,400,000
1,400,000
1,500,000
1,500,000
-
5,800,000
361,875
235,469
243,750
550,200
1,391,294
20,953,149
-
-
-
-
-
-
-
500,000
500,000
643,125
558,125
478,125
314,800
1,994,175
2,494,175
Fluence Corporation Limited
25
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
(b) Details of remuneration (continued)
Share-based payments granted as compensation during the year
For the period, options were issued to certain Key Management Personnel under the Fluence 2015 Employee Share
Option Plan (as amended) and the Fluence 2020 Employee Share Option Plan. In accordance with AASB 2 Share
Based Payments, the tables include employee options agreed to be issued up to and including 31 December 2021.
Options issued to Key Management Personnel during the period generally vest on a time basis in 16 equal quarterly
increments subject to the employee continuing to be employed by the Group at the vesting date. Some options are
also a subject to meeting performance criteria established by the Board.
Details of options granted to directors and other key management personnel as compensation during the reporting
period are as follows:
Fluence Corporation Limited
26
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
(b) Details of remuneration (continued)
Share-based payments granted as compensation during the year (continued)
2021
Executive Directors
Richard Irving
Non-Executive Directors
Paul Donnelly
Ross Haghighat
Rengarajan Ramesh
Samantha Tough
Key Management
Personnel
Francesco Fragasso
Anthony Hargrave
Spencer Smith
Richard Cisterna
Grant date
No. of options
granted
No. of options
vested
Fair value
per option
at grant
date
US$
Exercise
price
AU$
25 June 2021
25 June 2021
25 June 2021
25 June 2021
25 June 2021
25 June 2021
6 April 2021
6 April 2021
16 August 2021
6 April 2021
6 April 2021
6 April 2021
6 April 2021
16 August 2021
-
1,500,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
12,500
187,500
500,000
46,875
703,125
12,500
187,500
500,000
-
-
-
-
-
-
500,000
-
25,000
-
-
93,750
-
25,000
-
-
0.0171
0.0601
0.0601
0.0601
0.0601
0.0534
0.0751
0.0863
0.0849
0.0751
0.0863
0.0751
0.0863
0.0849
-
0.29
0.23
0.23
0.23
0.23
0.23
0.23
0.23
0.21
0.23
0.23
0.23
0.23
0.21
-
Expiry date
30 June 2022
25 August 2025
25 August 2025
25 August 2025
25 August 2025
25 June 2025
1 October 2024
31 May 2025
18 August 2025
1 October 2024
31 May 2025
1 October 2024
31 May 2025
18 August 2025
-
Value of
options at
grant date
US$
25,628
60,096
60,096
60,096
60,096
53,404
938
16,189
42,442
3,519
60,710
938
16,189
42,442
-
Fluence Corporation Limited
27
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
(b) Details of remuneration (continued)
Share-based payments granted as compensation during the year (continued)
2020
Executive Directors
Henry Charrabé
Richard Irving
Non-Executive Directors
Peter Marks
Ross Haghighat
Rengarajan Ramesh
Arnon Goldfarb
Paul Donnelly
Key Management
Personnel
Francesco Fragasso
Anthony Hargrave
Erik Arfalk
Spencer Smith
Grant date
No. of options
granted
No. of options
vested
Fair value
per option
at grant
date
US$
Exercise
price
AU$
Expiry date
Value of
options at
grant date
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26 February 2020
26 February 2020
26 February 2020
26 February 2020
330,000
360,000
300,000
300,000
61,875
67,500
56,250
56,250
0.0765
0.0765
0.0765
0.0765
0.44
0.44
0.44
0.44
1 March 2024
1 March 2024
1 March 2024
1 March 2024
25,257
27,553
22,961
22,961
Fluence Corporation Limited
28
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:
Richard Irving
Name:
Chairman and CEO
Title:
Agreement commenced: 13 November 2020
Term of agreement:
Details:
Open
In the role of Chairman and CEO, Mr Irving received base salary of US$400,000 per
annum up to 31 July 2021 and US$425,000 per annum from 1 August 2021. In addition Mr
Irving is entitled to performance based bonus based on the Board of directors discretion.
Remuneration is reviewed annually by the Remuneration and Nomination Committee.
Name:
Title:
Agreement commenced: 18 December 2015
Term of agreement:
Details:
Ross Haghighat
Non-Executive Director
Open
Non-Executive Director fees of AU$96,000 (US$72,114) per annum plus Chair of
Remuneration and Nomination Committee fees of AU$16,000 (US$12,019) per annum.
Remuneration is reviewed annually by the Remuneration and Nomination Committee.
Name:
Title:
Agreement commenced: 14 July 2017
Term of agreement:
Details:
Dr. Rengarajan Ramesh
Non-Executive Director
Open
Non-Executive Director fees of AU$96,000 (US$72,114) per annum plus Member of the
Audit and Risk Committee fees of AU$12,000 (US$9,014) per annum and Member of the
Remuneration and Nomination Committee fees of AU$12,000 (US$9,014) per annum.
Remuneration is reviewed annually by the Remuneration and Nomination Committee.
Name:
Title:
Agreement commenced: 20 July 2018
Term of agreement:
Details:
Paul Donnelly
Non-Executive Director
Open
Non-Executive Director fees of AU$96,000 (US$72,114) per annum plus Chair of the Audit
and Risk Committee fees of AU$16,000 (US$12,019) per annum and Lead Independent
Director fee amounting to AU$9,600 (US$7,211) per annum. Remuneration is reviewed
annually by the Remuneration and Nomination Committee.
Name:
Title:
Agreement commenced: 01 July 2021
Term of agreement:
Details:
Samantha Tough
Non-Executive Director
Open
Ms. Tough was appointed Non-Executive Director and Member of the Audit and Risk
Committee on 01 July 2021. She receives Non-Executive Director fees of AU$96,000 per
annum (US$72,114) plus Member of Audit and Risk Committee fees of AU$12,000
(US$9,014) per annum. Remuneration is reviewed annually by the Remuneration and
Nomination Committee.
Fluence Corporation Limited
29
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
Service agreements (continued)
Name:
Title:
Agreement commenced:
Term of agreement:
Details of remuneration:
Cash salary and fees:
Bonuses and deferred remuneration:
Other Benefits:
Employment Based Option Remuneration:
Richard Irving
Chairman and Chief Executive Officer
13 November 2020
The engagement term is not fixed
US$400,000 per annum up to 31 July 2021 and $425,000 per annum
from 1 August 2021 (base salary)
Performance based bonus based on the Board of directors discretion
Health insurance for Mr Irving and his family
Number of
Options Granted
1,000,000
Grant Date
Exercise Price
Vesting Period
25 June 2021
AU$0.23
Options are exercisable in equal annual
installments at the end of each consecutive
twelve (12) months period over four (4)
years period, commencing on 25 July 2021.
Performance Based Option Remuneration:
Number of
Options Granted
1,500,000
Grant Date
Exercise Price
Vesting Period
25 June 2021
AU$0.29
Vesting is subject to meeting performance
milestones set by the Board and is
accelerated upon a "change of control
event". The options expiry date is 30 June
2022.
Fluence Corporation Limited
30
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
Service agreements (continued)
Name:
Title:
Agreement commenced:
Term of agreement:
Details of remuneration:
Francesco Fragasso
Chief Financial Officer
2 April 2018
At will with 60 days' notice by either party
Cash salary and fees:
Bonuses and deferred remuneration:
Other Benefits:
US$289,636 (base salary)
Performance based bonus of up to 40% of base salary
Health insurance for Mr Fragasso and his family
Employment Based Option Remuneration:
Number of
Options Granted
400,000
26 March 2018
AU$0.48
Grant Date
Exercise Price
Vesting Period
330,000
26 February 2020
AU$0.44
200,000
6 April 2021
AU$0.23
Options vest and become exercisable in
equal installments at the end of each
consecutive three (3) months period over
four (4) years, commencing on 26 March
2018.
Options vest and become exercisable in
equal installments at the end of each
consecutive three (3) months period over
four (4) years, commencing on 26 February
2020.
Options vest and become exercisable in
equal installments at the end of each
consecutive three (3) months period over
four (4) years, commencing on 6 April 2021.
Performance Based Option Remuneration:
Number of
Options Granted
400,000
Grant Date
Exercise Price
Vesting Period
26 March 2018
AU$0.48
Options are exercisable in equal annual
installments at the end of each consecutive
twelve (12) months period over four (4)
years period, commencing on 26 March
2018. Vesting of these options is subject to
meeting performance criteria established by
the Board.
Fluence Corporation Limited
31
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
Service agreements (continued)
Trigger Event Based Option Remuneration:
Number of
Options Granted
500,000
Grant Date
Exercise Price
Vesting Period
11 August 2021
AU$0.21
Options vest and become exercisable upon
the Company meeting specific goals with an
expiry date of 18 August 2025.
Fluence Corporation Limited
32
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
Service agreements (continued)
Name:
Title:
Agreement commenced:
Term of agreement:
Details of remuneration:
Anthony Hargrave
Chief Operating Officer
Mr Hargrave joined Fluence Corporation Limited on 16 May 2018
At will with 60 days' notice by either party
Cash salary and fees:
Bonuses and deferred remuneration:
Other Benefits:
US$325,000 (base salary)
Performance based bonus of up to 30% of based salary
Health insurance for Mr Hargrave and his family
Employment Based Option Remuneration:
Number of
Options Granted
250,000
28 June 2018
AU$0.46
Grant Date
Exercise Price
Vesting Period
360,000
26 February 2020
AU$0.44
750,000
6 April 2021
AU$0.23
Options vest and become exercisable in
equal installments at the end of each
consecutive three (3) months period over
four (4) years, commencing on 28 June
2018.
Options vest and become exercisable in
equal installments at the end of each
consecutive three (3) months period over
four (4) years, commencing on 26 February
2020.
Options vest and become exercisable in
equal installments at the end of each
consecutive three (3) months period over
four (4) years, commencing on 6 April 2021.
Performance Based Option Remuneration:
Number of
Options Granted
250,000
Grant Date
Exercise Price
Vesting Period
28 June 2018
AU$0.46
Options are exercisable as follows: 12.5%
on 31 January 2019, 75% in 3 equal
installments on 31 January 2020, 31
January 2021 and 31 January 2022 with the
remaining 12.5% on 31 July 2022. Vesting
is subject to meeting performance criteria
established by the Board.
Fluence Corporation Limited
33
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
Service agreements (continued)
Name:
Title:
Agreement commenced:
Term of agreement:
Details of remuneration:
Spencer Smith
Chief Legal Officer
Mr Smith joined RWL Water LLC on 31 May 2016. His current
agreement was executed on July 14, 2017.
The initial term of the contract was 2 years. The Initial term will
automatically be extended for successive periods of 1 year until the
Company or the Executive gives ninety (90) days written notice of
non-renewal or unless terminated.
Cash salary and fees:
Bonuses and deferred remuneration:
Other Benefits:
US$319,000 (base salary)
Performance based bonus up to 25% of base salary
Health insurance for Mr Smith and his family
Employment Based Option Remuneration:
Number of
Options Granted
350,000
75,000
140,000
Grant Date
Exercise Price
Vesting Period
14 July 2017
AU$0.84
Options vest and become exercisable in
equal installments at the end of each
consecutive three (3) month period over
four (4) years, commencing on 14 July 2017
26 March 2018
AU$0.48
Options are fully vested
31 January 2019
AU$0.39
300,000
26 February 2020
AU$0.44
200,000
6 April 2021
AU$0.23
49,000 options vested at grant date, 91,000
options vest and become exercisable in ten
equal installments at the end of each
consecutive three (3) month period,
commencing on 30 April 2019
Options vest and become exercisable in
equal installments at the end of each
consecutive three (3) month period over
four (4) years, commencing on 26 February
2020.
Options vest and become exercisable in
equal installments at the end of each
consecutive three (3) month period over
four (4) years, commencing on 6 April 2021.
Fluence Corporation Limited
34
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
Service agreements (continued)
Trigger Event Based Option Remuneration:
Number of
Options Granted
500,000
Grant Date
Exercise Price
Vesting Period
11 August 2021
AU$0.21
Options vest and become exercisable upon
the Company meeting specific goals with an
expiry date of 18 August 2025.
Name:
Title:
Agreement commenced:
Term of agreement:
Details of remuneration:
Richard Cisterna
Chief Strategy Officer
13 December 2021
At will with 60 days' notice by either party
Cash salary and fees:
Bonuses and deferred remuneration:
Other Benefits:
US$250,000 (base salary)
Performance based bonus up to 40% of base salary
Health insurance for Mr Cisterna and his family
Fluence Corporation Limited
35
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Remuneration report (Audited) (continued)
Financial performance
The Directors disclose the following three years of financial performance on the basis that they consider this period
most relevant for comparative purposes.
The earnings of the consolidated entity for the three years to 31 December 2021 are summarised below:
Financial results
Revenue
Loss before income tax from continuing operations
Loss from discontinued operations
Loss for the year
2021
$'000
2020
$'000
2019
$'000
(*)
103,315
(8,962)
(5,926)
(15,083)
97,139
(8,378)
(12,419)
(19,859)
59,848
(29,355)
(238)
(31,585)
* The results for 2019 have been adjusted to conform with AASB 5: "Assets held for sale and discontinued
operations" presentation requirements.
Other factors relevant to shareholder returns include the share price performance and earnings per share over the
same period:
Market factors
Share price
31
December
2021
$'000
31
December
2020
$'000
31
December
2019
$'000
AU$0.15
AU$0.23
AU$0.43
2021
$
2020
$
2019
$
Financial factors
Loss per share from continuing
operations
(0.02)
(0.01)
(0.06)
[This concludes the Remuneration Report, which has been audited]
Fluence Corporation Limited
36
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Shares under option
Unissued ordinary shares
Unissued ordinary shares of Fluence Corporation Limited under option at the date of this report are as follows:
Date options granted
Expiry date
Issue price of shares (AU$)
Number under option
31 May 2017
14 July 2017
26 March 2018
28 June 2018
31 July 2018
31 July 2018
10 April 2019
10 April 2019
30 May 2019
30 May 2019
30 May 2019
10 March 2020
10 March 2020
10 March 2020
10 March 2020
10 March 2020
10 March 2020
10 March 2020
19 March 2020
24 September 2020
24 September 2020
24 September 2020
7 December 2020
6 April 2021
6 April 2021
25 June 2021
25 June 2021
25 June 2021
16 August 2021
25 May 2025
25 May 2025
25 May 2022
27 August 2022
31 July 2022
31 July 2022
3 June 2022
3 December 2022
30 May 2023
30 May 2023
14 July 2025
3 June 2022
3 December 2022
1 March 2023
30 May 2023
29 August 2023
29 November 2023
1 March 2024
1 March 2024
30 May 2024
31 May 2024
29 August 2024
29 August 2024
1 October 2024
31 May 2025
30 June 2022
25 June 2025
25 August 2025
18 August 2025
$0.93
$0.84
$0.48
$0.46
$1.20
$1.50
$0.46
$0.46
$0.60
$0.80
$0.39
$0.44
$0.44
$0.44
$0.44
$0.44
$0.44
$0.44
$0.44
$0.23
$0.23
$0.23
$0.26
$0.23
$0.23
$0.29
$0.23
$0.23
$0.21
8,992,938
350,000
1,090,625
402,344
750,000
750,000
72,000
54,000
250,000
250,000
1,470,000
70,000
74,000
12,000
112,000
169,250
34,000
56,000
1,490,000
3,750
250
44,000
172,000
143,750
2,636,250
1,500,000
1,000,000
4,000,000
1,000,000
26,949,157
On 6 April 2021, a tranche of 250,000 options was granted with an expiry date of 30 August 2024. These options
were forfeited on 26 October 2021 (171,875 options) and 24 December 2021 (78,125 options), not included in the
table above as they were forfeited in the same year as issued.
