Fluence Corporation Limited
ABN 52 127 734 196
Audited Financial Report
for the year ended 31 December 2022
Fluence Corporation Limited ABN 52 127 734 196
Audited Financial Report - 31 December 2022
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 Financial Report
Directors' Declaration
Independent Auditor's Report
Page
1
2
44
45
47
48
49
50
102
103
Fluence Corporation Limited
Corporate Directory
Directors
Company Secretary
Registered Office
Principal Place of Business
Share Registry
Auditors
Solicitors
Bankers
Securities Quoted
Website
Mr Douglas Brown (appointed 20 March 2023)
Chairman
Mr Thomas Pokorsky (appointed 14 March 2022)
CEO and Managing Director
Mr Paul Donnelly
Lead Independent Director, Non-Executive Director
Mr Richard Irving (transitioned from Chairman to
Non-Executive Director on 20 March 2023)
Non-Executive Director
Mr Ross Haghighat
Non-Executive Director
Dr Rengarajan Ramesh
Non-Executive Director
Ms Samantha Tough
Non-Executive Director
Ms Melanie Leydin
Level 4, 96-100 Albert Road
South Melbourne VIC 3205
Australia
Phone: +61 (0)3 9692 7222
Fax: +61 (0)3 9692 7222
7135 Madison Ave. West
Golden Valley MN 55427
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 2022
The Directors present their report, together with the financial statements for the year ended 31 December 2022 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 Douglas Brown, Chairman (appointed 20 March 2023)
Mr Thomas Pokorsky, CEO and Managing Director (appointed 14 March 2022)
Mr Paul Donnelly, Lead Independent Director, Non-Executive Director
Mr Richard Irving (transitioned from Chairman to Non-Executive Director on 20 March 2023), Non-Executive Director
Mr Ross Haghighat, Non-Executive Director
Dr Rengarajan Ramesh, Non-Executive Director
Ms Samantha Tough, Non-Executive Director
Review of operations
In 2022 the Company continued to execute its plan of transforming the organisation to focus on the sale of smart
products and building recurring revenue. During the course of the year, Fluence continued to grow Smart Product
Solutions (SPS) revenue in multiple geographies; in particular MABR wastewater treatment solutions in Southeast
Asia (SEA), NIROBOX™ desalination solutions in the Middle East, and sales of both product lines in North America
and the Caribbean. The SPS products from Argentina for industrial water treatment, as well as the industrial
wastewater treatment products from Italy, also contributed to the SPS growth.
In 2022 significant operational and management changes were made to improve the growth, efficiency and
profitability of Fluence. Most significantly, in March the Company appointed Thomas Pokorsky, a seasoned water
industry veteran, as the Chief Executive Officer and Managing Director. On 3 January 2023, the Company appointed
Ben Fash, also a water industry veteran, as the new Chief Financial Officer. In addition, Rick Cisterna who joined the
company in Q4 2021 was named Chief Commercial Officer. These three executives, together with our Chief Legal
Officer, Spencer Smith, now comprise an executive team with over 100 years’ experience in the water industry.
In the second half of 2022, the new executive management team developed and executed a plan to restructure and
reorganise the Company. This restructuring reduced the number of business units in half and aligned them by
product market rather than geography. In addition to saving an estimated $3-4 million in fixed costs, we were able to
deploy additional resources in growing areas like North America and SEA. The new reporting areas are broken down
into three major product groups: (1) Municipal Water & Wastewater; (2) Industrial Water Treatment; and (3) High
Strength Industrial Wastewater. China and SEA were combined and remain the Company’s only geographic division
selling all Fluence products. The Ivory Coast project, Research, Development and Engineering (RD&E) and
Build-Own-Operate (BOO) also remain as stand-alone divisions. Beginning on 1 January 2023, the Company will
begin reporting results based on this new structure.
Fluence Corporation Limited
2
Fluence Corporation Limited
Directors' Report
31 December 2022
(continued)
Review of operations (continued)
FY 2022 in Summary
During FY 2022 Fluence achieved underlying EBITDA of $2.3 million, a significant increase over the prior year. The
Company recorded revenue growth of 6% over 2021, highlighted by 40% growth in Recurring Revenue. The
Company continued to successfully execute the Ivory Coast water treatment project, which contributed $69.6 million
in revenue. Key achievements included:
• Underlying EBITDA of $2.3M versus adjusted guidance of $2.0 million.
• Revenue from Continuing Operations of $119.1 million in FY 2022, up 6% from $111.9 million in FY 2021.
• SPS Revenues for FY 2022 of $35.2 million, below adjusted guidance of $38.0 million due in large part to the
continued COVID-related business slowdown in China.
• Recurring Revenue in FY 2022 of $9.7 million, up 40% from FY 2021.
• Repositioning and reorganisation announced in November 2022 with an expected reduction in annual costs of $3-4
million.
• Cash position of $30.9 million and $13.6 million in short and long-term liquid investments provides adequate
operating reserves.
.
Loss for the year
Add:
31 December
2022
$'000
(16,292)
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
IFRIC 12 revenues
$1,111.00
Underlying EBITDA
2,404
1,679
9,801
4,037
(21)
267
400
2,275
Fluence Corporation Limited
3
Fluence Corporation Limited
Directors' Report
31 December 2022
(continued)
Review of operations (continued)
1 Detailed review of key market segments
China and SEA
Revenues generated from China were down in 2022, largely as a result of a near complete shutdown of China for
most of the year due to COVID. While business operations in China were halted during most of the year, the
Company was able to keep our production facility open to fulfill existing orders. However, meeting with customers and
securing new projects was significantly halted. The pipeline of new projects in China remains strong and will facilitate
renewed growth as restrictions are lifted and the overall economy in China rebounds, which we expect to happen in
2023.
While the China market was stalled, the Company pivoted and redirected our sales resources to other parts of the
SEA region. As a result, during FY 2022, the Company developed a new pipeline of projects in SEA that was even
larger than our current pipeline in China. These projects will provide additional growth for 2023 and beyond. There
were also a few notable contracts secured and projects executed in 2022. We received our first MABR operating
contract in China adding to our Recuring Revenue growth. We also received our first MABR project in Tiawan and a
Nitro (MABR) project in South Korea.
With the additional pipeline in SEA and the anticipated opening up of China, we expect to get back on track with
strong Chinese and SEA growth in 2023.
Middle East
NIROBOX™ and related desalination products are well established with over 30 plants (120 units) sold to date in the
Middle East. Fluence continues to develop strong partnerships to accelerate sales and the pipeline for these products
continues to grow. MABR sales have yet to gain significant traction in the region but interest is developing and our
sales team are working on numerous projects.
Of particular interest in the region is that the large New Mansoura desalination plant was commissioned and went
online in FY 2022. The plant is producing water while being operated by Fluence personnel and is expected to be
turned over to the owner in late 2023. We continue to work on obtaining future phases of this project as well as a
long-term operating contract.
Ivory Coast
Fluence continued to successfully execute the Ivory Coast project throughout FY 2022, achieving completion of
milestones 6 through 8.
Commissioning of the 150,000 m3/day surface water treatment plant is anticipated in late 2023. Fluence’s focus
remains on delivering the project in late 2023, a few months later than originally planned due to weather, supply chain
disruptions, and COVID-related delays but remains in line with the customer's expectations.
Fluence Corporation Limited
4
Fluence Corporation Limited
Directors' Report
31 December 2022
(continued)
Review of operations (continued)
1 Detailed review of key market segments (continued)
North America and the Caribbean
North America is by far the single largest water treatment market in the world. With the allocation of billions of dollars
in new government funding, this market is expected to grow faster than ever. North America has typically been an
underserved market for Fluence. In 2022, we added significant sales and technical support staff to develop the
market in North America and the Caribbean. The Company also added more independent sales representatives who
typically cover the municipal market. Fluence has increased our pipeline for municipal MABR systems, waste to
energy projects for the meat packing industry, industrial water pretreatment for the food and beverage industry as
well as multiple BOO projects for MABR and desalination in the Caribbean.
In the second half of 2022, the Company started gaining traction as we secured a MABR BOO project for a resort in
Jamaica, multiple wastewater treatment plants for disaster relief from FEMA as well as an MABR project in Iowa. We
expect significant growth in this area in 2023.
Other markets (South America and Europe)
The South American market and team generated single digit revenue growth in FY 2022, mostly in the food and
beverage and mining industries. Bookings, however, were high and the Company ended the year with a significant
backlog of projects that will provide strong revenue growth for 2023. We have also seen growth in the Recurring
Revenue side of the business as we have booked multi-year operating contracts. In addition, we are poised to export
certain technology and knowledge from our South American team to North America where there is great growth
potential.
Our only operations in Europe reside in Italy which specialises in high strength industrial wastewater treatment and
waste to energy projects. Like South America, the team in Italy has developed a strong pipeline and backlog which is
expected to grow faster in 2023 as they expand out of Italy to other parts of southern Europe. Like the team in South
America, the Italian team expects to export their technology and expertise to the North American market where there
is a very significant opportunity for waste to energy projects.
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
treatment
technologies emit Nitrous Oxide (N2O): 300 times worse than CO2 from an atmospheric warming
perspective. Fluence MABR systems currently save 306 tons/year of N2O emissions, equivalent to a further 91,800
tons of CO2. Treated wastewater from Fluence’s MABR installations collectively removes 2,100 tons of nutrients that
would otherwise damage the environment.
Fluence is committed to ESG and currently delivers on 10 of the 17 United Nations Sustainable Development Goals.
Fluence Corporation Limited
5
Fluence Corporation Limited
Directors' Report
31 December 2022
(continued)
Review of operations (continued)
1 Detailed review of key market segments (continued)
Outlook for FY 2023
Fluence is providing annual guidance of total revenue of $95-100 million for FY 2023, including SPS and Recurring
Revenue of $75-80 million, together representing meaningful growth over FY 2022. The Underlying EBITDA of $4
million is expected, representing growth of more than 70% over FY 2022. Additional highlights include:
• SPS and Recurring Revenue are expected to grow significantly in FY2023, driven by:
- Growth in North America, particularly from investment in our sales team in FY 2022;
- Executing O&M and BOO opportunities from our pipeline;
- Capitalising on the recently repositioned business and the ability to cross-sell all Fluence products across
all the geographies in which the Company operates;
- Rapidly expanding waste-to-energy opportunities in the US; and
- Growth in SEA and expected recovery in China.
