NOVONIX Limited
ABN 54 157 690 830
Annual Report - 31 December 2023
Table of Contents
Corporate Directory ................................................................................................................................ 3
Review of Operations and Activities ....................................................................................................... 4
Material Business Risks ......................................................................................................................... 15
Directors’ Report ................................................................................................................................... 18
Auditor’s Independence Declaration .................................................................................................... 56
Corporate Governance Statement ........................................................................................................ 57
Financial Reports – 31 December 2023 ................................................................................................ 58
Consolidated statement of profit or loss and other comprehensive income ................................... 59
Consolidated balance sheet .............................................................................................................. 60
Consolidated statement of changes in equity .................................................................................. 62
Consolidated statement of cash flows .............................................................................................. 63
Notes to the consolidated financial statements for the year ended 31 December 2023 ................ 64
Directors’ Declaration ......................................................................................................................... 128
Independent Auditor’s Report to the Members ................................................................................. 129
Shareholder Information .................................................................................................................... 136
Corporate Directory
Directors
ANNUAL REPORT - 31 DECEMBER 2023
Admiral R J Natter, US Navy (Ret.)
A Bellas B. Econ, DipEd, MBA, FAICD, FCPA, FGS
R Edmonds CPA, BBA (Acct)
Andrew N. Liveris AO, BE (Hons) Doctor of Science
(honoris causa)
J Oelwang BS (Hons)
S Vaidyanathan MTech (chemical engineering), MBA
Secretary
S M Yeates CA, B.Bus
Registered office in Australia
Principal place of business
Share register
Auditor
Solicitors
Bankers
Stock exchange listing
McCullough Robertson
Level 11, Central Plaza Two
66 Eagle Street
Brisbane QLD 4000
Level 38, 71 Eagle Street
Brisbane QLD 4000
Link Market Services Limited
Level 21, 10 Eagle Street
Brisbane QLD 4000
www.linkmarketservices.com.au
PricewaterhouseCoopers
480 Queen Street
Brisbane QLD 4000
www.pwc.com.au
Allens Linklaters
Level 26
480 Queen Street
Brisbane QLD 4000
J.P. Morgan Chase
NOVONIX Limited ordinary shares are listed on the
Australian Securities Exchange (“ASX”) and American
Depositary Receipts (“ADR’s”) are listed on the
Nasdaq Stock Market.
Website address
www.novonixgroup.com
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ANNUAL REPORT - 31 DECEMBER 2023
Review of Operations and Activities
NOVONIX Limited (“NOVONIX” or the “Company”) and, together with its consolidated subsidiaries,
(the “Group”), changed the Company’s fiscal year end to 31 December (previously 30 June) as
announced on 21 December 2022. As a consequence, the financial results released in this report are
for a new 12-month period ended 31 December 2023 and have also shown the six-month period
ended 31 December 2022.
NOVONIX is a leading battery materials and technology company aiming to revolutionise the global
lithium-ion battery industry with innovative, sustainable technologies, high-performance materials,
and more efficient production methods. The Company manufactures industry-leading battery cell
testing equipment, is growing its high-performance synthetic graphite anode material manufacturing
operations, and has developed an all-dry, zero-waste cathode synthesis process. Through advanced
R&D capabilities, proprietary technology, strategic partnerships, and as a leading North American
supplier of battery-grade synthetic graphite, NOVONIX has gained a prominent position in the electric
vehicle (“EV”) and energy storage systems (“ESS”) battery industry and is working to power a cleaner
energy future.
Our mission is underpinned by an increasing emphasis on environmentally conscious battery
technologies and is key to a sustainable future with prolific adoption of electric vehicles and grid energy
storage systems. We are focused on the development of materials, processes, and technologies that
support key sustainability criteria in the field of battery materials and technologies, including longer
life batteries, higher-energy efficiency, manufacturing processes, reduced chemical usage, reduced
waste generation, and the use of cleaner power inputs. Our vision is to accelerate adoption of battery
technologies for a cleaner energy future. This is demonstrated by our values, which include integrity,
respect, and collaboration that support social impact and embody NOVONIX’s approach to corporate
responsibility.
NOVONIX is well-positioned to be an industry leader at the forefront of product innovation and
intellectual property development in the battery materials and technology industry with a focus on
supporting the onshoring of the battery supply chain. The Company has built a team of top talent with
the experience to drive innovation company wide and believes it has the next-generation technology
needed to support the rapidly growing EV and ESS markets in North America. NOVONIX is focused on
scaling its production capacity of synthetic graphite to meet the growing demands of its customers,
through increasing production capabilities at its facility in Chattanooga, Tennessee, and future
expansions. Additionally, NOVONIX continues to focus on developing improved and sustainable
technologies, pursuing strategic partnerships with leading international battery companies and
growing an intellectual property pipeline that will position the Company at the forefront of next-
generation battery technology.
Throughout fiscal year 2023, NOVONIX continued to focus on the execution of its business strategy
and growth initiatives. NOVONIX had net assets of $183.9 million including $78.7 million in cash and
cash equivalents at December 31, 2023. The Company reported a statutory after-tax loss for the year
ended December 31, 2023, of $46.2 million. These financial results are in line with management
expectations.
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ANNUAL REPORT - 31 DECEMBER 2023
Highlights of Twelve-Month Period Ended 31 December 2023
The twelve months ended 31 December 2023, saw continued progress for NOVONIX with several
notable highlights along four main pillars of efforts. The Company continued to execute against its
long-term strategic and operational roadmap, to maintain industry leading research and development
efforts for battery materials, scale our operations to deliver commercial production, secure tier-one
customers, and secure financing to scale operations to create value for shareholders. Key highlights
and developments include:
Maintain Industry Leading R&D Efforts for Battery Materials
▪
▪
launched 10 tpa (tonnes per annum) pilot line for all-dry, zero-waste cathode synthesis
process with Hatch study showcasing capital and process cost reductions
signed agreement with SandBoxAQ for battery technology insights driven by AI and advanced
data analytics
Scale Operations to Deliver Commercial Production
▪ met target high-performance product specifications with first-in-the-world continuous closed
loop induction furnaces
▪ Generation 3 Furnaces met engineering specs on throughput, energy usage, and emissions
Secure Tier 1 Customers
▪
▪
signed LG Energy Solution (“LGES”) to JDA (“joint research and development agreement”)
continued providing material samples to major tier 1 customers
Secure Financing to Scale Operations
issued US$30M in convertible notes to LGES
▪
▪ awarded US$100M grant for Riverside facility from Department of Energy (“DOE”) office of
Manufacturing and Energy Supply Chains (“MESC”)
The Company incurred net losses of $46.2 million, $27.9 million, $51.9 million and $13.4 million for
the twelve months ended 31 December 2023, six months ended 31 December 2022, and years ended
30 June 2022 and 2021, respectively, and net operating cash outflows of $36.2 million, $18.9 million,
$29.2 million and $6.1 million the twelve months ended 31 December 2023, six months ended 31
December 2022, and years ended 30 June 2022 and 2021, respectively. At 31 December 2023 and
2022, we had a cash balance of $78.7 million and $99.0 million, respectively, and net current assets of
$86.9 million and $116.1 million, respectively.
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ANNUAL REPORT - 31 DECEMBER 2023
Our Growth Strategies
NOVONIX’s leadership is focused on the successful execution of its operational strategic roadmap with
the objective of maximising long-term shareholder value through the generation of strong cash flow
and the pursuit of profitable, high-growth opportunities. The Company’s key strategies include:
▪ Maintain technology leadership throughout the EV battery and energy storage supply chain
o NOVONIX is committed to continuing to leverage its competitive advantage to expand
its offerings and technological knowledge into other advanced offerings with a focus
on localisation of key elements of the supply chain.
▪ Execute on development of synthetic graphite production capacity with plan to expand to
at least 150,000 tpa based on customer demand
o The Company plans to match current and future customer demand for anode
materials as the battery industry scales. The Company is on track to reaching annual
production capacity of 3,000 tpa of synthetic graphite in 2024, with further plans to
expand annual production capacity to 50,000 tpa in Phase 2 expansion and to at least
150,000 tpa in its Phase 3 expansion.
▪ Commercialise our proprietary pipeline of advanced battery technologies
o We are currently expanding opportunities to collaborate with partners globally to
commercialise our proprietary and patent pending cathode synthesis process
technology. Our broader battery technology pipeline contains several innovative
materials and processes in advanced anodes, cathodes, and electrolytes, as well as
advanced capabilities and solutions for energy storage applications that we continue
to develop and believe will be critical to the growth of the clean energy economy.
▪
Invest in talent
o NOVONIX continues to invest in its personnel through recruitment, training, and
development to ensure it attracts and retains the best talent in the industry, which is
critical to the growth of our business.
Operational Structure at a Glance
NOVONIX’s synergistic operating structure, as depicted below, is integral to the company’s current
business development and future strategy.
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ANNUAL REPORT - 31 DECEMBER 2023
NOVONIX continues to invest in intellectual property for key materials technologies, including anode
and cathode materials, that we believe will enhance the performance of long-life EV and ESS
applications. Our NOVONIX Battery Technology Solutions (“BTS”) division, based in Nova Scotia,
Canada, has a full cell pilot line and extensive cell testing capabilities, and works with tier-one
customers across the battery value chain.
Supported by our Chief Scientific Advisor Dr. Jeff Dahn, and as part of our investment in intellectual
property, we continue our collaboration with the group led by Dr. Mark Obrovac, a leading battery
materials innovator, at Dalhousie University. NOVONIX exclusively owns all intellectual property
developed within Dr. Obrovac’s group under the collaborative research agreement without any
ongoing obligations to Dalhousie University.
NOVONIX provides battery materials and development technology for leading battery manufacturers,
materials companies, automotive original OEMs and consumer electronics manufacturers at the
forefront of the global electrification economy. Our core mission is to accelerate the continued
advancement and scaling of EV batteries and ESS through our advanced, proprietary technologies that
deliver longer cycle life batteries at lower costs. Through our in-house technology and capabilities, as
well as our front-line access to industry trends, we intend to be an industry leader, delivering what we
believe to be the most advanced, high-performance, and cost-effective battery and energy storage
technologies for our customers.
We currently operate two core businesses: BTS and NOVONIX Anode Materials. We also have a third
reporting segment - Graphite Exploration - the business of which is currently under strategic review
and is not presently considered by management as a core operating business.
BTS provides industry leading battery testing technology and research and development (“R&D”)
services to create next-generation battery technologies. BTS also serves as the pillar of innovation
across the NOVONIX ecosystem by creating a positive feedback loop with our anode and cathode
materials business through the development of applications and strategic partnerships. This
collaboration drives our continuous technological innovation and enables us to deliver best-in-class
products and services for customers.
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ANNUAL REPORT - 31 DECEMBER 2023
NOVONIX Anode Materials (“NAM”) was established with the objective of commercialising what we
believe is the most advanced anode material in the market for EV and energy storage applications.
These end-markets continue to demand high-performance batteries with longer life cycles and higher
performance, while at the same time pursuing cost efficiencies to continue to drive mass adoption.
Anode materials are one of the most significant components that define the overall performance,
reliability, and cycle life of the battery cell. To our knowledge, we are the only qualified U.S.-based
producer of EV battery-grade synthetic graphite anode material and believe NAM is well positioned to
support the rapid growth in demand for these advanced anode materials in North America and
globally.
Graphite Exploration, or the MDG Project, holds interests in a natural, high-grade graphite deposit in
Queensland, Australia. NOVONIX had previously put any exploration and development of the MDG
Project generally on hold while it conducts a strategic review of the graphite deposit asset in response
to continued sector momentum to evaluate options for furthering exploration and development of the
MDG Project. In October 2023, the Company decided to pursue potential opportunities to realise the
value of these assets through a strategic transaction.
NOVONIX Battery Technology Solutions Overview
BTS was founded by Dr. Chris Burns and researchers from the research group at Dalhousie University,
formerly headed by Dr. Jeff Dahn, in 2013, and the Company acquired BTS in June 2017. BTS provides
innovative R&D services along the supply chain to battery component, battery cell, and original
equipment manufacturers.
BTS, based in Nova Scotia, Canada, provides battery R&D services and manufactures what we believe
to be the most accurate lithium-ion battery cell test equipment in the world. This equipment is now
used by leading battery makers, researchers, and equipment manufacturers including Panasonic
Energy Co., Ltd. (“Panasonic Energy”), LGES, Samsung SDI, and SK Innovation, and numerous consumer
electronics and automotive OEMs. The BTS division significantly expanded R&D capabilities through
direct investment in and through a long-term partnership agreement with Dalhousie University.
Since we acquired the business, we have significantly expanded BTS’ R&D capabilities through direct
investments and our long-term collaborative research agreement with Dalhousie University. BTS now
has an established team of leading scientists with an internal battery cell pilot line to prototype and
evaluate new materials and cell designs, and extensive battery testing capability, including our
proprietary Ultra-High Precision Coulometry (“UHPC”) system.
In the twelve months ended 31 December 2023, BTS continued strong revenue growth through
increased sales of its hardware and battery testing and R&D service offerings, including through the
addition and expansion of key strategic accounts. In the twelve months ended 31 December 2023, BTS’
revenues from contracts with customers increased by 42%, compared to the twelve months ended 31
December 2022, due to an increase in sales with the addition of a new distributor which expanded our
footprint in the battery hardware market. In the twelve months ended 30 June 2022, BTS’ revenues
from contracts with customers grew by 57%, compared to the twelve months ended 30 June 2021,
due to an increase in sales in the battery hardware division of the business.
The Company is collaborating with Sandbox AQ, an enterprise SaaS company that combines artificial
intelligence (“AI”) with quantum analysis (“AQ”) to address some of the world’s most challenging
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ANNUAL REPORT - 31 DECEMBER 2023
problems, to predict the lifespan of lithium-ion batteries. The Company intends to leverage
SandboxAQ’s AI-driven chemical simulation software and the Company’s UHPC technology and
extensive battery cell prototyping and testing capabilities to enhance its data and analytics services.
This enhanced data and analytics offering complements the Company’s UHPC testing equipment and
R&D prototyping and testing services to provide actionable information faster for the battery industry.
The resulting models will be used for data products and services in the first half of 2024, building on
the Company’s purpose-built, proprietary, battery data platform.
In November 2022, BTS announced the opening of its new cathode pilot production facility aimed to
position NOVONIX as an industry leader in high-nickel cathode technology. The program will be housed
in a newly opened, 35,000-square-foot facility and leverage NOVONIX’s all-dry, zero-waste cathode
synthesis technology to pilot its patent-pending technology for material production with the target of
servicing the rapidly expanding electric vehicle and energy storage sectors.
The Company has continued its investment in the intellectual property developed around all-dry, zero-
waste cathode synthesis technology in 2023, which the Company believes could enable a substantial
reduction in the cost of producing high-energy density (high nickel-based) cathode materials including
cobalt-free materials, an industry game-changer. The Company announced it successfully completed
the commissioning of its 10 tpa cathode pilot line in July 2023. The cathode pilot line’s first product, a
mid-nickel grade of single-crystal cathode material (NMC622), produced using its patent-pending, all-
dry, zero-waste cathode synthesis technology, is performing in line with leading cathode materials
from existing suppliers in full-cell testing. NOVONIX will use the pilot line to further demonstrate the
manufacturability of the Company’s cathode materials and technology, including high-nickel (e.g.,
NMC811) and cobalt-free materials, along with their performance in industrial format lithium-ion cells
leveraging its capabilities at BTS.
We believe this patent-pending process – and the innovations resulting from it – are transformational
for the battery industry, decreasing processing complexity which should result in a substantial
reduction in costs and waste (e.g., elimination of sodium sulphate) in the cathode manufacturing
process. Hatch Ltd. (“Hatch”), a global engineering consultancy firm, was commissioned to conduct a
commercial-scale capital and operating cost comparison study, as well as a high-level evaluation of
plant emissions and impacts to natural resources, between the Company’s patent-pending process
and the current state-of-the-art wet-chemical process (“conventional process”). The Company’s all-
dry, zero-waste cathode synthesis process was built upon dry particle microgranulation, which
requires fewer steps than the conventional process, while producing no sodium sulphate, reducing
facility cooling water by an estimated 65% and eliminating the water needed for core materials
processing.
The Hatch study found that the NOVONIX process may potentially reduce power consumption by an
estimated 25% and practically eliminate waste byproduct generation over the conventional process.
These factors contributed to a potential processing cost reduction of an estimated 50% (excluding
material feedstock costs) and potentially lower capital costs by an estimated 30% when considering a
30,000 tpa high-nickel cathode manufacturing facility. Based on the scoping study comparing the two
processes, the NOVONIX process is estimated to consume fewer natural resources, likely requiring
essentially no reagents and generating fewer waste streams, and, as a result, is likely a far more
environmentally friendly and sustainable process than the conventional process.
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ANNUAL REPORT - 31 DECEMBER 2023
The Company’s 10 tpa cathode synthesis pilot line allows continued progress to develop and
demonstrate new materials and larger test samples to accelerate commercial discussions with
potential partners and customers. The Company has begun commercial discussions with precursor and
cathode suppliers regarding the Company’s cathode materials and technology including sampling of
products. We believe NOVONIX is positioned to become a market leader in cathode synthesis
technology as it pursues these development opportunities.
BTS is receiving up to CAD$3M (US$2.23M) in research and development funding and advisory services
from the National Research Council of Canada Industrial Research Assistance Program (“NRC IRAP”).
The Company will use the funds to advance both its collaboration with SandboxAQ towards data
analytics and the Company’s all-dry, zero-waste cathode materials development and pilot line.
With carbon-neutral policies taking hold across major countries, NOVONIX continues to work in the
ESS market, which has experienced an increase in demand driven primarily by a significant increase in
renewable energy adoption. BTS developed a first-of-its-kind microgrid battery prototype to support
Block Energy Labs' (formerly Emera Technologies) residential microgrid system, which is operating in
a residential pilot project in Florida. This relationship highlights the strategic value BTS provides
through working with various companies and industries to identify growth opportunities across the
battery value chain.
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ANNUAL REPORT - 31 DECEMBER 2023
NOVONIX Anode Materials Overview
NAM was established in March 2017 as a joint venture to develop and commercialise ultra-high purity,
high-performance graphite anode material for the lithium-ion battery market focused on electric
vehicles, energy storage, and specialty applications. In fiscal year 2019, we exercised our call option,
pursuant to which we acquired all our joint venture partner’s interest in NAM and increased our
ownership to 100%.
NAM exclusively owns all graphite-related intellectual property of its former joint venture partner and
has the ongoing exclusivity for the development of graphite products and battery anode materials
using that technology.
includes
intellectual property
This
innovative, high-performance graphite anode materials
(demonstrated in internal testing to outperform leading materials currently in the market) and
production methods that we expect to deliver production costs significantly lower than existing
producers.
Through operational growth and by executing strategic partnerships, NOVONIX has developed
proprietary technology that delivers increased energy efficiency, negligible facility emissions, and
anode materials that outperform industry standards. In June 2022, NOVONIX released the results of a
Life Cycle Assessment (“LCA”), which showed an approximate 60% decrease in global warming
potential compared to commercially manufactured anode grade synthetic graphite produced in China,
and an approximate 30% decrease in global warming potential compared to anode grade natural
graphite also produced in China. NAM strives for the highest performance while powering the battery
materials industry with lower carbon emissions.
Since the United States passed the Inflation Reduction Act of 2022, battery development capacity has
accelerated with increased domestic production and robust electric vehicle demand. These current
trends underpin the significance of NOVONIX’s agreement with Phillips 66 in January 2022 for the joint
development of new feedstocks and synthetic graphite with reduced carbon-intensive processing. We
believe this partnership positions NOVONIX at the forefront of revolutionary solutions that advance
the adoption of clean energy.
The Company has recently doubled its production target at its first manufacturing plant, Riverside, to
20,000 tpa. The Company plans to begin production in late 2024 at an initial 3,000 tpa to support its
supply agreements with KORE Power and Panasonic Energy and intends to eventually reach at least
150,000 tpa of total production capacity in North America through the acquisition or construction of
new production facilities. In the first quarter of 2023, the Company's Generation 3 Furnaces produced
its GX-23 product that fully met its physical and electrochemical specification targets. The continuous
output from a single Generation 3 Furnace, producing multiple tonnes of material which, was
confirmed to meet the target for the degree of graphitisation for the product. In 2023, the Company
met the engineering specifications for performance and efficiency of Generation 3 Furnace systems
and remains on track for commercial deliveries of anode material by late 2024. The Company continues
to leverage this progress in its engagements with prospective customers with whom the Company is
in discussions about product qualification, production timelines, and potential supply agreements
from Riverside and future facilities.
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ANNUAL REPORT - 31 DECEMBER 2023
The Company expects to complete updated engineering work to obtain the expanded capacity target
at the Riverside facility at the end of the first quarter of 2024 and will enable the continued deployment
of additional mass production equipment for the start of commercial production in late 2024.
The Biden Administration’s Inflation Reduction Act ("IRA") and the Bipartisan Infrastructure Law ("BIL")
have provided financial incentives for companies to build a robust supply chain in the United States.