Fluence Corporation Limited
37
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Insurance of officers and indemnities
(a)
Insurance of officers
The Group has indemnified the Directors and Executives of the Group for costs incurred, in their capacity as a
Director or Executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Group paid a premium in respect of a contract to insure the Directors and Executives of
the Group against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
(b) Indemnity of auditors
The Group has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
Group or any related entity against a liability incurred by the auditor.
During the financial year, the Group has not paid a premium in respect of a contract to insure the auditor of the Group
or any related entity.
Proceedings on behalf of the Group
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the purpose of taking
responsibility on behalf of the Group for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for audit and non-audit services provided during the year are set
out in Note 26 in the financial statements.
The Board of Directors has considered the position and is satisfied that the provision of the non-audit services is
compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The
Directors are satisfied that the provision of non-audit services by the auditor, did not compromise the auditor
independence requirements of the Corporations Act 2001 for the following reasons:
•
•
all non-audit services have been reviewed by the Audit and Risk Committee to ensure they do not impact the
impartiality and objectivity of the auditor, and
none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants.
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 40.
Rounding of amounts
The amounts contained in the directors’ report and in the financial report have been rounded to the nearest $1,000
(where rounding is applicable) under the option available to the Company under ASIC Corporations (Rounding in
Financial/Directors’ Report) Legislative Instrument 2016/191. The Company is an entity in which the Legislative
Instrument applies.
Fluence Corporation Limited
38
Fluence Corporation Limited
Directors' Report
31 December 2021
(continued)
Corporate Governance Statement
In accordance with ASX listing Rule 4.10.3, the Group’s Corporate Governance Statements can be found on its
website https://www.fluencecorp.com/investor-news/.
For and on behalf of the Directors
Richard Irving
Chairman of the Board
31 March 2022
New York
Fluence Corporation Limited
39
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Collins Square, Tower Four
Level 18, 727 Collins Street
Melbourne VIC 3008
GPO Box 5099 Melbourne VIC 3001
Australia
DECLARATION OF INDEPENDENCE BY TIM FAIRCLOUGH TO THE DIRECTORS OF FLUENCE
CORPORATION LIMITED
As lead auditor of Fluence Corporation Limited for the year ended 31 December 2021, I declare that, to
the best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Fluence Corporation Limited and the entities it controlled during the
period.
Tim Fairclough
Director
BDO Audit Pty Ltd
Melbourne, 31 March 2022
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members
of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent
member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Fluence Corporation Limited
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 December 2021
Revenues
Operating revenue
Other income
Testing
Expenses
Cost of sales
Research and development expenses
Sales and marketing expenses
General and administration expenses
Other losses
Finance costs - net
Loss before income tax
Income tax (expense)/benefit
Loss from continuing operations after tax
Loss from discontinued operations
Loss for the year
Loss for the year is attributable to:
Owners of Fluence Corporation Limited
Non-controlling interests
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations, net of tax
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
Continuing operations
Discontinued operations
Owners of Fluence Corporation Limited
Continuing operations
Discontinued operations
Non-controlling interests
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
Notes
4
4
4
4
4
4
6
3
103,193
122
103,315
89,846
221
90,067
(81,500)
(3,673)
(5,540)
(15,205)
(3,669)
(2,690)
(8,962)
(195)
(9,157)
(5,926)
(15,083)
(14,702)
(381)
(15,083)
(62,491)
(3,170)
(5,573)
(17,737)
(6,138)
(1,649)
(6,691)
761
(5,930)
(13,929)
(19,859)
(17,016)
(2,843)
(19,859)
217
(14,866)
2,932
(16,927)
(8,705)
(5,780)
(14,485)
(194)
(187)
(381)
(14,866)
(97)
(13,987)
(14,084)
(2,685)
(158)
(2,843)
(16,927)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the accompanying notes. All amounts are presented in US dollars.
Fluence Corporation Limited
41
Fluence Corporation Limited
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 December 2021
(continued)
Losses per share from continuing operations attributable to the ordinary
equity holders of the Group:
Basic and diluted loss per share
Losses per share from discontinued operations attributable to the
ordinary equity holders of the Group:
Basic and diluted loss per share
Losses per share attributable to the ordinary equity holders of the
Group:
Basic and diluted loss per share
Consolidated entity
31 December
2021
$
31 December
2020
$
Notes
7
7
7
(0.014)
(0.005)
(0.009)
(0.022)
(0.023)
(0.027)
(*) The comparative figures have been adjusted to conform with the AASB 5: "Assets held for sale and discontinued operations"
presentation requirements. Refer to Note 3 "Discontinued operations" for detailed information on the changes in comparatives
presentation.
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the accompanying notes. All amounts are presented in US dollars.
Fluence Corporation Limited
42
Fluence Corporation Limited
Consolidated Statement of Financial Position
As at 31 December 2021
ASSETS
Current assets
Cash and cash equivalents
Other financial assets
Trade and other receivables
Inventories
Prepayments
Concession arrangement assets
Other assets
Assets directly associated with assets classified as held for sale
Total current assets
Non-current assets
Investments accounted for using the equity method
Deferred tax assets
Property, plant and equipment
Intangible assets
Concession arrangement assets
Long-term deposits
Other assets
Total non-current assets
Total assets
White
LIABILITIES
Current liabilities
Trade and other payables
Borrowings and lease liability
Current tax liabilities
Provisions
Deferred revenue
Liabilities directly associated with assets classified as held for sale
Total current liabilities
Non-current liabilities
Other liabilities
Borrowings and lease liability
Deferred tax liabilities
Provisions
Deferred revenue
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Foreign currency translation reserve
Accumulated losses
Non-controlling interests
Total equity
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
Notes
8
8
9
10
11
13
3
14
6
15
16
11
12
13
17
18
19
20
3
17
18
6
19
20
21
23
22
40,849
11,502
31,674
13,387
9,299
231
188
8,493
115,623
547
-
12,005
1,709
2,881
14,281
2,090
33,513
149,136
42,019
2,918
30
4,290
31,984
11,656
92,897
1,964
34,263
794
390
2,838
40,249
133,146
15,990
31,038
15,474
38,486
12,810
7,823
353
605
-
106,589
415
610
12,981
1,834
8,750
23,368
215
48,173
154,762
39,451
3,287
175
6,594
32,045
-
81,552
2,812
25,160
928
711
13,127
42,738
124,290
30,472
212,279
(11,721)
(182,673)
17,885
(1,895)
15,990
212,161
(11,938)
(167,971)
32,252
(1,780)
30,472
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
All amounts are presented in US dollars.
Fluence Corporation Limited
43
Fluence Corporation Limited
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Consolidated entity
Balance at 1 January 2020
Profit/(Loss) for the period
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Issue of options
Balance at 31 December 2020
Contributed
equity
$'000
Notes
Foreign currency
translation
reserve
$'000
Accumulated
losses
$'000
Total
$'000
Non- controlling
interests
$'000
Total
equity
$'000
211,840
(14,870)
-
-
-
-
2,932
2,932
(150,955)
(17,016)
-
(17,016)
46,015
(17,016)
2,932
(14,084)
5
321
212,161
-
(11,938)
-
(167,971)
321
32,252
1,063
(2,843)
-
(2,843)
-
(1,780)
47,078
(19,859)
2,932
(16,927)
321
30,472
Balance at 1 January 2021
212,161
(11,938)
(167,971)
32,252
(1,780)
30,472
Profit/(Loss) for the period
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Issue of options
Transactions with non-controlling interests
Balance at 31 December 2021
-
-
-
-
217
217
(14,702)
-
(14,702)
5
22
446
(328)
212,279
-
-
(11,721)
-
-
(182,673)
(14,702)
217
(14,485)
446
(328)
17,885
(381)
-
(381)
-
266
(1,895)
(15,083)
217
(14,866)
446
(62)
15,990
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. All amounts are presented in US dollars.
Fluence Corporation Limited
44
Fluence Corporation Limited
Consolidated Statement of Cash Flows
For the year ended 31 December 2021
Cash flows from operating activities
Receipt from customers
Payments to suppliers and employees
Receipt from restricted cash
Interest received
Interest and other costs of finance paid
Income taxes paid
Net cash (outflow)/inflow from operating activities
Cash flows from investing activities
Payment for purchases of plant and equipment
Funds transferred (to)/from term deposit, net
Proceeds from sale of property, plant and equipment
Payments for construction of concession assets
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Proceeds from borrowings
Lease payments
Net cash inflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of year
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
Notes
110,542
(112,544)
108
91
(2,773)
(263)
(4,839)
(1,419)
8,737
36
-
7,354
10,709
(1,815)
8,894
11,409
31,038
(1,084)
41,363
122,440
(98,975)
106
148
(1,396)
(76)
22,247
(1,168)
(27,897)
225
(466)
(29,306)
18,593
(1,633)
16,960
9,901
21,908
(771)
31,038
8
8
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. All
amounts are presented in US dollars.
Fluence Corporation Limited
45
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
1 Summary of significant accounting policies
(a) Corporate information
The Financial Report of Fluence Corporation Limited and its controlled entities (the “Group”) for the year ended 31
December 2021 was authorised for issue in accordance with a resolution of the Directors on the 31
of March 2022.
st
Fluence Corporation Limited is a for profit listed public company limited by shares incorporated and domiciled in
Australia whose shares are publicly traded on the Australian Securities Exchange (“ASX”). The Group provides
fast-to-deploy, decentralised and packaged water and wastewater treatment solutions.
(b) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards
and interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001.
The financial statements also comply with International Financial Reporting Standards (IFRS) as issued by the
international accounting standards board.
The financial report has been prepared on an accruals basis and is based on historical costs, except for those assets
and liabilities measured at fair value. The financial report is presented in United States Dollars, which is the Group’s
presentation currency. All values are rounded to the nearest $1,000 (where rounding is applicable) under the option
available to the Company under ASIC Corporations (Rounding in Financial/Directors' Report) Legislative Instrument
2016/191. The Company is an entity in which the Legislative Instrument applies.
Management is required to make judgments, estimates and assumptions about carrying values of assets and
liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be reasonable under the circumstance, the results
of which form the basis of making the judgments. Actual results may differ from these estimates. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
Judgments made by management in the application of Australian Accounting Standards that have significant effects
on the financial statements and estimates with a significant risk of material adjustments in the next year are
disclosed, where applicable, in the relevant notes to the financial statements (refer to Note 1 (aa)).
information
Accounting policies are selected and applied in a manner which ensures that the resulting financial
satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions
or other events is reported.
(i) Going concern
The financial statements have been prepared on the going concern basis, which assumes the consolidated entity will
have sufficient cash to pay its debts, as and when they become payable, for a period of at least 12 months from the
date the financial report was authorised for issue.
For the year ended 31 December 2021, the consolidated entity incurred an operating loss after tax of $15,083,000
(2020: $19,859,000) and had cash outflow from operating activities of $4,839,000 (2020: cash inflow of $22,247,000),
and total net cash inflows of $11,409,000 (2020: $9,901,000). The Group had cash and cash equivalents of
$40,849,000 and other financial assets of $11,502,000 at 31 December 2021 (2020: $31,038,000 and $15,474,000
respectively).
The consolidated entity has prepared a cash flow forecast supported by detailed assumptions and scenario planning
directed to sustaining business growth. These forecasts indicate that the consolidated entity will be able to fund its
ongoing operations for a period of 12 months from the date the financial report was authorised for issue.
Fluence Corporation Limited
46
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
1 Summary of significant accounting policies (continued)
(b) Basis of preparation (continued)
(i) Going concern (continued)
The Group has prepared cash flow forecasts that include the following:
•
•
•
Positive Group operating cash inflows forecast for the 12 months ended 31 December 2022 and 15
months ended 31 March 2023 after allowing for operating, investing and financing cash flows.
The positive Group operating cash inflows have been based on a substantial contracted sales
backlog of US$133 million for FY 2022 and further, which includes the Ivory Coast Project and other
projects. Contracted revenues from the Ivory Coast Project are US$94 million for financial years 2022
and 2023.
The group has in place a project financing and working capital loan facility with an affiliate of Upwell
(the ‘Upwell Facility’), which will be applied to finance completion of strong cash flow generation
projects. The cash flow forecast allows for a drawdown on the Upwell Facility. The resulting net cash
flows from major projects will provide further working capital to the consolidated entity.
Management continue to strategise to manage and mitigate the ongoing impact of COVID-19 and have taken steps to
monitor projects performance, cash flows and operations accordingly.
(ii) New and amended standards adopted by the group
All accounting standards adopted by the Group are consistent with the most recent Annual Report for the year ended
31 December 2020.
(c) Comparatives
The comparative figures have been adjusted to conform with the AASB 5: "Assets held for sale and discontinued
operations" presentation requirements. Refer to Note 3 "Discontinued operations" for detailed information on the
changes in comparatives presentation.
(d) Principles of consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent company,
Fluence Corporation Limited, and all of the subsidiaries. Subsidiaries are entities the parent controls. The parent
controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the entity. A list of the subsidiaries is provided in Note 30.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group
from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the
date that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions
between Group entities are fully eliminated on consolidation.
Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity
of the accounting policies adopted by the Group. Equity interests in a subsidiary not attributable, directly or indirectly,
to the Group are presented as “non-controlling interests”.
The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and are
entitled to a proportionate share of
the
to initial recognition,
non-controlling interests’ proportionate share of
non-controlling interests are attributed their share of profit or loss and each component of other comprehensive
income.
the subsidiary’s net assets on liquidation at either fair value or at
the subsidiary’s net assets. Subsequent
Non-controlling interests are shown separately within the equity section of the Statement of Financial Position and
Statement of Profit or Loss and Other Comprehensive Income.
Fluence Corporation Limited
47
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
1 Summary of significant accounting policies (continued)
(e) Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the
same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is
responsible for the allocation of resources to operating segments and assessing their performance.
(f) Revenue recognition
Revenue is recognised when goods or services are transferred to a customer, in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services. Before recognising
revenue,
identify separate performance obligations, determine the
transaction price, allocate the transaction price to the performance obligations and recognise revenue as or when
each performance obligation is satisfied. Performance obligations can be satisfied at a point in time or over time.
the Group needs to identify the contract,
Revenue related to construction or upgrade services under service concession arrangements is recognised over
time, consistent with the Group's accounting policy on recognising revenue on construction contracts. Operating or
service revenue is recognised in the period in which the services are provided by the Group. If the service concession
arrangement contains more than one performance obligation, then the consideration received is allocated with
reference to the relative stand-alone selling price of the services delivered.
(g) Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant
will be received, and the group will comply with all attached conditions. Note 17 provides further information on how
the group accounts for government grants.