• The Ivory Coast project main works are expected to be completed in FY2023.
• Gross margins are expected to see expansion due to lower CES revenues and greater contribution from SPS and
Recurring Revenue.
• The restructuring and reorganisation plan is expected to deliver $3 - $4 million in fixed costs savings.
Significant events after balance date
On 3 January 2023, the Group appointed Benjamin Fash as Chief Financial Officer.
On 20 March 2023, the Group appointed Douglas Brown as Chairman of the Board. The outgoing Chairman, Richard
Irving, will remain a Non-Executive Director.
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
6
Fluence Corporation Limited
Directors' Report
31 December 2022
(continued)
Information on directors
Richard Irving Chairman and Chief Executive Officer (retired as CEO on 13 March 2022 and as Chairman on 20
March 2023)
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, raising and
managing 2 top-of-vintage cross-border, early stage technology venture capital funds. He
brings 40 years' experience in venture capital and building startups to successful exits in
US, Israel, UK, Australia, Ireland, Spain, & China, helping drive over US$3B in value
creation mainly from initial startup. Richard has 15 years’ tech operating experience
including P&L responsibility from Brooktree, AMD and AT&T Bell Labs.
Past exits include LiveRail (Facebook), Gigle Networks (Broadcom), 4Home (Motorola
Mobility), Transitive (IBM), and Microcosm Communications (Conexant).
Other current public
company directorships
Former public company
directorships in last 3
years
None
None
Special responsibilities Chairman
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;
1,000,000 Director options with an exercise price of A$0.23; and
500,000 Director options with an exercise price of A$0.22.
Contractual rights to
shares
None
Fluence Corporation Limited
7
Fluence Corporation Limited
Directors' Report
31 December 2022
(continued)
Information on directors (continued)
Thomas Pokorsky Chief Executive Officer and Managing Director (appointed 14 March 2022)
Qualifications
BSCE in Civil Engineering, Marquette University
Experience and
expertise
Thomas Pokorsky is Chief Executive Officer and Managing Director of Fluence
Corporation. Mr Pokorsky has 35 years of successful water industry executive
experience, including 15 years as CEO working in North America, with activity in Europe,
China and Israel.
Mr. Pokorsky has run public and private businesses, achieving returns of 5-10x with IRRs
up to 50%. He founded and grew Nexom in the wastewater sector, delivering 25% annual
revenue growth and 50% EBITDA growth, leading to its sale to KKR. At Water Pollution
Control Corporation (later “Sanitaire”), Mr Pokorsky doubled revenue and profits,
negotiated its sale to ITT Industries, and then grew its Advanced Water Treatment group
(now part of Xylem) from $60M to $350M in four years, including $100M in organic
growth and five successful acquisitions on three continents.
Other current public
company directorships
Former public company
directorships in last 3
years
None
None
Special responsibilities Chief Executive Officer and Managing Director
Interest in shares
None
Interest in options
Direct interest in:
6,250,000 Director options with an exercise price of A$0.22;
3,125,000 Director options with an exercise price of A$0.22;
3,125,000 Director options with an exercise price of A$0.24;
3,125,000 Director options with an exercise price of A$0.26;
3,125,000 Director options with an exercise price of A$0.28; and
12,500,000 Director options with an exercise price of A$0.22.
Contractual rights to
shares
None
Fluence Corporation Limited
8
Fluence Corporation Limited
Directors' Report
31 December 2022
(continued)
Information on directors (continued)
Paul Donnelly Lead Independent Director and Non-Executive Director
Qualifications
BSc (Hons) Chemistry, University of Southampton
Advanced Management Program, Harvard Business School
Fellow 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 Officer 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;
1,000,000 Director options with an exercise price of A$0.23; and
500,000 Director options with an exercise price of A$0.22.
Contractual rights to
shares
None
Fluence Corporation Limited
9
Fluence Corporation Limited
Directors' Report
31 December 2022
(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; and
500,000 Director options with an exercise price of A$0.22.
Contractual rights to
shares
None
Fluence Corporation Limited
10
Fluence Corporation Limited
Directors' Report
31 December 2022
(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; and
500,000 Director options with an exercise price of A$0.22.
Contractual rights to
shares
None
Fluence Corporation Limited
11
Fluence Corporation Limited
Directors' Report
31 December 2022
(continued)
Information on directors (continued)
Samantha Tough Non-Executive Director
Qualifications
B Juris; LLB; Fellow AICD
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 Panel
and Director of the Clean Energy Finance Corporation, Director of Rumin8 and Director
of Mineral Carbonation International. Ms. Tough is also a Pro Vice Chancellor Industry
and Commercial at the University of Western Australia.
Other current public
company directorships
None
Former public company
directorships in last 3
years
3D Metalforge Ltd. (ASX: 3MF)
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; and
500,000 Director options with an exercise price of A$0.22.
Contractual rights to
shares
None
Fluence Corporation Limited
12
Fluence Corporation Limited
Directors' Report
31 December 2022
(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 2022, 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 Thomas Pokorsky (1)
Mr Paul Donnelly
Mr Ross Haghighat
Dr Rengarajan Ramesh
Ms Samantha Tough
Mr Phillip Hains
A
10
8
9
10
9
10
B
10
8
10
10
10
10
A
-
-
9
-
9
9
B
-
-
9
-
9
9
A
-
-
-
3
3
-
B
-
-
-
3
3
-
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 = Mr Thomas Pokorsky was appointed Chief Executive Officer and Managing Director on 14 March 2022.
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.
Fluence Corporation Limited
13
Fluence Corporation Limited
Directors' Report
31 December 2022
(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 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;
•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
In response to the COVID-19 pandemic,
there will be no increase in base
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 retired from CEO position on 13 March 2022 and from the Chairman position on 20 March 2023.
Mr. Paul Donnelly continued to hold the role of Lead Independent Director.
Fluence Corporation Limited
14
Fluence Corporation Limited
Directors' Report
31 December 2022
(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 2022 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.
Fluence Corporation Limited
15
Fluence Corporation Limited
Directors' Report
31 December 2022
(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 2022 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 2022, executive
STI bonuses for 2022 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 2023 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 2022 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
16
Fluence Corporation Limited
Directors' Report
31 December 2022
(continued)
Remuneration report (Audited) (continued)
(b) Details of remuneration (continued)
Amounts of remuneration (shown in USD) (continued)
Directors and other key management personnel for 2022 consisted of:
• Richard Irving - Chairman (1)
• Thomas Pokorsky - Chief Executive Officer and Managing Director (appointed on 14 March 2022)
• Paul Donnelly - Lead Independent Director, Non-Executive Director
• Ross Haghighat - Non-Executive Director
• Dr Rengarajan Ramesh - Non-Executive Director
• Samantha Tough - Non-Executive Director
• Francesco Fragasso - Chief Financial Officer (retired on 31 August 2022)
• Anthony Hargrave - Chief Operating Officer
• Spencer Smith - Chief Legal Officer
• Richard Cisterna - Chief Commercial Officer (2)
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)
1= Mr Richard Irving as of 13 March 2022 retired as CEO and continued his role as Chairman.
2 = Mr Richard Cisterna's title was changed from Chief Strategy Officer to Chief Commercial Officer in 2022.
Fluence Corporation Limited
17
Fluence Corporation Limited
Directors' Report
31 December 2022
(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
$
$
$
$
$
267,214
370,708
637,922
84,322
77,665
83,213
74,891
320,091
-
-
-
-
-
-
-
267,214
370,708
637,922
84,322
77,665
83,213
74,891
320,091
-
52,500
52,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27,296
294,510
975,507 1,398,715
1,002,803 1,693,225
27,296
111,618
27,296
104,961
27,296
110,509
18,144
100,032
93,035
420,123
2022
Executive
directors:
Richard Irving
Thomas
Pokorsky
Total
Non-executive
directors:
Paul Donnelly
Ross
Haghighat
Rengarajan
Ramesh
Samantha
Tough
Total
Fluence Corporation Limited
18
Fluence Corporation Limited
Directors' Report
31 December 2022
(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
$
$
$
$
$
204,676
343,800
338,140
258,333
1,144,950
2,102,963
-
-
-
-
-
-
204,676
343,800
338,140
258,333
1,144,950
2,102,963
-
51,914
51,059
72,480
175,453
227,953
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(25,567) (b)
179,109
42,001
27,806
437,715
417,005
70,528
401,341
114,767 1,435,170
1,217,602 3,548,518
2022
Other key
management
personnel:
Francesco
Fragasso (a)
Anthony
Hargrave
Spencer Smith
Richard
Cisterna
Total
Grand total
(a) Mr Fragasso retired as Chief Financial Officer on 31 August 2022.
(b) Mr Fargasso forfeited his equity settled options upon retirement. Under AASB2 Share-based Payments, this is treated as a reversal of the expense.
Fluence Corporation Limited
19
Fluence Corporation Limited
Directors' Report
31 December 2022
(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
119,088
37,978
122,111
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
20
Fluence Corporation Limited
Directors' Report
31 December 2022
(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
21
Fluence Corporation Limited
Directors' Report
31 December 2022
(continued)
Remuneration report (Audited) (continued)
(b) Details of remuneration (continued)
Amounts of remuneration (shown in USD) (continued)
Remuneration subject to performance in 2022:
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 (1)
Thomas Pokorsky
Francesco Fragasso (2)
Anthony Hargrave
Spencer Smith
Richard Cisterna
Name
Richard Irving (1)
Thomas Pokorsky
Francesco Fragasso (2)
Anthony Hargrave
Spencer Smith
Richard Cisterna
Maximum potential
compensation
Maximum potential
compensation subject
to performance
Percentage of
compensation subject
to performance
267,214
445,708
204,676
446,940
422,675
378,333
-
75,000
-
103,140
84,535
120,000
-
16.8%
-
23.1%
20.0%
31.7%
Compensation
subject to
performance
paid/payable
2022
Compensation
subject to
performance
not earned
2022
0.0%
70.0%
0.0%
50.3%
60.4%
60.4%
0.0%
30.0%
0.0%
49.7%
39.6%
39.6%
(1) Mr Irving retired as CEO on 13 March 2022 and transitioned to the role of Chairman, hence not subject to performance based bonus in 2022.