On October 20, 2022, NOVONIX announced its selection by the DOE to enter negotiations for $150
million in grant funding to support the construction of a new synthetic graphite manufacturing facility
with a targeted initial output of 30,000 tpa. Through negotiations with the DOE’s MESC Office, the
Company announced in November 2023 that it successfully reallocated the funding more immediately
to its Riverside facility, which has a target production of up to 20,000 tpa, finalised its award agreement
and, accordingly, resized the award to $100 million, payable upon achieving certain milestones. The
DOE grant funding will support the installation and commissioning of equipment to produce the
targeted 20,000 tpa of capacity from Riverside. Under the terms of the grant, the Company must match
government funds comply with a number of U.S. laws and regulations. In addition to the $100 million
DOE grant funding, the Company expects its cash position, customer revenues, additional government
programs, strategic partners and other capital sources to fund planned growth. Synthetic graphite is
currently imported almost exclusively from China, and NOVONIX’s plant aims to be the first large-scale
battery-grade synthetic graphite manufacturing operation in the U.S. The DOE's MESC Office will work
closely with NOVONIX to oversee the award over the course of the project through full operation.
In the fourth quarter 2022, NAM was selected to submit a formal application to the DOE's Loan
Programs Office ("LPO"). The LPO provides low-interest loans to support the manufacture of eligible
vehicles and qualifying components under the Advanced Technology Vehicles Manufacturing Loan
("ATVM") program, authorised by the Energy Independence and Security Act of 2007. Through the
ATVM program, LPO can provide access to debt capital that is priced at U.S. Treasury Rates for auto
manufacturing projects in the United States and provide financing that meets the specific needs of
individual borrowers.
NOVONIX continues to advance plans for a new production facility with an initial production target of
at least 30,000 tpa. The Company continues to pursue funding support under the LPO's ATVM Program.
A loan through the ATVM program may fund up to 80% of eligible project costs of the Company's next
facility. The timing of this next facility and NOVONIX’s subsequent plans to reach at least 150,000 tpa
of production in North America will be based on the timelines of current and future customer demand.
Aligned with its strategic partnership and investment in KORE Power, NOVONIX will be KORE Power's
exclusive supplier of graphite anode material in North America. In 2022, KORE Power received strategic
financing from investors and a $850 million conditional commitment from DOE LPO in 2023 for the
construction of its KOREPlex facility in Phoenix, Arizona, targeted to begin production in the fourth
quarter of 2024. To support KORE Power’s capacity requirement and other customers, NOVONIX's
expanded production capacity target of 20,000 tpa at the Company’s Riverside facility in Chattanooga,
Tennessee can fully meet KORE Power's contracted anode material needs. The production ramp will
be aligned with the supply agreement starting at approximately 3,000 tpa and ramping up to 12,000
tpa as KORE Power's facility expands.
In March 2023, we entered a joint venture agreement with TAQAT Development Company (“TAQAT”)
with the intention to develop and produce anode materials for electric vehicle and energy storage
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ANNUAL REPORT - 31 DECEMBER 2023
system batteries in the Middle East & North Africa region. The parties planned to construct a
production facility in the Kingdom of Saudi Arabia to leverage access to precursor material as feedstock
for critical battery materials and to serve developing end-use markets for the manufacture and sale of
EVs and ESS applications. If the parties, unless otherwise mutually agreed through an amendment, do
not incorporate the joint venture, provide initial funding for a front-end engineering and design study,
and obtain merger control clearance, if required, from the Kingdom of Saudi Arabia by March 31, 2024,
the joint venture will terminate on its own terms. While the parties have had discussions relating to
these conditions, there can be no assurance that any of the conditions will be satisfied by such date or
that the parties will agree to extend the milestone.
In June 2023, NOVONIX and LGES, a global battery manufacturer, entered into a JDA providing for the
joint development of active anode material for lithium-ion batteries that meets certain product quality
specifications, with a term through June 2025. The material for testing will be supplied initially from
NOVONIX’s pilot plant and is anticipated to be supplied in 2024 and 2025 from its mass production
facilities. The JDA provides that, upon successful completion of certain development work under the
JDA, LGES and NOVONIX will enter into a separate purchase agreement pursuant to which LGES will
have the option to purchase up to 50,000 tons of artificial graphite anode material over a 10-year
period from the start of mass production. In conjunction with the JDA, pursuant to an Unsecured
Convertible Note Agreement dated as of 7 June 2023 (the "LGES Note Agreement"), NOVONIX issued
an aggregate principal amount of US$30 million unsecured convertible notes to LGES on 21 June 2023.
As a result of the issuance of the convertible notes and the conversion terms therein, LGES is as of 31
December 2023, the beneficial owner of more than 5% of our ordinary shares (based on the number
of our outstanding ordinary shares).
In February 2024, NOVONIX and Panasonic Energy, a leading manufacturer of electric vehicle batteries
in North America, each announced the signing of a binding off-take agreement for high-performance
synthetic graphite anode material to be supplied to Panasonic Energy's North American operations
from NOVONIX’s Riverside facility in Chattanooga, Tennessee. Under the off-take agreement,
Panasonic Energy has agreed to purchase at least 10,000 tonnes of anode material for use in its North
American plants over the term of 2025-2028, subject to NOVONIX achieving agreed upon milestones
regarding final mass production qualification timelines prior to the fourth quarter of 2025. Panasonic
Energy has the right to reduce the 10,000 tonnes volume (by up to 20%) if these milestones are not
achieved by the required dates or to terminate the agreement if there is a substantial delay to
achieving these milestones. During the term, if additional volumes are requested by Panasonic Energy,
NOVONIX shall use its best efforts to deliver the increased volumes. The companies have agreed to a
pricing structure that incorporates a mechanism for adjusting the price in response to significant
changes in NOVONIX’s raw material costs.
Graphite Exploration Overview
We hold tenement rights in the Mount Dromedary Graphite Project (the "MDG Project"), a high-grade
natural flake graphite deposit located in Northern Queensland, Australia. As of the date of this Annual
Report, the Company has not generated any revenue from the sale of natural graphite. Despite the
favourable characteristics of this natural graphite deposit and except to the extent of any exploration
required under the tenement rights, in 2021 the Company put any exploration and development of
the MDG Project on hold to conduct a strategic review of these assets. This decision was based on
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ANNUAL REPORT - 31 DECEMBER 2023
what the Company considered more favourable investment opportunities through the manufacturing
of advanced battery anode materials and the development of new battery technologies.
During the twelve months ended 31 December 2023, the Company received and evaluated inquiries
and expressions of interest in the MDG Project. In October 2023, the Company decided to pursue
potential opportunities to realise the value of these assets through a strategic transaction. All
tenement rights remain current, exploration activity is continuing to the extent required under the
tenement rights, a resource, principally high-grade graphite, has been identified, and, as a result of the
Company’s decision, the assets have been reclassified during the year ended 31 December 2023, as
being available for sale. While the Company may engage in discussions with interested third parties
regarding the MDG Project, there can be no assurances that any such discussions will result in any
transaction involving these assets.
Tenement List
Tenement
Permit Holder
Grant Date
EPM 26025 Exco Resources Limited
14/12/2015
NVX Rights
100% (Sub-Blocks
Normanton 3123 D, J, N, O
and S)
EPM 17323
MD South Tenements Pty Ltd
(Subsidiary of NOVONIX Limited)
20/10/2010
EPM 17246 MD South Tenements Pty Ltd
26/10/2010
100%
100%
Expiry Date
13/12/2025
19/10/2024
25/10/2024
End of Review of Operations and Activities
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ANNUAL REPORT - 31 DECEMBER 2023
Material Business Risks
Our business is subject to numerous risks and uncertainties that you should consider before
investing in our securities. These risks are described more fully below and include, but are not
limited to, risks relating to the following:
▪ We will need to obtain funding from time to time to finance our growth and operations, which
may not be available on acceptable terms, or at all. If we are unable to raise capital when
needed, we may be forced to delay, reduce, or eliminate certain operations, and we may be
unable to adequately control our costs.
Our DOE grant, and any future grants, loans or incentives we may obtain from government
agencies, will impose restrictions and compliance obligations on us, with associated costs and
risks.
▪
▪ We face significant challenges in our attempt to develop our anode and cathode materials to
produce them at volumes with acceptable performance, yields, and costs. The pace of
development in materials science is often not predictable. We may encounter substantial
delays or operational problems in the scale-up of our anode materials production or the
commercialisation of our cathode materials technology.
▪ Our reliance on certain limited or sole source suppliers subjects us to a number of risks.
▪ The energy storage market continues to evolve and is highly competitive, and we may not be
successful in competing in this industry or establishing and maintaining confidence in our long-
term business prospects among current and future partners and customers.
▪ Our anode materials business is subject to fluctuating and potentially unfavourable market
conditions for graphite.
▪ We may not realise any of the benefits of the proposed regulations providing tax credits to
U.S. producers of graphite.
▪ The systems, equipment, and processes we use in the production of our anode materials are
complex, and we are subject to many operational risks, any of which could substantially
increase our costs and limit the operational performance of our anode materials operations,
which would adversely affect our business.
▪ Our future growth and success will depend on our ability to sell effectively to large customers.
▪ We depend, and expect to continue to depend, on a limited number of customers for a
significant percentage of our revenue.
▪ We may not be able to engage target customers successfully and to convert such contacts into
meaningful orders in the future.
▪ Our commercial relationships are subject to various risks which could adversely affect our
business and future prospects.
▪ Our business and future growth depend substantially on the growth in demand for electric
vehicles and batteries for grid energy storage.
▪ Our projected operating and financial results rely in large part upon assumptions and analyses
we have developed. If these assumptions or analyses prove to be incorrect, our actual
operating results may be materially different from our projected results.
▪ We may not be able to establish supply relationships for necessary components or may be
required to pay costs for components that are more expensive than anticipated, which could
delay the introduction or acquisition of additional equipment necessary to support our growth
and negatively impact our business.
15
ANNUAL REPORT - 31 DECEMBER 2023
▪
▪ We may not be able to accurately estimate the future supply and demand for our materials
and equipment, which could result in a variety of inefficiencies in our business and hinder our
ability to generate revenue. If we fail to accurately predict our manufacturing requirements
or prices of components increase, we could incur additional costs or experience delays.
If we are unable to attract and retain key employees and qualified personnel, our ability to
compete could be harmed.
Labour shortages, turnover, and labour cost increases could adversely impact our ability to
scale up manufacturing of our anode materials and commercialise our cathode technology.
▪ We have a history of financial losses and expect to incur significant expenses and continuing
▪
losses in the near future.
▪ Any global political, economic, and financial crisis (as well as the indirect effects flowing
therefrom) could negatively affect our business, results of operations, and financial condition.
▪ Our systems and data may be subject to disruptions or other security incidents, or we may
face alleged violations of laws, regulations, or other obligations relating to data handling that
could result in liability and adversely impact our reputation and future sales.
▪ From time to time, we may be involved in litigation, regulatory actions or government
investigations and inquiries, which could have an adverse impact on our profitability and
consolidated financial position.
▪ We may become subject to product liability claims, which could harm our financial condition
and liquidity if we are not able to successfully defend or insure against such claims.
▪ We have a concentration of beneficial ownership among Phillips 66, LGES, and our executive
officers, non-executive directors and their affiliates that may prevent new investors from
influencing significant corporate decisions.
▪ From time to time, we may enter into negotiations for acquisitions, dispositions, partnerships,
joint ventures, or investments that are not ultimately consummated or, if consummated, may
not be successful.
▪ Our facilities or operations could be damaged or adversely affected as a result of natural
disasters and other catastrophic events.
▪ Terrorist activity, acts of war, and political instability around the world could adversely impact
our business.
▪ We are subject to substantial regulation and unfavourable changes to, or our failure to comply
with, these regulations could substantially harm our business and operating results.
▪ We are subject to environmental, health, and safety requirements which could adversely
affect our business, results of operation, and reputation.
▪ We are subject to anti-corruption, anti-bribery, anti-money laundering, financial and
economic sanctions, and similar laws, and non-compliance with such laws can subject us to
administrative, civil and criminal fines and penalties, collateral consequences, remedial
measures, and legal expenses, all of which could adversely affect our business, results of
operations, financial condition and reputation.
▪ Our success depends upon our ability to obtain and maintain intellectual property protection
for our materials and technologies.
▪ Termination of our collaborative research agreement with Dalhousie University to support the
development of current and future technology would likely harm our business, and even if it
continues, it may not help us successfully develop any new intellectual property.
16
ANNUAL REPORT - 31 DECEMBER 2023
▪ Our patent applications may not result in issued patents or our patent rights may be
contested, circumvented, invalidated, or limited in scope, any of which could have a material
adverse effect on our ability to prevent others from interfering with our commercialisation of
our products.
▪ Changes in patent law could diminish the value of patents in general, thereby impairing our
ability to protect our technologies and processes.
▪ Our lack of registered trademarks and trade names could potentially harm our business.
▪ We may be unable to obtain intellectual property rights or technology necessary to develop
and commercialise our materials and equipment.
▪ We may become involved in lawsuits or other proceedings to protect or enforce our
intellectual property, which could be expensive, time-consuming, and unsuccessful and have
a negative effect on the success of our business.
▪ We may be subject to claims by third parties asserting misappropriation of intellectual
▪
property, or claiming ownership of what we regard as our own intellectual property.
If we fail to implement and maintain an effective system of internal controls or fail to identify
and remediate our material weaknesses over financial reporting, we may be unable to
accurately report our results of operations, meet our reporting obligations or prevent fraud,
and investor confidence in our Company and the market price of our securities may be
negatively impacted.
▪ We are subject to risks associated with currency fluctuations, and changes in foreign currency
exchange rates could impact our results of operations.
▪ Our ability to utilise our net operating losses to offset future taxable income may be prohibited
or subject to certain limitations.
17
ANNUAL REPORT - 31 DECEMBER 2023
Directors’ Report
For the Year Ended 31 December 2023
Your Directors present the following report for the year ended 31 December 2023 together with the
consolidated financial report of NOVONIX Limited (the Company) and its subsidiaries (referred to
hereafter as the Group) and the auditor’s report thereon. The comparative information is for the six-
month period ended 31 December 2022 as the Company changed its year end to align the Company’s
financial year with that of its industry peers.
Directors and Company Secretary
The following persons were Directors of NOVONIX Limited during the financial period:
Dan Akerson – resigned 20 December 2023
Tony Bellas
Robert Cooper – resigned effective 5 April 2023
Ron Edmonds
Zhanna Golodryga – resigned effective 7 September 2023
Andrew Liveris
Admiral Robert Natter
Jean Oelwang
S Vaidyanathan – appointed effective 7 September 2023
The Company Secretary is Suzanne Yeates. Appointed to the position of Company Secretary on 18
September 2015, Ms. Yeates is a Chartered Accountant and Founder and Principal of Outsourced
Accounting Solutions Pty Ltd. She holds similar positions with other public and private companies.
Principal Activities
During the financial year, the principal activities of the Group included investment in scalability efforts
to increase production capacity of anode materials, commercialisation of the Company’s cathode
technology and expansion of cell assembly and testing capabilities.
Dividends
The Directors do not recommend the payment of a dividend. No dividend was paid during the financial
year.
Review of Operations
Information on the operations and financial position of the Group and its business strategies and
prospects are set out in the review of operations and activities on pages 4-14 of this annual report.
18
ANNUAL REPORT - 31 DECEMBER 2023
Significant Changes in the State of Affairs
There have been no significant changes in the state of affairs of the Group during the financial year.
Likely Developments and Expected Results of Operations
Comments on likely developments and expected results of operations are included in the review of
operations and activities on pages 4-14.
Events Since the End of the Financial Year
In February 2024, NOVONIX and Panasonic Energy, a leading manufacturer of EV batteries in North
America, each announced the signing of a binding off-take agreement for high-performance synthetic
graphite anode material to be supplied to Panasonic Energy’s North American operations from
NOVONIX’s Riverside facility in Chattanooga, Tennessee. Under the off-take agreement, Panasonic
Energy has agreed to purchase at least 10,000 tonnes of anode material for use in its North American
plants over the term of 2025-2028, subject to NOVONIX achieving agreed upon milestones regarding
final mass production qualification timelines prior to the fourth quarter of 2025. Panasonic Energy has
the right to reduce the 10,000 tonnes volume (by up to 20%) if these milestones are not achieved by
the required dates or to terminate the agreement if there is a substantial delay to achieving these
milestones. During the term, if additional volumes are requested by Panasonic Energy, NOVONIX shall
use its best efforts to deliver the increased volumes. The companies have agreed to a pricing structure
that incorporates a mechanism for adjusting the price in response to significant changes in NOVONIX’s
raw material costs.
There have been no other matters or circumstances have arisen since the end of the financial year
which significantly affected or could significantly affect the operations of the Company, the results of
those operations or the state of affairs of the Company in future financial years.
Environmental Regulations
The Group is subject to environmental regulations in respect of its exploration and development
activities in Australia and its operations in the United States and Canada and is committed to
undertaking all its operations in an environmentally responsible manner.
To the best of the Directors’ knowledge, the Group has adequate systems in place to ensure
compliance with the requirements of all environmental legislation and are not aware of any breach of
those requirements during the financial year and up to the date of the Directors’ report.
19
ANNUAL REPORT - 31 DECEMBER 2023
Information on Directors
The following information is current as at the date of this report.
Admiral R J Natter. Chair – Non-Executive (Appointed 14 July 2017)
Experience and
expertise
Robert J. Natter retired from active military service with the US Navy in 2003 and now has 17 years’
experience in the private sector of the US and Australia markets.
During his navy career, Admiral Natter served as the Commander of the US Seventh Fleet, controlling
all U.S. Navy operations throughout the western Pacific and Indian Oceans. As a four-star Admiral,
Natter was Commander in Chief of the U.S. Atlantic Fleet and the first Commander of U.S. Fleet
Forces Command, overseeing all Continental U.S. Navy bases and the training and readiness of all
Navy ships, submarines, and aircraft squadrons based there.
He is on the Board and chairs the Governance and Compensation Committee and the Government
Security Committee of Allied Universal Security Company with over 800,000 employees worldwide.
He also served on the Board of Intellisense (ISI), a privately held technology company based in
Torrance, California until 2023.
He also serves on the U.S. Naval Academy Foundation Board and was Chairman of the Academy
Alumni Association, representing over 60,000 living Academy alumni. He also served on the Navy
Seal Museum and the Yellow Ribbon Fund Boards.
Other current
directorships
Former listed
directorships in last 3
years
Special
responsibilities
Interests in shares
and options
N/A
N/A
Chairman
Chair of the Nominating and Corporate Governance Committee
2,132,758 ordinary shares
1,500,000 options
77,258 share rights
A Bellas. Deputy Chair – Non-Executive (Appointed 11 August 2015)
Experience and
expertise
Mr. Bellas was the inaugural Chair of the Company on his appointment in August 2015. He brings
over 35 years of experience in the public and private sectors. Mr. Bellas was previously CEO of the
Seymour Group, one of Queensland’s largest private investment and development companies.
Prior to joining the Seymour Group, he held the position of CEO of Ergon Energy Ltd, a Queensland
Government-owned corporation involved in electricity distribution and retailing. Before that, he
was CEO of CS Energy Ltd, also a Queensland Government-owned corporation and the State’s
largest electricity generation company, operating over 3,500 MW of gas-fired and coal-fired plants
at four locations. Mr. Bellas previously had a long career with Queensland Treasury, achieving the
position of Deputy Under Treasurer.
Mr. Bellas is a director of the listed companies shown below and is also a director of Healthcare
Logic Global Ltd, Loch Explorations Pty Ltd, Green and Gold Minerals Pty Ltd and Burlington Mining
Pty Ltd.
Other current
directorships
Former listed
directorships in last 3
years
Special responsibilities
Deputy Chairman of State Gas Limited.
Chairman of intelliHR Limited (ceased 2023)
Chair of the Audit & Risk Committee
Member of the Remuneration Committee
Member of the Nominating and Corporate Governance Committee
Interests in shares and
options
2,412,374 ordinary shares
69,995 share rights
20
ANNUAL REPORT - 31 DECEMBER 2023
J Oelwang. Non-Executive Director (Appointed 2 March 2022)
Experience and
expertise
Ms. Oelwang has 18 years of experience in helping to start and lead telecommunications companies
in South Africa, Colombia, Bulgaria, Singapore, Hong Kong, Australia, and the US. This included roles
in marketing, customer service, sales, and as a CEO.
Over the last 20 years, she has been the CEO and President of Virgin Unite, helping lead the
incubation and start-up of several global initiatives, many with a focus on sustainability, including:
The Elders, The B Team, The Carbon War Room (merged with RMI), Ocean Unite, and The Caribbean
Climate Smart Accelerator. Ms. Oelwang also worked with 25 Virgin businesses across 15 industries
to help embed purpose in all they do and served as a Partner in the Virgin Group leading their people
strategy.
She is on the Advisory Council of The Elders, is a B Team leader, is the cofounder of Plus Wonder,
and the author of the book Partnering.
Other current
directorships
Former listed
directorships in last 3
years
Special responsibilities
N/A
N/A
Chair of Remuneration Committee.
Member of the Nominating and Corporate Governance Committee
Interests in shares and
options
79,165 share rights
A N Liveris. Non-Executive Director (Appointed 1 July 2018)
Experience and
expertise
A recognised global business leader with more than 40 years at the Dow Chemical Company, Mr.
Liveris' career has spanned roles in manufacturing, engineering, sales, marketing, and business and
general management around the world.
During more than a decade as Dow’s CEO, Mr. Liveris led Dow’s transformation from a cyclical
commodity chemicals manufacturing company into a global specialty chemical, advanced materials,
agro-sciences, and plastics company.