Government grants are recognised in profit or loss on a systematic basis over the periods in which the entity
recognises expenses for the related costs for which the grants are intended to compensate.
Grants received from the Government of Israel that are required to be repaid by payment of royalties on sales
revenue, or refunded if relevant conditions are not met, are recorded as other payables.
(h) Leases
The Group recognises assets and liabilities for all leases with a term of more than 12 months, unless the underlying
asset is of low value. The Group recognises a right-of-use asset representing its right to use the underlying leased
asset and a lease liability representing its obligation to make lease payments. Right-in-use assets and lease liabilities
are measured initially on a present value basis. The Group recognises depreciation of the right-of-use asset and
interest on the lease liability. Depreciation is on a straight-line basis.
(i) Employee benefits
(i) Wages and salaries
Wages and salaries include non-monetary benefits, annual leave and long service leave. These are recognised and
presented in different ways in the financial statements:
•
•
•
The liability for annual leave and the portion of long service leave expected to be paid within twelve months is
measured at the amount expected to be paid.
The liability for long service leave and annual leave expected to be paid after one year is measured as the
present value of expected future payments to be made in respect of services provided by employees up to the
reporting date.
The liability for annual leave and the portion of long service leave that has vested at the reporting date included in
the current provision for employee benefits.
Fluence Corporation Limited
48
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
1 Summary of significant accounting policies (continued)
(i) Employee benefits (continued)
(i) Wages and salaries (continued)
•
The portion of long service leave that has not vested at the reporting date is included in the non-current provision
for employee benefits.
(ii) Share-based payments
Employees (including senior executives) of the Group receive remuneration in the form of share-based payments,
whereby employees render services as consideration for equity instruments (equity-settled transactions).
Equity-settled transactions
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an
appropriate valuation model, further details of which are given in Note 5.
That cost is recognised in employee benefits expense, together with a corresponding increase in equity (other capital
reserves), over the period in which the service and, where applicable, the performance conditions are fulfilled (the
vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the
vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number
of equity instruments that will ultimately vest. The expense or credit in the Statement of Profit or Loss and Other
Comprehensive Income for a period represents the movement in cumulative expense recognised as at the beginning
and end of that period.
Service and non-market performance conditions are not taken into account when determining the grant date fair
value of awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the
number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant
date fair value. Any other conditions attached to an award, but without an associated service requirement, are
considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to
an immediate expensing of an award unless there are also service and/or performance conditions.
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service
conditions have not been met. Where awards include a market or non-vesting condition, the transactions are treated
as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance
and/or service conditions are satisfied.
When the terms of an equity-settled award are modified, the minimum expense recognised is the grant date fair value
of the unmodified award, provided the original terms of the award are met. An additional expense, measured as at the
date of modification, is recognised for any modification that increases the total fair value of the share-based payment
transaction, or is otherwise beneficial to the employee. Where an award is canceled by the entity or by the
counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted
earnings per share.
(j)
Investment in associates and joint ventures
An associate is an entity over which the Group has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee but is not control or joint control over those
policies.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have
rights to the net assets of the joint venture. Joint control
is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the
parties sharing control.
Fluence Corporation Limited
49
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
1 Summary of significant accounting policies (continued)
(j)
Investment in associates and joint ventures (continued)
The considerations made in determining significant influence or joint control are similar to those necessary to
determine control over subsidiaries.
The Group’s investments in its associate and joint venture are accounted for using the equity method.
Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying
amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the associate or joint
venture since the acquisition date.
The Statement of Profit or Loss reflects the Group’s share of the results of operations of the associate or joint
venture. Any change in Other Comprehensive Income (OCI) of those investees is presented as part of the Group’s
OCI. In addition, when there has been a change recognised directly in the equity of the associate or joint venture, the
Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains
and losses resulting from transactions between the Group and the associate or joint venture are eliminated to the
extent of the interest in the associate or joint venture.
The aggregate of the Group’s share of profit or loss of an associate and a joint venture is shown on the face of the
Statement of Profit or Loss outside operating profit and represents profit or loss after tax and non-controlling interests
in the subsidiaries of the associate or joint venture.
The financial statements of the associate or joint venture are prepared for the same reporting period as the Group.
When necessary, adjustments are made to bring the accounting policies in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss
on its investment in its associate or joint venture. At each reporting date, the Group determines whether there is
objective evidence that the investment in the associate or joint venture is impaired. If there is such evidence, the
Group calculates the amount of impairment as the difference between the recoverable amount of the associate or
joint venture and its carrying value, and then recognises the loss as ‘Share of profit of an associate and a joint
venture’ in the Statement of Profit or Loss and Other Comprehensive Income.
Upon loss of significant influence over the associate or joint control over the joint venture, the Group measures and
recognises any retained investment at its fair value. Any difference between the carrying amount of the associate or
joint venture upon loss of significant influence or joint control and the fair value of the retained investment and
proceeds from disposal is recognised in profit or loss.
(k)
Impairment
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which
is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal
calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or
observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a
Discounted Cash Flow (DCF) model.
The cash flows are derived from the budget for the next five years and do not include restructuring activities that the
Group is not yet committed to or significant future investment that will enhance the performance of the assets of the
Cash Generating Unit (CGU) being tested.
The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash
inflows and the growth rate used for extrapolation purposes.
Fluence Corporation Limited
50
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
1 Summary of significant accounting policies (continued)
(l) Cash and cash equivalents
Cash and short-term deposits in the Consolidated Statement of Financial Position comprise cash at bank and in hand
and short-term deposits with an original maturity of three months or less.
(m) Other financial assets
Restricted cash is invested in highly liquid deposits, which are used mainly as security for guarantees provided to
lessors of office and production premises, bid bonds and performance guarantees.
For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and cash
equivalents as defined above.
(n) Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost, less any
appropriate provision for estimated irrecoverable amounts.
In relation to the impairment of financial assets, AASB 9 requires an expected credit loss model. The expected credit
loss model requires the Group to account for expected credit losses at each reporting date to reflect changes in credit
risk since the initial recognition of the financial assets.
(o) Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that
is directly attributable to the acquisition of the items. Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated
with the item will flow to the consolidated entity and the cost of the item can be measured reliably. The carrying
amount of the replaced part is derecognised. AII other repairs and maintenance are charged to profit or loss during
the reporting period in which they are incurred.
Depreciation on plant and equipment is calculated using the straight-line method to allocate their cost or revalued
amounts, net of their residual values, over their estimated useful lives, as follows:
25-50 years
Buildings
Over the shorter of the term of the lease or useful life of an asset
Leasehold improvements
4-17 years
Production equipment
Office furniture and equipment
3-17 years
Computers and peripheral equipment 3-15 years
Vehicles
Capitalised development costs
5-7 years
15 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds to the carrying amount. These are included in
profit or loss.
Fluence Corporation Limited
51
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
1 Summary of significant accounting policies (continued)
(p) Inventories
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost
comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure,
the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual
items of
inventory on basis of First in-First out (FIFO). Costs of purchased inventory are determined after deducting rebates
and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated
costs of completion and the estimated costs necessary to make the sale.
(q) Foreign currency translation
(i) Functional currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (‘the functional currency’). The financial statements of
Fluence Corporation Limited (the parent entity of the Group) are measured in Australian Dollars which is that entity’s
functional currency.
(ii) Presentation currency
The consolidated financial statements are presented in US Dollars, which is the Group’s presentation currency.
(iii) Translation and balances
Transactions in foreign currencies are converted to the functional currency at the exchange rate at the date of the
transaction. Amounts payable to and by the Group outstanding at reporting date and denominated in foreign
currencies have been converted to local currency using rates prevailing at the end of the financial year. All exchange
differences are taken to profit or loss.
(iv) Group companies
The results of foreign subsidiaries and the parent entity are translated to US Dollars at the exchange rate at the date
of the transaction. Assets and liabilities of foreign subsidiaries and the Australian parent are translated to US Dollars
at exchange rates prevailing as at the reporting date. All resulting exchange differences are recognised in other
comprehensive income and in the foreign currency translation reserve in equity.
(v) Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences on translation of foreign controlled
subsidiaries. Amounts are reclassified to profit or loss when the investment is disposed of.
(r)
Income tax
Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets
and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except where the deferred income
tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination
and, at the time of the transaction, affects neither the accounting loss nor taxable profit or loss.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax
assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised
except where the deferred income tax asset relating to the deductible temporary differences arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of transaction,
affects neither the accounting loss nor taxable profit or loss.
Fluence Corporation Limited
52
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
1 Summary of significant accounting policies (continued)
(r)
Income tax (continued)
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that
it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax
asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
(s) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except:
• where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in
which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as
applicable; and
receivables and payables are stated with the amount of GST included.
•
Cash flows arising from operating activities are included in the Consolidated Statement of Cash Flows on a gross
basis (i.e. including GST) and the GST component of cash flows arising from investing and financing activities, which
is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and
contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. The net
amount of GST recoverable from, or payable to, the taxation authority is included as part of the receivables or
payables in the Consolidated Statement of Financial Position.
(t)
Intangible assets
Intangible assets are initially measured at cost. Following initial recognition, intangible assets are carried at cost less
lives of intangible assets are
any accumulated amortisation and any accumulated impairment losses. The useful
assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful
life and
assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation
period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial
year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits
embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, which is a
change in an accounting estimate. The amortisation expense on intangible assets with finite lives is recognised in
profit or loss in the expense category consistent with the function of the intangible asset.
(i) Research and development
Research costs are expensed as incurred.
An intangible asset arising from development expenditure on an internal project is recognised only when the Group
can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale,
its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits,
the availability of resources to complete the development and the ability to measure reliably the expenditure
attributable to the intangible asset during its development.
Following initial recognition of the development expenditure, the cost model
carried at cost
capitalised is amortised over the period of expected benefits from the related project.
less any accumulated amortisation and accumulated impairment
is applied requiring the asset to be
losses. Any expenditure so
Fluence Corporation Limited
53
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
1 Summary of significant accounting policies (continued)
(t)
Intangible assets (continued)
(i) Research and development (continued)
The carrying value of an intangible asset arising from development expenditure is tested for impairment annually
when the asset is not available for use, or more frequently when an indication of impairment arises during the
reporting period.
Amortisation commences when the assets are ready for use.
(ii) Concession intangible asset
An intangible asset arising from a concession arrangement. The group recognises an intangible asset to the extent
that it receives a right to charge users over the life of arrangement for the use of the asset. The intangible asset is
measured initially at cost. The intangible assets will be amortised over the useful life of the arrangement and will be
measured at cost less any accumulated amortisation and accumulated impairment losses.
The carrying value of an intangible asset arising from a service concession arrangement is tested for impairment
annually when the asset is not available for use, or more frequently when an indication of impairment arises during
the reporting period.
(u) Impairment
The carrying values of non-financial assets are tested for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash inflows that are largely independent of the cash inflows from other assets or groups of assets (cash-generating
units). Non-financial assets that suffer impairment are tested for possible reversal of the impairment whenever events
or changes in circumstances indicate that the impairment may have reversed.
Impairment exists when the carrying value of an asset exceeds its estimated recoverable amount. The asset is then
written down to its recoverable amount.
(v) Trade and other payables
Trade and other payables are carried at amortised cost and represent liabilities for goods and services provided to
the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make
future payments in respect of the purchase of these goods and services.
(w) Contributed equity
Ordinary shares are classified as equity. Any transaction costs arising on the issue of ordinary shares are recognised
directly in equity as a reduction (net of tax) of the share proceeds received.
(x) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that
can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the
obligation. Where applicable, provisions are determined by discounting the expected future cash flows at a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Fluence Corporation Limited
54
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
1 Summary of significant accounting policies (continued)
(y) Earnings per share
Basic earnings per share is calculated as net profit or loss attributable to members, adjusted to exclude costs of
servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any
bonus element.
Diluted earnings per share is calculated as net profit or loss attributable to members, adjusted for:
•
•
•
costs of servicing equity (other than dividends);
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been
recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the dilution of
potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential
ordinary shares, adjusted for any bonus element.
(z) Concession financial asset
A financial asset arising from a concession arrangement. The Group recognises a financial asset to the extent that it
receives an unconditional contractual right to receive a specified or determinable amount of cash or another financial
asset in return for constructing or upgrading a public sector asset, and then operating and maintaining the asset for a
specified period of time. The financial asset is measured at fair value. The financial asset is reduced when amounts
are received.
(aa) Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of
future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of certain assets and liabilities within the next annual reporting period are:
(i) Fair value of financial liability
The Group assessed the fair value of the financial milestone payments and government grant liabilities, which
incorporate a number of key estimates and assumptions. For further details, please refer to Note 17 Trade and other
payables and other liabilities.
Income tax
(ii)
The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgment is required in
determining the provision for income tax. There are many transactions and calculations undertaken during the
ordinary course of business for which the ultimate tax determination is uncertain. The Group recognises liabilities for
anticipated tax audit issues based on the Group's current understanding of the tax law. Where the final tax outcome
of these matters is different from the carrying amounts, such differences will
impact the current and deferred tax
provisions in the period in which such determination is made.
(iii) Share-based payment transactions
Under AASB 2 Share Based Payments, the consolidated entity must recognise the fair value of share options granted
to directors, employees and consultants as remuneration as an expense on a pro-rata basis over the vesting period in
profit or loss with a corresponding adjustment to equity.
The consolidated entity provides benefits to employees (including directors) of the consolidated entity in the form of
share-based payment transactions, whereby employees render services in exchange for shares or rights over shares
("equity-settled transactions").
Fluence Corporation Limited
55
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
1 Summary of significant accounting policies (continued)
(aa) Significant accounting estimates and assumptions (continued)
(iii) Share-based payment transactions (continued)
Estimating the fair value of share-based payment transactions requires the determination of the most appropriate
valuation model, which depends on the terms and conditions of
the grant. This estimate also requires the
determination of the most appropriate inputs to the valuation model including the expected life of the share option or
appreciation right, volatility and dividend yield and making assumptions about them. For the measurement of the fair
value of equity-settled transactions with employees at the grant date, the Group uses a binominal model for the
options. The assumptions and models used for estimating fair value for share-based payment transactions are
disclosed in Note 5 - People costs.
(iv) Fair value measurement hierarchy
The consolidated entity is required to classify all assets and liabilities, measured at fair value, using a three level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1:
Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly or indirectly; and Level 3: Unobservable inputs for the asset or liability. Considerable
judgment is required to determine what is significant to fair value and therefore which category the asset or liability is
placed in can be subjective.
The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These
include discounted cash flow analysis or the use of observable inputs that require significant adjustments based on
unobservable inputs.
Impairment
(v)
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which
is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal
calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or
observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a
Discounted Cash Flow (DCF) model. The cash flows are derived from the budget for the next five years and do not
include restructuring activities that the Group is not yet committed to or significant future investments that will
enhance the performance of the assets of the Cash Generating Units (CGU) being tested. The recoverable amount is
sensitive to the discount rate used for the DCF model as well as the expected future cash inflows and the growth rate
used for extrapolation purposes. These estimates are most relevant to goodwill and other intangibles with indefinite
useful lives recognised by the Group.