(2) Mr Fragasso retired as Chief Financial officer on 31 August 2022, hence not subject to performance based bonus in 2022.
Fluence Corporation Limited
22
Fluence Corporation Limited
Directors' Report
31 December 2022
(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.
2022
Executive Directors
Richard Irving
Thomas Pokorsky
Non-Executive Directors
Ross Haghighat
Rengarajan Ramesh
Paul Donnelly
Samantha Tough
Key Management Personnel
Francesco Fragasso
Anthony Hargrave
Spencer Smith
Richard Cisterna
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
23
Fluence Corporation Limited
Directors' Report
31 December 2022
(continued)
Remuneration report (Audited) (continued)
(b) Details of remuneration (continued)
Issue of shares (continued)
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
24
Fluence Corporation Limited
Directors' Report
31 December 2022
(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.
2022
Executive Directors
Richard Irving
Thomas Pokorsky
Non-Executive Directors
Paul Donnelly
Ross Haghighat
Rengarajan Ramesh
Samantha Tough
Key Management Personnel
Francesco Fragasso (a)
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
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
31,250,000
31,750,000
(1,500,000)
-
(1,500,000)
500,000
500,000
500,000
500,000
2,000,000
500,000
500,000
500,000
1,250,000
2,750,000
36,500,000
-
-
-
-
-
(2,155,000)
(402,344)
(75,000)
-
(2,632,344)
(4,132,344)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,500,000
31,250,000
32,750,000
2,000,000
1,500,000
1,500,000
1,500,000
6,500,000
-
1,610,000
1,850,000
1,250,000
4,710,000
43,960,000
250,000
-
250,000
1,250,000
31,250,000
32,500,000
750,000
250,000
250,000
1,000,000
2,250,000
-
645,000
675,000
156,400
1,476,400
3,976,400
1,250,000
1,250,000
1,250,000
500,000
4,250,000
-
965,000
1,175,000
1,093,600
3,233,600
39,983,600
(a) Mr Fragasso's options were forfeited upon his retirement on 31 August 2022.
Fluence Corporation Limited
25
Fluence Corporation Limited
Directors' Report
31 December 2022
(continued)
Remuneration report (Audited) (continued)
(b) Details of remuneration (continued)
Issue of options (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
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
26
Fluence Corporation Limited
Directors' Report
31 December 2022
(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 2022.
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
27
Fluence Corporation Limited
Directors' Report
31 December 2022
(continued)
Remuneration report (Audited) (continued)
(b) Details of remuneration (continued)
Share-based payments granted as compensation during the year (continued)
2022
Executive Directors
Richard Irving
Thomas Pokorsky
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$
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
500,000
6,250,000
3,125,000
3,125,000
3,125,000
3,125,000
12,500,000
500,000
500,000
500,000
500,000
-
-
-
-
-
-
-
-
-
-
-
21 March 2022
21 March 2022
21 March 2022
21 March 2022
500,000
500,000
500,000
1,250,000
-
-
-
39,100
0.0690
0.0665
0.0593
0.0625
0.0651
0.0663
0.0639
0.0690
0.0690
0.0690
0.0690
0.1235
0.1235
0.1235
0.1080
0.22
0.22
0.22
0.24
0.26
0.28
0.22
0.22
0.22
0.22
0.22
0.17
0.17
0.17
0.18
Expiry date
30 June 2026
14 March 2027
14 March 2027
14 March 2027
14 March 2027
14 March 2027
14 March 2027
30 June 2026
30 June 2026
30 June 2026
30 June 2026
22 March 2027
22 March 2027
22 March 2027
01 January 2027
Value of
options at
grant date
US$
34,510
415,897
185,211
195,211
203,510
207,281
799,328
34,511
34,511
34,511
34,511
42,807
42,807
42,807
93,573
Fluence Corporation Limited
28
Fluence Corporation Limited
Directors' Report
31 December 2022
(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
29
Fluence Corporation Limited
Directors' Report
31 December 2022
(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$450,500 per
annum. On 13 March 2022 Mr Irving retired as CEO. As of 14 March 2022 Mr Irvings fee
as Chairman of Group is AU$250,000 (US$173,360).
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$66,570) per annum plus Chair of
Remuneration and Nomination Committee fees of AU$16,000 (US$11,095) 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$66,570) per annum plus Member of the
Audit and Risk Committee fees of AU$12,000 (US$8,321) per annum and Member of the
Remuneration and Nomination Committee fees of AU$12,000 (US$8,321) 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$66,570) per annum plus Chair of the Audit
and Risk Committee fees of AU$16,000 (US$11,095) per annum and Lead Independent
Director fee amounting to AU$9,600 (US$6,657) 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
Non-Executive Director fees of AU$96,000 per annum (US$66,570) plus Member of Audit
and Risk Committee fees of AU$12,000 (US$8,321) per annum. Remuneration is
reviewed annually by the Remuneration and Nomination Committee.
Fluence Corporation Limited
30
Fluence Corporation Limited
Directors' Report
31 December 2022
(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$450,500 per annum up to 13 March 2022 and US$173,360 per
annum from 14 March 2022 as Chairman.
Health insurance for Mr. Irving and his family up to 13 March 2022.
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.
500,000
30 June 2022
AU$0.22
Options vest on the 3rd anniversary
following the grant date on 29 June 2025.
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. The Options has not been exercised
hence expired.
Fluence Corporation Limited
31
Fluence Corporation Limited
Directors' Report
31 December 2022
(continued)
Remuneration report (Audited) (continued)
Service agreements (continued)
Name:
Title:
Agreement commenced:
Term of agreement:
Details of remuneration:
Thomas Pokorsky
Chief Executive Officer and Managing Director
14 March 2022
4 Year Agreement with automatic 1-year renewals. Either party to
provide 6 months written notice for termination of agreement
Cash salary and fees:
Bonuses and deferred remuneration:
Other Benefits:
US$465,000 (base salary)
Performance based bonus of up to US$75,000
Health insurance for Mr Pokorsky and his family
Employment Based Option Remuneration:
Number of
Options Granted
3,125,000
Grant Date
Exercise Price
Vesting Period
30 June 2022
AU$0.22
Options vest and become exercisable 1
year anniversary from the start date.
9,375,000
30 June 2022
AU$0.22
Options shall vest and become exercisable
in twelve (12) equal installments of 781,250
at the end of each consecutive three (3)
month period over a three (3) year period
commencing on 30 June 2023.
Performance Based Option Remuneration:
Number of
Options Granted
3,125,000
30 June 2022
AU$0.22
Grant Date
Exercise Price
Vesting Period
3,125,000
30 June 2022
AU$0.24
3,125,000
30 June 2022
AU$0.26
3,125,000
30 June 2022
AU$0.28
Options vest and become exercisable on 15
January 2023 subject to meeting
performance criteria.
Options vest and become exercisable on 15
January 2024 subject to meeting
performance criteria.
Options vest and become exercisable on 15
January 2025 subject to meeting
performance criteria.
Options vest and become exercisable on 15
January 2026 subject to meeting
performance criteria.
Fluence Corporation Limited
32
Fluence Corporation Limited
Directors' Report
31 December 2022
(continued)
Remuneration report (Audited) (continued)
Service agreements (continued)
Number of
Options Granted
6,250,000
Grant Date
Exercise Price
Vesting Period
30 June 2022
AU$0.22
Options shall vest and become exercisable
when the Enterprise Value of Fluence
Corporation Limited reaches at least US
$400 million.
Fluence Corporation Limited
33
Fluence Corporation Limited
Directors' Report
31 December 2022
(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
500,000
21 March 2022
AU$0.17
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. (a)
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. (a)
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.
(a)
Options vest and become exercisable in
equal installments at the end of each
anniversary year for a period over three (3)
years. (a)
Fluence Corporation Limited
34
Fluence Corporation Limited
Directors' Report
31 December 2022
(continued)
Remuneration report (Audited) (continued)
Service agreements (continued)
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. (a)
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. (a)
(a) Mr Fragasso retired on 31 August 2022. All Options issued to Mr Fragasso have been forfeited and as of 31
December 2022 there are no outstanding Options.
Fluence Corporation Limited
35
Fluence Corporation Limited
Directors' Report
31 December 2022
(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$343,800 (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
500,000
21 March 2022
AU$0.17
Performance Based Option Remuneration:
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.
Options vest and become exercisable in
equal installments at the end of each
anniversary year for a period over three (3)
years.
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
36
Fluence Corporation Limited
Directors' Report
31 December 2022
(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$338,140 (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
500,000
21 March 2022
AU$0.17
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.
Options vest and become exercisable in
equal installments at the end of each
anniversary year for a period over three (3)
years.