Andrew is a director of the listed companies shown below and has also been appointed as the Chair
of the Brisbane Organising Committee for the 2032 Olympic and Paralympic Games.
Board member of Lucid Motors (NASDAQ: LCID).
Non-executive director of Saudi Arabian Oil Company (Saudi Aramco) and Worley Parsons Limited
(ASX: WOR).
Non-executive director of International Business Machines (IBM) Corporation (NYSE: IBM).
None
Other current
directorships
Former listed
directorships in last 3
years
Special responsibilities N/A
Interests in shares and
options
9,198,794 ordinary shares
9,000,000 options
69,995 share rights
21
ANNUAL REPORT - 31 DECEMBER 2023
S Vaidyanathan. Non-Executive Director (Appointed 7 September 2023)
Experience and
expertise
A global business leader with more than 30 years in the oil and gas energy industry, Mr.
Vaidyanathan’s career has spanned roles in technical, operations, business functions and general
management around the world.
In his prior role as Vice President and Chief Engineer, Refining Business Improvement for Phillips
66, Mr. Vaidyanathan led Phillips 66’s effort to improve margins, cost, advancing use of digital
technologies and to jump start the Renewable energy activities. Mr. Vaidyanathan currently leads
the Renewable Fuels business for Phillips66.
Other current
directorships
Former listed
directorships in last 3
years
N/A
N/A
Special responsibilities Member of the Remuneration Committee.
Interests in shares and
options
^Mr Suresh Vaidyanathan is not permitted to receive remuneration, including any equity incentives, in his personal capacity
N/A^
under the terms of his employment with Phillips 66 and terms of engagement with the Company. Accordingly, all fees earned
by, and all equity instruments granted to, Mr Suresh Vaidyanathan are paid or granted directly to Phillips 66.
R Edmonds. Non-Executive Director (Appointed 27 October 2022)
Experience and expertise
Ron Edmonds is the Controller, Vice President of Controllers and Tax and the Chief Accounting
Officer for Dow, a material science company with 2022 sales of $57 billion. He was formerly the
Co-Controller of DowDuPont, a $73 billion holding company comprised of The Dow Chemical
Company and DuPont which was spun into three independent, publicly traded companies in
agriculture (Corteva), materials science (Dow) and specialty products sectors (DuPont). Edmonds
leads all aspects of Dow’s Controllers & Tax organisations, overseeing 1250 employees and is
responsible for all accounting, management reporting, external reporting, statutory reporting,
internal controls, finance systems, tax planning, tax operations and strategy, and tax controversy
globally for 500 legal entities. He oversees all corporate controls that guide enterprise strategy,
investment decisions, and global initiatives for Dow.
He is a member of the Public Accounting Oversight Board’s Standards and Emerging Issues Advisory
Group and the IFRS Advisory Council.
Other current
directorships
Former listed
directorships in last 3
years
N/A
N/A
Special responsibilities
Member of the Audit & Risk Committee.
Interests in shares and
options
N/A
22
ANNUAL REPORT - 31 DECEMBER 2023
Meetings of Directors
The number of meetings of the Company’s Board of Directors and of each Committee held during the
year ended 31 December 2023, and the number of meetings attended by each Director were:
Full Meetings of
Directors
Meetings of
Audit & Risk
Committee
Meeting of the
Remuneration
Committee
Admiral R J Natter
D Akerson
A Bellas
R Cooper
R Edmonds
Z Golodryga
A Liveris
J Oelwang
S Vaidyanathan
A
7
7
7
2
7
3
6
7
2
B
7
7
7
3
7
5
7
7
2
A
-
0
5
1
5
5
-
-
-
B
-
1
5
2
5
5
-
-
-
A
-
3
4
1
-
-
-
4
1
B
-
4
4
1
-
-
-
4
1
Meeting of the
Nominating and
Corporate
Governance
Committee
B
A
3
3
3
3
3
3
-
-
-
-
-
-
-
-
3
3
-
-
A = Number of meetings attended
B = Number of meetings held during the time the director held office, was a member of the committee during the year and was not absent
from a meeting due to a conflict of interest.
23
ANNUAL REPORT - 31 DECEMBER 2023
Remuneration Report
Dear Shareholders,
On behalf of the Board of Directors and as Chair of the Remuneration Committee, I am pleased to
present the remuneration report for the financial year ended 31 December 2023.
Over the last year, we strengthened our Board and Committees. Through new and upcoming
appointments to the Board, we have greatly enhanced the capacity of the Board in the areas of
governance, financial management, manufacturing, people, and sustainability, and increased our
diversity. I was honoured to become the Chair of the Remuneration Committee in May 2023, and to
work with my fellow committee members Tony Bellas and Suresh Vaidyanathan, who together have
more than 32 years of experience in the energy industry. As previously announced, Sharan Burrow AC
will be joining the Board as an independent Director and member of the Remuneration Committee
effective 28 February 2024. We welcome her deep experience in building healthy, diverse, high-
performing teams with strong governance.
We are fortunate to be working with a great management team who we believe have unmatched
expertise in this emerging battery industry to help advance clean energy. Their leadership has led to
a high level of retention and to a high level of satisfaction across the organisation, as we have grown
to over 200 employees over the last several years, a number that is expected to increase as the
Company is anticipated to enter production at our anode materials business in its next phase of
growth.
Both the Board and the management team are committed to retaining our strong team and to
nurturing a culture that will deliver results to shareholders and key stakeholders.
We’ve taken very seriously the feedback from our shareholders at our 2023 Annual General Meeting
(“AGM”), where we received our first-ever strike on our remuneration report. Over the last nine
months, we’ve expanded our engagement with our investors and proxy advisors to better understand
their feedback and recommendations. We’ve also worked closely with an independent executive
remuneration consultant to review a range of potential compensation structures. This has led us to
more clearly identify some of the realities we face in recruiting and retaining top talent as a company
in a highly specialised, nascent industry, with operations based exclusively in North America, which
has notably different remuneration practises than Australia. We’ve also taken into consideration the
strong macro-economic headwinds that have had a negative effect on our share price. We are grateful
for the team’s continued hard work towards the significant milestones reached this year, from
securing a joint development agreement and investment with LG Energy Solution (“LGES”), to
finalising a USD$100 million grant from the U.S. DOE MESC, and most recently to entering into a
binding off-take with Panasonic Energy. As a Board and management team, we are more energised
than ever behind delivering on our mission to help revolutionise the battery market towards cleaner
energy.
Through a rigorous process guided by feedback from our investors, we have identified several key
changes to our 2024 remuneration strategy, which we believe will set us up for success in the years
ahead. These changes include:
24
ANNUAL REPORT - 31 DECEMBER 2023
•
•
an updated pay philosophy with guiding principles
a streamlined narrative in our annual remuneration report so you, our shareholders, can
better understand the “why” of our remuneration program,
significantly increased disclosures for short-term incentive (“STI”) metrics,
•
• equity grants in 2024 under our Long-Term Incentive Plan (“LTIP”) to our Chief Executive
Officer (“CEO”) and executive team, consisting 100% of performance rights vesting based on
performance over a three-year period, using challenging relative total shareholder return
(“TSR”) performance goals and a revenue modifier. Equity grants in 2024 to our CEO and
executive team included no performance rights with time-based vesting,
the 2024 LTIP grants to our CEO and executive team also include a reduced total LTIP target
opportunity, compared to 2023, and
in line with the decrease in total quantum for the CEO and executive team, a 50% reduction
in the Board’s share rights.
•
•
We’ve also ensured that the 2023 STI payout mirrors the impact our shareholders have experienced
from the decline in share price. While investors have been very clear that they deeply respect the
management team (something we heard in every investor feedback session), we acknowledge the
market volatility that has impacted our share price and as such have only paid out to our executives
33% of the 2023 STI target opportunity. The non-executive Directors also wanted to show their long-
term dedication to the team and Company and so their share rights for the period 1 July 2023 to 31
December 2023 will not be issued.
To further demonstrate our commitment to the important mission of this organisation, the Board has
adopted formal share ownership guidelines (see page 39).
We remain deeply committed to NOVONIX and confident to deliver our mission to help revolutionise
the battery industry to accelerate the adoption of clean energy. We know that we have the right team,
technology, and strategy in place to make this happen, and a Board who is in it for the long run. Over
the last year, the team has made significant steps towards our goals, and we are confident that this
will lead to great future outcomes for all our stakeholders.
We look forward to continuing to partner with you as we build from strength to strength. We always
welcome your feedback and insights and are grateful for the time many of you took over this last nine
months to have honest conversations with us. We will continue to review our compensation plans and
learn from best practises. Thanks so much for your ongoing belief in NOVONIX and its ability to be a
part of revolutionising the battery industry.
With gratitude,
Jean Oelwang
Chairperson of the Remuneration Committee
25
ANNUAL REPORT - 31 DECEMBER 2023
OVERVIEW OF THE REMUNERATION REPORT
The Board of Directors present the NOVONIX Limited 2023 remuneration report, outlining key aspects
of our remuneration policy and framework and remuneration awarded this financial year ending 31
December 2023. The remuneration report also addresses our response to the vote on the
remuneration report at last year’s AGM in form of our 2024 remuneration program and enhanced
disclosures in this remuneration report. The remuneration report has been audited as required by
s308 (3C) of the Corporations Act 2001 and contains the following sections:
• Remuneration and our 2023 Performance
• Key Management Personnel (each a “KMP and collectively “KMPs”) Covered by the
Remuneration Report
• KMP Remuneration Governance
• Our Response to Last Year’s AGM Vote
• Our Remuneration Strategy
• Our Remuneration Mix
• Remuneration Outcomes for the Year Ended 31 December 2023
• Other Aspects of our Remuneration Program
• Remuneration Expenses for KMPs
• Non-Executive Director Remuneration
• Additional Statutory Information
REMUNERATION AND OUR 2023 PERFORMANCE
We are in the business of supplying advanced, high-performance battery materials, equipment, and
services to the global lithium-ion battery market. Founded in 2012 and publicly traded since 2015, we
started as a company in a nascent industry and continue to grow scale in an increasingly highly
specialised industry.
As part of our business strategy, we currently maintain a lean but experienced team. To deliver on our
ambitious business objectives, we aim to attract and retain high-quality employees who embody our
core values of curiosity, collaboration, and commitment in a competitive market and even more
competitive industry. We are a dual-listed Australian corporation with a management team and
operations based entirely in North America, with over 200 full-time employees in the United States
and Canada.
26
ANNUAL REPORT - 31 DECEMBER 2023
In 2023, our management made important strides in our business, executing on several critical
business goals, namely:
✓ signed a JDA with LGES for the joint research and development of artificial graphite anode
material for lithium-ion batteries, and an agreement to issue US$30 million worth of
unsecured convertible notes to LGES
✓ finalised US$100 million in grant funding from the U.S. Department of Energy’s Office of
Manufacturing and Energy Supply Chains to expand domestic production of high-
performance, synthetic graphite anode materials at our Riverside facility in Chattanooga,
Tennessee
✓ ran a production campaign on our Generation 3 Furnaces that produced material meeting all
specifications while also reaching the equipment design throughput targets
✓ signed a binding off-take with Panasonic for 10,000 tonnes of high-performance synthetic
graphite from our Riverside facility, to be used in their North American operations, since the
conclusion of FY2023.
✓ commissioned a 10 tpa cathode pilot line and released the results of a third-party engineering
study on our proprietary all-dry, zero-waste cathode synthesis process highlighted potential
improvements over conventional cathode synthesis.
As a growth stage company, we incurred in FY 2023, and have historically incurred, operating losses
due to significant expenses, which we expect will continue as we develop our technology and scale
production ahead of eventual commercialisation and profitability. During the year, our share price
also experienced some decline much like most in our sector. This stemmed from various factors, many
of which were unrelated to leadership performance but which we recognise still negatively impacted
shareholders, including: fluctuations in current and expected demand for EVs and ESS; trends in
technology adoption; international market prices for battery anode materials; and general market
sentiment towards the battery materials and lithium-ion battery sectors. Given the nature of our
activities and the consequential operating results, we have not proposed or paid dividends to
shareholders or returned capital to them.
In this critical growth phase where we aim to achieve important business milestones and the
challenging goals we have set for ourselves, while sustaining losses and seeing our share price
fluctuate, we must take care that our remuneration program accomplishes several aims: it must
incentivise and reflect the performance of our pre-profitability business assessed mainly on
technology and operating milestones, rather than conventional financial metrics; it must promote the
interests of shareholders, whose investment in us is often impacted by macroeconomic factors outside
our control; it must meet the expectations of both Australian and U.S. investors, each of whom have
distinct expectations around remuneration; and, as a dual-listed Australian company with operations
exclusively in North America, it must ensure the ability to attract and retain employees in an intensely
competitive global industry.
The details of share price movements are as follows:
31 December
2023
$0.735
31 December
2022
$1.47
Share price (AUD)
30 June 2022
30 June 2021
30 June 2020
$2.28
$2.22
$0.87
27
ANNUAL REPORT - 31 DECEMBER 2023
As discussed in this remuneration report, our 2023 remuneration program, and even more so our 2024
program, achieves these goals. The program incentivises management to deliver growth and results,
while at the same time motivating and retaining key talent in the North American market where our
operations are located; we recognise these as vital to achieving both short and long-term business
objectives and enhancing shareholder value in the long term. Our remuneration program also ensures
that management feels the same shorter-term impact on share price coming from macroeconomic
headwinds as do our shareholders. For instance, despite the achievement of the majority of required
STI thresholds in 2023, in the context of our share prices performance, we exercised discretion to
further reduce and pay out only 33% of the STI target opportunity.
The following table summarises total remuneration for each of the executive KMPs (as defined below)
for 2023 showing the grant date fair values of the equity grants.
Fixed Remuneration (USD$)
Variable Remuneration (USD$)
Name
Cash Salary
Post-
Employment
Benefits
Annual Leave
Entitlements
Non-
Monetary
Benefits
STI
Performance/Share
Rights
Options1
Total
(USD$)
C Burns2
659,571
11,469
25,648
1,915
215,562
1,106,175
60,594
2,080,934
N Liveris
405,833
11,250
15,653
26,594
134,310
325,469
12,065
923,482
R Buttar
380,469
5,720
14,675
8,401
125,916
573,629
-
1,094,387
The following table shows the total remuneration realised by our executive KMPs in 2023, based on
the value of outstanding equity awards that vested or were exercised during the year, excluding
post-employment and annual leave entitlements:
Fixed Remuneration
(USD$)
Name
Cash Salary
STI
C Burns
659,571
215,562
N Liveris
R Buttar
405,833
134,310
380,469
125,916
Variable Remuneration (USD$)
Value Realised on
Performance Rights
with Performance-
Based Vesting
-
-
-
Value Realised on
Performance
Rights with Only
Time-Based
Vesting
-
-
103,9003
Value Realised on
Options Exercised
Total (USD$)
-
-
-
875,133
540,143
610,285
Additionally, a discussion of our 2024 remuneration is included under “Our Response to Last Year’s
AGM Vote.”
1 Represents options held by the relevant KMP during the 2023 fiscal year. No options were granted during the 2023 fiscal
year.
2 Cash salary amounts for Chris Burns throughout this remuneration report represent the USD translated amount of the
salary he received in CAD.
3 Value converted from AUD.
28
ANNUAL REPORT - 31 DECEMBER 2023
KEY MANAGEMENT PERSONNEL (KMPS) COVERED BY THE REMUNERATION REPORT
This remuneration report discusses the compensation of the key management personnel listed below
(defined under Australian rules as individuals who have authority and responsibility for planning,
directing, and controlling the activities of the Company, directly or indirectly, including all Directors).
Name
NON-EXECUTIVE DIRECTORS
R Natter
Position
Independent Chairman
D Akerson
Independent Non-executive Director
Country
Term as KMP in FY2023
United
States
United
States
Full year
Resigned effective 20
December 2023
A Bellas
Independent Deputy Chairman
Australia
Full year
R Cooper
Independent Non-executive Director
Australia
Resigned effective 5 April
2023
R Edmonds
Independent Non-executive Director
Z Golodryga
Non-executive Director
United
States
United
States
Full year
Resigned effective 7
September 2023
A Liveris
Non-executive Director
Australia
Full year
J Oelwang
Independent Non-executive Director
S Vaidyanathan
Non-executive Director
United
States
United
States
Full year
Appointed effective 7
September 2023
EXECUTIVE KMP
C Burns
N Liveris
R Buttar
Chief Executive Officer
Canada
Full year
Chief Financial Officer
Chief Legal & Administrative Officer
United
States
United
States
Full year
Full year
There have been no changes to KMPs, both since the end of the reporting period and as of the date
of this remuneration report. As previously announced, effective 28 February 2024, Sharan Burrow AC
will be joining the Board as an independent non-executive Director and member of the Remuneration
Committee.
KMP REMUNERATION GOVERNANCE
Role of the Remuneration Committee
The Board is responsible for the Company’s remuneration strategy. The Remuneration Committee,
comprised of a majority of independent, non-executive Directors, advises the Board on remuneration
policies and practices generally, and makes specific recommendations on remuneration package and
other terms of employment for executive KMPs and non-executive Directors. Individual pay structures
and outcomes are developed in consultation with external and independent remuneration
consultants, and reviewed and approved by the Remuneration Committee, which then recommends
them for approval to the Board.
29
ANNUAL REPORT - 31 DECEMBER 2023
In making recommendations to the Board, the Remuneration Committee considers, among other
things, relevant market trends and practices, individual roles and responsibilities, legal and regulatory
requirements, diversity (including with respect to gender), and feedback from shareholders and other
stakeholders. This governance structure is aimed at ensuring that our remuneration program aligns
the pay of our management team with shareholder value, within the context of our Company’s unique
situation as a dual-listed Australian company in a critical growth stage with a management team and
operations based entirely in North America.
Role of Management
Although the Remuneration Committee ultimately is responsible for reviewing and making
recommendations to the Board for the Company’s remuneration policies and framework, the
Remuneration Committee may receive input from the management team, which it reviews closely.
The Remuneration Committee, at its discretion, may invite representatives of management and other
employed personnel to attend committee meetings. Our executive KMPs do not participate in
Remuneration Committee discussions about their own remuneration and may not have any indirect
conflict in setting the remuneration of other KMPs. As discussed under “Oversight of Changes to our
Remuneration Program,” the Remuneration Committee met with management extensively
throughout 2023 to evaluate the remuneration strategy for 2024.
Role of Consultants
When appropriate, the Remuneration Committee will seek advice or recommendations from external
and independent expert consultants, including benchmarking studies. In 2023, the Remuneration
Committee retained AON Consulting Inc. (“AON”), which advised on various remuneration-related
items, including peer group development, market practices, industry trends, investor views, and
market data. Advice provided by consultants during the year did not constitute a “remuneration
recommendation” as defined in section 9B of the Corporations Act and was received free from any
undue influence by KMPs to whom the advice related. Furthermore, our Remuneration Committee
concluded that AON is “independent” pursuant to Rule 5605(d)(3) of The Nasdaq Stock Market
(“Nasdaq”).
Remuneration Peer Group
To understand the external market competitiveness of the compensation for our KMPs, our
independent executive remuneration consultant analyzes publicly available information and
compares the compensation of each KMP to data for comparable positions at companies in our peer
group and provides a report to the Remuneration Committee. The Remuneration Committee reviews
our peer group periodically, with input from its independent executive remuneration consultant. In
creating the peer group, our independent executive remuneration consultant considers various
factors, including: (i) relative size to our Company (revenue, market capitalisation, and other relevant
criteria); and (ii) nature of business (business focus, model, and location).
The 2023 compensation peer group consisted of 18 companies publicly traded in the United States in
various industries, including electronic equipment and instruments, specialty chemicals, electrical
components and equipment, automobile manufacturers, automotive retail, construction machinery
30
ANNUAL REPORT - 31 DECEMBER 2023
and heavy transportation equipment, environmental and facilities services, and diversified metals and
mining, with revenues generally less than USD$1 billion.
OUR RESPONSE TO LAST YEAR’S AGM VOTE
At last year’s AGM, 40% of the votes cast at the meeting voted against the adoption of the
remuneration report and a “first strike” was recorded. A “first strike” occurs under Australian rules
when more than 25% of the votes cast at the meeting voted against the adoption of the remuneration
report. In this section, we discuss how we engaged with shareholders, what we heard from them, and
how we considered their valued input in creating our 2024 remuneration program and enhancing the
disclosures in this remuneration report.
Outreach to Shareholders
We remain committed to listening to our shareholders as we continually review and evaluate our
remuneration program. We maintain an ongoing, proactive outreach effort with our shareholders and
regularly engage with our shareholders to seek their input, to remain well-informed regarding their
perspectives, and to help increase their understanding of our business. As part of that ongoing
commitment and to understand the concerns that gave rise to the prior year’s voting results, we
engaged extensively with our shareholders and proxy advisors in the latter half of 2023.
We believe that our shareholder engagement program was robust. Close to a majority of our
shareholders are individual and retail investors, many of which, to the extent they voted at last year’s
AGM, are either unidentifiable or hold less than 100,000 shares. Additionally, at our last AGM, more
than one third of all shares outstanding were held by current and former insiders and Phillips 66. All
former insiders voted for the adoption of our remuneration report. Phillips 66 was not permitted to
vote toward the remuneration report due to restrictions under Australian law.