(vi) Revenue recognition over time
The value of work performed using the stage of completion method is used to determine revenue recognition on
contracts where revenue is recognised over time. This measurement is an accounting judgment as management
uses judgement to estimate costs incurred to date as a percentage of total estimated costs.
(vii) PDVSA project
In December 2014, Fluence Argentina entered into significant work agreements with PDVSA Agricola (PDVSA), a
wholly owned company by the Venezuelan government. These work agreements consisted of a series of purchase
orders (POs) from PDVSA (PDVSA contract), for detailed engineering and the supply of water and wastewater
treatment systems and composting systems for five ethanol production plants in Venezuela. In relation to those work
agreements, Fluence Argentina received advanced payments of approximately $95 million in June 2015.
During March 2016, PDVSA rescinded the original work agreements. During that period, Fluence Argentina had
invested significant amounts in the engineering design of the projects. In January 2017, PDVSA expressed its
intention to continue with a smaller scope of work, comprising the plant named "Portuguesa", at a project value of $45
million.
Fluence Corporation Limited
56
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
1 Summary of significant accounting policies (continued)
(aa) Significant accounting estimates and assumptions (continued)
(vii) PDVSA project (continued)
During 2019, the United States Office of Foreign Assets Control (OFAC), enacted further sanctions with respect to
Venezuela (the Venezuelan Sanctions). As Fluence is headquartered in the US, the Company has determined that
the Venezuelan Sanctions are applicable to the Company and its subsidiaries. While in place, the Venezuelan
Sanctions prohibit US persons from having certain dealings with Venezuela. This extends to any work Fluence’s
Argentinean subsidiary may otherwise have performed for PDVSA. Fluence is keeping the customer informed as
permitted under the OFAC regulations, and to date no claims have been brought in response to the issue.
(viii)San Quintin project
The Group has classified the operations in Mexico as a discontinued operation. Following the decision not to proceed
with the contract in 2020, project-related assets in Mexico have been written down to a carrying value of nil. A bond of
$3.1 million, deposited with a third party under the terms of the original contract, continues to be recorded as a
non-current asset at 31 December 2021 within Fluence Corporation LLC (the US parent of the Mexican operation).
The assessment of the recoverability of the $3.1m deposit is subject to Management’s best estimate and has been
made with regards to the available information and in consultation with Fluence’s Legal Counsel and external experts.
A mutual termination agreement is in the process of being finalised with the customer and management are confident
of a formal resolution within the next 12 months. Based on the available information the Group is confident that the
bond will be recovered.
2 Segment information
Segment disclosure replicates the manner in which the Chief Operating Decision Maker (CODM) monitors the
business performance.
The Group's operating segments are:
• Operating Units (OUs) - These are defined as the operating entities of the Group that earn revenues and incur
expenses that are reviewed by the CODM and their discrete financial information is available. The OUs are
aggregated into a single operating segment on the basis that the OUs are similar in each of the following respects:
•
•
•
•
•
nature of the products and services;
nature of the production processes;
type or class of customer for their products and services;
methods used to distribute their products or provide their services; and
nature of the regulatory environment
• Product and Innovation Group (P&I) - Defined as the Research and Development vehicle of the Group.
2021
Segment revenue
Contract revenue
Service revenue
Other income
Operating
Units
$'000
Product and
Innovation
$'000
Intersegment
Elimination
$'000
Total
$'000
97,582
5,570
122
103,274
-
640
-
640
-
(599)
-
(599)
97,582
5,611
122
103,315
Fluence Corporation Limited
57
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
2 Segment information (continued)
2021
Segment expense
Segment depreciation and amortisation
Share of profits of associates
Write off of inventories
Loss after tax from discontinued
operations
Segment expense
Unallocated expenses - corporate
Segment results
Assets
Investments in associates
Assets directly associated with assets
classified as held for sale
Segment assets
Unallocated assets - corporate
Liabilities
Liabilities directly associated with
assets classified as held for sale
Segment liabilities
Unallocated liabilities - corporate
Acquisitions of non-current assets
Operating
Units
$'000
Product and
Innovation
$'000
Intersegment
Elimination
$'000
Total
$'000
(1,590)
83
(148)
(5,926)
(98,896)
-
(106,477)
(3,203)
547
8,493
116,186
-
125,226
(11,656)
(84,712)
-
(96,368)
1,164
(694)
-
-
-
(2,661)
-
(3,355)
(2,715)
-
-
5,075
-
5,075
-
(5,971)
-
(5,971)
38
-
-
-
-
599
-
599
-
-
-
(1,433)
-
(1,433)
-
1,433
-
1,433
-
(2,284)
83
(148)
(5,926)
(100,958)
(9,165)
(118,398)
(15,083)
547
8,493
119,828
20,268
149,136
(11,656)
(89,250)
(32,240)
(133,146)
1,202
Contract revenue from Operating Units segment includes Ivory Coast revenue of $56.3 million for FY 2021 (FY 2020:
$36.5 million).
2020
Segment revenue
Contract revenue
Service revenue
Other income
Operating
Units
$'000
Product and
Innovation
$'000
Intersegment
Elimination
$'000
Total
$'000
82,782
6,830
221
89,833
-
1,442
-
1,442
-
(1,208)
-
(1,208)
82,782
7,064
221
90,067
Fluence Corporation Limited
58
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
2 Segment information (continued)
2020
Segment expense
Segment depreciation and amortisation
Share of profits of associates
Write off of inventories
Loss after tax from discontinued operations
Segment expense
Unallocated expenses - corporate
Segment result
Assets
Investments in associates
Segment assets
Unallocated assets - corporate
Liabilities
Segment liabilities
Unallocated liabilities - corporate
Acquisitions of non-current assets
Unallocated expenses
Other corporate expenses
Unallocated assets
Cash and cash equivalents
Other assets
Operating
Units
$'000
Product and
Innovation
$'000
Intersegment
Elimination
$'000
Total
$'000
(1,887)
55
(32)
(13,929)
(81,671)
-
(97,464)
(7,631)
415
137,105
-
137,520
(92,852)
-
(92,852)
972
(1,027)
-
-
-
(1,554)
-
(2,581)
(1,139)
-
6,264
-
6,264
(10,800)
-
(10,800)
77
-
-
-
-
1,208
-
1,208
-
-
(4,141)
-
(4,141)
4,141
-
4,141
-
(2,914)
55
(32)
(13,929)
(82,017)
(11,089)
(109,926)
(19,859)
415
139,228
15,119
154,762
(99,511)
(24,779)
(124,290)
1,049
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
(9,165)
(11,089)
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
14,779
5,489
20,268
9,924
5,195
15,119
Fluence Corporation Limited
59
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
2 Segment information (continued)
Unallocated liabilities
Trade and other payables
Borrowings
Other liabilities
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
(748)
(30,459)
(1,033)
(32,240)
(1,089)
(20,446)
(3,244)
(24,779)
Intersegment transactions
Intersegment transactions are made on an arm's-length basis and are eliminated on consolidation.
3 Discontinued operations and assets classified as held for sale
(a) Discontinued operations and assets classified as held for sale
(i) Description
During the year ended 31 December 2021, the Company classified its operations in Italy and Peru as Held for Sale
and operations in Mexico as discontinued operations. The operations in Italy and Peru have met the conditions of
AASB 5, management is committed to a plan to sell, the asset is available for immediate sale, an active program to
locate a buyer is initiated, the sale is highly probable within 12 months, the asset is being actively marketed for sale,
and actions required to complete the plan indicate that it is unlikely that plan will be significantly changed or
withdrawn.
(ii) Financial performance and cash flow information
The financial performance and cash flow information presented are for the year ended 31 December 2021 and the
year ended 31 December 2020.
Fluence Italy
Revenue
Cost of sales
Research and development expenses
Sales and marketing expenses
General and administrative expenses
Other gains/losses - net
Finance costs - net
Loss before income tax
Income tax benefit/(expense)
Loss after income tax from discontinued operations
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
8,671
(7,355)
(129)
(442)
(1,370)
(1,365)
(30)
(2,020)
(38)
(2,058)
7,260
(6,755)
(146)
(520)
(1,428)
(30)
4
(1,615)
172
(1,443)
Fluence Corporation Limited
60
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
3 Discontinued operations and assets classified as held for sale (continued)
(a) Discontinued operations and assets classified as held for sale (continued)
(ii) Financial performance and cash flow information (continued)
Net cash outflow from operating activities
Net cash outflow from investing activities
Net cash inflow from financing activities
Effects of exchange rate changes on cash and cash equivalents
Net increase/(decrease) in cash and cash equivalents from discontinued
operations
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
(719)
(44)
867
(76)
28
(579)
(20)
478
75
(46)
According to the AASB 5 "Non-current assets held for sale and discontinued operations" presentation requirements
for intragroup transactions, Fluence Italy revenue for the year ended 31 December 2021 excludes the revenue
earned from the Group in the amount of $5,454,000 and the related costs in the amount of $4,959,000. Fluence Italy
revenue for the year ended 31 December 2020 excludes the revenue earned from the Group in the amount of
$1,947,000 and the related costs in the amount of $437,000.
If the intragroup transactions were reported as Fluence Italy's financial performance, Fluence Italy would have a net
loss after income tax of $1,563,000 for the year ended 31 December 2021 and a net profit after income tax of
$67,000 for the year ended 31 December 2020.
GCM Peru
Revenue
Cost of sales
General and administrative expenses
Impairment expense
Other gains - net
Loss before income tax
Income tax benefit
Loss after income tax from discontinued operations
Net cash outflow from operating activities
Net cash outflow from investing activities
Net cash inflow from financing activities
Effects of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents from discontinued operations
Fluence Corporation Limited
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
40
(40)
(72)
(3,274)
(196)
(3,542)
11
(3,531)
(47)
(42)
80
(12)
(21)
39
(91)
(55)
-
35
(72)
5
(67)
(73)
(52)
79
(5)
(51)
61
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
3 Discontinued operations and assets classified as held for sale (continued)
(a) Discontinued operations and assets classified as held for sale (continued)
(ii) Financial performance and cash flow information (continued)
Fluence Mexico
Revenue
Cost of sales
General and administrative expenses
Impairment expense
Other gains/(losses) - net
Finance costs
Loss before income tax
Income tax benefit/(expense)
Loss after income tax from discontinued operations
Net cash inflow/(outflow) from operating activities
Net cash outflow from investing activities
Net cash inflow from financing activities
Effects of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents from discontinued operations
Impairment expense
Concession arrangements asset
Intangible assets
Unbilled receivables
GST receivable
Reversal of accruals
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
-
(486)
(99)
-
251
(68)
(402)
65
(337)
(120)
(7)
49
18
(60)
417
(373)
(248)
(11,903)
(69)
(126)
(12,302)
(117)
(12,419)
18
(413)
305
57
(33)
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
(1,739)
-
(1,535)
-
-
(3,274)
(12,037)
(4,012)
-
(475)
4,621
(11,903)
Fluence Corporation Limited
62
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
3 Discontinued operations and assets classified as held for sale (continued)
(a) Discontinued operations and assets classified as held for sale (continued)
(ii) Financial performance and cash flow information (continued)
Loss after income tax expense from discontinued operations
Fluence Italy
GCM Peru
Fluence Mexico
(b) Carrying amounts of assets and liabilities disposed
Fluence Mexico
Carrying amounts of assets and liabilities disposed
Cash and cash equivalents
Trade receivables
Prepayments
Other current assets
Property, plant and equipment
Total assets disposed
.
Trade and other payables
Current tax liabilities
Deferred revenue
Other non-current liabilities
Total liabilities disposed
Net assets / (liabilities)
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
(2,058)
(3,531)
(337)
(5,926)
(1,443)
(67)
(12,419)
(13,929)
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
166
12
9
6
4
197
(361)
(33)
(1)
(322)
(717)
(520)
226
4
59
8
6
303
(193)
(92)
-
(262)
(547)
(244)
Fluence Corporation Limited
63
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
3 Discontinued operations and assets classified as held for sale (continued)
(c) Assets and liabilities directly associated with assets classified as held for sale
Fluence Italy
Disposal group held for sale
Cash and cash equivalents
Trade receivables
Inventories
Prepayments
Deferred tax assets
Property, plant and equipment
Long-term deposits
Other long-term assets
Total assets directly associated with assets classified as held for sale
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Deferred revenue
Long-term borrowings
Deferred tax liabilities
Employee benefits
Other non-current liabilities
Total liabilities directly associated with assets classified as held for sale
Net assets / (liabilities)
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
514
5,310
496
795
163
578
6
69
7,931
(7,167)
(551)
(5)
(237)
(2,772)
(301)
(101)
(522)
-
(11,656)
(3,725)
486
8,817
491
349
178
769
14
1,011
12,115
(4,325)
(483)
(67)
(272)
(3,921)
(458)
(49)
(479)
(585)
(10,639)
1,476
According to the AASB 5 "Non-current assets held for sale and discontinued operations" presentation requirements
for intragroup transactions, Fluence Italy Trade receivables balance for the year ended 31 December 2021 excludes
the amount receivable from the Group of $4,516,000. Fluence Italy Trade receivables balance for the year ended 31
December 2020 included the amount receivable from the Group of $2,917,000 and the Trade and other payables
balances included the amount of $1,176,000 payable to the Group.
If the intragroup receivable balance for the year ended 31 December 2021 was included in Fluence Italy assets, the
net assets would be positive $791,000. The intragroup receivable balance is expected to be repaid prior to the closing
of the Fluence Italy sale.
Fluence Corporation Limited
64
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
3 Discontinued operations and assets classified as held for sale (continued)
(c) Assets and liabilities directly associated with assets classified as held for sale (continued)
GCM Peru
Disposal group held for sale
Cash and cash equivalents
Trade receivables
Concession arrangement assets - Short-term
Deferred tax assets
Property, plant and equipment
Concession arrangement assets - Long-term
Total assets directly associated with assets classified as held for sale
Trade and other payables
Current tax liabilities
Total liabilities directly associated with assets classified as held for sale
Net assets
Assets directly associated with assets classified as held for sale
Fluence Italy
GCM Peru
Liabilities directly associated with assets classified as held for sale
Fluence Italy
GCM Peru
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
-
67
-
44
99
352
562
-
-
-
562
21
65
145
33
99
3,898
4,261
(1,969)
(1)
(1,970)
2,291
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
7,931
562
8,493
12,115
4,261
16,376
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
11,656
-
11,656
10,639
1,970
12,609
Prior year comparatives within the note have not been restated in the statement of financial position as at 31
December 2020.
Fluence Corporation Limited
65
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
4 Operating revenue and expenses
Operating revenue
Contract revenue
Smart product solutions
Customer engineering solutions
Service concession arrangements revenue
Service revenue
Revenues on services
Revenue on parts
Recurring revenue from concession assets
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
37,620
59,962
-
97,582
1,152
3,088
1,371
5,611
29,431
53,260
91
82,782
2,461
3,035
1,568
7,064
103,193
89,846
Revenue has been disaggregated based on contract revenue (inclusive of smart product solutions and customer
engineering solutions) and service revenue. They comprise distinct revenue streams, customers and margins.