Fluence Corporation Limited
37
Fluence Corporation Limited
Directors' Report
31 December 2022
(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
38
Fluence Corporation Limited
Directors' Report
31 December 2022
(continued)
Remuneration report (Audited) (continued)
Service agreements (continued)
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
Employment Based Option Remuneration:
Number of
Options Granted
1,250,000
Grant Date
Exercise Price
Vesting Period
21 March 2022
AU$0.18
Options will vest and become exercisable in
equal installments at the end of each
consecutive three (3) month period over
four (4) years, commencing on 21 March
2022
Fluence Corporation Limited
39
Fluence Corporation Limited
Directors' Report
31 December 2022
(continued)
Remuneration report (Audited) (continued)
Financial performance
The earnings of the consolidated entity for the five years to 31 December 2022 are summarised below:
Financial results
Revenue
Loss before income tax from continuing
operations
Loss from discontinued operations
Loss for the year
2022
$'000
2021
$'000
2020
$'000
(*)
2019
$'000
(*)
2018
$'000
119,098
111,986
97,139
59,848
101,123
(16,046)
(267)
(16,292)
(10,982)
(3,868)
(15,083)
(8,378)
(12,419)
(19,859)
(29,355)
(238)
(31,585)
(62,360)
-
(62,802)
* The results for 2020 and 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
Financial factors
Loss per share from continuing
operations
31
December
2022
$'000
31
December
2021
$'000
31
December
2020
$'000
31
December
2019
$'000
31
December
2018
$'000
AU$0.17
AU$0.15
AU$0.23
AU$0.43
AU$0.31
2022
$
2021
$
2020
$
2019
$
2018
$
(0.03)
(0.02)
(0.01)
(0.06)
(0.14)
[This concludes the Remuneration Report, which has been audited]
Fluence Corporation Limited
40
Fluence Corporation Limited
Directors' Report
31 December 2022
(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
30 May 2019
28 June 2018
30 May 2019
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
25 June 2021
25 June 2021
11 August 2021
21 March 2022
21 March 2022
21 March 2022
21 March 2022
21 March 2022
23 May 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
25 May 2025
25 May 2025
30 May 2023
30 May 2023
14 July 2025
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
31 May 2025
25 June 2025
25 August 2025
18 August 2025
1 January 2026
1 July 2026
1 January 2027
1 January 2027
22 March 2027
31 March 2027
30 June 2026
14 March 2027
14 March 2027
14 March 2027
14 March 2027
$0.93
$0.84
$0.60
$0.80
$0.39
$0.44
$0.44
$0.44
$0.44
$0.44
$0.44
$0.23
$0.23
$0.23
$0.26
$0.23
$0.23
$0.23
$0.21
$0.18
$0.22
$0.18
$0.22
$0.17
$0.22
$0.22
$0.22
$0.24
$0.26
$0.28
8,992,938
350,000
250,000
250,000
1,470,000
12,000
102,000
164,000
25,000
48,250
860,000
3,750
250
12,000
170,500
2,490,000
1,000,000
4,000,000
500,000
100,000
250,000
1,250,000
25,000
1,000,000
12,500,000
2,500,000
21,875,000
3,125,000
3,125,000
3,125,000
69,575,688
Fluence Corporation Limited
41
Fluence Corporation Limited
Directors' Report
31 December 2022
(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 44.
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
42
Fluence Corporation Limited
Directors' Report
31 December 2022
(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
Thomas Pokorsky
Chief Executive Officer and Managing Director
30 March 2023
Minnesota
Fluence Corporation Limited
43
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 KATHERINE ROBERTSON TO THE DIRECTORS OF FLUENCE
CORPORATION LIMITED
As lead auditor of Fluence Corporation Limited the year ended 31 December 2022, 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.
Katherine Robertson
Director
BDO Audit Pty Ltd
Melbourne, 30 March 2023
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 2022
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 benefit/(expense)
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
2022
$'000
31 December
2021
$'000
Notes
4
4
4
4
4
4
6
3
119,088
10
119,098
111,853
133
111,986
(91,071)
(3,779)
(6,320)
(20,136)
(9,801)
(4,037)
(16,046)
21
(16,025)
(267)
(16,292)
(16,193)
(99)
(16,292)
(88,855)
(3,802)
(5,982)
(16,575)
(5,034)
(2,720)
(10,982)
(233)
(11,215)
(3,868)
(15,083)
(14,702)
(381)
(15,083)
(2,176)
(18,468)
217
(14,866)
(18,094)
(275)
(18,369)
(57)
(42)
(99)
(18,468)
(10,816)
(3,669)
(14,485)
(194)
(187)
(381)
(14,866)
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
45
Fluence Corporation Limited
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 December 2022
(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
2022
$
31 December
2021
$
Notes
7
7
7
(0.025)
(0.018)
0.000
(0.006)
(0.025)
(0.024)
In accordance with AASB 5 "Non-current Assets Held for Sale and Discontinued Operations", the 31 December 2021 comparatives
within the 2022 annual report have been re-presented to consolidate the Italian operations into the consolidated entity.
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
46
Fluence Corporation Limited
Consolidated Statement of Financial Position
As at 31 December 2022
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
Contract liabilities
Total current liabilities
Non-current liabilities
Other liabilities
Borrowings and lease liability
Deferred tax liabilities
Provisions
Contract liabilities
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
2022
$'000
31 December
2021
$'000
Notes
8
9
10
11
13
3
14
6
15
16
11
12
13
17
18
19
20
17
18
6
19
20
21
23
22
30,936
4,128
49,026
9,290
6,065
246
151
-
99,842
348
-
9,663
1,339
2,619
9,532
277
23,778
123,620
51,494
2,368
118
6,172
24,977
85,129
1,779
32,937
334
525
-
35,575
120,704
2,916
41,363
11,502
36,984
13,883
10,094
231
188
562
114,807
547
163
12,583
1,709
2,881
14,287
2,159
34,329
149,136
49,186
3,469
35
4,527
34,756
91,973
1,964
34,564
895
912
2,838
41,173
133,146
15,990
217,673
(13,897)
(198,866)
4,910
(1,994)
2,916
212,279
(11,721)
(182,673)
17,885
(1,895)
15,990
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
47
Fluence Corporation Limited
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Consolidated entity
Balance at 1 January 2021
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
Contributed
equity
$'000
Foreign currency
translation
reserve
$'000
Accumulated
losses
$'000
Total
$'000
Non- controlling
interests
$'000
Total
equity
$'000
212,161
(11,938)
-
-
-
446
(328)
212,279
-
217
217
-
-
(11,721)
(167,971)
(14,702)
-
(14,702)
-
-
(182,673)
32,252
(14,702)
217
(14,485)
446
(328)
17,885
(1,780)
(381)
-
(381)
-
266
(1,895)
30,472
(15,083)
217
(14,866)
446
(62)
15,990
Balance at 1 January 2022
212,279
(11,721)
(182,673)
17,885
(1,895)
15,990
Loss for the period
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Issue of ordinary shares, net of transaction costs
Issue of options
Balance at 31 December 2022
-
-
-
21
5
3,715
1,679
217,673
-
(2,176)
(2,176)
-
-
(13,897)
(16,193)
-
(16,193)
-
-
(198,866)
(16,193)
(2,176)
(18,369)
3,715
1,679
4,910
(99)
-
(99)
-
-
(1,994)
(16,292)
(2,176)
(18,468)
3,715
1,679
2,916
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
48
Fluence Corporation Limited
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
Cash flows from operating activities
Receipt from customers
Payments to suppliers and employees
Income from equity accounted investments
Receipt from restricted cash
Interest received
Interest and other costs of finance paid
Income taxes paid
Net cash outflow from operating activities
Cash flows from investing activities
Payment for purchases of plant and equipment
Funds transferred from term deposit, net
Proceeds from sale of property, plant and equipment
Net cash inflow from investing activities
Cash flows from financing activities
Proceeds from issues of ordinary shares
(Repayment)/proceeds of borrowings
Lease payments
Net cash inflow from financing activities
Net (decrease)/ 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
2022
$'000
31 December
2021
$'000
Notes
91,307
(107,949)
136
-
78
(3,947)
(110)
(20,485)
110,542
(112,544)
-
108
91
(2,773)
(263)
(4,839)
(445)
10,861
253
10,669
3,715
(365)
(1,588)
1,762
(8,054)
41,363
(2,373)
30,936
(1,419)
8,737
36
7,354
-
10,709
(1,815)
8,894
11,409
31,038
(1,084)
41,363
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
49
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
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 2022 was authorised for issue in accordance with a resolution of the Directors on the 31
March 2023.
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 smart 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 2022, the consolidated entity incurred an operating loss after tax of $16,292,000
(2021: $15,083,000) and had cash outflow from operating activities of $20,485,000 (2021: cash outflow of
$4,839,000), and total net cash outflows of $8,054,000 (2021: cash inflow of $11,409,000). The Group had cash and
cash equivalents of $30,936,000 and other financial assets of $4,128,000 at 31 December 2022 (2021: $41,363,000
and $11,502,000 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
50
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(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 assumptions:
•
•
•
Positive Group cash position forecast at the end of 31 March 2024 after allowing for operating, investing and
financing cash flows.
The positive Group cash position at that date is based on a substantial contracted sales backlog of $47.7 million,
which includes the Ivory Coast Project and other projects. Contracted revenues from the Ivory Coast Project are
$15.9 million for financial year 2023.
The Group has in place a project financing and working capital loan facility with an affiliate of Upwell (the ‘Upwell
Facility’), which can be applied to finance completion of strong cash flow generation projects.
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 2021.
(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
non-controlling interests’ proportionate share of
to initial recognition,
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
51
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(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
52
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(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
53
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(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
54
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(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
5-7 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
55
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(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
56
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(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
57
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(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.
(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.
(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.
Fluence Corporation Limited
58
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
1 Summary of significant accounting policies (continued)
(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").
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.
Fluence Corporation Limited
59
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
1 Summary of significant accounting policies (continued)
(aa) Significant accounting estimates and assumptions (continued)
(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.
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.
Fluence Corporation Limited
60
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
1 Summary of significant accounting policies (continued)
(aa) Significant accounting estimates and assumptions (continued)
(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.
The cash supporting a bond of $3.1 million, deposited with a third party under the terms of the original contract, was
returned to the Group in July 2022.
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.
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 segment of the
Group.
2022
Segment revenue
Contract revenue
Service revenue
Other income
Segment expense
Segment depreciation and amortisation
Write off of inventories
Loss after tax from discontinued
operations
Segment expense
Unallocated expenses - corporate
Segment results
Operating
Units
$'000
Product and
Innovation
$'000
Intersegment
Elimination
$'000
Total
$'000
109,357
9,681
10
119,048
(1,789)
(877)
(293)
(115,101)
-
(118,060)
988
-
292
-
292
(583)
-
-
(3,401)
-
(3,984)
(3,692)
-
(242)
-
(242)
-
-
-
242
-
242
-
109,357
9,731
10
119,098
(2,372)
(877)
(293)
(118,260)
(13,588)
(135,390)
(16,292)
Fluence Corporation Limited
61
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
2 Segment information (continued)
2022
Assets
Investments in associates
Segment assets
Unallocated assets - corporate
Liabilities
Segment liabilities
Unallocated liabilities - corporate
Acquisitions of non-current assets
Operating
Units
$'000
Product and
Innovation
$'000
Intersegment
Elimination
$'000
Total
$'000
348
117,925
-
118,273
(83,893)
-
(83,893)
445
-
3,296
-
3,296
(5,187)
-
(5,187)
-
-
(663)
-
(663)
663
-
663
-
348
120,558
2,714
123,620
(88,417)
(32,287)
(120,704)
445
Contract revenue from Operating Units segment includes Ivory Coast revenue of $69.6 million for FY 2022 (FY 2021:
$56.3 million).