Company Participants
✓ Chairperson of the Board
✓ Deputy Chairperson of the Board
✓ Chairperson of the Remuneration
Committee
✓ Chief Legal and Administrative
Officer
Results of Outreach
Shareholders We Contacted:
•
21 of our largest shareholders
Shareholders We Met or Spoke with Individually:
• More than 70% of shareholders who voted against
remuneration at 2023 AGM
Two of our four largest shareholders after Phillips 66
Seven of our largest shareholders overall
•
•
31
ANNUAL REPORT - 31 DECEMBER 2023
The resulting discussions provided consistent and valuable feedback that reflected the following
views:
✓
✓
✓
✓
✓
✓
Our current management team is well-respected and critical to the growth of our
business, and competition for talent in our sector is fierce.
Recent enhancements to communication with shareholders were well-received.
Investors have long-term confidence in the Company and believe pay should be better
aligned with performance, including with regard to share price and other operational
metrics.
The Company is in a unique and complex situation with respect to its geography, market,
industry, and growth stage.
A better understanding of benchmarking against industry compensation would be
helpful, in part given our primary listing in Australia.
Greater understanding of financial/non-financial metrics impacting our profitability, as
well as disclosure around compensatory performance metrics and their achievement, is
key.
Oversight of Changes to our Remuneration Program
After the AGM, the Remuneration Committee met extensively with management, our independent
executive remuneration consultant, and other external advisors to develop a long-term plan for
improving the alignment of our remuneration program with enhancing shareholder value. A total of
15 meetings were held. The Remuneration Committee considered the following criteria in its
deliberations:
responsiveness to shareholder and proxy advisor concerns
•
• balancing the expectations of the Australian market with the reality of operating and
competing in the North American market
• execution on our business plan
• appropriate compensation philosophy
• peer practices in the U.S., along with expectation of Australian investors of pay in their local
market.
32
ANNUAL REPORT - 31 DECEMBER 2023
Results of Shareholder Outreach and Changes to our Remuneration Program
In response to shareholder and proxy advisor concerns, we committed to reforming our remuneration
program for 2024, and to include enhanced disclosures in this 2023 remuneration report. The key
changes made to the 2024 remuneration program are as follows:
What We Heard
What We Did
Remuneration was not
sufficiently aligned with
performance.
STI performance criteria: STIs
should be more closely aligned to
well-understood quantitative and
financial metrics.
STI performance criteria: STI
payouts should better reflect
negative share price
performance.
Long-term incentive (“LTI”)
performance criteria: With STI
payouts linked to business goals,
LTI payouts should be better
linked to share price
performance. LTI payouts should
also be based on multi-year
performance.
LTI performance criteria: LTI
payouts should align with longer-
term business goal of achieving
revenues.
Size of equity grants was not in
line with market practise for
Australia.
LTI quantum: Generally, local
Australian companies pay their
executives LTIs of a more modest
quantum.
Director compensation: Market in
Australia is to pay directors LTIs
with a lower value.
Investors could benefit from
enhanced disclosure of
performance metrics.
For STIs granted in 2024, goals include forward-looking revenue and revenue in-
hand (aggregate 25% weight), budget variance (10% weight) and access to capital
(10% weight), with the rest made of up strategic, operational, and people/ESG-
based metrics, in light of our continued emphasis on scaling our business as a
growth-stage company.
For STIs granted in 2024, the Remuneration Committee retains discretion to reduce
annual STI payout based on negative annual TSR and other factors, thus further
aligning our management’s interests with those of shareholders.
For LTI awards granted in 2024, all performance rights vest based on corporate
performance, with none vesting solely based on time. Payouts are measured based
on achievement of relative TSR (versus a peer group of 20 companies primarily
focused in the diversified metals and electronic equipment industries) over a three-
year performance period and are capped at the target opportunity. Performance
rights require a minimum level of relative TSR (35th percentile) to achieve any
payout, regardless of revenue earned, and a relative TSR of at least 60th percentile to
pay out at the highest level. This establishes a rigorous framework for evaluating
Company performance and is directly aligned with shareholders’ interests.
Performance rights granted in 2024 also include a revenue modifier based on the
attainment of a three-year revenue goal (with the payout still capped at the target
opportunity). The addition of this modifier reinforces our focus on top-line revenue
growth, a core metric for effectively scaling and growing the business.
For LTIs granted in 2024, awarded LTI opportunities with a quantum substantially
below the median of our U.S. peer group.
For 2024, Director LTI quantum reduced 50% in value from the prior year.
This 2023 remuneration report includes enhanced detail of:
•
how 2023 incentives and payouts were determined;
•
greater context around the “why” of our remuneration design and key decisions
•
our compensation governance
33
ANNUAL REPORT - 31 DECEMBER 2023
In addition, the Company changed its fiscal year-end from June 30 to December 31. As a consequence
of this change, Directors were scheduled to receive share rights for the period 1 July 2023 to 31
December 2023 (“2023 partial year”) to align with the new fiscal year-end. Shareholders approved the
2023 partial year share rights; however, they were not issued and will not be issued. The Board has
determined that one Director shall be granted his share rights for the period from his appointment in
October 2022 to 30 June 2023, subject to shareholder approval. We view this as an additional sign to
shareholders of the Board’s long-term commitment to the team and Company. See “Non-Executive
Director Remuneration.”
OUR REMUNERATION STRATEGY
As discussed in “Remuneration and our 2023 Performance,” our remuneration strategy is informed by
both U.S. and Australian pay practices, our market, industry, and growth stage, and is designed to
ensure we can:
• attract and retain experienced leaders and key employees in the markets in which the
•
•
Company operates in a highly specialised and competitive industry,
link remuneration with performance to align pay outcomes with value created for the
Company and its shareholders,
reward performance that will support our long-term strategic growth, business objectives,
innovation, and a strong culture,
• encourage an ownership mentality across all levels of the Company.
34
These strategic priorities have led us to implement the following pay practices in 2023 and 2024:
ANNUAL REPORT - 31 DECEMBER 2023
Performance-Based Remuneration
Rationale
Fixed Remuneration1
Attracts and retains key
personnel via competitive
baseline pay and provides a
level of cash income
predictability and stability.
Short-Term Incentives
Focuses attention on
corporate KPIs that
promote achievement of
strategic objectives and
shareholder wealth.
Long-Term Incentives
Serves multi-pronged
purpose:
• retains employees
• provides a framework for
increasing shareholder
value and business
performance through key
objectives that we believe
are critical to long-term
profitability
• conserves cash
Performance rights in our
ordinary shares (in 2023,
both performance-vesting
and time-vesting, and in
2024, performance-vesting
only).
Granted annually. For
performance-vesting grants,
Remuneration Committee
sets multi-year performance
goals upon grant at beginning
of year and assesses their
achievement after a typical 3-
year period.
Opportunity set based on
target number of shares.
Actual pay outcomes
following vesting are variable
subject to share price
fluctuations and/or the
achievement of performance
criteria.
For 2023, revenue. For 2024,
relative TSR with a revenue
modifier.
Delivered as
Cash
Cash
Process
Set annually.
Quantum of
opportunity
Set according to each KMP’s
accountabilities, experience
and qualifications, and
market relativities.
Performance
criteria
N/A
Granted annually.
Remuneration Committee
sets one-year performance
goals upon grant at
beginning of year and
assesses their achievement
after end of that year.
Opportunity set as a
percentage of fixed
remuneration. Pay
outcomes are variable
based on the achievement
of performance criteria and
Remuneration Committee’s
discretion.
Corporate KPIs (business
milestones), allowing use of
negative discretion.
N/A
1 year.
3 years.
Performance
and service
period
Cessation of
employment
N/A
Unvested performance rights
are forfeited, unless Board
exercises discretion.
1 Fixed remuneration includes cash salary, post-employment benefits, annual leave entitlements and non-monetary
benefits.
No award will be made to
employees who have
ceased employment.
35
ANNUAL REPORT - 31 DECEMBER 2023
OUR REMUNERATION MIX
Our Remuneration Committee reviews and recommends to the Board the remuneration strategy for
our KMPs annually to ensure it remains aligned to our business needs and outcomes. In our current,
early stage of growth, setting quantitative target performance levels can be challenging. This is further
complicated by rapidly shifting market and regulatory conditions. The majority of our target
compensation is performance-based and at risk, and, for our CEO, focused on long-term performance.
Our 2024 pay mix also reflects a significant reduction in LTI opportunity (without a significant change
in cash salary and STI opportunity levels).
REMUNERATION OUTCOMES FOR THE YEAR ENDED 31 DECEMBER 2023
Cash Salary/Fixed Remuneration
The Remuneration Committee provides guidance in setting cash salaries for the Company’s KMPs at
levels that reflect the Remuneration Committee’s assessment of competitive compensation averages
within our peer group for individuals with similar responsibilities at companies with similar financial,
operating and industry characteristics, in similar locations. The members of the Remuneration
Committee also evaluate KMP compensation using their accumulated individual knowledge and
industry experience, as well as publicly available compensation information with respect to companies
within our peer group.
In 2023, the Remuneration Committee increased our KMPs’ cash salaries in amounts ranging from 2%
to 5%, as a cost-of-living adjustment, as shown below.
KMP
Chris Burns
Nick Liveris
Rashda Buttar
Short-term Incentives
2022 Cash Salary
(USD$)
$637,738
2023 Cash Salary
(USD$)
$653,217
$400,513
$361,944
$407,000
$381,563
% Change
2%
2%
5%
The purpose of our STIs is to motivate and reward our KMPs for the attainment of measurable
performance objectives, including annually set goals for financing, strategic, and operational
performance in line with KPIs. These are criteria that management is focused on for the Company in
our current growth stage. The KPIs are the same among all KMPs and measure the Company’s
achievement during the fiscal year. Financial metrics do not currently make up the majority of KPIs
given that we remain focused on scaling the business and that certain of our long-term incentives
already include a revenue metric.
During the year for which performance is measured, each KMP receives an STI target award, which is
a percentage of their salary for that year. Following the end of the year, Company performance against
each KPI is measured. The level of achievement on each KPI is multiplied by the relative weight for
that KPI, which then translates to a defined payout expressed as a percentage of the target STI.
For 2023, the target STI was 100% of salary for all KMPs. The table below shows the STI objectives and
outcomes for the fiscal year.
36
ANNUAL REPORT - 31 DECEMBER 2023
Metric
Category
(Weighting)
NAM
Operational
(35%)
Goals
Product reaching customer specifications
Definition of mass production equipment and
process
Equipment on site or on order to align with
production targets
Customer off-take agreements
Engineering progress on Greenfield facility
% of Total STI
Assuming
Highest Rating
7.0%
NAM Operational Subtotal
Secure target funding for Greenfield facility
Financing (25%)
Secured funding relative to ongoing operational
spend
Financing Performance Subtotal
Strategy
(20%)
Secure cathode technology partnership
Secure non-US partner for anode materials
expansion plan
Establish key ESG program metrics and disclosures
Strategy Subtotal
BTS Operational
(10%)
Develop long term strategic partnerships at BTS
Cathode material performance meeting targets
Data solution customer onboarding
BTS Operational Subtotal
People
(10%)
TRIFR targets
Employee engagement metrics
Employee retention metrics
People Subtotal
STI Performance Ratio
STI Payout Ratio Approved by the Committee and Board
7.0%
7.0%
7.0%
7.0%
12.5%
12.5%
6.7%
6.7%
6.7%
3.3%
3.3%
3.3%
3.3%
3.3%
3.3%
Rating
80%
90%
80%
50%
25%
20%
80%
0%
100%
100%
33%
90%
100%
100%
100%
100%
Outcome as
% of total
STI
5.6%
6.3%
5.6%
3.5%
1.8%
22.8%
2.5%
10%
12.5%
0%
6.7%
6.7%
13.4%
1.1%
3%
3.3%
7.4%
3.3%
3.3%
3.3%
10%
66%
33%
The Remuneration Committee assessed the Company’s performance of KPIs for the financial year
ended 31 December 2023 as achieving 66% of target. This reflects achievement of several significant
operational, financial, and people goals. Despite the achievement of the majority of required STI
thresholds, in the context of the share price performance in the year, the Remuneration Committee
recommended that the Board exercise its discretion to further reduce and pay out only 50% of the
calculated STI to ensure KMP remuneration is aligned to enhancing shareholder value. This represents
a significant reduction from the payout of 77.5% for the six-month period ending 31 December 2022.
This led to the following payouts for 2023, which the Company believes reflects the close link between
the STI remuneration and the Company performance during the financial year.
KMP
Cash
(USD$)
Salary
STI Target (%)
Chris Burns
Nick Liveris
Rashda Buttar
$653,217
$407,000
$381,563
100%
100%
100%
Achieved
Performance
Ratio
66%
66%
66%
STI
Payout
Ratio
33%
33%
33%
Actual
Payout
(USD$)
$215,562
$134,310
$125,916
37
ANNUAL REPORT - 31 DECEMBER 2023
Long-term Incentives
Performance rights
KMPs participate in the LTIP, composed of grants of performance rights with varying vesting
conditions. The dollar value of the LTI award is converted into a fixed number of performance rights
based on the market value of NOVONIX shares at the time of grant.
In 2023, we granted both performance rights, including performance rights vesting based on the
achievement of performance criteria, such as corporate goals, and those vesting only based on
continued service over time (referred to in this remuneration report as vesting based on “time”) to
the Company, as follows:
Performance
Rights Vesting
Based on
Performance
(Target
Opportunity)(#)
802,435
Details Regarding Vesting
Criteria
Vest subject to achievement
of revenue, for the 12-
month period preceding
vesting date (31 December
2025) as follows:
Performance
Rights
Vesting Only
Based on
Time(#)
802,436
Details
Regarding
Vesting
Criteria
Vest subject
to continued
employment
Total
Rights(#)
1,604,871
274,517
274,518
549,035
KMP
Chris
Burns
Nick
Liveris
Rashda
Buttar
126,701
•
•
0-50% of target
opportunity for revenue
up to USD$50M
(calculated using linear
interpolation).
50-100% of target
opportunity for revenue
from USD$50M -
$125M+ (calculated
using linear
interpolation, capped at
100%).
126,700
253,401
The mix of performance-and time-based grants, the performance criteria used, and three-year vesting
period for all awards were unchanged in 2023 from 2022. Payouts of performance-vesting rights are
capped at target.
The performance rights (both performance and time-based rights) listed above were granted to Mr.
Liveris on 5 April 2023 and to Mr. Burns and Ms. Buttar on 13 April 2023. Any unvested performance
rights will lapse. The long-term incentives will be issued as performance rights under the Company’s
existing Performance Rights Plan.
The Remuneration Committee believes that the performance criteria in the performance rights
provide challenging but appropriate incentives to KMPs given our focus on producing revenue over
the coming years and our recognition of the necessary runway for achieving that goal.
38
ANNUAL REPORT - 31 DECEMBER 2023
Options
No options were awarded to executive KMPs during the 2023 financial year.
OTHER ASPECTS OF OUR REMUNERATION PROGRAM
Share Ownership Guidelines
To further align the interests of our non-executive Directors and other leadership with those of
shareholders, the Company has adopted share ownership guidelines. These require (1) each non-
executive Director (other than those who do not receive remuneration from us, as further described
below) to retain ordinary shares having a value of at least three times the annual cash retainer fee and
(2) the Chief Executive Officer to retain ordinary shares having a value equal to three times his annual
salary. Until reaching the required ownership level, non-executive Directors covered by the guidelines
and the Chief Executive Officer are required to retain at least 50% of their shares, net of applicable tax
withholding and the payment of any exercise or purchase price (if applicable), received upon the
vesting or settlement of equity awards or the exercise of share options. Each non-executive Director
covered by the guidelines and the Chief Executive Officer has five years to comply with the guidelines,
and options and unvested performance rights do not count toward the requirement. The following
shows compliance with the ownership guidelines as of 31 December 2023:
KMP
Share Ownership Guideline
(Multiple of Salary or Retainer)
3x cash salary
Share Ownership as of
31 December 2023
Guidelines met
3x cash retainer
C Burns
Non-executive
Directors*
* Does not include Ms. Golodryga and Mr. Vaidyanathan, who are not permitted to receive remuneration,
including any equity incentives, in their personal capacity under the terms of their employment with Phillips 66
and terms of engagement with the Company (all of whose equity grants are paid or granted directly to Phillips
66).
Guidelines met**
** Non-executive Directors who joined the Company in the past two years have not yet met the required
ownership level but retain at least 50% of their shares as required.
39
ANNUAL REPORT - 31 DECEMBER 2023
Clawback Policy
We maintain a clawback policy as required by the rules of Nasdaq. Our clawback policy covers each of
our current and former executive officers (i.e., executive KMPs). The policy provides that, subject to
the limited exemptions provided by the Nasdaq rules, if the Company is required to restate its financial
results due to material noncompliance with financial reporting requirements under the securities
laws, the Remuneration Committee must reasonably promptly seek recovery of any cash or equity-
based incentive compensation (including vested and unvested equity) paid or awarded to the covered
individual, to the extent that the compensation (i) was based on erroneous financial data and (ii)
exceeded what would have been paid to the executive officer under the restatement. Recovery
applies to any such excess cash or equity-based bonus/other incentive compensation received by any
covered individual, while he/she was an executive officer, on or after 2 October 2023 during the three
completed fiscal years immediately preceding the date on which the Company determines an
accounting statement is required. For more information, see the full text of our claw-back policy,
which is filed as an exhibit to our Annual Report on Form 20-F.
REMUNERATION EXPENSES FOR KMPS
The following table details the remuneration expenses recognised for the Company’s KMPs and non-
executive Directors, for the current period and previous financial year measured in accordance with
accounting standard requirements.
40
Year ended 31 December 2023 – All amounts are shown in USD$.
Fixed Remuneration
Variable Remuneration
Name
Key Management Personnel
Cash Salary
Post-
Employment
Benefits
Annual Leave
entitlements
Non-Monetary
Benefits1
STI
Performance/
Share Rights
Options2
Total
659,571
11,469
25,648
1,915
215,562
1,106,175
C Burns
N Liveris
R Buttar
Non-executive Directors
D Akerson
(Ceased 20/12/2023)
A Bellas
R Cooper
(Ceased 5/04/2023)
R Edmonds
Z Golodryga
(ceased 7/9/2023)
A Liveris
R Natter
J Oelwang
S Vaidyanathan
(appointed 7/9/2023)
405,833
380,469
63,333
92,743
17,281
60,000
41,500
45,241
116,000
68,125
18,034
11,250
5,720
-
9,974
1,814
-
-
4,865
-
-
-
7,961
252
-
-
-
-
-
-
-
-
-
26,594
134,310
325,469
60,594
12,065
2,080,934
923,482
8,401
125,916
573,629
-
1,094,387
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,593
5,476
31,943
22,593
22,593
22,593
22,593
-
-
-
-
-
-
-
-
-
-
63,333
125,310
24,571
91,943
64,093
72,699
138,593
90,718
18,034
Total KMP remuneration expensed
1,968,130
45,092
33,861
36,910
475,788
2,155,657
72,659
4,788,097
1 Short-term benefits as per Corporations Regulation 2M.3.03(1) Item 6, primarily health insurance.
2 Represents options held by the relevant KMP during the 2023 fiscal year. No options were granted during the 2023 fiscal year.
41
Six-month period ended 31 December 2022 – All amounts are shown in USD$.
Name
Key Management Personnel
C Burns
N Liveris
R Buttar
Non-executive Directors
D Akerson
(Appointed 27/10/2022)
A Bellas
R Cooper
R Edmonds
(Appointed 27/10/2022)
Z Golodryga
A Liveris
R Natter
J Oelwang
Fixed Remuneration
Variable Remuneration
Cash Salary
Post-
Employment
Benefits
Non-Monetary
Benefits1
STI
Performance/
Share Rights
Options
Total
303,971
200,000
185,250
9,583
45,547
33,582
10,000
30,000
23,318
56,388
30,708
5,714
4,527
-
-
4,782
3,526
-
-
2,448
-
-
975
9,536
4,422
-
-
-
-
-
-
-
-
250,635
2,270,362
155,000
600,418
108,984
677,226
-
-
-
-
-
-
-
-
-
112,8572
112,8572
-
112,8572
112,8572
126,9712
130,6772
11,394
2,445
-
-
-
-
-
-
-
-
-
2,843,051
971,926
975,882
9,583
163,186
149,965
10,000
142,857
138,623
183,359
161,385
Total KMP remuneration expensed
928,347
20,997
14,933
514,619
4,257,082
13,839
5,749,817
1 Short-term benefits as per Corporations Regulation 2M.3.03(1) Item 6, primarily health insurance.
2 Revised to reflect the appropriate vesting period for the FY23 Share Rights award, resulting in an increase of $44,099 in performance/share rights for each of A Bellas, R Cooper, A Liveris, J Oelwang, R Natter and Z Golodryga.
42
Contractual Arrangements with KMPs
Component
Chris Burns
Nick Liveris
Rashda Buttar
Annual fixed remuneration (USD$)
Contract duration
653,217
Ongoing
contract
407,000
381,563
Ongoing
contract
Ongoing
contract
Notice by the individual / company
3 months
3 months
3 months
AON, an external remuneration consultant, is engaged to benchmark KMP salaries, with those salaries
positioned at the 50th percentile of the peer group. KMP salaries also are set taking into account each
KMP’s accountabilities, experience, and qualifications.