Research and development
Salaries and other employee related expenses
Depreciation
Materials
Professional fees
Travel and entertainment
Other
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
(2,232)
(643)
(317)
(225)
(33)
(223)
(3,673)
(1,881)
(929)
(361)
(178)
(13)
192
(3,170)
Fluence Corporation Limited
66
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
4 Operating revenue and expenses (continued)
Sales and marketing
Salaries and other employee related expenses
Professional fees
Marketing activities
Travel and entertainment
Depreciation
Other
General and administration
Salaries and other employee related expenses
Professional fees
Depreciation
Insurance
Director expense
Office expenses
Bank charges
Travel and entertainment
Maintenance
Other
Other gains/(loss) - net
Foreign exchange loss
Withholding taxes
(Bad debts)/reversal of provision
Inventory reserve
Gain on disposal of property, plant and equipment
Gain from investments accounted for using the equity method
COVID-19 relief
Reversal of provisions
Other
Fluence Corporation Limited
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
(3,573)
(535)
(406)
(380)
(49)
(597)
(5,540)
(3,726)
(411)
(556)
(413)
(54)
(413)
(5,573)
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
(8,557)
(2,058)
(1,324)
(1,131)
(506)
(340)
(277)
(222)
(123)
(667)
(15,205)
(9,626)
(3,006)
(1,271)
(1,090)
(1,388)
(320)
(364)
(270)
(114)
(288)
(17,737)
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
(4,866)
(248)
(247)
(148)
31
83
785
975
(34)
(3,669)
(5,542)
(32)
23
(32)
70
55
-
104
(784)
(6,138)
67
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
4 Operating revenue and expenses (continued)
Finance income/(costs) - net
Interest income
Interest expense
Project financing and other
Aggregate expenses
Aggregate depreciation and amortisation expenses
Aggregate employee benefits expense
5 People costs
(a) Share-based payments
Employee Option Plan
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
248
(2,875)
(63)
(2,690)
213
(1,710)
(152)
(1,649)
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
2,495
20,167
3,089
27,752
A share option plan has been established by the consolidated entity and approved by shareholders at a general
meeting, whereby the consolidated entity may, at the discretion of the Board of Directors, grant options over ordinary
shares in the Group to employees, consultants and directors of the consolidated entity. The options are issued for nil
consideration and are granted in accordance with performance guidelines established by the Remuneration and
Nomination Committee.
Set out below are summaries of the movement in options granted under the plan during the year ended 31 December
2021:
Fluence Corporation Limited
68
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
5 People costs (continued)
(a) Share-based payments (continued)
Employee Option Plan (continued)
a
Grant/change date
Opening balance
Options vested during the year
4 January 2021
11 January 2021
28 January 2021
28 January 2021
29 January 2021
1 February 2021
9 February 2021
26 February 2021
4 March 2021
4 March 2021
12 March 2021
29 March 2021
29 March 2021
1 April 2021
6 April 2021
6 April 2021
6 April 2021
9 April 2021
21 April 2021
21 April 2021
29 April 2021
3 May 2021
12 May 2021
18 May 2021
3 June 2021
3 June 2021
1 March 2024
10 January 2021
3 December 2021
3 December 2022
10 September 2021
10 September 2021
9 February 2021
29 November 2023
4 March 2021
27 August 2022
29 August 2024
3 December 2021
3 December 2022
10 September 2021
30 August 2024
1 October 2024
31 May 2025
1 March 2024
3 December 2022
3 December 2022
29 November 2023
3 May 2021
29 November 2023
18 May 2021
3 June 2021
3 June 2021
Exercise
Price
(AU$)
Expiry Date
Granted
79,026,872
Exercised
(13,773,161)
0.44
0.84
0.46
0.44
0.81
0.81
1.00
0.44
0.82
0.46
0.23
0.46
0.44
0.81
0.23
0.23
0.23
0.44
0.44
0.46
0.44
0.86
0.44
0.40
0.44
0.46
-
-
-
-
-
-
-
-
-
-
-
-
-
-
250,000
118,750
2,661,250
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Vested
46,140,339
3,164,260
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Cancelled /
Reversed
(30,646,387)
Balance at year
end
34,607,324
(4,000)
(25,000)
(375)
(375)
(3,000)
(4,000)
(290,000)
(8,250)
(1,000,000)
(31,250)
(12,000)
(1,625)
(1,625)
(49,000)
(250,000)
-
-
(12,000)
(2,000)
(2,000)
(3,750)
(150,000)
(20,000)
(1,000,000)
(20,000)
(20,000)
(4,000)
(25,000)
(375)
(375)
(3,000)
(4,000)
(290,000)
(8,250)
(1,000,000)
(31,250)
(12,000)
(1,625)
(1,625)
(49,000)
-
118,750
2,661,250
(12,000)
(2,000)
(2,000)
(3,750)
(150,000)
(20,000)
(1,000,000)
(20,000)
(20,000)
Fluence Corporation Limited
69
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
5 People costs (continued)
(a) Share-based payments (continued)
Employee Option Plan (continued)
Grant/change date
25 June 2021
25 June 2021
25 June 2021
30 June 2021
6 July 2021
9 July 2021
9 July 2021
12 July 2021
13 July 2021
13 July 2021
13 July 2021
30 July 2021
30 July 2021
6 August 2021
6 August 2021
16 August 2021
10 September 2021
10 September 2021
30 September 2021
26 October 2021
12 November 2021
19 November 2021
24 December 2021
29 December 2021
Closing balance
Expiry Date
30 June 2022
25 June 2025
25 August 2025
29 August 2023
6 July 2021
3 December 2022
3 December 2022
30 May 2023
13 July 2021
13 July 2021
13 July 2021
3 June 2022
3 June 2022
3 December 2022
3 December 2022
18 August 2025
10 September 2021
10 September 2021
30 September 2021
30 August 2024
13 November 2021
29 August 2023
30 August 2024
29 November 2023
Exercise
Price
(AU$)
0.29
0.23
0.23
0.44
0.97
0.44
0.46
0.44
0.84
1.20
1.50
0.44
0.46
0.44
0.46
0.21
0.44
0.81
0.39
0.23
0.86
0.44
0.23
0.44
Granted
1,500,000
1,000,000
4,000,000
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
-
-
-
-
-
-
-
-
89,556,872
Exercised
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(13,773,161)
Vested
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
49,304,599
Cancelled /
Reversed
-
-
-
(12,000)
(100,000)
(4,375)
(1,875)
(20,000)
(1,500,000)
(3,850,000)
(3,850,000)
(6,000)
(6,000)
(9,625)
(4,125)
-
(100,000)
(3,853,167)
(858,000)
(171,875)
(840,000)
(6,750)
(78,125)
(6,000)
(48,834,554)
Balance at year
end
1,500,000
1,000,000
4,000,000
(12,000)
(100,000)
(4,375)
(1,875)
(20,000)
(1,500,000)
(3,850,000)
(3,850,000)
(6,000)
(6,000)
(9,625)
(4,125)
1,000,000
(100,000)
(3,853,167)
(858,000)
(171,875)
(840,000)
(6,750)
(78,125)
(6,000)
26,949,157
Fluence Corporation Limited
70
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
5 People costs (continued)
(a) Share-based payments (continued)
Employee Option Plan (continued)
(i) Fair value of options granted
For the options granted during the current financial year, the valuation model inputs used to determine the fair value
at the grant date are outlined below. The expected volatility reflects the assumption that the historical volatility is
indicative of future trends, which may also not necessarily be the actual outcome.
Grant date
a
6 April 2021
6 April 2021
6 April 2021
25 June 2021
25 June 2021
25 June 2021
16 August 2021
Expiry Date
30 August 2024
1 October 2024
31 May 2025
25 June 2025
25 August 2025
30 June 2022
18 August 2025
Share price at
grant date (AU$)
0.25
0.25
0.25
0.19
0.19
0.19
0.19
Exercise
Price (AU$)
0.23
0.23
0.23
0.23
0.23
0.29
0.21
Dividend
yield
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Risk-free
interest rate
(%)
0.223
0.248
0.441
0.672
0.706
0.620
0.400
Fair value at
grant date, $
0.0799
0.0751
0.0864
0.0534
0.0601
0.0171
0.0848
The weighted average remaining contractual life of options outstanding at year-end was 2.81 years.
The fair value of the options granted to employees is considered to represent the value of the employee services
received over the vesting period.
The weighted average fair value of options granted during the year was $0.0838. These values were calculated using
the binomial lattice, based on the Cox, Ross Rubinstein (1979) method applying the following inputs:
Weighted average exercise price: $0.44
Expected share price volatility: 65%
The volatility measure was obtained based on the historical returns of the Company's stock on the ASX.
(b) Expenses arising from share-based payment transactions
Share based payment expense
Consultant share based payments
Employee share based payments
Director share based payments
(c) Key Management Personnel Disclosures
Compensation
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
29
159
258
446
49
(646)
918
321
The aggregate compensation made to directors and other members of key management personnel of the Group is
set out below:
Fluence Corporation Limited
71
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
5 People costs (continued)
(c) Key Management Personnel Disclosures (continued)
Compensation (continued)
Short-term employee benefits
Share based payments
Consolidated entity
31 December
2021
$
31 December
2020
$
2,068,085
323,415
2,391,500
3,679,915
1,033,316
4,713,231
The above Key Management Personnel disclosures represent the remuneration of Key Management Personnel
defined in the Remuneration Report and paid or payable for the 12 months ended 31 December 2021 and 31
December 2020.
For more information on Key Management Personnel Compensation disclosed under the Corporations Act 2001,
please refer to the Remuneration Report contained within the Directors’ Report.
6 Income tax
(a)
Income tax expense
The components of tax expense comprise:
Current tax
Current tax
Adjustments for current tax of prior periods
IFRIC 23 liability
Adjustments for current tax of prior periods
Increase/(decrease) in deferred tax assets
(Increase)/decrease in deferred tax liabilities
Income tax expense is attributable to:
Loss from continuing operations
Loss from discontinued operations
Aggregate income tax expense
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
Notes
213
-
-
(403)
33
(157)
(195)
38
(157)
(124)
35
45
(248)
1,113
821
938
(117)
821
3
Fluence Corporation Limited
72
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
6 Income tax (continued)
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Loss from continuing operations before income tax
Loss from discontinued operations before income tax
space
Prima facie tax on profit from ordinary activities
Tax losses carried forward
Tax expense - Fluence Italy S.R.L.
Tax expense - Fluence Israel Ltd
Tax expense - Fluence Argentina
Tax expense - other
Income tax expense
(c) Deferred tax balances
The components of deferred tax asset and liability comprise:
(i) Deferred tax assets
The balance comprises temporary differences attributable to:
Tax losses
Unrealised foreign exchange gain/loss
Accrued licence fee
Annual leave provision
Other
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
(8,962)
(5,926)
(14,888)
(4,466)
4,466
(38)
(57)
(38)
(24)
(157)
(8,378)
(12,302)
(20,680)
(6,204)
6,204
172
(291)
1,065
(125)
821
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
110
-
-
-
97
207
406
3
100
12
89
610
Fluence Corporation Limited
73
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
6 Income tax (continued)
(c) Deferred tax balances (continued)
(ii) Deferred tax liabilities
The balance comprises temporary differences attributable to:
WIP
Fixed assets
Other
Deferred tax asset is attributable to:
Deferred tax asset
Less deferred tax asset classified as discontinued operations
Aggregate deferred tax asset
Deferred tax liability is attributable to:
Deferred tax liability
Less deferred tax liability classified as discontinued operations
Aggregate deferred tax liability
(d) Unrecognised deferred tax assets
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
87
-
808
895
581
22
325
928
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
Notes
3
3
207
(207)
-
895
(101)
794
610
-
610
928
-
928
A few of the Group's subsidiaries have been accumulating losses in the past years. The consolidated balance of the
tax losses carried forward as of 31 December 2021 was $47,277,000 (2020: $44,596,000).
7 Loss per share
(a) Loss per share from continuing operations
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
Loss per share from continuing operations
Loss profit after income tax
Non-controlling interest
Loss after income tax from continuing operations attributable to the ordinary
equity holders of the Group
(9,157)
194
(5,930)
2,685
(8,963)
(3,245)
Fluence Corporation Limited
74
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
7 Loss per share (continued)
(a) Loss per share from continuing operations (continued)
Basic loss per share
Diluted loss per share
(b) Loss per share from discontinued operations
Consolidated entity
31 December
2021
$
31 December
2020
$
(0.014)
(0.014)
(0.005)
(0.005)
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
Loss per share from discontinued operations
Loss after income tax
Non-controlling interest
Loss after income tax from discontinued operations attributable to the ordinary
equity holders of the Group
(5,926)
187
(13,929)
158
(5,739)
(13,771)
Basic loss per share
Diluted loss per share
(c) Loss per share
Loss per share
Loss after income tax
Non-controlling interest
Loss after income tax attributable to the ordinary equity holders of the Group
Basic loss per share
Diluted loss per share
Consolidated entity
31 December
2021
$
31 December
2020
$
(0.009)
(0.009)
(0.022)
(0.022)
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
(15,083)
381
(14,702)
(19,859)
2,843
(17,016)
Consolidated entity
31 December
2021
$
31 December
2020
$
(0.023)
(0.023)
(0.027)
(0.027)
Fluence Corporation Limited
75
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
7 Loss per share (continued)
(d) Weighted average number of shares
Consolidated entity
2020
2021
Number
Number
Weighted average number of ordinary shares used as the denominator in calculating
basic and diluted earnings/(loss) per share
624,854,034
624,854,034
8 Cash and cash equivalents, Other financial assets, Cash flows
(a) Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents classified as held for sale
(b) Other financial assets
Restricted cash
Short term deposits
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
40,849
514
41,363
31,038
-
31,038
Notes
3
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
106
11,396
11,502
109
15,365
15,474
Short-term deposits are collections from the Ivory Coast projects deposited for a period of less than twelve months.
(c) Cash flow information
Loss after income tax
Adjustment for:
Depreciation and amortisation expenses
Share based payments expense
Loss from discontinued operations
Decrease/(increase) in bad debt provision
Warranty provision
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
(15,083)
(19,859)
2,495
446
5,926
247
170
3,108
321
11,903
(30)
150
Fluence Corporation Limited
76
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
8 Cash and cash equivalents, Other financial assets, Cash flows (continued)
(c) Cash flow information (continued)
Inventory reserve
Gain on disposal of property, plant and equipment
Share of profits of associates and joint ventures
Provision for losses
Increase/(decrease) in employee benefits provision
Decrease in restructuring provision
Finance costs - net
Foreign exchange differences
Decrease in restricted cash
Increase in trade and other receivables
Increase in inventory
Increase in prepaid expenses
(Increase)/decrease in net tax asset
Increase in other current and non-current assets
Increase/(decrease) in trade and other payables
Increase in deferred revenues
Cash generated from/(used in) operations
9 Trade and other receivables
Current receivables
Contract receivables
Contract unbilled receivables
Provision for impairment - contract receivables
Other current receivables
GST and other taxes receivable
Income tax receivable
Other receivables
Total current receivables
Non-current receivables
Long-term receivables
Provision for impairment - long-term receivables
Total non-current receivables
Fluence Corporation Limited
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
148
(31)
(83)
-
(2)
(568)
(2,690)
4,866
-
(6,720)
(1,212)
(4,106)
408
(60)
7,817
3,193
(4,839)
32
(70)
(55)
309
195
(428)
522
5,546
318
(2,213)
(1,139)
(1,865)
(771)
(327)
(776)
27,376
22,247
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
20,024
11,303
(2,118)
29,209
1,181
807
477
2,465
23,013
15,478
(2,079)
36,412
1,207
816
51
2,074
31,674
38,486
1,200
(1,200)
-
1,300
(1,300)
-
77
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
9 Trade and other receivables (continued)
Additional information on contract debtors
Total contract debtors
Total contract liabilities
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
Notes
17
29,209
(25,315)
3,894
36,412
(17,779)
18,633
Contract assets are balances due from customers under long-term contracts as work is performed and therefore a
contract asset is recognised over the period in which the performance obligation is fulfilled. This represents the
Group's right to consideration for the products and services transferred to date. Amounts are generally reclassified to
contract receivables when they have been invoiced to the customer.