2021
Segment revenue
Contract revenue
Service revenue
Other income
Segment expense
Segment depreciation and amortisation
Share of profits of associates
Write off of inventories
Loss from discontinued operations
Segment expense
Unallocated expenses - corporate
Segment result
Assets
Investments in associates
Segment assets
Unallocated assets - corporate
Assets directly associated with assets classified as
held for sale
Operating
Units
$'000
Product and
Innovation
$'000
Intersegment
Elimination
$'000
Total
$'000
104,882
6,930
133
111,945
(1,590)
83
(148)
(3,868)
(109,625)
-
(115,148)
(3,203)
547
124,117
-
562
125,226
-
640
-
640
(694)
-
-
-
(2,661)
-
(3,355)
(2,715)
-
5,075
-
-
5,075
-
(599)
-
(599)
-
-
-
-
599
-
599
-
-
(1,433)
-
-
(1,433)
104,882
6,971
133
111,986
(2,284)
83
(148)
(3,868)
(111,687)
(9,165)
(127,069)
(15,083)
547
127,759
20,268
562
149,136
Fluence Corporation Limited
62
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
2 Segment information (continued)
2021
Liabilities
Segment liabilities
Unallocated liabilities - corporate
Acquisitions of non-current assets
Unallocated expenses
Other corporate expenses
Unallocated assets
Cash and cash equivalents
Other assets
Unallocated liabilities
Trade and other payables
Borrowings
Other liabilities
Operating
Units
$'000
Product and
Innovation
$'000
Intersegment
Elimination
$'000
Total
$'000
(96,368)
-
(96,368)
1,164
(5,971)
-
(5,971)
38
1,433
-
1,433
-
(100,906)
(32,240)
(133,146)
1,202
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
(13,588)
(9,165)
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
1,284
1,430
2,714
14,779
5,489
20,268
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
(1,097)
(30,424)
(766)
(32,287)
(748)
(30,459)
(1,033)
(32,240)
Intersegment transactions
Intersegment transactions are made on an arm's-length basis and are eliminated on consolidation.
Fluence Corporation Limited
63
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
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 2022, the Company classified its operations in Peru as Held for Sale and
operations in Mexico ("Fluence Mexico") as discontinued operations.
FLC Generate GCM, S.A. de C.V. ("GCM Peru") was sold for $290,000 in April 2022 and was deconsolidated from
Fluence Group. GCM Peru net assets on the date of disposal were $497,000. The sale of subsidiary resulted in a
$207,000 loss.
The Fluence Italian operations were classified as a held for sale within the 2021 annual report. Following a strategic
review of the Fluence Italian operations in 2022, the Board determined that the Italian operations would be retained
and therefore no longer classified as held for sale. As a consequence, in accordance with AASB 5 "Non-current
Assets Held for Sale and Discontinued Operations", the 31 December 2021 comparatives within the 2022 annual
report have been re-presented to consolidate the Italian operations into the consolidated entity.
(ii) Financial performance and cash flow information
The financial performance and cash flow information presented are for the year ended 31 December 2022 and the
year ended 31 December 2021.
GCM Peru
Revenue
Cost of sales
General and administrative expenses
Impairment expense
Other gains - net
Loss from Peru disposal
Loss before income tax
Income tax benefit
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
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
-
-
(7)
-
-
(207)
(214)
-
(214)
4
-
-
(4)
-
40
(40)
(72)
(3,274)
(196)
-
(3,542)
11
(3,531)
(47)
(42)
80
(12)
(21)
Fluence Corporation Limited
64
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(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
Cost of sales
General and administrative expenses
Other gains
Finance costs - 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
Impairment expense
Concession arrangements asset
Unbilled receivables
Loss after income tax expense from discontinued operations
GCM Peru
Fluence Mexico
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
(93)
(35)
41
5
(82)
29
(53)
(27)
-
-
(12)
(39)
(486)
(99)
251
(68)
(402)
65
(337)
(120)
(7)
49
18
(60)
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
-
-
-
(1,739)
(1,535)
(3,274)
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
(214)
(53)
(267)
(3,531)
(337)
(3,868)
Fluence Corporation Limited
65
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
3 Discontinued operations and assets classified as held for sale (continued)
(b) Carrying amounts of assets and liabilities discontinued
Fluence Mexico
Carrying amounts of assets and liabilities discontinued
Cash and cash equivalents
Trade receivables
Prepayments
Other current assets
Property, plant and equipment
Total assets discontinued
.
Trade and other payables
Current tax liabilities
Contract liabilities
Other non-current liabilities
Total liabilities discontinued
Net liabilities
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
127
34
8
7
3
179
366
5
1
347
719
166
12
9
6
4
197
361
33
1
322
717
(540)
(520)
(c) Assets and liabilities directly associated with assets classified as held for sale
GCM Peru
Disposal group held for sale
Trade receivables
Deferred tax assets
Property, plant and equipment
Concession arrangement assets - Long-term
Total assets directly associated with assets classified as held for sale
Net assets
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
-
-
-
-
-
-
67
44
99
352
562
562
Fluence Corporation Limited
66
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
4 Operating revenue and other gains/(loss)
Operating revenue
Contract revenue
Smart product solutions
Customer engineering solutions
Service revenue
Revenues on services
Revenue on parts
Recurring revenue from concession assets
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
35,202
74,155
109,357
7,158
506
2,067
9,731
42,667
62,215
104,882
2,512
3,088
1,371
6,971
119,088
111,853
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 and margins. Refer to Note 2 for
disaggregation of revenue by operating segments.
Research and development
Salaries and other employee related expenses
Depreciation
Materials
Professional fees
Travel and entertainment
Other
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
(2,422)
(558)
(450)
(158)
(55)
(136)
(3,779)
(2,350)
(643)
(317)
(225)
(44)
(223)
(3,802)
Fluence Corporation Limited
67
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
4 Operating revenue and other gains/(loss) (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
IT expenses
Other
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
(4,479)
(352)
(575)
(428)
(44)
(442)
(6,320)
(3,955)
(541)
(447)
(410)
(49)
(580)
(5,982)
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
(11,532)
(3,296)
(1,365)
(767)
(773)
(587)
(262)
(473)
(180)
(719)
(182)
(20,136)
(9,191)
(2,224)
(1,717)
(1,196)
(506)
(379)
(318)
(233)
(148)
(515)
(148)
(16,575)
Fluence Corporation Limited
68
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
4 Operating revenue and other gains/(loss) (continued)
Other gains/(loss) - net
Restructuring provision
Foreign exchange loss
Onerous contracts provision
Inventory reserve
Non-operating expenses
Bad debts
Withholding taxes
COVID-19 relief
Gain on disposal of property, plant and equipment
Gain from investments accounted for using the equity method
Other gains/(loss)
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
2022
$'000
31 December
2021
$'000
(3,455)
(2,234)
(1,911)
(877)
(793)
(506)
(186)
417
108
9
(373)
(9,801)
-
(4,868)
(404)
(148)
-
(287)
(248)
785
31
83
22
(5,034)
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
224
(4,142)
(119)
(4,037)
253
(2,910)
(63)
(2,720)
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
2,404
25,939
3,562
27,752
A share option plan has been established by the consolidated entity and approved by shareholders at a general
meeting, whereby the consolidated entity may, at the discretion of the Board of Directors, grant options over ordinary
shares in the Group to employees, consultants and directors of the consolidated entity. The options are issued for nil
consideration and are granted in accordance with performance guidelines established by the Remuneration and
Nomination Committee.