NON-EXECUTIVE DIRECTOR REMUNERATION
Non-executive Director remuneration includes both a cash component and an annual grant of equity
awards using a value-based approach by issuing share rights to non-executive Directors each financial
year.
At the 2022 AGM, the shareholders approved the granting of the financial year 2023 share rights
(covering the period 1 July 2022 to 30 June 2023) to Directors. The number of share rights granted
was calculated by dividing the value of the share rights (USD$110,000) by the closing share price of
the Company’s shares on the ASX on 30 June 2022 and the USD$/AUD$ spot rate as of 30 June 2022.
The share rights automatically vested on 30 June 2023.
In addition, the Company changed its fiscal year-end from June 30 to December 31. As a consequence
of this change, Directors were scheduled to receive share rights for the period 1 July 2023 to 31
December 2023 (“2023 partial year”) to align with the new fiscal year-end. Shareholders approved the
2023 partial year share rights; however, they were not issued and will not be issued. The Board has
determined that one Director shall be granted his share rights for the period from his appointment in
October 2022 to 30 June 2023, subject to shareholder approval. We view this as an additional sign to
shareholders of the Board’s long-term commitment to the team and Company.
In addition, and with effect from 1 January 2024, the value of the share rights to be granted to
Directors each year has been reduced from USD$110,000 to USD$55,000.
If a non-executive Director is appointed during the financial year, the number of share rights to be
issued comprises a pro-rata amount of the value of the share rights, based on the date of the non-
executive Director’s appointment, as a proportion of the financial year. The number of share rights is
then calculated by dividing the value of the share rights by the closing share price of the Company’s
shares on the ASX and the USD$/AUD$ spot rate on the trading day immediately prior to the non-
executive Director’s appointment.
If a non-executive Director ceases to hold office as a Director prior to the vesting date, that person's
share rights will lapse, and they will be entitled to a pro-rata amount of shares representing the
proportion of the relevant financial year that such person was a non-executive Director.
43
Ms. Golodryga and Mr. Vaidyanathan are not permitted to receive remuneration, including any equity
incentives, in their personal capacity under the terms of their employment with Phillips 66 and terms
of engagement with the Company. Accordingly, all fees earned by, and all equity instruments granted
to, Ms Golodryga and Mr. Vaidyanathan are paid or granted directly to Phillips 66.
The table below shows the value of share rights that were granted, exercised and forfeited during the
year ended 31 December 2023.
2023
D Akerson
A Bellas
R Cooper
R Edmonds
Z Golodryga
A Liveris
R Natter
J Oelwang
Non-executive Director share rights
Number
Granted
Value
Granted
(AUD$)1
-
-
-
-
-
-
Value
Exercised
(AUD$)1
-
72,095
54,910
Number
Forfeited
-
-
Value
Forfeited
(AUD$)1
-
-
16,684
48,384
65,405
48,073
-
-
-
-
-
-
-
-
-
72,095
72,095
79,576
81,540
-
-
-
-
-
-
-
-
-
-
1 Amounts are disclosed in AUD$ as the value is determined based on the ASX share price at grant date, which is denominated
in AUD.
The non-executive Directors received the following cash fees:
Chairman
Base non-executive Director fee
Chair of Audit & Risk Committee
Member of Audit & Risk Committee
Chair of Nominating and Corporate Governance Committee
Member of Nominating and Corporate Governance Committee
Chair of Remuneration Committee
Member of Remuneration Committee
USD$
106,000
50,000
20,000
10,000
10,000
5,000
15,000
7,500
The current base fees were reviewed with effect from 1 September 2022.
The maximum annual aggregate non-executive Directors’ fee pool limit is USD$700,000 (excluding
share-based payments) and was approved by shareholders at the 2023 AGM.
Any Director who devotes special attention to the business of the Company, or who otherwise
performs services which in the opinion of the Directors are outside the scope of the ordinary duties of
a Director may be paid extra remuneration as determined by the Directors, which will not form part
44
of the aggregate fee pool limit above. Non-executive Directors are not entitled to any performance-
related remuneration or retirement allowances outside of statutory superannuation entitlements.
All non-executive Directors enter into a service agreement with the Company in the form of a letter
of appointment. The letter summarises the Board policies and terms, including remuneration relevant
to the office of Director.
Additional Statutory Information
Performance Based Remuneration Granted, Forfeited, and Cancelled During the Year
The table below shows for each KMP how much of their STI cash bonus was awarded and how much
was forfeited. It also shows the fair value of performance rights that were granted, exercised, forfeited
and cancelled (where applicable) during the year ended 31 December 2023. The number of
performance rights and percentages vested/forfeited for each grant are disclosed in section (ii) on
page 50 below.
2023
C Burns
N Liveris
R Buttar
Total STI Bonus
Total STI
Opportunity
$
654,217
407,000
381,563
Awarded
%
Forfeited
%
33%
33%
33%
67%
67%
67%
LTI Performance Rights
Value
Exercised
AUD
$*
Value
Granted
AUD
$
1,749,309
664,332
276,207
-
-
155,738
* The value at the exercise date of options/performance rights that were granted as part of remuneration and were exercised during the
year has been determined as the intrinsic value of the options at that date.
45
(ii)
Terms and conditions of the share-based payment arrangements
Options
The terms and conditions of each grant of options affecting remuneration in the current or a future
reporting period are as follows:
Name
Grant Date
Vesting
Date
Expiry Date
Number
Under
Option
Exercise
Price
AUD
$
Value per
Option at
Grant Date
AUD
$
Performance
Achieved
Vested
%
C Burns
13/03/2019
30/09/2025~
Cessation of employment
850,000
$0.50
13/03/2019
31/12/2025~
Cessation of employment
850,000
$0.50
13/03/2019
31/07/2026~
Cessation of employment
850,000
$0.50
13/03/2019
30/09/2026~
Cessation of employment
850,000
$0.50
13/03/2019
30/11/2026~
Cessation of employment
850,000
$0.50
13/03/2019
31/12/2026~
Cessation of employment
850,000
$0.50
13/03/2019
31/08/2027~
Cessation of employment
850,000
$0.50
13/03/2019
30/09/2027~
Cessation of employment
850,000
$0.50
13/03/2019
31/10/2027~
Cessation of employment
850,000
$0.50
13/03/2019
30/11/2027~
Cessation of employment
850,000
$0.50
N Liveris
21/11/2019
30/09/2025~
Cessation of employment
250,000
$0.50
21/11/2019
31/12/2025~
Cessation of employment
250,000
$0.50
21/11/2019
31/07/2026~
Cessation of employment
250,000
$0.50
21/11/2019
30/09/2026~
Cessation of employment
250,000
$0.50
21/11/2019
30/11/2026~
Cessation of employment
250,000
$0.50
21/11/2019
31/12/2026~
Cessation of employment
250,000
$0.50
21/11/2019
31/08/2027~
Cessation of employment
250,000
$0.50
21/11/2019
30/09/2027~
Cessation of employment
250,000
$0.50
21/11/2019
31/10/2027~
Cessation of employment
250,000
$0.50
21/11/2019
30/11/2027~
Cessation of employment
250,000
$0.50
$0.54
$0.55
$0.56
$0.56
$0.57
$0.57
$0.57
$0.57
$0.58
$0.58
$0.36
$0.37
$0.38
$0.38
$0.39
$0.39
$0.39
$0.39
$0.40
$0.40
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
~ These options vest in 10 equal tranches upon the achievement of progressive incremental production milestones of 1,000 tonnes. The
vesting dates in the table represent the current estimate of when the vesting conditions will be met, and the options can be exercised.
The number of options over ordinary shares in the Company provided as remuneration to key
management personnel is shown in the table below on page 49. The options carry no dividend or
voting rights. When exercisable, each option is convertible into one ordinary share of NOVONIX
Limited.
46
Performance Rights
The terms and conditions of each grant of performance rights affecting remuneration in the current
or a future reporting period are as follows:
KMP
Number
Grant Date
Vesting Date Vesting Conditions
C Burns
1,412,000
28/01/2022
30/06/2024
N Liveris
667,831
26/10/2022
30/06/2024
R Buttar
255,238
28/01/2022
30/06/2024
C Burns
2,275,400
26/10/2022
30/06/2025
N Liveris
778,400
26/10/2022
30/06/2025
R Buttar
359,300
26/10/2022
30/06/2025
C Burns
1,604,871
13/04/2023
31/12/2025
N Liveris
549,035
05/04/2023
31/12/2025
R Buttar
253,401
13/04/2023
31/12/2025
50% vest subject to continued
employment at 30 June 2024 and
50% vest subject to achievement of
revenue for the period 1 July 2023
to 30 June 2024:
a) 0-50% of award for linear
revenue up to USD$45M
b) 50-100% of award
for
incremental
revenue
linearly from USD$45m -
$105m.
50% vest subject to continued
employment at 30 June 2025 and
50% vest subject to achievement of
revenue, for the 12-month period
preceding vesting date as follows:
a) 0-50% of award for linear
revenue up to USD$75M
b) 50-100% of award for
incremental revenue
linearly from USD$75m -
$180m.
50% vest subject to continued
employment at 31 December 2025
and 50% vest achievement of
revenue targets for the 2025
financial year as follows:
a) 0-25% of award for linear
revenue up to USD$50M
b) 25-50% of award for
incremental revenue
linearly from USD$50m -
$125m+.
Grant Date
Fair Value
Per Unit
(AUD$)
$7.21
$2.90
$7.21
$2.90
$2.90
$2.90
$1.09
$1.21
$1.09
R Buttar
Tranche 1
Tranche 2
Tranche 3
37,500
37,500
37,500
6/10/2021
6/10/2021
6/10/2021
22/04/2023
22/04/2024
22/04/2025
Vest subject to continued service
with the Company up to the
vesting date.
$4.92
$4.92
$4.92
The number of performance rights over ordinary shares in the Company provided as remuneration to
KMPs is shown on page 50. The performance rights carry no dividend or voting rights. Rights granted
are dependent on the recipient’s continued service, or achievement of performance related vesting
conditions, by the vesting date.
Upon vesting, each performance right is convertible into one ordinary share of NOVONIX Limited. If a
KMP ceases employment before the rights vest, the rights will be forfeited, except in limited
circumstances that they are approved by the Board on a case-by-case basis.
47
Share Rights
The terms and conditions of each grant of share rights affecting remuneration in the current or a
future reporting period are as follows, for each of our non-executive Directors:
Number
Grant Date
Vesting Date
69,995
69,995
10,542
54,863
69,995
69,995
69,995
69,995
26/10/2022
26/10/2022
31/12/2023
31/12/2023
26/10/2022
26/10/2022
26/10/2022
26/10/2022
30/06/2023
30/06/2023
31/12/2023
31/12/2023
30/06/2023
30/06/2023
30/06/2023
30/06/2023
Grant Date Fair
Value Per Unit
AUD
$
$2.90
$2.90
$0.735*
$0.735*
$2.90
$2.90
$2.90
$2.90
A Bellas
R Cooper
R Edmonds
R Edmonds
Z Golodryga
A Liveris
R Natter
J Oelwang
* Estimated grant date fair value at the end of the reporting period, subject to shareholder approval at the 2024 AGM.
The number of share rights over ordinary shares in the Company provided as remuneration to key
management personnel is shown on page 51. The share rights carry no dividend or voting rights.
These share rights vest in full in one instalment based solely on service to us through the vesting date
and do not have any performance related vesting conditions.
Upon vesting, each share right is convertible into one ordinary share of NOVONIX Limited. If a non-
executive Director ceases to hold office before the share rights vest, the rights will vest on a pro rata
basis representing the proportion of the relevant financial year that such a person served as a non-
executive Director. For example, if a non-executive Director who is issued share rights ceases to hold
office halfway through the financial year, then that non-executive Director will only be entitled to half
of the shares initially awarded.
48
Reconciliation of options, performance rights, share rights and ordinary shares held by KMP
(iii)
The table below shows a reconciliation of options held by each KMP (to the extent they held any options at all) from 1 January 2023 to 31 December 2023.
Options
2023
Name & Grant Dates
R Natter
22 Nov 2018
31 July 2019
R Cooper
22 Nov 2018
A Liveris
31 July 2019
C Burns
13 March 2019
24 May 2019
N Liveris
31 July 2019
21 November 2019
Balance at the Start of the
Period
Unvested
Vested
Granted as
Compensation
Vested
Number
%
-
-
-
-
500,000
1,000,000
200,000
9,000,000
8,500,000
-
-
1,000,000
-
2,500,000
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The amounts paid per ordinary share on the exercise of options at the date of exercise were as follows:
Exercise Date
23 March 2023
29 August 2023
Amount Paid Per Share
$0.90
$0.70
No amounts are unpaid on any shares issued on the exercise of options.
Balance at the End of the Period
Exercised
Expired
(500,000)
-
-
-
Vested and
Exercisable
-
1,000,000
(66,666)
(133,334)
-
-
-
-
-
-
-
-
-
-
-
Unvested
-
-
-
-
9,000,000
-
1,000,000
8,500,000
-
1,000,000
-
-
2,500,000
49
The table below shows how many performance rights were granted and vested during the period. No performance rights were forfeited during the period.
Performance Rights
Name & Grant Dates
C Burns
28 January 2022
1 July 2022
1 January 2023
N Liveris
28 January 2022
1 July 2022
1 January 2023
R Buttar
6 October 2021
28 January 2022
1 July 2022
1 July 2022
1 January 2023
Balance at the Start
of the Period
Unvested
Vested
Granted as
Compensation
Vested
During the
Period
Exercised
During the
Period
Lapsed
During
the
Period
Balance at the End of
the Period
Unvested
Vested
1,412,000
2,275,400
-
667,831
778,400
-
112,500
255,238
482,441
359,300
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,604,871
-
-
549,035
-
-
-
-
253,401
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
37,500
-
120,610
-
-
-
-
-
-
-
-
-
-
-
-
-
1,412,000
2,275,400
1,604,871
667,831
778,400
549,035
75,000
255,238
361,831
359,300
253,401
-
-
-
-
-
-
-
-
-
-
-
Maximum
Value Yet
to Vest*
USD$
791,628
1,220,332
534,639
150,597
417,468
201,416
61,556
143,097
251,324
192,698
84,417
*
The maximum value of the performance rights yet to vest has been determined as the amount of the grant date fair value of the rights that are yet to be expensed at 31 December 2023, converted at the USD$/AUD$ spot rate
at 31 December 2023. The minimum value of deferred shares yet to vest is nil, as the shares will be forfeited if the vesting conditions are not met.
50
Share Rights
The table below shows a reconciliation of share rights held by each non-executive Director (to the extent they held any share rights at all) from 1 January 2023 to 31
December 2023.
Name & Grant Dates
A Bellas
1 July 2022
R Cooper
1 July 2022
R Edmonds
31 December 2023
31 December 2023
Z Golodryga
1 July 2022
A Liveris
1 July 2022
R Natter
1 July 2022
J Oelwang
1 July 2022
Balance at the Start
of the Period
Unvested
Vested
69,995
69,995
-
-
69,995
69,995
77,258
79,165
-
-
-
-
-
-
-
-
Granted as
Compensation
Vested & Exercised During
the Period
Forfeited During the
Period
Number
%
Number
(69,995)
100%
-
%
-
(53,311)
76%
(16,684)
24%
-
-
54,863*
10,542*
-
-
-
-
-
-
-
-
(69,995)
100%
(69,995)
100%
(77,258)
100%
(79,165)
100%
-
-
-
-
-
-
-
-
-
-
-
-
Balance at the End of the
Period
Unvested
Vested
Maximum
Value Yet
to Vest^
US$
-
-
54,863
10,542
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
^ The maximum value of the performance rights yet to vest has been determined as the amount of the grant date fair value of the rights that are yet to be expensed, converted at the USD$/AUD$ spot rate at 31 December 2023.
The minimum value of deferred shares yet to vest is nil, as the shares will be forfeited if the vesting conditions are not met.
* Granted subject to receipt of Shareholder approval at the 2024 AGM.
51
Shareholdings
Name
Ordinary shares
D Akerson
A Bellas
R Cooper
R Edmonds
Z Golodryga
A Liveris
R Natter
J Oelwang
S Vaidyanathan
C Burns
N Liveris
R Buttar
American Depository Receipts
D Akerson
Balance at the
Start of the
Period
-
2,412,374
652,612
-
-
9,198,794
2,132,758
-
-
3,448,936
1,202,679
37,500
-
-
66,666
-
-
-
500,000
-
-
-
-
-
Options
Exercised
Performance
Rights Exercised
Share Rights
Exercised
Other Changes
Balance at the End
of the Period
-
-
-
-
-
-
-
-
-
-
89,160
-
-
69,995
53,311
-
-
69,995
77,258
79,165
-
-
-
-
-
-
116,9593
(772,589)1
-
-
360,000
6,9842
-
-
-
-
-
(25,000)1
-
2,599,328
-
-
-
9,628,789
2,717,000
79,165
-
3,448,936
1,202,679
126,660
-
25,000
-
1 Shareholding on date of appointment/resignation
2 On-market sale of 373,016 shares and purchase of 380,000 shares.
3 On-market purchase of 116,959 shares.
Loans with KMPs
(iv)
During the financial year there were no loans to executive KMP during the financial year (2022: Nil)
Other transactions with KMPs
(v)
There have been no other transactions with KMPs.
52
Reliance on external remuneration consultants
(vi)
The Remuneration Committee engages AON to review its remuneration policies and to provide
recommendations on KMP cash salary, short-term and long-term incentive plan design. AON was engaged
by the Remuneration Committee independently of management. AON was paid USD$169,911 for these
services during the year ended 31 December 2023.
End of remuneration report (audited)
53
Annual Report - 31 December 2023
Shares Under Option and Performance Rights
Unissued Ordinary Shares
Unissued ordinary shares of NOVONIX Limited under option at the date of this report are as follows:
Date Options Granted
Expiry Date
Exercise Price
AUD
$
Number Under Option
Vested
Unvested
2 November 2018
2 November 2023
$0.55
10,000
-
13 March 2019
Cessation of employment
$0.50
-
11,000,000
14 March 2019
Cessation of employment
$0.50
666,667
24 May 2019
5 August 2024
$0.50
1,000,000
31 July 2019
5 August 2024
$0.50
11,000,000
21 November 2019
Cessation of employment
$0.50
17 December 2019
Cessation of employment
$0.50
4 February 2020
Cessation of employment
$0.50
14 March 2021
Cessation of employment
$0.50
-
-
-
-
-
-
-
2,500,000
1,000,000
1,000,000
33,334
Unissued ordinary shares of NOVONIX Limited under performance right at the date of this report
totalled 13,430,249. 400,000 of the performance rights expire on 11/12/2025 with the balance
expiring on cessation of employment of the holder. 4,631,721 of the performance rights on issue were
granted during the financial period, 236,603 were granted subsequent to year end, with the remaining
8,561,926 being granted in the prior financial years.
There were no unissued ordinary shares of NOVONIX Limited under share rights at the date of this,
however 514,844 share rights have been granted to Directors during the financial year, subject to
approval of Shareholders at the 2024 Annual General Meeting.
No performance right holder or option holder has any right to participate in any other share issue of
the Company or any other entity.
Insurance of Officers and Indemnities
Insurance of Officers
During the financial period, NOVONIX Limited paid a premium of $3,962,922 to insure the Directors
and Secretaries of the Company.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings
that may be brought against the officers in their capacity as officers of entities in the Group, and any
other payments arising from liabilities incurred by the officers in connection with such proceedings.
This does not include such liabilities that arise from conduct involving a wilful breach of duty by the
officers or the improper use by the officers of their position or of information to gain advantage for
54
themselves or someone else or to cause detriment to the Company. It is not possible to apportion the
premium between amounts relating to the insurance against legal costs and those relating to other
liabilities.
Annual Report - 31 December 2023
Proceedings on Behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a
party, for the purpose of taking responsibility on behalf of the Company for all or part of those
proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court
under section 237 of the Corporations Act 2001.
Audit and Non-Audit Services
Details of amounts paid or payable to the auditor (PricewaterhouseCoopers Australia) for audit and
non-audit services during the period are disclosed in Note 8 Auditor’s remuneration.
The Company may decide to employ the auditor on assignments additional to their statutory audit
duties where the auditor’s expertise and experience with the Company and/or the Group are
important.
The Board has considered the position and, in accordance with advice received from the Audit & Risk
Committee, 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 & Risk Committee to ensure they do
not impact the impartiality and objectivity of the auditor
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 56.
This report is made in accordance with a resolution of Directors.
R Natter
Chairman
Brisbane 28 February 2024
End of Directors’ Report
55
Auditor’s Independence Declaration
Annual Report - 31 December 2023
Auditor’s Independence Declaration
As lead auditor for the audit of NOVONIX Limited for the year ended 31 December 2023, I declare that to
the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of NOVONIX Limited and the entities it controlled during the period.
Michael Crowe
Partner
PricewaterhouseCoopers
Brisbane
28 February 2024
PricewaterhouseCoopers, ABN 52 780 433 757
480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
56
Corporate Governance Statement
Annual Report - 31 December 2023
NOVONIX Limited and the Board are committed to achieving and demonstrating the highest standards
of corporate governance. NOVONIX Limited has reviewed its corporate governance practices against
the Corporate Governance Principles and Recommendations (4th edition) published by the ASX
Corporate Governance Council.