10 Inventories
Raw materials - at cost
Work in progress - at cost
Finished goods - at lower of cost or net realisable value
11 Concession asset
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
5,494
4,301
3,592
13,387
7,450
1,937
3,423
12,810
In July 2018 the Group entered into a service concession arrangement in the Bahamas to build a seawater
desalination potable treatment plant. The onsite execution and construction started in October 2018 and was
completed in October 2019. Under the terms of the agreement, the Group will operate the desalination plant and
provide water to the grantor for a period of 15 years. The Group will be responsible for any maintenance services
required during the concession period. The Group does not expect major repairs to be necessary during the
concession period. The grantor provides the Group a guaranteed minimum annual payment for each year that the
desalination plant will be in operation. At the end of the concession period, the desalination plant will become the
property of the grantor and the Group will have no further involvement in its operation or maintenance requirements.
For the year ended 31 December 2021, the Group has recognised revenue of $1.4 million on the desalination plant.
In January 2016 the Group entered into a service concession arrangement in Mexico to build and operate a
desalination plant. In December 2020, following challenges with project execution, the Board decided it no longer
wished to move forward with this project. A mutual termination is the most likely potential outcome. The impairment of
assets associated with this project was recorded in 2020 and amounted to $11.9 million. For more information refer to
Note 3.
Fluence Corporation Limited
78
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
11 Concession asset (continued)
In November 2018 the Group acquired a company holding a concession service arrangement to build a desalination
plant in Peru for a period of 10 years. The Group started construction in March 2019. In 2021 the Board decided it no
longer wished to move forward with this project and the project was listed for sale. The impairment of assets
associated with this project was recorded in 2021 and amounted to $3.3 million. For more information refer to Note 3.
a
Concession assets
Current concession asset
Non-current concession asset
12 Long-term deposits
Long-term deposits
Collections from customers deposited for a period of more than twelve months
Consolidated entity
31 December 31 December
2021
$'000
2020
$'000
231
2,881
3,112
353
8,750
9,103
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
14,281
14,281
23,368
23,368
Long-term deposits are collections from the Ivory Coast projects deposited for a period of more than twelve months.
13 Other assets
a
Current assets
Government benefits
Other
a
Non-current assets
Prepaid contract costs
Debt issuance costs
Other
Consolidated entity
31 December 31 December
2021
$'000
2020
$'000
-
188
188
422
183
605
Consolidated entity
31 December 31 December
2021
$'000
2020
$'000
1,731
291
68
2,090
215
-
215
215
79
Fluence Corporation Limited
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
14 Investments accounted for using the equity method
Carrying Amount
31 December 31 December
2021
$'000
2020
$'000
Place of
business/
country of
incorporation
% of
ownership
interest
Nature of
relationship
Measurement
method
Israel
50%
Associate Equity method
547
415
a
Name of entity
E.T.G.R Water
Infrastructure
Management
The Group holds 50% interest in E.T.G.R Water Infrastructure Management partnership. This investment contributed
a gain of $83,000 to Fluence Corporation Limited (2020: $55,000), which is included in 'Other gains/(losses)' in the
Consolidated Statement of Profit or Loss and Other Comprehensive Income.
Summarised below is the financial information of E.T.G.R Water Infrastructure Management as of 31 December 2021
and 31 December 2020.
Cash and cash equivalents
Trade and other receivables
Other assets
Total assets
Trade and other payables
Total liabilities
Net assets
Revenues
Cost of sales
Other expenses
Net income for the year
31 December
2021
$'000
31 December
2020
$'000
502
156
466
1,124
35
35
1,089
211
157
568
936
43
43
893
31 December
2021
$'000
31 December
2020
$'000
452
(271)
(15)
166
439
(311)
(18)
110
Fluence Corporation Limited
80
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
15 Property, plant and equipment
Consolidated entity
At 1 January 2021
Cost or fair value
Accumulated depreciation
Net book amount
Year ended 31 December 2021
Opening net book amount
Disposals
Additions
Assets included in a disposal group
classified as held for sale and other
disposals
Depreciation charge
Exchange differences
Closing net book amount
At 31 December 2021
Cost
Accumulation depreciation
Net book amount
Buildings and
Leasehold
improvements
$'000
Production
equipment
$'000
Office
furniture and
equipment
$'000
Land
$'000
Computers
and
peripheral
equipment
$'000
Vehicles
$'000
Right of use
assets
$'000
Total
$'000
120
-
120
120
-
-
(98)
-
-
22
22
-
22
3,723
(1,005)
2,718
2,718
-
707
-
(122)
91
3,394
4,434
(1,040)
3,394
5,693
(3,696)
1,997
1,997
-
24
(70)
(432)
35
1,554
5,283
(3,729)
1,554
1,395
(993)
402
402
-
19
(16)
(99)
16
322
1,346
(1,024)
322
3,812
(2,699)
1,113
1,113
-
408
(82)
(268)
1
1,172
3,809
(2,637)
1,172
883
(645)
238
238
(5)
261
(2)
(134)
49
407
1,098
(691)
407
10,958
(4,565)
6,393
6,393
-
462
(600)
(1,426)
305
5,134
10,506
(5,372)
5,134
26,584
(13,603)
12,981
12,981
(5)
1,881
(868)
(2,481)
497
12,005
26,498
(14,493)
12,005
Fluence Corporation Limited
81
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
15 Property, plant and equipment (continued)
Consolidated entity
At 1 January 2020
Cost or fair value
Accumulated depreciation
Net book amount
Year ended 31 December 2020
Opening net book amount
Additions
Assets included in a disposal group
classified as held for sale and other
disposals
Depreciation charge
Exchange differences
Closing net book amount
At 31 December 2020
Cost or fair value
Accumulated depreciation
Net book amount
Buildings and
Leasehold
improvements
$'000
Production
equipment
$'000
Office
furniture and
equipment
$'000
Land
$'000
Computers
and
peripheral
equipment
$'000
Vehicles
$'000
Right of use
assets
$'000
Total
$'000
120
-
120
120
-
-
-
-
120
120
-
120
3,496
(884)
2,612
2,612
227
(75)
(147)
101
2,718
3,723
(1,005)
2,718
5,484
(2,867)
2,617
2,617
224
-
(772)
(72)
1,997
5,693
(3,696)
1,997
1,492
(1,136)
356
356
56
(24)
(142)
156
402
1,395
(993)
402
3,087
(2,228)
859
859
571
-
(207)
(110)
1,113
3,812
(2,699)
1,113
874
(573)
301
301
90
(56)
(97)
-
238
883
(645)
238
10,668
(3,371)
7,297
7,297
514
-
(1,601)
183
6,393
10,958
(4,565)
6,393
25,221
(11,059)
14,162
14,162
1,682
(155)
(2,966)
258
12,981
26,584
(13,603)
12,981
Fluence Corporation Limited
82
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
16 Intangible assets
Consolidated entity
Year ended 31 December 2021
Opening net book amount
Amortisation charge
Currency translation differences
Closing net book amount
Year ended 31 December 2020
Opening net book amount
Additions
Impairment loss
Amortisation charge
Currency translation differences
Closing net book amount
17 Trade and other payables and other liabilities
Current
Trade payables
Accrued payroll liabilities
Accrued project expenses
Government grants (i)
Other accruals
Non-current
Government grants (i)
Other liabilities
Capitalised
development
costs
$'000
Capitalised
concession
asset
$'000
Total
$'000
1,834
(183)
58
1,709
1,876
-
-
(171)
129
1,834
-
-
-
-
4,122
104
(4,012)
-
(214)
-
1,834
(183)
58
1,709
5,998
104
(4,012)
(171)
(85)
1,834
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
5,396
1,980
25,315
1,906
7,422
42,019
1,927
37
1,964
12,750
3,072
17,779
1,168
4,682
39,451
2,518
294
2,812
Fluence Corporation Limited
83
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
17 Trade and other payables and other liabilities (continued)
(i) Government Grant Liability
The Group participates in programs sponsored by the Israel Innovation Authority (“IIA”) (formerly the Office of the
Chief Scientist (“OCS”)), for the support of research and development projects. In exchange for the IIA's participation
in the programs, the Group is required to pay royalties to the IIA at a rate between 3% and 4% of sales to end
customers of products developed with funds provided by the IIA, if and when such sales are recognised. As of 31
December 2021 and 31 December 2020, the Group recognised a liability to the IIA in the amount of $3,722,000 and
$3,506,000 respectively for the obligation for future royalty payments. The recognition of a liability for the Group to
repay the grants from future royalty payments is based on its estimation at the end of each year. The discounted rate
used by the Group for the liability is 18.2%.
The Group has also participated in programs sponsored by the Ministry of National Infrastructures (“MNI”) of Israel,
for the support of research and development projects. In exchange for the MNI's participation in the programs, the
Group is required to pay royalties to the MNI at a rate of 5% of the sales to end customers of products developed with
funds provided by the MNI, if and when such sales are recognised. As of 31 December 2021 and 31 December 2020,
the Group recognised a liability to the MNI in the amount of $111,000 and $180,000 respectively. The exceptions of
the Group to pay the grants are based on its estimation at the end of each year. The discounted rate used by the
Group for the liability is 18.2%.
18 Borrowings and lease liability
Borrowings and lease liability
Current borrowings and interest payable
Current lease liability
Non-current borrowings
Non-current lease liability
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
1,549
1,369
2,918
30,085
4,178
34,263
1,878
1,409
3,287
19,825
5,335
25,160
On 29 July 2020, the Company entered into a loan agreement with an affiliate of Upwell LLC to provide an initial
US$20 million finance facility. In December 2021 facility increased by US$10.3 million. The facility can be increased
up to US$50 million at the Company's request and at Upwell's discretion. The facility is available to fund the Build,
Own, Operate and Transfer ("BOOT") projects and the Company's working capital.
Fluence Corporation Limited
84
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
19 Provisions
Current
Employee benefits
Warranty provision
Provision for onerous contracts
Restructuring provision
Other provisions
Non-current
Employee benefits
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
1,160
1,922
260
-
948
4,290
390
390
1,485
1,822
334
1,672
1,281
6,594
711
711
Consolidated entity
Current
At 1 January 2021
Additions
Reversal
Utilised
Discontinued
operations
reclassification
Currency translation
differences
Total
Non-current
At 1 January 2021
Additions
Reversal
Discontinued
operations
reclassification
Currency translation
differences
Employee
benefits
$'000
Warranty
$'000
Onerous
contracts
$'000
Restructuring
provision
$'000
Other
$'000
Total
$'000
1,485
317
-
(475)
(240)
73
1,160
711
156
-
(479)
2
390
1,822
731
-
(561)
(31)
(39)
1,922
-
-
-
-
-
-
334
-
(74)
-
-
-
260
-
-
-
-
-
-
1,672
-
(568)
(1,104)
-
-
-
-
-
-
-
-
-
1,281
48
(381)
-
-
-
948
-
-
-
-
-
-
6,594
1,096
(1,023)
(2,140)
(271)
34
4,290
711
156
-
(479)
2
390
Fluence Corporation Limited
85
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
20 Deferred revenue
Current deferred revenue
Non-current deferred revenue
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
31,984
2,838
34,822
32,045
13,127
45,172
Current deferred revenue represents remaining pre-payments made primarily by PDVSA upon entering into a
multi-year contract with the Group in 2015 and payments obtained from the Ivory Coast project that will be released
according to the payment schedule in the next 12 months. For more information regarding the PDVSA project refer to
note 1(aa)(vii)
Non-current deferred revenue represents payments obtained from the Ivory Coast project and will be released
according to the payment schedule in greater than 12 months.
21 Contributed equity
Ordinary shares
Options
Share capital
31 December
2021
No.
31 December
2020
No.
31 December
2021
$'000
31 December
2020
$'000
624,854,034
26,949,157
651,803,191
624,854,034
34,607,324
659,461,358
203,728
8,551
212,279
204,056
8,105
212,161
(a) Ordinary Shares - Fully Paid
Number of shares
$'000
Opening balance 1 January 2020
Balance 31 December 2020
Opening balance 1 January 2021
Non-controlling interest buyout
Balance 31 December 2021
Notes
624,854,034
624,854,034
624,854,034
Number of shares
624,854,034
-
624,854,034
204,056
204,056
204,056
$'000
204,056
(328)
203,728
Transaction costs relating to share issues
Under AASB 132, incremental costs that are directly attributable to issuing new shares should be deducted from
equity. The share issue expense relates to costs directly attributable to the issuing of new shares, costs associated
with the listing have been deducted from equity.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group in
proportion to the number of shares held. At shareholder meetings, each ordinary share is entitled to one vote when a
poll is called; otherwise each shareholder has one vote on a show of hands.
Fluence Corporation Limited
86
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
21 Contributed equity (continued)
(b) Options
2020
w
Opening balance
Unlisted options issued to employees
Cancelled, lapsed and forfeited options
Balance at 31 December 2020
2021
w
Opening balance
Unlisted options issued to employees
Cancelled, lapsed and forfeited options
Balance at 31 December 2021
Number of options
39,597,824
2,594,000
(7,584,500)
34,607,324
Number of options
34,607,324
10,530,000
(18,118,167)
26,949,157
(c) Summary of all unlisted options in existence
Date options granted
Expiry date
Issue price of shares (AU$)
Number under option
31 May 2017
14 July 2017
26 March 2018
28 June 2018
31 July 2018
31 July 2018
10 April 2019
10 April 2019
30 May 2019
30 May 2019
30 May 2019
10 March 2020
10 March 2020
10 March 2020
10 March 2020
10 March 2020
10 March 2020
10 March 2020
19 March 2020
24 September 2020
24 September 2020
24 September 2020
7 December 2020
6 April 2021
6 April 2021
25 June 2021
25 June 2021
25 June 2021
16 August 2021
25 May 2025
25 May 2025
25 May 2022
27 August 2022
31 July 2022
31 July 2022
3 June 2022
3 December 2022
30 May 2023
30 May 2023
14 July 2025
3 June 2022
3 December 2022
1 March 2023
30 May 2023
29 August 2023
29 November 2023
1 March 2024
1 March 2024
30 May 2024
31 May 2024
29 August 2024
29 August 2024
1 October 2024
31 May 2025
30 June 2022
25 June 2025
25 August 2025
18 August 2025
$0.93
$0.84
$0.48
$1.20
$1.50
$0.46
$0.46
$0.60
$0.80
$0.39
$0.44
$0.44
$0.44
$0.44
$0.44
$0.44
$0.44
$0.44
$0.44
$0.23
$0.23
$0.23
$0.26
$0.23
$0.23
$0.29
$0.23
$0.23
$0.21
8,992,938
350,000
1,090,625
402,344
750,000
750,000
72,000
54,000
250,000
250,000
1,470,000
70,000
74,000
12,000
112,000
169,250
34,000
56,000
1,490,000
3,750
250
44,000
172,000
143,750
2,636,250
1,500,000
1,000,000
4,000,000
1,000,000
26,949,157
Fluence Corporation Limited
87
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
21 Contributed equity (continued)
(ii) Summary of all unlisted options in existence (continued)
On 6 April 2021, a tranche of 250,000 options was granted with an expiry date of 30 August 2024. These options
were forfeited on 26 October 2021 (171,875 options) and 24 December 2021 (78,125 options), not included in the
table above as they were forfeited in the same year as issued.