Fluence Corporation Limited
69
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
5 People costs (continued)
(a) Share-based payments (continued)
Employee Option Plan (continued)
Set out below are summaries of the movement in options granted under the plan during the year ended 31 December
2022:
Fluence Corporation Limited
70
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
5 People costs (continued)
(a) Share-based payments (continued)
Employee Option Plan (continued)
a
Grant/change date
Opening balance
Options vested during the year
4 January 2022
4 January 2022
4 January 2022
14 January 2022
14 January 2022
20 January 2022
27 February 2022
28 February 2022
28 February 2022
28 February 2022
16 March 2022
16 March 2022
18 March 2022
21 March 2022
21 March 2022
21 March 2022
21 March 2022
21 March 2022
4 April 2022
4 April 2022
29 April 2022
29 April 2022
29 April 2022
17 May 2022
17 May 2022
23 May 2022
3 June 2022
3 June 2022
29 August 2023
25 May 2022
1 March 2024
29 August 2023
29 November 2023
3 June 2022
3 June 2022
31 May 2025
25 May 2022
1 March 2024
3 June 2022
1 January 2026
1 July 2026
1 January 2027
1 January 2027
22 March 2027
3 June 2022
3 June 2022
3 June 2022
3 June 2022
31 May 2025
3 June 2022
3 June 2022
31 March 2027
Exercise
Price
(AU$)
Expiry Date
Granted
89,556,872
Exercised
(13,773,161)
0.46
0.44
0.44
0.48
0.44
0.44
0.44
0.46
0.44
0.23
0.48
0.44
0.44
0.18
0.22
0.18
0.22
0.17
0.46
0.44
0.46
0.44
0.23
0.46
0.44
0.22
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
250,000
1,250,000
25,000
1,500,000
-
-
-
-
-
-
-
12,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Vested
49,304,599
4,392,988
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Cancelled /
Reversed
(48,834,554)
Balance at year
end
26,949,157
(375)
(375)
(750)
(78,125)
(150,000)
(4,500)
(6,000)
(625)
(625)
(73,125)
(312,500)
(150,000)
(750)
-
-
-
-
-
(375)
(625)
(9,375)
(8,750)
(16,875)
(5,250)
(4,875)
-
(375)
(375)
(750)
(78,125)
(150,000)
(4,500)
(6,000)
(625)
(625)
(73,125)
(312,500)
(150,000)
(750)
100,000
250,000
1,250,000
25,000
1,500,000
(625)
(9,375)
(8,750)
(16,875)
(5,250)
(4,875)
12,500,000
Fluence Corporation Limited
71
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
5 People costs (continued)
(a) Share-based payments (continued)
Employee Option Plan (continued)
Grant/change date
25 May 2022
3 June 2022
3 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
15 July 2022
31 July 2022
31 July 2022
26 August 2022
27 August 2022
31 August 2022
31 August 2022
31 August 2022
31 August 2022
13 September 2022
26 October 2022
28 October 2022
28 October 2022
15 November 2022
16 November 2022
30 November 2022
3 December 2022
3 December 2022
Expiry Date
25 May 2022
3 June 2022
3 June 2022
30 June 2026
14 March 2027
14 March 2027
14 March 2027
14 March 2027
30 June 2022
29 August 2024
1 March 2024
31 July 2022
31 July 2022
29 August 2024
27 August 2022
1 March 2024
31 May 2025
18 August 2025
22 March 2027
1 March 2024
29 August 2024
1 March 2024
31 May 2025
1 March 2024
29 November 2023
30 May 2023
3 December 2022
3 December 2022
Exercise
Price
(AU$)
0.48
0.46
0.44
0.22
0.22
0.24
0.26
0.28
0.29
0.23
0.44
1.20
1.50
0.23
0.46
0.44
0.23
0.21
0.17
0.44
0.23
0.44
0.23
0.44
0.44
0.44
0.46
0.46
Granted
-
-
-
2,500,000
21,875,000
3,125,000
3,125,000
3,125,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Exercised
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Vested
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Cancelled /
Reversed
(700,000)
(56,000)
(54,000)
-
-
-
-
-
(1,500,000)
(12,000)
(1,500)
(750,000)
(750,000)
(10,000)
(402,344)
(123,750)
(125,000)
(500,000)
(500,000)
(2,500)
(10,000)
(206,250)
(75,000)
(3,750)
(3,000)
(10,000)
(50,625)
(3,375)
Balance at year
end
(700,000)
(56,000)
(54,000)
2,500,000
21,875,000
3,125,000
3,125,000
3,125,000
(1,500,000)
(12,000)
(1,500)
(750,000)
(750,000)
(10,000)
(402,344)
(123,750)
(125,000)
(500,000)
(500,000)
(2,500)
(10,000)
(206,250)
(75,000)
(3,750)
(3,000)
(10,000)
(50,625)
(3,375)
Fluence Corporation Limited
72
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
5 People costs (continued)
(a) Share-based payments (continued)
Employee Option Plan (continued)
Grant/change date
3 December 2022
29 December 2022
Closing balance
Expiry Date
3 December 2022
29 August 2024
Exercise
Price
(AU$)
0.44
0.26
Granted
Exercised
Vested
138,931,872
(13,773,161)
53,697,587
Cancelled /
Reversed
(74,000)
(1,500)
(55,583,023)
Balance at year
end
(74,000)
(1,500)
69,575,688
Fluence Corporation Limited
73
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(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
21 March 2022
21 March 2022
21 March 2022
21 March 2022
21 March 2022
23 May 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
Expiry Date
22 March 2027
1 July 2026
1 January 2027
1 January 2026
1 January 2027
31 March 2027
30 June 2026
14 March 2027
14 March 2027
14 March 2027
14 March 2027
Share price at
grant date (AU$)
0.22
0.22
0.22
0.22
0.22
0.26
0.20
0.20
0.20
0.20
0.20
Exercise
Price (AU$)
0.17
0.22
0.22
0.18
0.18
0.22
0.22
0.22
0.24
0.26
0.28
Dividend
yield
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Risk-free
interest rate
(%)
2.249
2.085
2.199
1.972
2.199
3.003
3.231
3.309
3.309
3.309
3.309
Fair value at
grant date, $
0.0856
0.0783
0.0756
0.0790
0.0749
0.0968
0.0690
0.0640
0.0625
0.0651
0.0663
The weighted average remaining contractual life of options outstanding at year-end was 3.62 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: 60%
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
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
500
84
1,095
1,679
29
159
258
446
Fluence Corporation Limited
74
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
5 People costs (continued)
(c) Key Management Personnel Disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is
set out below:
Short-term employee benefits
Share based payments
Consolidated entity
31 December
2022
$
31 December
2021
$
2,330,916
1,217,602
3,548,518
2,068,085
323,415
2,391,500
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 2022 and 31
December 2021.
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
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
2022
$'000
31 December
2021
$'000
Notes
209
195
207
(561)
50
21
29
50
213
-
(403)
33
(157)
(233)
76
(157)
3
Fluence Corporation Limited
75
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(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
Other
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
(16,046)
(296)
(16,342)
(4,903)
4,903
190
196
(579)
243
50
(10,982)
(3,838)
(14,820)
(4,466)
4,466
(38)
(57)
(38)
(24)
(157)
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
-
-
-
110
53
163
Fluence Corporation Limited
76
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
6 Income tax (continued)
(c) Deferred tax balances (continued)
(ii) Deferred tax liabilities
The balance comprises temporary differences attributable to:
WIP
Other
Deferred tax asset is attributable to:
Deferred tax asset
Aggregate deferred tax asset
Deferred tax liability is attributable to:
Deferred tax liability
Aggregate deferred tax liability
(d) Unrecognised deferred tax assets
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
126
208
334
87
808
895
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
-
-
334
334
163
163
895
895
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 2022 was $49,668,000 (2021: $47,277,000 ).
7 Loss per share
(a) Loss per share from continuing operations
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
Loss per share from continuing operations
Loss after income tax
Non-controlling interest
Loss after income tax from continuing operations attributable to the ordinary
equity holders of the Group
(16,025)
57
(11,215)
194
(15,968)
(11,021)
Fluence Corporation Limited
77
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(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
2022
$
31 December
2021
$
(0.025)
(0.025)
(0.018)
(0.018)
Consolidated entity
31 December
2022
$'000
31 December
2021
$'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
(267)
42
(225)
(3,868)
187
(3,681)
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
2022
$
31 December
2021
$
0.000
0.000
(0.006)
(0.006)
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
(16,292)
99
(16,193)
(15,083)
381
(14,702)
Consolidated entity
31 December
2022
$
31 December
2021
$
(0.025)
(0.025)
(0.024)
(0.024)
Fluence Corporation Limited
78
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
7 Loss per share (continued)
(d) Weighted average number of shares
Consolidated entity
2021
2022
Number
Number
Weighted average number of ordinary shares used as the denominator in calculating
basic and diluted earnings/(loss) per share
640,485,267
624,854,034
8 Cash and cash equivalents
(a) Cash and cash equivalents
Cash and cash equivalents
(b) Other financial assets
Restricted cash
Short term deposits
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
30,936
30,936
41,363
41,363
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
90
4,038
4,128
106
11,396
11,502
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
Increase /(decrease) in restructuring provision
Provision for losses
Inventory reserve
Fluence Corporation Limited
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
(16,292)
(15,083)
2,404
1,679
267
3,455
1,911
877
2,495
446
5,926
(568)
-
148
79
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
8 Cash and cash equivalents (continued)
(c) Cash flow information (continued)
Warranty provision
Bad debt provision
Increase/(decrease) in employee benefits provision
Gain on disposal of property, plant and equipment
Share of profits of associates and joint ventures
Finance costs - net
Foreign exchange differences
Increase in trade and other receivables
(Increase)/decrease in inventory
(Increase)/decrease in prepaid expenses
Decrease in net tax asset
(Increase)/decrease in other current and non-current assets
Increase in trade and other payables
Increase/(decrease) in contract liabilities
Cash used in operations
9 Trade and other receivables
Current receivables
Trade receivables
Provision for impairment - trade receivables
Other current receivables
Contract assets (unbilled 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
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
685
506
100
(108)
(9)
(3,869)
2,234
(22,199)
3,534
4,996
425
66
5,724
(6,871)
(20,485)
170
247
(2)
(31)
(83)
(2,690)
4,866
(6,720)
(1,212)
(4,106)
408
(60)
7,817
3,193
(4,839)
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
21,191
(1,775)
19,416
27,423
965
826
396
29,610
49,026
1,131
(1,131)
-
21,385
(2,118)
19,267
14,638
1,684
859
536
17,717
36,984
1,200
(1,200)
-
Fluence Corporation Limited
80
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
9 Trade and other receivables (continued)
Additional information on contract assets and liabilities
Total contract assets
Total contract liabilities
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
Notes
20
27,423
(24,977)
2,446
14,638
(37,594)
(22,956)
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.
Contract liabilities represent the Group's obligation to transfer goods or services to a customer and are recognised
when a customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to
consideration (whichever is earlier) before the Group has transferred the goods or services 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
2022
$'000
31 December
2021
$'000
4,910
2,412
1,968
9,290
5,990
4,301
3,592
13,883
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 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 2022, the Group has recognised revenue of $2.1 million on the
desalination plant.
Fluence Corporation Limited
81
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
11 Concession asset (continued)
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
2022
$'000
2021
$'000
246
2,619
2,865
231
2,881
3,112
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
9,532
9,532
14,287
14,287
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
Other current assets
a
Non-current assets
Prepaid contract costs
Debt issuance costs
Other
Consolidated entity
31 December 31 December
2022
$'000
2021
$'000
151
151
188
188
Consolidated entity
31 December 31 December
2021
$'000
2020
$'000
-
178
99
277
1,731
291
137
2,159
Fluence Corporation Limited
82
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
14 Investments accounted for using the equity method
Carrying Amount
31 December 31 December
2022
$'000
2021
$'000
Place of
business/
country of
incorporation
% of
ownership
interest
Nature of
relationship
Measurement
method
Israel
50%
Associate Equity method
348
547
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 $9,000 to Fluence Corporation Limited (2021: $83,000), 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 2022
and 31 December 2021.