The 2023 corporate governance statement is dated at 31 December 2023 and reflects the corporate
governance practices in place throughout the year ended 31 December 2023. The 2023 corporate
governance statement was approved by the Board on 28 February 2024. A description of the Group's
current corporate governance practices is set out in the Group's corporate governance statement
which can be viewed at https://www.novonixgroup.com/governance/.
57
Annual Report - 31 December 2023
NOVONIX LIMITED
ABN 54 157 690 830
Financial Reports – 31 December 2023
Financial statements
Consolidated statement of profit or loss and other comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors’ declaration
Auditor’s report
Page
59
60
61
63
64
128
129
These financial statements are consolidated financial statements for the Group consisting of NOVONIX
Limited and its subsidiaries. A list of major subsidiaries is included in note 28.
The financial statements are presented in US dollars.
NOVONIX Limited is a Company limited by shares, incorporated, and domiciled in Australia.
All press releases, financial reports, and other information are available at our website:
www.novonixgroup.com.
58
Consolidated statement of profit or loss and other comprehensive income
For the year ended 31 December 2023 and six-months ended 31 December 2022
All figures are reported in US$
Annual Report - 31 December 2023
Consolidated
12 months
6 months
ended
ended
31 December
2023
31 December
2022
Notes
US$
US$
Revenue from contracts with customers
Product manufacturing and operating costs (exclusive of
depreciation presented separately)
Administrative and other expenses
Borrowing costs
Depreciation and amortisation expenses
Loss on equity investment securities at fair value through profit or loss
Research and development costs
Nasdaq listing related expenses
Share based compensation
Employee benefits expense
Gain on fair value of derivative financial instruments
Foreign currency (loss)/gain
Other income
Loss before income tax expense
Income tax (expense)/benefit
Loss for the year
Other comprehensive income for the year, net of tax
Items that may be reclassified to profit or loss
Foreign exchange differences on translation of foreign
operations
Total comprehensive loss for the year
Net loss per share for loss from continuing operations
attributable to the ordinary equity holders of the Company:
Basic loss per share
Diluted loss per share
3
5
5
5
4
6
9
9
8,054,528
2,702,276
(2,817,269)
(1,319,682)
(18,863,896)
(2,864,102)
(4,740,135)
-
(5,750,574)
-
(5,621,959)
(20,339,880)
1,525,320
1,359,857
(11,481,647)
(943,421)
(2,572,019)
-
(2,020,656)
-
(5,354,429)
(8,549,850)
-
1,360,308
3,609,900
315,106
(46,448,210)
(27,864,014)
199,949
-
(46,248,261)
(27,864,014)
(1,489,976)
(2,445,538)
(47,738,237)
(30,309,552)
(0.09)
(0.09)
(0.06)
(0.06)
The above consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes.
59
Consolidated balance sheet
As at 31 December 2023
All figures are reported in US$
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventory
Prepayments
Escrow reserves
Assets classified as held for sale
Total current assets
Non-current assets
Property, plant and equipment
Investment securities at fair value through profit or loss
Right-of-use assets
Exploration and evaluation assets
Intangible assets
Other assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Contract liabilities
Lease liabilities
Borrowings
Current tax liabilities
Total current liabilities
Non-current liabilities
Contract liabilities
Lease liabilities
Derivative financial instruments
Borrowings
Total non-current liabilities
Total liabilities
Net assets
Annual Report - 31 December 2023
Consolidated
31-Dec-23
31-Dec-22
Notes
US$
US$
11
12
15
13
14
18
16
17
22
18
19
20
21
22
24
21
22
23
24
78,713,885
3,564,333
2,000,808
1,859,797
794,500
99,039,172
2,847,229
3,165,932
1,958,269
9,137,605
86,933,323
116,148,207
2,219,952
-
89,153,275
116,148,207
139,793,447
16,666,665
4,484,521
-
11,990,309
125,316,748
16,490,271
4,915,035
2,212,013
12,173,710
1,254,826
168,574
174,189,768
161,276,351
263,343,043
277,424,558
5,760,061
285,221
345,933
1,341,689
6,954,464
71,985
353,378
1,085,314
107,458
-
7,840,362
8,465,141
3,000,000
4,479,627
866,278
3,000,000
4,825,560
-
63,220,501
35,077,588
71,566,406
42,903,148
79,406,768
51,368,289
183,936,275
226,056,269
60
Consolidated balance sheet (continued)
As at 31 December 2023
All figures are reported in US$
EQUITY
Contributed equity
Reserves
Accumulated losses
Total equity
Annual Report - 31 December 2023
Consolidated
31-Dec-23
31-Dec-22
Notes
US$
US$
25
26
338,425,286
30,358,828
338,108,198
26,547,649
(184,847,839)
(138,599,578)
183,936,275
226,056,269
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
61
Annual Report - 31 December 2023
Consolidated statement of changes in equity
For the year ended 31 December 2023 and six-months ended 31 December 2022
All figures are reported in US$
Consolidated Group
Balance at 1 July 2022
Loss for the period
Other comprehensive loss
Total comprehensive loss
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs
Share-based payments
Balance at 31 December 2022
Loss for the year
Other comprehensive loss
Total comprehensive loss
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs
Share-based payments
Balance at 31 December 2023
Contributed
equity
Accumulated
losses
Share based
payments
reserve
US$
US$
US$
338,011,842
-
(110,735,564)
(27,864,014)
32,025,511
-
-
-
96,356
-
-
-
-
-
-
-
-
5,135,987
Reserves
Foreign
currency
translation
reserve
US$
(12,691,406)
-
(2,445,538)
(2,445,538)
-
-
Convertible
loan note
reserve
Total
US$
US$
4,523,095
-
-
-
-
-
251,133,478
(27,864,014)
(2,445,538)
(30,309,552)
96,356
5,135,987
338,108,198
(138,599,578)
37,161,498
(15,136,944)
4,523,095
226,056,269
-
-
-
(46,248,261)
-
(46,248,261)
317,088
-
-
-
-
-
-
-
5,301,155
-
(1,489,976)
(1,489,976)
-
-
-
-
-
-
-
(46,248,261)
(1,489,976)
(47,738,237)
317,088
5,301,155
338,425,286
(184,847,839)
42,462,653
(16,626,920)
4,523,095
183,936,275
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
62
Annual Report - 31 December 2023
Consolidated statement of cash flows
For the year ended 31 December 2023 and six-months ended 31 December 2022
All figures are reported in US$
Cash flows from operating activities
Receipts from customers (inclusive of consumption tax)
Payments to suppliers and employees
(inclusive of consumption tax)
Interest received
Payment of borrowing costs
Government grants received
Consolidated
12 months
ended
31-Dec-23
US$
6 months
ended
31-Dec-22
US$
Notes
7,708,839
4,095,716
(45,629,733)
(22,516,447)
1,621,201
(1,872,154)
1,943,424
18,242
(898,461)
434,379
Net cash outflow from operating activities
27
(36,228,423)
(18,866,571)
Cash flows from investing activities
Payments for exploration assets
Proceeds from release of escrow funds
Payments for escrow funds
Payments for security deposits
Payments for property, plant and equipment
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds on issue of shares
Payment of share issue expenses
Proceeds from convertible loan note issues
Payment of convertible notes issue expenses
Payment of withholding tax – Performance Rights
Proceeds from borrowings
Principal elements of lease repayments
Repayment of borrowings
Net cash inflow from financing activities
Net decrease in cash and cash equivalents
Effects of foreign currency
29
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
11
(13,665)
8,343,107
-
(882,325)
(18,534)
1,887,579
(934,628)
-
(19,182,131)
(24,497,314)
(11,735,014)
(23,562,897)
338,327
(12,529)
30,000,000
(47,338)
(295,043)
752,831
(353,378)
(1,073,082)
29,309,788
(18,653,649)
(1,671,638)
99,039,172
78,713,885
12,061
(8,024)
-
-
(131,506)
-
(166,741)
(483,620)
(777,830)
(43,207,298)
(490,892)
142,737,362
99,039,172
Non-cash financing and investing activities
27(b)
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
63
Annual Report - 31 December 2023
Notes to the consolidated financial statements for the year ended
31 December 2023
Note 1
Summary of Significant Accounting Policies
Basis of Preparation
These general purpose financial statements of NOVONIX Limited and its subsidiaries have been prepared
in accordance with Australian Accounting Standards (“AASB”), as issued by the Australian Accounting
Standards Board (“AASB”). NOVONIX Limited is a for-profit entity for the purpose of preparing the
financial statements. Material accounting policies adopted in the preparation of these financial
statements are presented below and have been consistently applied unless stated otherwise.
Except for cash flow information, the financial statements have been prepared on an accruals basis and
are based on historical costs, modified, where applicable, by the measurement at fair value of selected
non-current assets, financial assets, and financial liabilities.
Applying Materiality
Management provides the specific accounting policies and disclosures required by IFRS unless the
information is not applicable or is considered immaterial to the decision-making of the primary users of
these financial statements.
Going Concern
The financial report has been prepared on a going concern basis, which contemplates continuity of normal
business activities and the realisation of assets and settlement of liabilities in the normal course of
business.
For the twelve-month period ended 31 December 2023, the Group incurred a net loss of $46.2 million
(six-month period ended 31 December 2022: $27.9 million) and net operating cash outflows of $36.2
million (six-month period ended 31 December 2022: $18.9 million). As at 31 December 2023, the Group
has a cash balance of $78.7 million (31 December 2022: $99.0 million) and net current assets of $81.3
million (31 December 2022: $107.7 million).
The Group continues to execute its expansion plans to reach a production capacity of at least 150,000
tpa. This will involve scaling operations in line with customer off-take agreements, as well as current and
future customer demand. To fund these expansionary activities, which will primarily require significant
capital expenditure, additional funding beyond the existing cash balance at December 31, 2023, and
forecasted customer inflows will be necessary.
These conditions give rise to a material uncertainty which may cast significant doubt (or raise substantial
doubt as contemplated by Public Company Accounting Oversight Board (“PCAOB”) standards) over the
Group’s ability to continue as a going concern and therefore, that it may be unable to realise its assets
and discharge its liabilities in the normal course of business.
64
Annual Report - 31 December 2023
Note 1
Summary of Significant Accounting Policies (continued)
The ability of the Group to continue as a going concern is principally dependent upon one or more of the
following:
•
•
•
the ability of the Group to raise funds as and, when necessary, from either customers,
governments and/or investors in the form of debt, equity and/or grant funding
the successful and profitable growth of the battery materials, battery consulting, and
battery technology businesses
the ability of the Group to meet its cash flow forecasts.
The directors believe that the going concern basis of preparation is appropriate as the Group has a strong
history of being able to raise capital from debt and equity sources, most recently through the issue of
US$30million of unsecured convertible loan notes to LGES during the period (note 23).
In November 2023, the Group finalised its $100 million grant from the Office of Manufacturing & Energy
Supply Chains (“MESC”) of the U.S. Department of Energy (“DOE”) to expand domestic production of high-
performance, synthetic graphite anode materials at its Riverside facility in Chattanooga, Tennessee. No
funds have been drawn against the grant as of 31 December 2023, and to the date of issuance of the
financial statements.
Should the Group be unable to continue as a going concern, it may be unable to realise its assets and
discharge its liabilities in the normal course of business, and at amounts stated in the financial report.
This financial report does not include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts or classification of liabilities and appropriate disclosures that may
be necessary should the Group be unable to continue as a going concern.
The financial statements were authorised for issue by the Directors on 28 February 2024. The Directors
have the power to amend and reissue the financial statements.
a.
Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of
NOVONIX Limited (‘Company’ or ‘Parent Entity’) as at 31 December 2023 and the results of all
subsidiaries for the year then ended. NOVONIX Limited and its subsidiaries together are referred
to in these financial statements as the ‘Group’.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity
when the Group 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 to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They
are de-consolidated from the date that control ceases.
Intercompany transactions, balances, and unrealised gains on transactions between entities in the
Group are eliminated. Unrealised losses are also eliminated unless the transaction provides
evidence of the impairment of the asset transferred. The accounting policies of subsidiaries have
been changed where necessary to ensure consistency with the policies adopted by the Group.
65
Note 1
Summary of Significant Accounting Policies (continued)
Annual Report - 31 December 2023
Where equity instruments are issued in a business combination, the fair value of the instruments
is their published market price as at the date of exchange. Costs arising from a business
combination are expensed when incurred. The consideration transferred also includes the fair
value of any asset or liability resulting from a contingent consideration arrangement.
With limited exceptions, all identifiable assets acquired, and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values at the acquisition date.
The excess of the consideration transferred, amount of any non-controlling interest in the acquired
entity, over the net fair value of the Group's share of the identifiable net assets acquired is
recognised as goodwill. If the consideration transferred of the acquisition is less than the Group's
share of the net fair value of the identifiable net assets of the subsidiary, the difference is
recognised as a gain in the profit and loss in the Consolidated Statement of Profit or Loss and Other
Comprehensive Income, but only after a reassessment of the identification and measurement of
the net assets acquired.
Where settlement of any part of the cash consideration is deferred, the amounts payable in the
future are discounted to their present value, as at the date of exchange. The discount rate used is
the entity's incremental borrowing rate, being the rate at which a similar borrowing could be
obtained from an independent financier under comparable terms and conditions.
b.
Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. For some assets and
liabilities, observable market transactions or market information is available. For other assets and
liabilities, observable market transactions or market information might not be available. When a
price for an identical asset or liability is not observable, another valuation technique is used. To
increase consistency and comparability in fair value measurements, there are three levels of the
fair value hierarchy based on the inputs used:
•
•
Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or
liabilities
Level 2 – Inputs are inputs other than quoted prices included within Level 1, which are
observable for the asset or liability either directly or indirectly
•
Level 3 – Inputs are unobservable inputs for the asset or liability
The Group recognises transfers between levels of the fair value hierarchy at the end of the
reporting period during which the change has occurred.
c.
Income Tax
The income tax expense or benefit for the period is the tax payable on that period’s taxable income
based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred
tax assets and liabilities attributable to temporary differences, unused tax losses and the
adjustment recognised for prior periods, where applicable.
66
Note 1
Summary of Significant Accounting Policies (continued)
Annual Report - 31 December 2023
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates
expected to be applied when the assets are recovered or liabilities are settled, based on those tax
rates that are enacted or substantively enacted, except for:
• When the deferred income tax asset or liability arises from the initial recognition of goodwill
or an asset or liability in a transaction that is not a business combination and that, at the time
of the transaction, affects neither the accounting nor taxable profits; or
• When the taxable temporary difference is associated with interests in subsidiaries, associates
or joint ventures, and the timing of the reversal can be controlled, and it is probable that the
temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only
if it is probable that future taxable amounts will be available to utilise those temporary differences
and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each
reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer
probable that future taxable profits will be available for the carrying amount to be recovered.
Previously unrecognised deferred tax assets are recognised to the extent that it is probable that
there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset
current tax assets against current tax liabilities and deferred tax assets against deferred tax
liabilities; and they relate to the same taxable authority on either the same taxable entity or
different taxable entities which intend to settle simultaneously.
d.
Revenue Recognition
Revenue from contracts with customers is recognised when control of the goods is transferred, or
services are provided to the customer at an amount that reflects the consideration to which the
Company expects to be entitled in exchange for those goods or services.
Sales of Goods
Revenue for the hardware is recognised at a point in time when the hardware is delivered, the legal
title has passed.
67
Annual Report - 31 December 2023
Note 1
Summary of Significant Accounting Policies (continued)
Consulting Services
under
The consulting division provides battery cell design, implementation and support services
fixed-price and variable price contracts. Revenue from providing services is recognised in the
accounting period in which the services are rendered. For fixed-price contracts, revenue is
recognised based on the actual service provided to the end of the reporting period relative to the
remaining services under the contract because the customer receives and uses the benefits
simultaneously. This is determined based on the actual labour hours spent relative to the total
expected labour hours.
Where the contracts include multiple performance obligations, the transaction price will be
allocated to each performance obligation based on the stand-alone selling prices. Where these are
not directly observable, they are estimated based on expected cost-plus margin.
e.
Contract Balances
Trade and Other Receivables
A receivable is recognised when the Group’s right to consideration is unconditional, which is
generally when goods are delivered or services are performed, as only the passage of time is
required before payment is due.
Contract Liabilities
A contract liability is the obligation to transfer goods or provide services to a customer for which
the Group has received consideration (or an amount of consideration is due) from the customer. If
a customer pays consideration before the Group transfers goods or services to the customer, a
contract liability is recognised when the payment is made, or the payment is due (whichever is
earlier). Contract liabilities are recognised as revenue when the Group performs under the contract.
f.
Other Income
Interest
Interest income is recognised as interest accrues using the effective interest method. This is a
method of calculating the amortised cost of a financial asset and allocating the interest income
over the relevant period using the effective interest rate, which is the rate that discounts estimated
future cash receipts through the expected life of the financial asset to the net carrying amount of
the financial asset.
68
Annual Report - 31 December 2023
Note 1
Summary of Significant Accounting Policies (continued)
Grant Revenue
Grants from government bodies 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.
g.
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 (”CODMs”). The CODMs is responsible for the allocation of resources to operating
segments and assessing their performance.
h.
Current and Non-Current Classification
Assets and liabilities are presented in the balance sheet based on current and non-current
classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or
consumed in normal operating cycle; it is held primarily for the purpose of trading; it is expected
to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent
unless restricted from being exchanged or used to settle a liability for at least 12 months after the
reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in normal operating cycle;
it is held primarily for the purpose of trading; it is due to be settled within 12 months after the
reporting period; or there is no unconditional right to defer the settlement of the liability for at
least 12 months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
i.
Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions,
other short-term, highly liquid investments with original maturities of three months or less that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value.
j.
Inventories
Inventories are measured at the lower of cost and net realisable value. Cost is determined based
on the standard cost method, which approximates first-in, first-out. The cost of manufactured
products includes direct materials.
69
Annual Report - 31 December 2023
Note 1
Summary of Significant Accounting Policies (continued)
k.
Exploration and Evaluation Assets
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area
of interest. Such expenditures comprise net direct costs and an appropriate portion of related
overhead expenditure but do not include overheads or administration expenditure not having a
specific nexus with a particular area of interest. These costs are only carried forward to the extent
that they are expected to be recouped through the successful development of the area or where
activities in the area have not yet reached a stage which permits reasonable assessment of the
existence of economically recoverable reserves and active or significant operations in relation to
the area are continuing.
A regular review has been undertaken on each area of interest to determine the appropriateness
of continuing to carry forward costs in relation to that area of interest.
An impairment charge is recognised when the Directors are of the opinion that the carried forward
net cost may not be recoverable or the right of tenure in the area lapses.
When production commences, the accumulated costs for the relevant area of interest are
amortised over the life of the area according to the rate of depletion of the economically
recoverable reserves.
l.
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised in profit or loss over the period of the
borrowings using the effective interest method.
The fair value of the liability (borrowings) portion of a convertible bond is determined using a
market interest rate for an equivalent non-convertible bond. This amount is recorded as a liability
on an amortised cost basis until extinguished on conversion or maturity of the bonds. The
remainder of the proceeds is allocated to the conversion option. Alternatively, the fair value of the
conversion option is determined using Monte Carlo Simulation methodology, with the remainder
of the proceeds allocated to the liability (borrowings) portion.
m.
Convertible Loan Notes
Convertible loan notes are initially measured at fair value less transaction costs.
Amortised cost is calculated as the amount at which the loan note is measured at initial recognition
less principal repayments and adjusted for any cumulative amortisation of the difference between
that initial amount and the maturity amount calculated using the effective interest method.
The effective interest method is used to allocate interest expense over the relevant period and is
equivalent to the rate that discounts estimated future cash payments over the expected life of the
financial instrument to the net carrying amount of the financial liability.
Non-derivative financial liabilities, other than financial guarantees, are subsequently measured at
amortised cost. Gains or losses are recognised in profit or loss through the amortisation process
and when then financial liability is derecognised.
70
Annual Report - 31 December 2023
Note 1 Summary of Significant Accounting Policies (continued)
n.
Property, Plant, and Equipment
Property, plant, and equipment is stated at historical cost less accumulated depreciation and
impairment. Historical cost includes expenditure that is directly attributable to the acquisition of
the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property,
plant, and equipment (excluding land) over their expected useful lives as follows:
• Buildings (25 – 39 years)
• Plant and equipment (3 - 20 years)
The residual values, useful lives and depreciation methods are reviewed, and adjusted if
appropriate, at each reporting date.
An item of plant and equipment is derecognised upon disposal or when there is no future economic
benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are
taken to profit or loss.
o.
Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Group prior to the end
of the financial year and which are unpaid. Due to their short-term nature, they are measured at
amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30
days of recognition.
p.
Leases
Lease terms are negotiated on an individual basis and contain a wide range of different terms and
conditions. The lease agreements do not impose any covenants other than the security interests in
the leased assets that are held by the lessor. Leased assets may not be used as security for
borrowing purposes.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease
liabilities include the net present value of the following lease payments:
•
fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payments that are based on an index or a rate, initially measured using the index
or rate as at the commencement date,
• amounts expected to be payable by the Group under residual value guarantees,
•
the exercise price of a purchase option if the Group is reasonably certain to exercise that
option,
• payments of penalties for terminating the lease, if the lease term reflects the Group exercising
that option.
Lease payments to be made under reasonably certain extension options are also included in the
measurement of the liability.