22 Non-controlling interests
a
Opening balance
Contributed equity
Loss for the year attributable to non-controlling interests
Transactions with NCI
Closing balance
a
Opening balance
Contributed equity
Loss for the year attributable to non-controlling interests
Closing balance
The group has five subsidiaries with non-controlling interests.
Consolidated entity
31 December
2021
$'000
(1,780)
-
(381)
266
(1,895)
Consolidated entity
31 December
2020
$'000
1,063
-
(2,843)
(1,780)
(i) Desaladora Kenton SA de CV, Mexico was founded in December 2015 by RWL Water LLC group ('RWL') and
Mexican partners in order to invest in the project to build, finance, operate and transfer (BOT) a seawater desalination
plant in San Quintin, Baja California, Mexico. RWL holds the 51% ownership share in Desaladora Kenton SA de CV.
For more details please refer to Note 3.
(ii) Constructora Kenton SA de CV, Mexico was founded in May 2016 by RWL and Mexican partners in order to act
as the EPC contractor for the project to build, finance, operate and transfer (BOT) a seawater desalination plant in
San Quintin, Baja California, Mexico. RWL holds the 51% ownership share in Constructora Kenton SA de CV. For
more details please refer to Note 3.
(iii) RWL acquired the 70% share in Acquavit Ltda., Brazil in March 2017. Acquavit Ltda. delivers water and
wastewater treatment projects to industrial and municipal clients. The company has expertise in advanced oxidation,
disinfection processes, membrane systems, ion exchange systems, water and wastewater treatment units, and water
reuse systems. In October 2020 because of non-controlling interest buyout the Group share increased by 6.8% and
reached 76.8%. In September 2021 the Group bought back the remaining non-controlling interest and reached 100%
of ownership.
(iv) In October 2018 the Group formed a new entity The International Company for Water Services and Infrastructure
S.A.E. in Egypt to supply the desalination plants to projects owned by the Egyptian Ministry of Housing. The Group
holds 75% share in this entity.
(v) In May 2020 the Group formed a new entity, Bimini Water Services Ltd which is held 60% by the Group to supply
water to the customers in Bimini, the Bahamas for 15 years.
Fluence Corporation Limited
88
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
23 Foreign currency translation reserve
Foreign currency translation reserve
Consolidated entity
31 December
2021
$'000
31 December
2020
$'000
(11,721)
(11,938)
Foreign currency translation reserve is used to record exchange differences on translation of foreign controlled
subsidiaries. Amounts are reclassified to profit or loss when the investment is disposed of.
24 Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk
and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of
the Group. The Group uses different methods to measure different types of risk to which it is exposed.
The Board provides principles for overall risk management, as well as policies covering specific areas, such as
foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity.
(a) Market risk
(i) Foreign exchange risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk
through foreign exchange rate fluctuations.
Foreign exchange rate risk arises from future commercial transactions and recognised financial assets and financial
liabilities denominated in a currency that is not the Group’s functional currency.
The carrying amounts of the Group’s foreign currency denominated monetary assets and liabilities at the reporting
date are as follows:
Consolidated entity
31 December 2021
Assets
Liabilities
ILS
$'000
3,203
(11,118)
(7,915)
EUR
$'000
35,115
(10,346)
24,769
AUD
$'000
601
(35)
566
ARS
$'000
1,914
(602)
1,311
CNY
$'000
16,484
(7,373)
9,111
BRL
$'000
577
(3,171)
(2,594)
AED
$'000
EGP
$'000
5,919
-
5,919
7
-
7
A strengthening or weakening of 10% of the United States Dollar against the following currencies would have an
equal and opposite effect on loss after tax and equity as outlined below. The analysis assumes that all other
variables, in particular interest rates, remain constant.
The use of 10% was determined based on the analysis of the above currencies change, on an absolute value basis,
between 31 December 2021 and 31 December 2020.
Fluence Corporation Limited
89
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
24 Financial risk management (continued)
(a) Market risk (continued)
(i) Foreign exchange risk (continued)
w
Israeli New Shekel (ISL)
Euro (EUR)
Australian Dollar (AUD)
Argentine Peso (ARS)
Chinese Yuan (CNY)
Brazilian Real (BRL)
United Arab Emirates Dirham (AED)
Egyptian Pound (EGP)
2021
+10%/-10%
$'000
791/(791)
2,477/(2,477)
57/(57)
131/(131)
911/(911)
259/(259)
1/(1)
592/(592)
Interest rate risk
(ii)
The Group's fixed rate borrowings and receivables are carried at amortised cost. They are therefore not subject to
interest rate risk as defined in AASB 7, since neither the carrying amount nor the future cash flows will fluctuate
because of a change in market interest rates.
(b) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to
the Group. The Group closely monitors the activities of its counterparties and controls the access to its intellectual
property which enables it to ensure the prompt collection of customers’ balances. The Group’s main financial assets
are cash and cash equivalents as well as trade and other receivables and represent the Group’s maximum exposure
to credit risk in connection with its financial assets. Trade and other receivables are carried on the Statement of
Financial Position net of bad and doubtful debt provisions estimated by management based on prior year experience
and an evaluation of prevailing economic circumstances. Wherever possible and commercially practical the Group
holds cash with major financial institutions in various regions.
Maturity profile
The table below analyses the consolidated entity’s financial assets into relevant maturity groupings based on the
aging profile at the reporting date. The amounts disclosed in the table are the aging profiles of trade and other
receivables for the Group.
Contractual maturities of financial assets
At 31 December 2021
Trade receivables
Other receivables
Less than
6 months
$'000
Greater
than 6
months
$'000
Total
contractual
cash flows
$'000
7,721
36
7,757
10,185
441
10,626
17,906
477
18,383
Fluence Corporation Limited
90
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
24 Financial risk management (continued)
(b) Credit risk (continued)
Contractual maturities of financial assets
At 31 December 2020
Trade receivables
Other receivables
Less than
6 months
$'000
Greater
than 6
months
$'000
Total
contractual
cash flows
$'000
18,884
51
18,935
2,058
-
2,058
20,942
51
20,993
Impairment of financial assets
In relation to the impairment of financial assets, AASB 9 requires an expected credit loss model. The expected credit
loss model requires the Group to account for expected credit losses at each reporting date to reflect changes in credit
risk since the initial recognition of the financial assets. In other words, it is no longer necessary for a credit event to
have occurred before credit losses are recognised.
AASB 9 allows a simplified approach for measuring the loss allowance at an amount equal to lifetime expected credit
losses (ECL) for trade receivables, contract assets and lease receivables in certain circumstances.
The Group recognises a loss allowance for expected credit losses on investments in debt instruments that are
measured at amortised cost, amounts due from customers, as well as on loan commitments and financial guarantee
contracts. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk
since the initial recognition of the respective financial instrument.
Low credit risk financial instruments
Some financial instruments are considered low credit risk due to contracts held with certain counterparties, including
government organisations with strong capacity to meet contractual cash flow obligations in the near term and not
expected to be affected by changes in economic and business conditions.
Measuring movements in credit risk
The Group has developed a sophisticated approach to periodically reviewing each contract. The Group measures its
credit risk through credit assessment criteria and uses risk mitigation actions to manage credit risk.
The Group uses the following credit assessment criteria:
•
•
Exposure - The magnitude of credit exposure indicates the extent to which the Group is exposed to the risk of
loss in the event of the counterparty default. Credit exposure can be minimised through avoiding engagement
with only several counterparties in the same geographical area, background checks on new customers,
establishing credit limits, using credit and political risk insurance, etc.
Probability of default (PD) - the likelihood of a default over a particular time horizon. It provides an estimate of the
likelihood that a counterparty will be unable to meet its contractual obligations. PD can be minimised by
developing a credit score for each counterparty by using historical information such as financial statements or use
external rating agencies and developing a standard process to handle overdue accounts.
The Company considers the probability of default upon initial recognition of the asset and whether there has been a
significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a
significant increase in credit risk the Company compares the risk of a default occurring on the asset as at the
reporting date with the risk of default as at the date of initial recognition. In making this assessment, the Group
considers both quantitative and qualitative information that
including historical
experience and forward-looking information that is available without undue cost or effort.
is reasonable and supportable,
Fluence Corporation Limited
91
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
24 Financial risk management (continued)
(b) Credit risk (continued)
Impairment of financial assets (continued)
Definition of default
The Group considers the following as constituting an event of default for internal credit risk management purposes as
historical experience indicates that receivables that meet either of the following criteria are generally not recoverable.
•
•
•
if there is a material breach of financial covenants by the counterparty and this is not expected to be remedied in
the foreseeable future; or
information developed internally or obtained from external sources indicates that the counterparty is unlikely to
pay its creditors, including the Group, in full (without taking into account any collaterals held by the Group).
Irrespective of the above analysis, the Group considers that default has occurred when a financial asset is
significantly past due unless the Group has reasonable and supportable information to demonstrate that a more
lagging default criterion is more appropriate.
Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future
cash flows of
is credit-impaired includes
observable data about the following events:
financial asset have occurred. Evidence that a financial asset
that
•
•
•
a breach of contract, such as a default or past due event;
it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
the disappearance of an active market for that financial asset because of financial difficulties.
Write-off policy
The Group writes off a financial asset when there is information indicating that the counterparty is in severe financial
difficulty and there is no realistic prospect of recovery, e.g. when the counterparty has been placed under liquidation
or entered into bankruptcy proceedings. Financial assets written off may still be subject to enforcement activities
under the Group’s recovery procedures, taking into account legal advice where appropriate. Any recoveries made are
recognised in profit or loss.
(c) Liquidity risk
Liquidity risk is the risk that the consolidated entity will not be able to meet its financial obligations as they fall due.
Prudent liquidity risk management implies maintaining sufficient cash balances and access to equity funding when
needed.
Maturity profile
The table below analyses the consolidated entity’s financial liabilities into relevant maturity groupings based on the
remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the
contracted undisclosed cash flows.
Fluence Corporation Limited
92
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
24 Financial risk management (continued)
(c) Liquidity risk (continued)
Maturity profile (continued)
Contractual maturities of financial liabilities
At 31 December 2021
Trade and other payables and other liabilities
Borrowings
Lease liabilities
At 31 December 2020
Trade and other payables and other liabilities
Borrowings
Lease liabilities
Greater
than 6
months
$'000
Total
contractual
cash
flows
$'000
Less than
6 months
$'000
29,591
192
684
30,467
26,245
303
704
27,252
14,392
31,442
4,863
50,697
16,018
21,400
6,040
43,458
43,983
31,634
5,547
81,164
42,263
21,703
6,744
70,710
Long-term debt facility
On 29 July 2020, The Company entered into a loan agreement with an affiliate of Upwell LLC to provide an initial
US$20 million finance facility. In 2021 the finance facility increased to US$30 million. The facility can be increased up
to $50 million at the Company`s request and at Upwell`s discretion. The facility is available to fund the Build, Own,
Operate and Transfer ("BOOT") projects and the Company`s working capital.
(d) Capital risk management
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern
and to maintain an optimal capital structure to maximise shareholder value. In order to maintain or achieve an optimal
capital structure, the Group may issue new shares or reduce its capital, subject to the provisions of the Group's
constitution. The capital structure of the Group consists of equity attributed to equity holders of the Group, comprising
contributed equity, reserves and accumulated losses. By monitoring undiscounted cash flow forecasts and actual
cash flows provided to the Board by the Group's Management the Board monitors the need to raise additional equity
from the equity markets.
(i) Loan covenants
Under the terms of the debt facility with Upwell, the Company is required to comply with a minimum debt service ratio,
minimum unrestricted cash and cash equivalents and collection requirements for Ivory Coast Project Receivable. The
debt service ratio and minimum unrestricted cash and cash equivalents are determined on a consolidated basis.
The Company has complied with these covenants throughout the reporting period.
25 Recognised fair value measurements
Fair value hierarchy
All assets and liabilities for which fair value is measured or disclosed are categorised according to the fair value
hierarchy as follows:
•
•
•
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly or indirectly; and
Level 3 - Inputs for the assets or liability that are not based on observable market data (unobservable inputs).
Fluence Corporation Limited
93
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
25 Recognised fair value measurements (continued)
Fair value hierarchy (continued)
2021
Recurring fair value measurements
Government grant liability
a
2020
Recurring fair value measurements
Government grant liability
a
Level 1
$'000
Level 2
$'000
-
-
-
-
Level 1
$'000
Level 2
$'000
-
-
-
-
Level 3
$'000
3,833
3,833
Level 3
$'000
3,686
3,686
Total
$'000
3,833
3,833
Total
$'000
3,686
3,686
Disclosed fair values
The group also has assets and liabilities which are not measured at fair value, but for which fair values are disclosed
in the notes to the financial statements.
Due to their short-term nature, the carrying amount of trade and other receivables, trade and other payables and
provisions are assumed to approximate their fair values because the impact of discounting is not significant.
Valuation techniques and assumptions used to derive Level 3 fair values recognised in the financial
statements
The fair value of the government grant liability is determined by the expected time period that the grant liability is to
be repaid from the royalty stream from future revenue discounted over time at a rate of 18.2% (2020: 18.2%)
Reconciliation of Level 3 fair value movements
The following table sets out the movements in Level 3 fair values for recurring measurements.
Opening Balance at 1 January 2020
Adjustment to fair value of liability
Currency translation differences
Closing Balance at 31 December 2020
Adjustment to fair value of liability
Currency translation differences
Closing Balance at 31 December 2021
26 Remuneration of auditors
Audit and other assurance services
Audit and review of financial statements - BDO Audit Pty Ltd
Audit and review of financial statements - BDO related practices
a
Other services
BDO - Non-assurance services (i)
Fluence Corporation Limited
Government grant
$'000111
4,562
(1,164)
288
3,686
20
127
3,833
Consolidated entity
2021
$
180,500
193,425
373,925
38,000
38,000
2020
$
189,000
195,000
384,000
35,600
35,600
94
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
26 Remuneration of auditors (continued)
(i) BDO non-assurance services relate to the provision of services in connection with tax lodgement.
27 Commitments and Contingent Liabilities
(a) Commitments
(i) As at 31 December 2021 the group provided bank guarantees for fulfillment of a lease commitment, for bid bonds
and performance guarantees for its projects in the amount of $950,000 (2020: $1,029,000).
(ii) The Group has a government grant liability of $3,833,000 (2020: $3,686,000). For more details refer to Note 17 -
Trade and other payables and other liabilities.