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
2022
$'000
31 December
2021
$'000
532
118
237
887
191
191
696
502
161
466
1,129
35
35
1,094
31 December
2022
$'000
31 December
2021
$'000
448
(352)
(79)
17
452
(271)
(15)
166
Fluence Corporation Limited
83
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
15 Property, plant and equipment
Consolidated entity
At 1 January 2022
Cost or fair value
Accumulated depreciation
Net book amount
Year ended 31 December 2022
Opening net book amount
Disposals
Additions
Depreciation charge
Exchange differences
Closing net book amount
At 31 December 2022
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
22
-
22
22
(15)
-
-
-
7
7
-
7
4,487
(1,086)
3,401
3,401
(345)
-
(91)
18
2,983
4,119
(1,136)
2,983
5,800
(4,189)
1,611
1,611
(11)
13
(389)
(90)
1,134
5,284
(4,150)
1,134
1,454
(1,122)
332
332
(48)
-
(71)
(52)
161
1,267
(1,106)
161
4,230
(3,008)
1,222
1,222
274
418
(274)
(65)
1,575
4,706
(3,131)
1,575
1,146
(716)
430
430
-
14
(121)
(44)
279
1,123
(844)
279
11,535
(5,970)
5,565
5,565
(677)
411
(1,333)
(442)
3,524
9,753
(6,229)
3,524
28,674
(16,091)
12,583
12,583
(822)
856
(2,279)
(675)
9,663
26,259
(16,596)
9,663
Fluence Corporation Limited
84
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
15 Property, plant and equipment (continued)
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 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
-
-
(98)
-
-
22
22
-
22
3,723
(1,005)
2,718
2,718
-
721
-
(128)
90
3,401
4,487
(1,086)
3,401
5,693
(3,696)
1,997
1,997
-
30
-
(454)
38
1,611
5,800
(4,189)
1,611
1,395
(993)
402
402
-
19
-
(103)
14
332
1,454
(1,122)
332
3,812
(2,699)
1,113
1,113
-
412
(15)
(290)
2
1,222
4,230
(3,008)
1,222
883
(645)
238
238
(5)
288
-
(137)
46
430
1,146
(716)
430
10,958
(4,565)
6,393
6,393
-
504
-
(1,597)
265
5,565
11,535
(5,970)
5,565
26,584
(13,603)
12,981
12,981
(5)
1,974
(113)
(2,709)
455
12,583
28,674
(16,091)
12,583
Fluence Corporation Limited
85
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
16 Intangible assets
Consolidated entity
Year ended 31 December 2022
Opening net book amount
Amortisation charge
Currency translation differences
Closing net book amount
Year ended 31 December 2021
Opening net book amount
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
Other accruals
Non-current
Government grants
Other liabilities
Capitalised
development
costs
$'000
1,709
(175)
(195)
1,339
1,834
(183)
58
1,709
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
17,609
3,576
23,085
1,927
5,297
51,494
1,779
-
1,779
11,740
1,980
26,138
1,906
7,422
49,186
1,927
37
1,964
(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 2022 and 31 December 2021, the Group recognised a liability to the IIA in the amount of $3,589,000 and
$3,722,000 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 discount rate
used by the Group in determening the liability is 18.2% (2021:18.2%).
Fluence Corporation Limited
86
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
17 Trade and other payables and other liabilities (continued)
(i) Government Grant Liability (continued)
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. As of 31 December 2022 and 31 December 2021, the Group
recognised a liability to the MNI in the amount of $117,000 and $111,000 respectively. In January 2023 the Group
reached final agreement with MNI to settle the liability at its current value. The discount rate used by the Group in
determening the liability in 2021 was 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
2022
$'000
31 December
2021
$'000
1,265
1,103
2,368
30,003
2,934
32,937
1,940
1,529
3,469
30,085
4,479
34,564
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 the facility was 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. Refer to Note 24 (d)(i)
for information in relation to covenants and restrictions.
19 Provisions
Current
Employee benefits
Warranty provision
Provision for onerous contracts
Restructuring provision
Other provisions
Non-current
Employee benefits
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
1,355
2,529
56
1,883
349
6,172
525
525
1,371
1,948
260
-
948
4,527
912
912
Fluence Corporation Limited
87
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
19 Provisions (continued)
Consolidated entity
Current
At 1 January 2022
Additions
Utilised
Currency translation
differences
Total
Non-current
At 1 January 2022
Additions
Reversal
Utilised
Currency translation
differences
Employee
benefits
$'000
Warranty
$'000
Onerous
contracts
$'000
Restructuring
provision
$'000
Other
$'000
Total
$'000
1,371
660
(560)
(116)
1,355
912
100
-
(447)
(40)
525
1,948
745
(60)
(104)
2,529
-
-
-
-
-
-
260
1,911
(2,109)
(6)
56
-
3,455
(1,546)
(26)
1,883
-
-
-
-
-
-
-
-
-
-
-
-
948
342
(941)
-
349
-
-
-
-
-
-
4,527
7,113
(5,216)
(252)
6,172
912
100
-
(447)
(40)
525
20 Contract liabilities
Current contract liabilities
Non-current contract liabilities
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
24,977
-
24,977
34,756
2,838
37,594
Current contract liabilities represent remaining pre-payments made by PDVSA upon entering into a multi-year
contract with the Group in 2015 and classified as a current liability. The performance obligation in relation to PDVSA
will only be satisfied after the sanctions are lifted in Venezuela. For more information regarding the PDVSA project
refer to note 1(aa)(vii). In addition, the balances relate to pre-payments obtained from the Ivory Coast project that will
be released according to the payment schedule in the next 12 months.
Non-current contract liabilities represent payments obtained from the Ivory Coast project and will be released
according to the payment schedule in greater than 12 months.
Fluence Corporation Limited
88
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
20 Contract liabilities (continued)
Current contract liabilities
Current contract liabilities opening balance
Payments received in advance
Transfer from long-term
Transfer to Revenue
Currency translation differences
Current contract liabilities closing balance
Long-term contract liabilities
Long-term contract liabilities opening balance
Transfer to current
Currency translation differences
Long-term contract liabilities closing balance
Total contract liabilities
111
21 Contributed equity
Ordinary shares
Options
Share capital
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
34,756
8,563
2,820
(18,123)
(3,039)
24,977
2,838
(2,820)
(18)
-
24,977
32,045
10,709
10,101
(22,976)
4,877
34,756
13,127
(10,101)
(188)
2,838
37,594
31 December
2022
No.
31 December
2021
No.
31 December
2022
$'000
31 December
2021
$'000
650,554,034
69,575,688
720,129,722
624,854,034
26,949,157
651,803,191
207,443
10,318
217,761
203,728
8,551
212,279
(a) Ordinary Shares - Fully Paid
Number of shares
$'000
Opening balance 1 January 2021
Non-controlling interest buyout
Balance 31 December 2021
Opening balance 1 January 2022
Private placement at AU$0.21 per share issued at 23 May 2022
Balance 31 December 2022
Notes
624,854,034
-
624,854,034
Number of shares
624,854,034
25,700,000
650,554,034
204,056
(328)
203,728
$'000
203,728
3,715
207,443
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.
Fluence Corporation Limited
89
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
21 Contributed equity (continued)
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.
(b) Options
2021
w
Opening balance
Unlisted options issued to employees
Cancelled, lapsed and forfeited options
Balance at 31 December 2021
2022
w
Opening balance
Unlisted options issued to employees
Cancelled, lapsed and forfeited options
Balance at 31 December 2022
Number of options
34,607,324
10,530,000
(18,188,167)
26,949,157
Number of options
26,949,157
49,375,000
(6,748,469)
69,575,688
Fluence Corporation Limited
90
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
21 Contributed equity (continued)
(c) Summary of all unlisted options in existence
Date options granted
Expiry date
31 May 2017
14 July 2017
30 May 2019
30 May 2019
30 May 2019
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
25 June 2021
25 June 2021
11 August 2021
21 March 2022
21 March 2022
21 March 2022
21 March 2022
21 March 2022
23 May 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
30 June 2022
25 May 2025
25 May 2025
30 May 2023
30 May 2023
14 July 2025
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
31 May 2025
25 June 2025
25 August 2025
18 August 2025
01 January 2026
01 July 2026
01 Jaunary 2027
01 Jaunary 2027
22 March 2027
31 March 2027
30 June 2026
14 March 2027
14 March 2027
14 March 2027
14 March 2027
Issue price of shares (AU$)
Number under option
$0.93
$0.84
$0.60
$0.80
$0.39
$0.44
$0.44
$0.44
$0.44
$0.44
$0.44
$0.23
$0.23
$0.23
$0.26
$0.23
$0.23
$0.23
$0.21
$0.18
$0.22
$0.18
$0.22
$0.17
$0.22
$0.22
$0.22
$0.24
$0.26
$0.28
8,992,938
350,000
250,000
250,000
1,470,000
12,000
120,000
164,000
25,000
48,250
860,000
3,750
250
12,000
170,500
2,490,000
1,000,000
4,000,000
500,000
100,000
250,000
1,250,000
25,000
1,000,000
12,500,000
2,500,000
21,875,000
3,125,000
3,125,000
3,125,000
69,575,688
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
Closing balance
Consolidated entity
31 December
2022
$'000
(1,895)
-
(99)
(1,994)
Fluence Corporation Limited
91
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
22 Non-controlling interests (continued)
a
Opening balance
Loss for the year attributable to non-controlling interests
Transactions with NCI
Closing balance
The group has four subsidiaries with non-controlling interests.
Consolidated entity
31 December
2021
$'000
(1,780)
(381)
266
(1,895)
(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) 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.
(iv) 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.
23 Foreign currency translation reserve
Foreign currency translation reserve
Consolidated entity
31 December
2022
$'000
31 December
2021
$'000
(13,897)
(11,721)
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), collection 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.
Fluence Corporation Limited
92
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
24 Financial risk management (continued)
(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 Group is also subject to foreign
exchange risk from the capital and currency controls in Argentina.
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 2022
Assets
Liabilities
ILS
$'000
2,154
(9,251)
(7,097)
EUR
$'000
25,875
(19,814)
6,061
AUD
$'000
155
(368)
(213)
ARS
$'000
5,226
(1,027)
4,199
CNY
$'000
8,069
(6,908)
1,161
BRL
$'000
AED
$'000
456
(925)
(469)
98
(205)
(107)
EGP
$'000
5,644
-
5,644
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 2022 and 31 December 2021.