71
Note 1 Summary of Significant Accounting Policies (continued)
Annual Report - 31 December 2023
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot
be readily determined, which is generally the case for leases in the Group, the lessee’s incremental
borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic
environment with similar terms, security, and conditions.
To determine the incremental borrowing rate, the Group:
• where possible, uses recent third-party financing received by the individual lessee as a starting
point, adjusted to reflect changes in financing conditions since third party financing was
received,
• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for
leases held by NOVONIX Limited, which does not have recent third-party financing,
• makes adjustments specific to the lease, e.g. term, country, currency and security.
The Group is exposed to potential future increases in variable lease payments based on an index or
rate, which are not included in the lease liability until they take effect. When adjustments to lease
payments based on an index or rate take effect, the lease liability is reassessed and adjusted against
the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to
profit or loss over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability,
•
• any lease payments made at or before the commencement date less any lease incentives
received,
• any initial direct costs,
•
restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the
lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option,
the right-of-use asset is depreciated over the underlying asset’s useful life. The Group does not
revalue the right-of-use buildings held by the Group.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value
assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are
leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small
items of office furniture.
Extension options are included in property and equipment leases across the Group. These are used
to maximise operational flexibility in terms of managing the assets used in the Group’s operations.
The extension options held are exercisable only by the Group and not by the lessor.
72
Note 1 Summary of Significant Accounting Policies (continued)
Annual Report - 31 December 2023
When the Group revises its estimate of the term of any lease (because, for example, it re-assesses
the probability of a lessee extension or termination option being exercised), it adjusts the carrying
amount of the lease liability to reflect the payments to make over the revised term, which are
discounted using a revised discount rate. The carrying value of lease liabilities is similarly revised
when the variable element of future lease payments dependent on a rate or index is revised, except
the discount rate remains unchanged. In both cases an equivalent adjustment is made to the
carrying value of the right-of-use asset, with the revised carrying amount being amortised over the
remaining (revised) lease term. If the carrying amount of the right-of-use asset is adjusted to zero,
any further reduction is recognised in profit or loss.
When the Group renegotiates the contractual terms of a lease with the lessor, the accounting
depends on the nature of the modification:
•
•
•
if the renegotiation results in one or more additional assets being leased for an amount
commensurate with the standalone price for the additional rights-of-use obtained, the
modification is accounted for as a separate lease in accordance with the above policy,
in all other cases where the renegotiated increases the scope of the lease (whether that
is an extension to the lease term, or one or more additional assets being leased), the lease
liability is remeasured using the discount rate applicable on the modification date, with
the right-of-use asset being adjusted by the same amount,
if the renegotiation results in a decrease in the scope of the lease, both the carrying
amount of the lease liability and right-of-use asset are reduced by the same proportion
to reflect the partial of full termination of the lease with any difference recognised in
profit or loss. The lease liability is then further adjusted to ensure its carrying amount
reflects the amount of the renegotiated payments over the renegotiated term, with the
modified lease payments discounted at the rate applicable on the modification date. The
right-of-use asset is adjusted by the same amount.
Specific details about the Group’s leasing policy are provided in note 22.
q.
Investments and Other Financial Assets
Classification
The Group classifies its financial assets in the following measurement categories:
•
•
those to be measured subsequently at fair value (either through OCI or through profit or
loss)
those to be measured at amortised cost
The classification depends on the entity’s business model for managing the financial assets and the
contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI.
For investments in equity instruments that are not held for trading, this will depend on whether
the Group has made an irrevocable election at the time of initial recognition to account for the
equity investment at fair value through other comprehensive income (“FVOCI”).
73
Note 1
Summary of Significant Accounting Policies (continued)
Recognition and Derecognition
Annual Report - 31 December 2023
Regular way purchases and sales of financial assets are recognised on trade date, being the date
on which the Group commits to purchase or sell the asset. Financial assets are derecognised when
the rights to receive cash flows from the financial assets have expired or have been transferred and
the Group has transferred substantially all the risks and rewards of ownership.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at
FVPL are expensed in profit or loss.
The Group subsequently measures all equity investments at fair value. Where the Group’s
management has elected to present fair value gains and losses on equity investments in OCI, there
is no subsequent reclassification or fair value gains and losses to profit or loss following the
derecognition of the investment. Dividends from such investments continue to be recognised in
the consolidated statement of profit or loss and other comprehensive income as other income
when the Group’s right to receive payment is established.
Changes in fair value of financial assets at FVPL are recognised in other gains/(losses) in the
Consolidated Statement of Profit or Loss and Other Comprehensive Income as applicable.
Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI
are not reported separately from other changes in fair value.
r.
Employee Benefits
Short-Term Employee Benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave, and long-service
leave expected to be settled within 12 months of the reporting date are measured at the amounts
expected to be paid when the liabilities are settled.
Short-term incentives are payable on achievement of mutually agreed KPIs each fiscal year with
short-term incentives being payable in either cash or by way of the issue of fully paid ordinary
shares. The Company has historically paid short-term incentives in cash.
Other Long-Term Employee Benefits
The liability for long-service leaves not expected to be settled within 12 months of the reporting
date 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 using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at
the reporting date on corporate bonds with terms to maturity and currency that match, as closely
as possible, the estimated future cash outflows.
74
Note 1
Summary of Significant Accounting Policies (continued)
Share-Based Payments
Annual Report - 31 December 2023
Equity-settled share-based compensation benefits are provided to employees. Equity-settled
transactions are awards of shares, options, or performance rights over shares, that are provided to
employees in exchange for the rendering of services.
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is
determined using various valuation methods including Black Scholes, Binomial, and the Monte
Carlo Simulation method that takes into account the exercise price, the term of the performance
right, the impact of dilution, the share price at grant date and expected price volatility of the
underlying share, the expected dividend yield, and the risk-free interest rate for the term of the
performance right award.
The cost of equity-settled transactions is recognised as an expense with a corresponding increase
in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the
grant date fair value of the award, the best estimate of the number of awards that are likely to vest
and the expired portion of the vesting period. The amount recognised in profit or loss for the period
is the cumulative amount calculated at each reporting date less amounts already recognised in
previous periods.
Market conditions are taken into consideration in determining fair value. Therefore, any awards
subject to market conditions are considered to vest irrespective of whether or not that market
condition has been met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification
has not been made. An additional expense is recognised, over the remaining vesting period, for any
modification that increases the total fair value of the share-based compensation benefit as at the
date of modification.
Share-based payment expenses are recognised over the period during which the employee
provides the relevant services. This period may commence prior to the grant date. In this situation,
the entity estimates the grant date fair value of the equity instruments for the purposes of
recognising the services received during the period between service commencement date and
grant date. Once the grant date has been established, the earlier estimate is revised so that the
amount recognised for services received is ultimately based on the grant date fair value of the
equity instruments.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy
the condition is treated as a cancellation. If the condition is not within the control of the Group or
employee and is not satisfied during the vesting period, any remaining expense for the award is
recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation,
and any remaining expense is recognised immediately. If a new replacement award is substituted
for the cancelled award, the cancelled and new award is treated as if they were a modification.
75
Annual Report - 31 December 2023
Note 1
Summary of Significant Accounting Policies (continued)
s.
Issued Capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as
a deduction, net of tax, from the proceeds.
t.
Impairment of Non-Financial Assets
At the end of each reporting period, the Group assesses whether there is any indication that an
asset may be impaired. The assessment will include the consideration of external and internal
sources of information, including dividends received from subsidiaries, associates or joint ventures
deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is
carried out on the asset by comparing the recoverable amount of the asset, being the higher of the
asset’s fair value less costs of disposal and value in use, to the asset’s carrying amount. Any excess
of the assets carrying amount over its recoverable amount is recognised immediately in profit or
loss, unless the asset is carried at a revalued amount in accordance with another Standard. Any
impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that
other Standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Impairment testing is performed annually for goodwill, intangible assets with indefinite lives and
intangible assets not yet available for use.
u.
Intangible Assets Other than Goodwill
Technology
Technology is recognised at fair value on the date of acquisition. It has a finite life and is
subsequently carried at cost less any accumulated amortisation and any impairment losses.
Technology is amortised over its useful life of 5 years.
Software
Software is measured at cost (at acquisition or development costs) and amortised on a straight-line
basis over its useful life, generally 3 years. Maintenance cost of software is expensed as incurred.
Development costs directly attributable to the design and creation of software that are identifiable
and unique, and that may be controlled by the Company, are recognised as an intangible asset
providing the following conditions are met:
•
It is technically feasible for the intangible asset to be completed so that it will be available
for use or sale,
• Management intends to complete the asset for use or sale,
• The Company has the capacity to use or sell the asset,
•
It is possible to show evidence of how the intangible asset will generate probable future
economic benefits,
76
Annual Report - 31 December 2023
Note 1
Summary of Significant Accounting Policies (continued)
• Adequate technical, financial, and other resources are available to complete the
development and to use or sell the intangible asset,
• The outlay attributable to the intangible asset during its development can be reliably
determined.
Directly attributable costs capitalised in the value of the software include the cost of personnel
developing the programs.
Costs that do not meet the criteria listed above are recognised as an expense as incurred. An
example of this is Software as a Service ("SaaS"). The cloud computing is a model for delivering
information technology services through web-based tools and applications. In such contracts, the
customer generally does not obtain a software license or have a right to take possession of the
software. The contract conveys to the customer the right to receive access to the supplier’s
application software over the contract term. That right to receive access does not provide the
customer with a software asset and, therefore, the access to the software is a service that the
customer receives over the contract term.
v.
Goodwill
Goodwill acquired on a business combination is initially measured at cost, being the excess of the
consideration transferred for the business combination over the Group’s interest in the net fair
value of the acquiree’s identifiable assets, liabilities, and contingent liabilities.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Goodwill is reviewed for impairment, annually, or more frequently, if events or changes in
circumstances indicate that the carrying value may be impaired.
As at the acquisition date, any goodwill acquired is allocated to each of the cash-generating units
that are expected to benefit from the combination’s synergies.
Impairment is determined by assessing the recoverable amount of the cash-generating unit to
which the goodwill relates.
Where the recoverable amount of the cash-generating unit is less than the carrying amount, an
impairment loss is recognised.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is
disposed, the goodwill associated with the disposed operation is included in the carrying amount
of the operation when determining the gain or loss on disposal of the operation.
Disposed goodwill in this circumstance is measured on the basis of the relative values of the
disposed operation and the portion of the cash-generating unit retained.
77
Annual Report - 31 December 2023
Note 1
Summary of Significant Accounting Policies (continued)
w.
Research and Development costs
Research and development costs primarily represent the Company’s investment in research and
development activities for the all-dry, zero-waste cathode synthesis project. At present, our
research and development activities are conducted through our two core businesses: BTS and
NAM; cathode falls under BTS R&D.
Research expenditures are recognised as an expense when incurred. Costs incurred on
development projects (relating to the design and testing of enhancements or extensions of
products from the all-dry, zero-waste cathode synthesis project) are recognised as intangible assets
when:
•
the technical feasibility of completing the intangible asset so that it will be available for
use or sale
the intention to complete the intangible asset and use it or sell it
the ability to use or sell the intangible asset
•
•
• how the intangible asset will generate probable future economic benefits
•
the availability of adequate technical, financial, and other resources to complete the
development and to use or sell the intangible asset
the ability to measure reliably the expenditure attributable to the intangible asset during
its development.
•
The expenditures capitalised comprise all directly attributable costs, including costs of materials,
services, direct LU, and an appropriate proportion of overhead. Other development expenditures
that do not meet these criteria are recognised as an expense when incurred. Development costs
previously recognised as an expense are not recognised as an asset in a subsequent period.
Capitalised development costs are recorded as intangible assets and amortised from the point at
which the asset is ready for use on a straight-line basis over its useful life.
x.
Borrowing Costs
Borrowing costs are recognised in the profit or loss in the period in which they are incurred.
78
Annual Report - 31 December 2023
Note 1 Summary of Significant Accounting Policies (continued)
y.
Foreign Currency Transactions and Balances
Functional and Presentation Currency
The functional currency of each of the Company’s entities is the currency of the primary economic
environment in which that entity operates. Effective July 1, 2022, the Company’s reporting currency
is the U.S. dollar. The Company changed its reporting currency from Australian dollars to U.S.
dollars to enhance the relevance of the Company’s financial information and comparability with its
industry peer group.
Transactions and Balances
Foreign currency transactions are translated into functional currency using the exchange rates
prevailing at the date of the transaction. Foreign currency monetary items are translated at the
year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at
the exchange rate at the date of the transaction. Non-monetary items measured at fair value are
reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss,
except where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in
other comprehensive income to the extent that the underlying gain or loss is recognised in other
comprehensive income; otherwise, the exchange difference is recognised in profit or loss.
Group Companies
The financial results and position of foreign operations, whose functional currency is different from
the Group’s presentation currency, are translated as follows:
-
-
-
assets and liabilities are translated at exchange rates prevailing at the end of the reporting
period
income and expenses are translated at the average exchange rates for the period
accumulated losses are translated at the exchange rates prevailing at the date of the
transaction.
Exchange differences arising on translation of foreign operations with functional currencies other
than US dollars are recognised in other comprehensive income and included in the foreign currency
translation reserve in the balance sheet. The cumulative amount of these differences is reclassified
into profit or loss in the period in which the operation is disposed of.
z.
Earnings per Share
Basic Earnings Per Share
Basic earnings per share is calculated by dividing the profit attributable to the owners of NOVONIX
Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average
number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
ordinary shares issued during the financial year.
79
Annual Report - 31 December 2023
Note 1 Summary of Significant Accounting Policies (continued)
Diluted Earnings Per Share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share
to take into account the after income tax effect of interest and other financing costs associated
with dilutive potential ordinary shares and the weighted average number of shares assumed to
have been issued for no consideration in relation to dilutive potential ordinary shares.
aa. Goods and Services Tax (‘GST’) and Other Similar Taxes
Revenues, expenses, and assets are recognised net of the amount of associated GST, unless the
GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the
cost of the acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net
amount of GST recoverable from, or payable to, the tax authority is included in other receivables
or other payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing
or financing activities which are recoverable from, or payable to the tax authority, are presented
as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or
payable to, the tax authority.
ab. Assets Held for Sale
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held for
sale if it is highly probable that they will be recovered primarily through sale rather than through
continuing use.
Such assets, or disposal groups, are generally measured at the lower of their carrying amount and
fair value less costs to sell. Any impairment loss on a disposal group is allocated first to goodwill,
and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated
to inventories, financial assets, deferred tax assets, employee benefit assets, investment property
or biological assets, which continue to be measured in accordance with the Group’s other
accounting policies. Impairment losses on initial classification as held-for-sale or held-for
distribution and subsequent gains and losses on remeasurement are recognised in profit or loss.
Once classified as held-for-sale, intangible assets and property, plant, and equipment are no
longer amortised or depreciated, and any equity-accounted investee is no longer
equity accounted.
ac.
New and Amended Standards and Interpretations
Amendments to IAS 12 – Deferred Tax related to Assets and Liabilities arising from a Single
Transaction: In May 2021, the AASB issued Deferred Tax related to Assets and Liabilities arising
from a Single Transaction, which amended IAS 12, Income Taxes. The amendments clarify that
companies are required to recognise deferred taxes on transactions where both assets and
80
Annual Report - 31 December 2023
Note 1 Summary of Significant Accounting Policies (continued)
liabilities are recognised, such as with leases and asset retirement (decommissioning) obligations.
The amendments are effective for annual reporting periods beginning on or after January 1, 2023,
with earlier application permitted. The adoption of the amendment did not have a material impact
on the consolidated financial statements.
The Company noted that no other new AASB Accounting Standards amendments or interpretations
that became effective in 2023 had a material impact on the Company’s consolidated financial
statements.
ad.
Standards and Interpretations not yet Effective
Based on the Company’s assessment, there are no AASB Accounting Standards, amendments, or
interpretations not yet effective in 2023 that would be expected to have a material impact on the
Company’s consolidated financial statements.
ae.
Critical Accounting Estimates and Judgements
The preparation of the financial statements requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the
Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial statements, are disclosed
below.
Valuation of Unsecured Convertible Notes and Embedded Derivatives
The fair value of the conversion feature is determined using a Monte Carlo Simulation, taking into
account the terms and conditions upon which the convertible loan notes were issued. The key
assumptions include:
•
•
•
the probability of the timing of when the parties will enter into a purchase order for
material, which will lead to the mandatory conversion of all loan notes into ordinary
shares;
the risk-free rate;
the volatility of the NOVONIX share price.
Value of Intangible Assets Relating to Acquisitions
The Company has allocated portions of the cost of acquisitions to technology intangibles, valued
using the relief from royalty method. These calculations require the use of assumptions including
future revenue forecasts and a royalty rate. Technology is amortised over its useful life of 5 years.
Impairment of Goodwill and Identifiable Intangible Assets
The Company determines whether goodwill is impaired on an annual basis. This assessment
requires an estimation of the recoverable amount of the cash-generating units to which the
goodwill is allocated.
81
Annual Report - 31 December 2023
Note 1
Summary of Significant Accounting Policies (continued)
Share-Based Payment Transactions
The Group has issued options where individual tranches have variable vesting dates due to the
performance conditions being linked to the achievement of incremental production targets. At
each reporting period, an estimate is made of the expected vesting dates for each of the tranches
based on the expectation of when performance conditions will be met, and where necessary, an
adjustment to the share-based payment expense is recognised.
Fair Value of Financial Instruments Carried at Fair Value Through Profit Loss
The fair value of financial instruments that are not traded in an active market is determined using
valuation techniques. The Group uses its judgement to select a variety of methods and make
assumptions that are mainly based on market conditions existing at the end of each reporting
period. For details of the key assumptions used and the impact of changes to these assumptions
see Note 17 – Intangible Assets.
Other areas of critical accounting estimates and judgments include:
•
•
unused tax losses for which no deferred tax asset has been recognised (see Note 6
– Income Tax (Expense) Benefit)
the impairment testing of goodwill (see Note 17 – Intangible Assets).
82
Note 2
Parent Entity Financial Information
The following information has been extracted from the books and records of the parent and has been
prepared in accordance with International Accounting Standards.
Annual Report - 31 December 2023
Balance sheet
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Assets classified as held for sale
Total current assets
Non-current assets
Amounts due from related parties
Exploration and evaluation assets
Investment securities at fair value through profit and loss
Other assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Payables
Total current liabilities
Non-current liabilities
Derivative financial instruments
Borrowings
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total equity
31-Dec-23
US$
31-Dec-22
US$
72,819,657
62,513
12,992
72,895,162
2,372,886
75,268,048
84,366,622
36,298
901,634
85,304,554
-
85,304,554
121,976,670
-
16,429,244
5,741
124,178,058
2,364,946
16,490,271
7,468
138,411,655
143,040,743
213,679,703
228,345,297
322,941
322,941
2,289,028
2,289,028
866,278
28,554,209
29,420,487
29,743,428
-
-
-
2,289,028
183,936,275
226,056,269
338,425,286
25,017,175
(179,506,186)
338,108,198
20,318,892
(132,370,821)
183,936,275
226,056,269
Statement of Profit or Loss and Other Comprehensive Income
Total loss and total comprehensive loss
(47,135,365)
(27,197,861)
83
Annual Report - 31 December 2023
Note 2 Parent Information (continued)
Guarantees
NOVONIX Limited has not entered into any guarantees, in the current or previous reporting period, in
relation to the debts of its subsidiaries.
Contingent liabilities
At 31 December 2023, NOVONIX Limited did not have any contingent liabilities (31 December 2022: Nil).
Contractual commitments
At 31 December 2023, NOVONIX Limited did not have any contractual commitments (31 December 2022:
Nil).
Note 3
Revenue
(a)
Revenue
The Group derives revenue from the transfer of goods and provision of services in the following major
product lines and segments:
Twelve-months ended
31 December 2023
Battery
Materials
US$
Hardware sales
Consulting sales
Revenue from external
customers
Timing of revenue recognition
At a point in time
Over time
Six-months ended
31 December 2022
Hardware sales
Consulting sales
Revenue from external
customers
Timing of revenue recognition
At a point in time
Over time
-
-
-
-
-
-
Battery
Materials
US$
-
-
-
-
-
-
Battery
Technology
US$
2,999,533
5,054,995
8,054,528
2,999,533
5,054,995
8,054,528
Battery
Technology
US$
403,680
2,298,596
2,702,276
403,680
2,298,596
2,702,276
Graphite
exploration
US$
-
-
-
-
-
-
Graphite
exploration
US$
-
-
-
-
-
-
Total
US$
2,999,533
5,054,995
8,054,528
2,999,533
5,054,995
8,054,528
Total
US$
403,680
2,298,596
2,702,276
403,680
2,298,596
2,702,276
84
Annual Report - 31 December 2023
Note 3
Revenue (continued)
Revenues from external customers come from the sale of battery testing hardware equipment and the
provision of battery testing and development consulting services.
(i)
Assets and liabilities related to contracts with customers
The Group has recognised the following assets and liabilities related to contracts with customers:
Contract liabilities – Hardware sales
Contract liabilities – Service sales
Total current contract liabilities
31-Dec-23
US$
31-Dec-22
US$
56,653
228,568
285,221
71,985
-
71,985
Revenue recognised in relation to contract liabilities
The following table shows how much of the revenue recognised in the current reporting period relates
to brought-forward contract liabilities.