(b) Contingent liabilities
The Group was party to several claims during the year. With respect to claims brought against the Company, Fluence
will vigorously defend itself and is confident they will be successfully defended. There is significant uncertainty as to
whether a future liability will arise in respect of these claims. The amount of liability, if any, is not disclosed on the
grounds that it can be expected to prejudice seriously the outcome of the litigation. The directors are of the opinion
that the claims can be successfully resisted by the company.
28 Related party transactions
Parent entity
Fluence Corporation Limited is the legal parent entity in the consolidated Group.
Subsidiaries
Interests in subsidiaries are set out in Note 30.
Key management personnel
Disclosures relating to key management personnel are set out in Note 5 and the remuneration report in the directors'
report.
Loans to/from related parties
Other than the issue of shares and options, no other related party transactions have been entered into between key
management personnel and the Group during the financial years 2021 and 2020.
29 Parent entity financial information
Summary financial information
The functional currency of the parent entity is Australian Dollars. The individual Financial Statements for the parent
entity show the following aggregate amounts:
Fluence Corporation Limited
95
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
29 Parent entity financial information (continued)
Summary financial information (continued)
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Reserves
Accumulated losses
Total Equity
Loss for the period
Total comprehensive loss
31 December
2021
$'000
AUD
31 December
2020
$'000
AUD
-
615
22,674
235
629
255,099
6,610
(239,664)
22,045
(31,052)
(31,052)
-
471
41,280
517
1,806
254,749
(6,663)
(208,612)
39,474
(13,281)
(13,281)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity has not entered into any guarantees in the current or prior financial year in relation to the debts of
its subsidiaries.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group as disclosed in Note 1.
Contractual commitments and Contingent Liabilities
At 31 December 2021 Fluence Corporation Limited had no contractual commitment and contingent liabilities.
30 Subsidiaries
Name
Parent Entity
Fluence Corporation Limited
Subsidiaries of Fluence Corporation Limited
Fluence Water Products and Innovation Limited
Fluence Hong Kong Limited
Subsidiaries of Fluence Hong Kong Limited
Fluence Water Technologies (Jiangsu) Limited
Fluence China Limited (Liaoning)
Fluence (Hunan) Water Technologies Limited
Subsidiaries of Fluence Corporation Limited
Fluence Corporation LLC
Subsidiaries of Fluence Corporation LLC
Aeromix Systems, Incorporated
Fluence Middle East FZE
Nirosoft Trading (1987) Limited
Fluence Water Israel Limited
Place of
incorporation
Ownership
interest 2021
Ownership
interest 2020
Australia
Israel
Hong Kong
China
China
China
USA
USA
UAE
Israel
Israel
N/A
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
N/A
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Fluence Corporation Limited
96
Fluence Corporation Limited
Notes to the Financial Report
31 December 2021
(continued)
30 Subsidiaries (continued)
Name
Place of
incorporation
Ownership
interest 2021
Ownership
interest 2020
Subsidiaries of Fluence Water Israel Limited
VIC Water Systems S.R.L
Nirosoft Industries Limited - Sucursal Colombia
Nirosoft Cyprus Limited
FLC Water Mexico S de RL de CV
Constructora Kenton SA de CV
Italy
Colombia
Cyprus
Mexico
Mexico
100%
100%
100%
100%
51%
Subsidiaries of Fluence Corporation LLC
Fluence Investments Limited
Subsidiaries of Fluence Investments Limited
RWL Desal Holding S de RL de CV
Desaladora Kenton
Fluence Water Singapore PTE Ltd.
Fluence Philippines, Inc.
Subsidiaries of Fluence Corporation LLC
Fluence Argentina SA
Subsidiaries of Fluence Argentina SA
Fluence Brazil Industria e Comercio de Sistemas
de Tratamento de Agua Ltda.
Subsidiaries of Fluence Corporation LLC
Fluence Italia S.R.L
Subsidiaries of Fluence Italia S.R.L
Fluence France SAS
Subsidiaries of Fluence Corporation LLC
Fluence Investments LLC
Subsidiaries of Fluence Investments LLC
International Company for Water Services and
Infrastructure S.A.E.
Subsidiaries of Fluence Corporation LLC
FLC Boot Finance LLC
Subsidiaries of Fluence Boot Finance LLC
FLC Generate GCM SA de CV
GCM Peru Ltda
Bimini Water Services Ltd.
FLC Water Bahamas Limited
United Kingdom
100%
Mexico
Mexico
Singapore
Philippines
Argentina
Brazil
Italy
France
USA
Egypt
USA
Mexico
Peru
Bahamas
Bahamas
100%
51%
100%
100%
100%
100%
100%
100%
100%
75%
100%
100%
100%
60%
100%
100%
100%
100%
100%
51%
100%
100%
51%
-
-
100%
77%
100%
100%
100%
75%
100%
100%
100%
60%
100%
31 Events occurring after the reporting period
On 14 March 2022, the Group appointed Thomas Pokorsky as CEO and Managing Director. Richard Irving will retain
his position as Chairman of the Board.
No other matter or circumstance has occurred subsequent to year end that has significantly affected, or may
significantly affect, the operations of the Group, the results of those operations or the state of affairs of the Group or
economic entity in subsequent financial years.
Fluence Corporation Limited
97
Fluence Corporation Limited
Directors' Declaration
31 December 2021
In the Directors' opinion:
(a)
the Financial Statements and notes set out on pages 41 to 97 are in accordance with the Corporations Act
2001, including:
(i)
(ii)
complying with Australian Accounting Standards,
mandatory professional reporting requirements, and
the Corporations Regulations 2001 and other
giving a true and fair view of the consolidated entity's financial position as at 31 December 2021 and
of its performance for the year ended on that date, and
(b)
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become
due and payable.
Note 1(b) confirms that the Financial Statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
This declaration is made in accordance with a resolution of Directors.
Richard Irving
Chairman of the Board
31 March 2022
New York
Fluence Corporation Limited
98
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Collins Square, Tower Four
Level 18, 727 Collins Street
Melbourne VIC 3008
GPO Box 5099 Melbourne VIC 3001
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Fluence Corporation Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Fluence Corporation Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 31 December 2021,
the consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended,
and notes to the financial report, including a summary of significant accounting policies and the
directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 31 December 2021 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
Recognition of revenue – AASB 15 Revenue from Contracts with Customers and AASB 1059 Service
Concession Arrangements
Key audit matter
How the matter was addressed in our audit
The Group is a project driven business and
enters into contracts in different geographies.
Under AASB 15 Revenue from Contracts with
Customers revenues are recognised over time,
or at point in time, as performance
obligations are fulfilled.
AASB 1059 Service Concession Arrangements
is also applicable to Fluence’s B.O.T (‘Build,
Operate, Transfer’) contracts.
Contract revenue is recorded after assessing
all factors relevant to each individual
contract including:
• For revenue recognised over time: The
determination of stage of completion and
measurement of progress towards
satisfaction of performance obligations;
including estimation of total contract
revenue and costs
• For revenue recognised at a point in time:
When the performance obligation is
satisfied
• Determination of transaction price
• Estimation of project completion date.
Revenue has been determined as a key audit
matter due to the:
• Complexity associated with accounting for
individual contract terms and conditions
and the timing of revenue recognition
• Degree of estimation required over the
course of a contract
• Judgement involved to assess the
probability of recovery of contract assets
and receivables.
The accounting policy for revenue is described
in Note 1(f), ‘Revenue recognition’, and details
of the key accounting estimates and
assumptions associated with revenue are
disclosed in Note 1(aa).
Our audit procedures included, but were not limited
to:
• Evaluating Management’s processes and controls
in respect of the recognition of revenue
• Selecting a sample of contracts for testing based
on a number of quantitative and qualitative
factors which may indicate that a greater level
of judgement is required in recognising revenue,
including:
History of issues identified
Likelihood of risk events
Material new contracts
High value contracts which may also include
more than one performance obligation
• For the contracts selected the following
procedures were performed, as appropriate:
Obtaining an understanding of the contract
terms and conditions to evaluate whether
they reflected Management’s position
including estimated forecast revenue and
costs
Reviewing the determination and allocation
of each performance obligation and
associated margin
Vouching a sample of costs incurred to date
and agreeing these to supporting
documentation
Testing the determination of the revenue
recognition for B.O.T. contracts in
accordance with AASB 1059 and the
associated margin and timeline in line with
the terms of the concession arrangement
Assessing the measurement of stage of
completion for contracts which satisfy the
requirement to record revenue over time
Assessing the forecast costs to complete
through discussion and challenging the
project managers and finance personnel.
• Assessing the appropriateness of the relevant
disclosures in the financial statements.
Discontinued Operations and Assets Held for Sale
Key audit matter
How the matter was addressed in our audit
The Group has classified its operations in Italy
and Peru as held for sale and its operations in
Mexico as a discontinued operation.
AASB 5 Non-current Assets Held for Sale and
Discontinued Operations outlines specific
conditions to be met to satisfy the disclosure
and presentation requirements associated
with classifying operations as either ‘held for
sale’ or ‘discontinued’.
These have been considered a key audit
matter due to the judgement required, and
material nature, of the operations at 31
December 2021.
The accounting policy and details for the
discontinued operations are disclosed in Note 3
and details of the key accounting estimates and
assumptions associated with the discontinued
operations are disclosed in Note 1(aa).
Our audit procedures included, but were not limited
to:
• Obtaining correspondence between Fluence
Management and third parties including the:
Draft share purchase agreements and letters
of intent
Mutual termination agreement in relation to
Fluence’s Mexico operations
Relevant legal correspondence
• Reviewing Board minutes and enquiring with the
Chief Financial Officer and Chief Legal Officer
• Evaluating Management’s position paper and
assessing the judgements and assumptions for
each operation to agree they meet the
requirements of the Accounting Standards
• Assessing for indicators of impairment in relation
to the held for sale and discontinued operations
including:
Reviewing the third-party correspondence
to corroborate commercial discussions held
to date
Evaluating the recoverability of carrying
value of assets recognised including
reviewing the contractual enforceability of
the bond associated with the Mexican
discontinued operation
• Assessing the relevance and adequacy of
disclosures within the financial statements.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 31 December 2021, but does not include
the financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 13 to 36 of the directors’ report for the
year ended 31 December 2021.
In our opinion, the Remuneration Report of Fluence Corporation Limited, for the year ended 31
December 2021, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit Pty Ltd
Tim Fairclough
Director
Melbourne, 31 March 2022
Fluence Corporation Limited
Shareholder information
31 December 2021
Following is a summary of shareholder information as at 14 March 2022.
A. Distribution of equity securities
Analysis of numbers of ordinary shareholders by size of holding:
Holdings Ranges
Holders
Total Units
%
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-999,999,999
Totals
536
1,070
576
1,464
331
3,977
123,657
3,113,563
4,589,579
52,463,923
0.020
0.500
0.730
8.400
564,563,312
90.350
624,854,034
100.000
Based on the Fluence closing share price on March 14, 2022 of A$0.205, there were 997 holders of less than a marketable
parcel of ordinary shares, holding 941,616shares in aggregate.
All issued ordinary shares carry one vote per share.
B. Equity security holders
Twenty largest equity security holders
The names of the twenty largest registered holders of Fully Paid Ordinary Shareholders are listed below:
Name
RSL INVESTMENTS CORPORATION
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
POND VENTURES NOMINEES 111 LIMITED
CITICORP NOMINEES PTY LIMITED
RSL CAPITAL LLC
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
PLAN B VENTURES I LLC
BNP PARIBAS NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
EMPLOYEE EQUITY ADMINISTRATION PTY LTD
JAGEN PTY LTD
MR HAO JING
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
PYXIS HOLDINGS PTY LTD
DR STUART LLOYD PHILLIPS & MRS FIONA JANE
PHILLIPS
BOND STREET CUSTODIANS LIMITED
MR RONEN ITZHAK SHECHTER
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
HOSANDA CORPORATION PTY LIMITED
MR XUANJUN LIU
Total Securities of Top 20 Holdings
Total Securities of remaining shareholders
Total of Securities
Balance as at
14 March 2022
131,037,848
71,012,637
36,264,579
31,751,675
31,046,683
24,752,451
20,007,151
19,274,236
18,575,369
14,166,593
11,644,393
9,100,000
8,578,645
7,225,000
7,202,500
%
20.971%
11.365%
5.804%
5.081%
4.969%
3.961%
3.202%
3.085%
2.973%
2.267%
1.864%
1.456%
1.373%
1.156%
1.153%
5,000,000
0.800%
4,240,850
4,186,086
3,077,725
2,584,457
460,728,878
164,125,156
624,854,034
0.679%
0.670%
0.493%
0.414%
73.734%
26.266%
100.00%
Fluence Corporation Limited
Shareholder information
31 December 2021
B. Equity security holders
(continued)
Options as at 31 December 2021 (not listed)
Class of options
Total
number
granted
Number of
holders
Lowest
exercise
price
Highest
exercise
price
Earliest expiry
date
Latest expiry date
$0.23
$1.50
30 June 2022
25 August 2025
$0.21
$1.50
11 March 2022
18 August 2025
Director Options
18,962,938
Issued under the
Company’s ESOP
7,986,219
7*
54
Total
26,949,157
* Includes vested options for past Directors.
Options do not carry the right to vote.
C. Substantial holders
Substantial holders in the company, based on the latest notices received from them, are set out below:
RSL INVESTMENTS CORPORATION
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
POND VENTURES NOMINEES 111 LIMITED
Total Number of Shares Held by Substantial
Shareholders
Number held Percentage
165,408,542
52,846,024
37,264,579
26.47%
8.46%
5.96%
255,519,145
40.89%
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
Other classes of equity securities do not carry voting rights.
On-market buy-back
There is no current on-market buy-back
Fluence Corporation Limited
Shareholder information
31 December 2021
Shareholder enquiries
Shareholders with enquiries about their shareholdings should contact the share registry:
Boardroom Pty Ltd
Level 12, 225 George Street, Sydney, NSW, 2000, Australia
Telephone: 1300 737 760 (local), +61 2 9290 9600 (international)
Email: enquiries@boardroomlimited.com.au
Change of address, change of name, consolidation of shareholdings
Shareholders should contact the Share Registry to obtain details of the procedure required for any of these
changes.
Annual report
Shareholders do not automatically receive a hard copy of the Company's Annual Report unless they notify the
Share Registry in writing. An electronic copy of the Annual Report can be viewed on the company's website:
www.fluencecorp.com
Corporate Governance Statement
Refer to the Company's Corporate Governance statement at: https://www.fluencecorp.com/investor-news/
Tax file numbers
It is important that Australian resident Shareholders, including children, have their tax file number or exemption
details noted by the Share Registry.
CHESS (Clearing House Electronic Sub-register System)
Shareholders wishing to move to uncertified holdings under the Australian Securities Exchange CHESS system
should contact their stockbroker.
Uncertified share register
Shareholding statements are issued at the end of each month that there is a transaction that alters the balance
of an individual/company's holding.
Company Secretary
The name of the Company Secretary is Ms Melanie Leydin.
Registered office
The address of the registered office is Level 4, 96-100 Albert Road, South Melbourne VIC 3205, Australia.
Phone: +61 3 9692 7222
Stock exchange listing
Quotation has been granted for all the ordinary shares of the Group on all member exchanges of the Australia
Securities Exchange Limited.