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)
2022
+10%/-10%
$'000
710/(710)
606/(606)
21/(21)
420/(420)
116/(116)
47/(47)
11/(11)
564/(564)
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.
Fluence Corporation Limited
93
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
24 Financial risk management (continued)
(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.
The Group has a credit risk exposure with a major customer, which as at 31 December 2022 owed the Group
$19,340,000 (41% of trade and unbilled receivables) (2021: nil). This balance was within its terms of trade and no
impairment was made as at 31 December 2022. Management closely monitors the receivable balance on a monthly
basis and is in regular contact with this customer to mitigate risk.
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 2022
Trade receivables
Other receivables
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
18,870
352
19,222
546
44
590
19,416
396
19,812
Less than
6 months
$'000
Greater
than 6
months
$'000
Total
contractual
cash flows
$'000
16,265
95
16,360
3,002
441
3,443
19,267
536
19,803
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.
Fluence Corporation Limited
94
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
24 Financial risk management (continued)
(b) Credit risk (continued)
Impairment of financial assets (continued)
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
including historical
considers both quantitative and qualitative information that
experience and forward-looking information that is available without undue cost or effort.
is reasonable and supportable,
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
Fluence Corporation Limited
95
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
24 Financial risk management (continued)
(b) Credit risk (continued)
Impairment of financial assets (continued)
•
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.
Contractual maturities of financial liabilities
At 31 December 2022
Trade and other payables and other liabilities
Borrowings
Lease liabilities
At 31 December 2021
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
41,690
781
551
43,022
30,750
192
765
31,707
12,919
30,483
3,486
46,888
14,392
31,833
5,243
51,468
54,609
31,264
4,037
89,910
45,142
32,025
6,008
83,175
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.
Fluence Corporation Limited
96
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
24 Financial risk management (continued)
(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 was in compliance with the minimum unrestricted cash and cash equivalents covenant throughout the
reporting period. For the month ending 31 December 2022, the Company was out of compliance with the minimum
debt service ratio and received a waiver from Upwell before the end of the financial year.
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).
2022
Recurring fair value measurements
Government grant liability
a
2021
Recurring fair value measurements
Government grant liability
a
Level 1
$'000
Level 2
$'000
-
-
-
-
Level 1
$'000
Level 2
$'000
-
-
-
-
Level 3
$'000
3,706
3,706
Level 3
$'000
3,833
3,833
Total
$'000
3,706
3,706
Total
$'000
3,833
3,833
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.
Fluence Corporation Limited
97
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
25 Recognised fair value measurements (continued)
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% (2021: 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 2021
Adjustment to fair value of liability
Currency translation differences
Closing Balance at 31 December 2021
Adjustment to fair value of liability
Currency translation differences
Closing Balance at 31 December 2022
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)
Government grant
$'000111
3,686
20
127
3,833
(478)
351
3,706
Consolidated entity
2022
$
172,500
201,387
373,887
39,672
39,672
2021
$
180,500
193,425
373,925
35,600
35,600
(i) BDO non-assurance services relate to the provision of services in connection with tax lodgement.
27 Commitments and 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.
Fluence Corporation Limited
98
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
28 Related party transactions (continued)
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 2022 and 2021.
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:
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Reserves
Accumulated losses
Total Equity
Loss for the period
Total comprehensive loss
31 December
2022
$'000
AUD
31 December
2021
$'000
AUD
-
768
5,349
543
1,059
261,281
21,360
(278,351)
4,290
(38,687)
(38,687)
-
615
22,674
235
629
255,099
6,610
(239,664)
22,045
(31,052)
(31,052)
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 2022 Fluence Corporation Limited had no contractual commitment and contingent liabilities.
Fluence Corporation Limited
99
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
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 2022
Ownership
interest 2021
Australia
Israel
Hong Kong
China
China
China
USA
USA
UAE
Israel
Israel
N/A
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51%
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
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
United Kingdom
100%
Mexico
Mexico
Singapore
Philippines
Argentina
Brazil
Italy
France
USA
Egypt
USA
Mexico
100%
51%
100%
100%
100%
100%
100%
100%
100%
75%
100%
100%
N/A
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51%
100%
100%
51%
100%
100%
100%
100%
100%
100%
100%
75%
100%
100%
Fluence Corporation Limited
100
Fluence Corporation Limited
Notes to the Financial Report
31 December 2022
(continued)
30 Subsidiaries (continued)
Name
Bimini Water Services Ltd.
FLC Water Bahamas Limited
Place of
incorporation
Ownership
interest 2022
Ownership
interest 2021
Bahamas
Bahamas
60%
100%
60%
100%
31 Events occurring after the reporting period
On 3 January 2023, the Group appointed Benjamin Fash as Chief Financial Officer.
On 20 March 2023, the Group appointed Douglas Brown as Chairman of the Board. The outgoing Chairman, Richard
Irving, will remain a Non-Executive Director.
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
101
Fluence Corporation Limited
Directors' Declaration
31 December 2022
In the Directors' opinion:
(a)
(b)
(c)
(d)
the attached Financial Statements and notes set out on pages 45 to 101 comply with the Corporations Act
2001,
the Corporations Regulations 2001 and other mandatory professional
reporting requirements;
the Accounting Standards,
the attached financial statements and notes comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial
position as at 31 December 2022 and of its performance for the financial year ended on that date;
there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable; and
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
Tom Pokorsky
Chief Executive Officer and Managing Director
30 March 2023
Minnesota
Fluence Corporation Limited
102
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 2022,
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 2022 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)(vi).
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
• Travelling to Côte d'Ivoire to perform a site visit of
•
material Ivory Coast project.
For the samples 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 margins 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.
• Corroborating the contract status through
examinations of third-party evidence, such as
approved variations and customer or
subcontractor correspondence.
• Assessing the appropriateness of the relevant
disclosures in 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 2022, 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 has 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 14 to 40 of the directors’ report for the
year ended 31 December 2022.
In our opinion, the Remuneration Report of Fluence Corporation Limited, for the year ended 31
December 2022, 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
Katherine Robertson
Director
Melbourne, 30 March 2023
Fluence Corporation Limited
Shareholder information
31 December 2022
Following is a summary of shareholder information as at 28 February 2023.
Equity security holders
Distribution of equity securities
Analysis of number of equity security holders by size of holding:
Holdings Ranges
Ordinary Shares
Unquoted Options
Holders
Total Units
%
Holders
Total Units
%
1-1,000
1,001-5,000
5,001-10,000
531
972
533
119,374
2,795,968
4,258,656
10,001-100,000
1,284
46,145,646
0.020
0.430
0.650
7.090
100,001-999,999,999
298
597,234,390
91.800
Totals
3,618
650,554,034
100.000
-
3
-
20
18
41
-
-
12,000
0.014%
-
-
681,000
0.769%
87,868,622
99.217%
88,561,622
100.000
Holding less than a marketable parcel
Based on the Fluence closing share price on February 28, 2023 of A$0.185, there were 1,057 holders of less than
a marketable parcel of ordinary shares, holding 1,128,646 shares in aggregate.
Holdings of 20% or more of the unquoted securities
The following person(s) hold 20% or more of the unquoted equity securities:
Name
Thomas Pokorsky
Securities
Number Held
Options
30,312,500
Voting Rights
All issued ordinary shares carry one vote per share.
All options do not carry the right to vote.
Top 20 largest holders of ordinary shares
Name
RSL INVESTMENTS CORPORATION
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
POND VENTURES NOMINEES 111 LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
RSL CAPITAL LLC
BNP PARIBAS NOMINEES PTY LTD
PLAN B VENTURES I LLC
NATIONAL NOMINEES LIMITED
EMPLOYEE EQUITY ADMINISTRATION PTY LTD
JAGEN PTY LTD
PYXIS HOLDINGS PTY LTD
MR HAO JING
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
DEBORAH L BROWN <2020 IRREVOCABLE A/C>
Balance as at
28 February 2023
131,037,848
80,514,067
36,264,579
35,981,419
34,072,570
31,046,683
22,994,574
20,007,151
18,569,369
14,166,593
11,644,393
10,250,000
9,100,000
9,007,010
6,500,000
%
20.143%
12.376%
5.574%
5.531%
5.237%
4.772%
3.535%
3.075%
2.854%
2.178%
1.790%
1.576%
1.399%
1.385%
0.999%
Fluence Corporation Limited
Shareholder information
31 December 2022
DOUGLAS R BROWN <2020 IRREVOCABLE A/C>
6,500,000
0.999%
DR STUART LLOYD PHILLIPS & MRS FIONA JANE PHILLIPS
NIKOLAUS OLDENDORFF
HOSANDA CORPORATION PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
Total Securities of Top 20 Holdings
Total Securities of remaining shareholders
Total of Securities
Substantial Holders
5,647,921
5,000,000
3,950,000
3,373,160
495,627,337
154,926,697
650,554,034
0.868%
0.769%
0.607%
0.519%
76.185%
23.815%
100.000%
Substantial holders in the Company, as disclosed in substantial holding notices given to the Company, are set out
below:
Name
RSL Investments Corporation and its associate and controlling person
Pond Venture Partners Limited, Pond Ventures Nominees III Limited and Richard
Irving
Number held
Percentage
165,408,542
37,264,579
26.71%
6.02%
On-market buy-back
There is no current on-market buy-back
Shareholder enquiries
Shareholders with enquiries about their shareholdings should contact the share registry:
Boardroom Pty Ltd
Level 8, 210 George Street, Sydney, NSW, 2000, Australia
Telephone: 1300 737 760 (local), +61 2 9290 9600 (international)
Email: enquiries@boardroomlimited.com.au
Post: GPO Box 3993, Sydney NSW 2001
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.
Fluence Corporation Limited
Shareholder information
31 December 2022
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.
Closing Date for Director Nominations for Annual General Meeting
An election of Directors will be held at the Company’s 2023 Annual General Meeting on 25 May 2023. Notice is
hereby given in accordance with ASX Listing Rules 3.13.1 and the Company’s constitution that the closing date for
receipt of nominations from persons wishing to be considered for election as a Director is 3 April 2023 (‘Closing
Date’).
Nomination must be received in writing no later than 5.00pm (Melbourne Time) on the Closing Date at the
Company’s registered office.