12 months
6 months
ended
ended
31 December
2023
31 December
2022
US$
US$
Revenue recognised that was included in the contract
liability balance at the beginning of the period
Hardware sales
71,985
2,715
The Company had no contract assets as of December 31, 2023, and December 31, 2022. See Note 12,
Trade and other receivables, for trade receivables.
The Company had no remaining performance obligations which have an original expected term of more
than one year.
85
Note 4 Other Income
Interest received from unrelated parties
Grant funding
Tax related reimbursement
Other
Annual Report - 31 December 2023
12 months
6 months
ended
ended
31 December
2023
31 December
2022
US$
1,611,128
1,161,992
689,089
147,691
3,609,900
US$
19,416
260,536
-
35,154
315,106
Note 5
Loss for the Year
Loss before income tax from continuing operations includes the following specific expenses:
Share based payments expense^
Performance rights granted
Share rights granted
Options granted
Total share-based compensation expense
^ Refer to note 29 for further information regarding share-based
payments.
Borrowing costs
Unwinding of fair value gain
Interest accrued on convertible notes
Interest accrued on borrowings
Total borrowing costs
Administrative and other expenses
Insurance
Legal fees
Occupancy expenses
Consulting fees
Software implementation costs expensed
Other
Total administrative and other expenses
Consolidated
12 months
6 months
ended
ended
31 December
2023
31 December
2022
US$
US$
5,094,244
399,982
127,734
5,621,960
4,857,249
444,480
52,700
5,354,429
18,553
980,852
1,864,697
2,864,102
6,750,308
1,730,766
418,206
3,672,513
1,758,962
4,533,142
25,945
-
917,476
943,421
4,019,027
895,138
628,816
751,047
1,034,420
4,153,199
18,863,896
11,481,647
86
Annual Report - 31 December 2023
Note 6
Income Tax Expense
This note provides an analysis of the Group’s income tax expense, shows what amounts are recognised
directly in equity and how the tax expense is affected by non-assessable and non-deductible items. It
also explains significant estimates made in relation to the Group’s tax position.
Consolidated
12 months
6 months
ended
ended
31 December
2023
31 December
2022
US$
US$
(a) Numerical reconciliation of income tax expense to
prima facie tax payable
Loss before income tax expense
(46,448,210)
(27,864,014)
Tax at the Australian tax rate of 30% (2022: 30%)
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Share based payments
Government grants
Unrealised foreign exchange gain
Entertainment
Other non-deductible amounts
Difference in overseas tax rate
Adjustments for current tax of prior periods
Adjustment to deferred tax assets and liabilities for tax
losses and temporary differences not recognised
Income tax expense / (benefit)
(b) Tax losses
Unused tax losses for which no deferred tax asset has
been recognised
Potential tax benefit
(c) Tax expense (income) recognised directly in equity
Aggregate current and deferred tax arising in the
reporting period and not recognised in net profit or loss
or other comprehensive income but directly debited or
credited to equity:
Deferred tax: Share issue costs
(13,934,463)
(8,359,204)
1,262,386
507,207
-
9,375
-
2,232,607
(102,522)
9,825,461
(199,949)
1,087,931
104,079
(7,459)
7,524
68,801
670,144
(292,141)
6,720,325
-
115,482,188
34,644,656
82,326,319
24,697,896
-
-
87
Note 6 Income Tax Expense (continued)
Annual Report - 31 December 2023
(d) Deferred tax assets
The balance comprises temporary differences attributable
to:
Tax losses
Exploration and evaluation assets
Business capital costs
Other non-current assets
Right of use asset
Unrealised exchange loss on borrowings
Accrued expenses
Other
Total deferred tax assets
Set-off of deferred tax liabilities pursuant to set-off
provisions
Deferred tax assets not recognised
Net deferred tax assets
(e) Deferred tax liabilities
Prepayments
Other non-current assets
Unrealised exchange loss on borrowings
Total deferred tax liabilities
Set-off of deferred tax liabilities pursuant to set-off
provisions
Net deferred tax liabilities
Consolidated
31-Dec-23
US$
31-Dec-22
US$
34,644,656
365,919
1,566,275
8,116,735
92,858
259,804
98,303
21,438
45,165,988
24,697,896
522,068
2,143,430
4,759,740
79,151
433,514
307,811
19,686
32,963,296
(4,970,299)
(39,994,325)
(2,913,574)
(30,049,722)
201,364
-
(224,008)
(4,162,691)
(583,600)
(215,967)
(2,031,711)
(665,896)
(4,970,299)
(2,913,574)
4,970,299
2,913,574
-
-
Deferred tax assets are only recognised for deductible temporary differences and unused tax losses if it
is probable that future taxable amounts will be available to utilise those temporary differences and
losses. An amount of $201,364 has been recognised in relation to the deferred tax assets of NOVONIX
Corp, as it has been determined that future taxable amounts will be available to utilise temporary
differences.
88
Note 6
Income Tax Expense (continued)
Annual Report - 31 December 2023
Unused losses which have not been recognised as an asset, will only be obtained if:
(i)
the Group derives future assessable income of a nature and of an amount sufficient to enable the
losses to be realised;
the Group continues to comply with the conditions for deductibility imposed by the law; and
no changes in tax legislation adversely affect the Group in realising the losses.
(ii)
(iii)
Offsetting within tax consolidated entity
NOVONIX Limited and its wholly-owned Australian subsidiaries have applied the tax consolidation
legislation which means that these entities are taxed as a single entity. As a consequence, the deferred
tax assets and deferred tax liabilities of these entities have been offset in the consolidated financial
statements.
Note 7
Key Management Personnel Compensation
Refer to the remuneration report contained in the Directors’ report for details of the remuneration paid
or payable to each member of the Group’s key management personnel (KMP) for the year ended 31
December 2023.
The totals of remuneration paid to KMP of the Company and the Group during the year ended 31
December 2023 and the six-month period ended 31 December 2022 are as follows:
Consolidated
12 months
6 months
ended
ended
31 December
2023
31 December
2022
US$
US$
2,514,689
45,092
2,228,316
4,788,097
1,457,899
20,997
4,006,327
5,485,223
Short-term employee benefits
Post-employment benefits
Share-based compensation
Total KMP compensation
Short-term employee benefits
These amounts include fees and benefits paid to the non-executive Chairman as well as all salary, paid
leave benefits and fringe benefits paid to Executive Directors.
Post-employment benefits
These amounts are the superannuation contributions made during the year.
Share-based compensation
These amounts represent the expense related to the participation of KMP in equity-settled benefit
schemes as measured by the fair value of the options and performance rights on grant date.
Further information in relation to KMP remuneration can be found in the Directors report.
89
Note 8 Auditor’s Remuneration
The following fees were paid or payable for services provided by PricewaterhouseCoopers Australia (PwC)
as the auditor of the Group:
Annual Report - 31 December 2023
Consolidated
12 months
6 months
ended
ended
31 December
2023
31 December
2022
US$
US$
412,793
8,382
13,291
434,466
471,568
-
-
471,568
Audit fees
Other fees in relation to prior year's audit
Other assurance services
Total
90
Note 9 Earnings per Share
(a) Basic net loss per share
Total basic net loss per share attributable to the ordinary
equity holders of the Company
(b) Diluted net loss per share
Total diluted net loss per share attributable to the
ordinary equity holders of the Company
Annual Report - 31 December 2023
12 months
6 months
ended
ended
31 December
2023
31 December
2022
US $
US $
(0.09)
(0.06)
(0.09)
(0.06)
(c) Reconciliations of net loss used in calculating net loss per share
Basic net loss per share
Net loss attributable to the ordinary equity holders of the
Company used in calculating basic net loss per share
(46,248,261)
(27,864,014)
Diluted net loss per share
Net loss attributable to the ordinary equity holders of the
Company used in calculating diluted net loss per share
(46,248,261)
(27,864,014)
(d) Weighted average number of shares used as the denominator
12 months
6 months
ended
ended
31 December
2023
31 December
2022
Number
Number
487,474,460
486,616,365
Weighted average number of ordinary shares used as the
denominator in calculating basic and diluted net loss per
share
(e)
Information concerning the classification of securities
Options and rights
Options, rights and convertible notes on issue during the year ended 31 December 2023, and the six-
month period ended 31 December 2022, are not included in the calculation of diluted earnings per share
because they are antidilutive. These options, rights and convertible notes could potentially dilute basic
earnings per share in the future. Details relating to options and rights are set out in note 29.
91
Annual Report - 31 December 2023
Note 10
Impairment Testing of Goodwill
For the purposes of impairment testing, the cash generating unit has been defined as the business to
which the goodwill relates where individual cash flows can be ascertained for the purposes of
discounting future cash flows.
The carrying amount of goodwill allocated to the cash
generating unit
NOVONIX Anode Materials
Total carrying amount of goodwill
Consolidated
31 December
2023
31 December
2022
US$
11,975,024
11,975,024
US$
11,975,024
11,975,024
The Company performs its annual impairment testing on 30 June each year. For the purposes of
impairment testing, the cash generating unit has been defined as the business to which the goodwill
relates where individual cash flows can be ascertained for the purposes of discounting future cash flows.
The recoverable amount of the NOVONIX Anode Materials cash generating unit (“NOVONIX Anode
Materials CGU”) has been determined on a ‘Fair Value Less Costs to Sell’ (“FVLCS”) basis.
To determine the recoverable amount, the FVLCS was calculated with reference to the allocated portion
of the Company’s enterprise value (EV). The EV model calculation considered the following:
The market capitalisation of the Company on the (ASX:NVX) at the testing date;
The volatility of the share price of the Company at the testing date; and
The issuance of the convertible notes in June 2023 (as outlined in Note 23) given that the
convertible loan note issuance is directly associated with the planned future expansion of the
NOVONIX Anode Materials CGU.
•
•
•
Events occurring between the date of the convertible loan note issuance and 31 December 2023, have
also been considered, and the directors do not believe that there have been any material events that
would adversely impact the NOVONIX Anode Materials CGU such that the recoverable amount may not
exceed the carrying value.
The directors have assessed impairment triggers since the annual impairment test was performed at 30
June 2023, and they do not believe that there have been any material events that would adversely impact
the NOVONIX Anode Materials CGU such that the recoverable amount may not exceed the carrying value.
The recoverable amount of the NOVONIX Anode Materials CGU is deemed to be in excess of the carrying
value of the CGU, and therefore no impairment has been recognised at 31 December 2023.
92
Note 11 Cash and Cash Equivalents
Cash at bank
Balances as above
Bank overdrafts
Balance per statement of cash flows
Note 12 Trade and Other Receivables
Trade debtors
Other receivables
Total current trade and other receivables
Credit risk
Annual Report - 31 December 2023
Consolidated
31 December
2023
US$
78,713,885
31 December
2022
US$
99,039,172
78,713,885
99,039,172
78,713,885
-
78,713,885
99,039,172
-
99,039,172
Consolidated
31 December
2023
US$
3,034,897
529,436
31 December
2022
US$
2,327,364
519,865
3,564,333
2,847,229
The Company has no significant concentration of credit risk with respect to any counterparties or on a
geographical basis. Amounts are considered as “past due” when the debt has not been settled, in line
with the terms and conditions agreed between the Company and the customer to the transaction.
The Company assess impairment on trade and other receivables using the simplified approach of the
expected credit loss (ECL) model under AASB 9, Financial Instruments.
The balance of receivables that remain within initial trade terms are considered to be of high credit
quality.
93
Note 13 Prepayments
Prepayments of inventory components
Prepaid general and administrative expenses
Annual Report - 31 December 2023
Consolidated
31 December
2023
US$
31 December
2022
US$
753,973
1,105,824
1,859,797
-
1,958,269
1,958,269
Prepaid general and administrative expenses consisted primarily of prepaid property insurance premiums
for our Riverside facility of $745,693 and $719,891 at 31 December 2023 and 31 December 2022.
Note 14 Escrow Reserves
Consolidated
31 December
2023
US$
31 December
2022
US$
Escrow reserves
794,500
9,137,605
The reserves are funds deposited with the Lender for capital expenditure, insurance, tax, and production
as additional collateral for the loan obtained in relation to the purchase of the new facility in Chattanooga,
Tennessee. Reserves are released as the conditions of the loan are satisfied. All conditions are expected
to be satisfied within 12 months from the balance sheet date.
During the year and in accordance with all applicable loan conditions, the Company received the
remaining disbursement of the capital expenditure and earnout reserves as the scheduled capital
expenditure work was completed, installed, and being utilised by the Company in the ordinary course of
business.
94
Note 15
Inventory
Raw materials
Components and assemblies
Finished goods – at cost
Amounts recognised in profit or loss
Annual Report - 31 December 2023
Consolidated
31 December
2023
US$
31 December
2022
US$
507,326
1,403,873
89,609
2,000,808
539,271
2,470,762
155,899
3,165,932
Inventories recognised as an expense during the year ended 31 December 2023 amounts to $1.1M (six-
month period ended 31 December 2022: $1.0M). These were included in product manufacturing and
operating costs (exclusive of depreciation presented separately) in the consolidated statement of profit
or loss and other comprehensive income.
95
Note 16
Property, Plant, and Equipment
Annual Report - 31 December 2023
At 30 June 2022
Cost
Accumulated depreciation
Net book amount
Period ended 31 December 2022
Opening net book amount
Additions
Disposals
Transfers
Depreciation charge
Exchange differences
Closing net book amount
At 31 December 2022
Cost
Accumulated depreciation
Net book amount
Land
US$
Buildings
US$
Leasehold
improvements
US$
Plant and
equipment
US$
Construction
work in
progress
US$
Total
US$
2,351,349
-
47,824,346
(1,823,292)
1,102,865
(364,730)
23,315,589
(2,959,087)
34,760,142
-
109,354,291
(5,147,109)
2,351,349
46,001,054
738,135
20,356,502
34,760,142
104,207,182
2,351,349
-
-
-
-
(36,876)
46,001,054
111,338
-
-
(957,247)
(316,079)
738,135
42,002
-
-
(201,027)
-
20,356,502
505,380
(33,485)
1,263,939
(1,071,251)
(152,236)
34,760,142
23,305,647
-
(1,263,939)
-
(86,600)
104,207,182
23,964,367
(33,485)
-
(2,229,525)
(591,791)
2,314,473
44,839,066
579,110
20,868,849
56,715,250
125,316,748
2,314,473
-
47,602,298
(2,763,232)
1,148,447
(569,337)
24,816,965
(3,948,116)
56,715,250
-
132,597,433
(7,280,685)
2,314,473
44,839,066
579,110
20,868,849
56,715,250
125,316,748
96
Note 16
Property, Plant, and Equipment (continued)
Annual Report - 31 December 2023
Year ended 31 December 2023
Opening net book amount
Additions
Disposals
Transfers
Depreciation charge
Exchange differences
Closing net book amount
At 31 December 2023
Cost
Accumulated depreciation
Net book amount
Land
US$
Buildings
US$
Leasehold
improvements
US$
Plant and
equipment
US$
Construction
work in
progress
US$
Total
US$
2,314,473
-
-
-
-
16,353
44,839,066
113,215
-
-
(1,304,113)
138,061
579,110
193,251
-
88,882
(436,474)
-
20,868,849
877,938
(193,160)
1,939,982
(2,385,633)
96,025
56,715,250
17,341,364
-
(2,028,864)
-
19,872
125,316,748
18,525,768
(193,160)
-
(4,126,220)
270,311
2,330,826
43,786,229
424,770
21,204,001
72,047,622
139,793,447
2,330,826
-
47,866,171
(4,079,942)
1,430,580
(1,005,810)
27,520,756
(6,316,755)
72,047,622
-
151,195,954
(11,402,507)
2,330,826
43,786,229
424,770
21,204,001
72,047,622
139,793,447
97
Annual Report - 31 December 2023
Note 17 Financial Assets at Fair Value through Profit or Loss
(i) Classification of financial assets at fair value through profit or loss
The Group classifies equity investments for which it has not elected to recognise fair value gains and
losses through OCI as financial assets at fair value through profit or loss (FVPL).
Financial assets measured at FVPL include the following:
Consolidated
31 December
2023
US$
31 December
2022
US$
US unlisted equity securities
16,666,665
16,490,271
On 31 January 2022 NOVONIX Limited entered into a Securities Purchase Agreement with KORE Power,
Inc. (“KORE Power”) a US based developer of battery cell technology for the clean energy industry, under
which NOVONIX Limited acquired 3,333,333 shares of KORE Power Common Stock at an issue price of
USD$7.50 per share, representing approximately 5% of the common equity of KORE Power. The
consideration for the shares in KORE Power totalled USD$25M (AUD $35,131,550) and was settled
through a combination of 50% cash and 50% through the issue of 1,974,723 ordinary shares in NOVONIX
Limited.
The equity investment was revalued in 2022 to USD$5.00 per share, which was the share price for a
significant capital raise undertaken by KORE Power in November 2022. At 31 December 2023 the
investment in KORE Power represents approximately 3.7% of the common equity of KORE Power.
(ii) Amounts recognised in the consolidated statement of profit or loss and other comprehensive income
During the year ended 31 December 2023 there have been no gains or losses recognised in the
consolidated statement of profit or loss and other comprehensive income related to equity investments
held at FVPL.
(iii) Fair value hierarchy
US unlisted equity securities are classified as a Level 3 fair value in the fair value hierarchy as one or more
of the significant inputs is not based on observable market data.
The following table presents the changes in level 3 instruments during the twelve months ended
December 31, 2023 (in U.S. dollars):
Balance at the beginning of the period
Exchange differences
Balance at the end of the period
Unlisted equity securities
US$
16,490,271
176,394
16,666,665
98
Annual Report - 31 December 2023
Note 17
Financial Assets at Fair Value through Profit or Loss (continued)
There were no transfers between levels 1, 2, or 3 for recurring fair value measurements during the year.
The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as at the end of
the reporting period.
(iv) Valuation technique using significant unobservable inputs – Level 3
This category includes assets where the valuation incorporates significant inputs that are not based on
observable market data (unobservable inputs). Unobservable inputs are those not readily available in an
active market due to market illiquidity or complexity of the product. These inputs are generally derived
and extrapolated from observable inputs to match the risk profile of the financial instrument, and are
calibrated against current market assumptions, historic transactions and economic models, where
available.
In 2022, the primary approach used in the determination of the fair value of the investment in KORE
Power was with reference to the pricing of significant external capital raising activity undertaken by KORE
Power. The most recent significant external capital raising undertaken by KORE Power was in November
2022 and no further capital raising has occurred in the twelve months ended December 31, 2023. The
Group considered available information produced by management of KORE Power along and contrasted
it with the Group's analysis of share price movements of listed peer companies in the battery technology
sector and concluded that, in the aggregate, the factors and information considered would not result in
a significant change in the fair value of the investment.
Note 18
Exploration and Evaluation Assets
Consolidated
31 December
2023
US$
31 December
2022
US$
Exploration and evaluation assets – at cost
-
2,212,013
The capitalised exploration and evaluation assets carried forward
above have been determined as follows:
Balance at the beginning of the period
Expenditure incurred during the period
Exchange differences
Assets classified as held for sale
Balance at the end of the period
2,212,013
16,691
(8,752)
(2,219,952)
-
2,218,238
40,560
(46,785)
-
2,212,013
The Company holds tenement rights to a high-grade natural flake graphite deposit located in Northern
Queensland, Australia. In October 2023, the Company decided to pursue potential opportunities to
realise the value of these assets through a strategic transaction. All tenement rights remain current,
exploration activity is continuing to the extent required under the tenement rights, a resource,
principally high-grade graphite, has been identified, and the assets are available for sale in their current
conditions.
99
Note 19
Intangible Assets
Goodwill
Technology
Balance at the beginning of the year
Additions
Amortisation
Written-off
Balance at the end of the year
Annual Report - 31 December 2023
Consolidated
31 December
2023
US$
11,975,024
15,285
31 December
2022
US$
11,975,024
198,686
11,990,309
12,173,710
Goodwill
US$
Technology
US$
Total
US$
11,975,024
-
-
-
11,975,024
198,686
-
(183,401)
-
12,173,710
-
(183,401)
-
15,285
11,990,309
Intangible assets, other than goodwill, have finite useful lives. The current amortisation charges for
intangible assets are included under depreciation and amortisation expense in the statement of profit or
loss and other comprehensive income. Goodwill has an indefinite useful life.
Note 20 Trade and Other Payables
Unsecured liabilities:
Trade payables
Sundry payables and accrued expenses
Employee entitlements
Consolidated
31 December
2023
US$
31 December
2022
US$
1,342,369
4,102,800
314,892
5,760,061
4,108,380
2,718,349
127,735
6,954,464
100
Note 21 Contract Liabilities
Current - Contract liabilities
Non-current – Other liabilities
Annual Report - 31 December 2023
Consolidated
31 December
2023
US$
31 December
2022
US$
285,221
3,000,000
3,285,221
71,985
3,000,000
3,071,985
During the 2021 financial year, the Group received grant funds of USD$3,000,000 from the Department
of Economic and Community Development in the State of Tennessee, USA. The grant funds are
conditional upon the Group creating, filling and maintaining 290 jobs in the State of Tennessee.
The grant becomes fully earned once 90% of the performance target is achieved by March 2026, and is
repayable in full if a minimum of 50% of the performance target is not achieved by March 2026. The grant
is proportionately repayable between 50% and 90% of the performance target being achieved.
Accordingly, as at 31 December 2023, the full amount of the grant has been deferred and classified as a
contract liability and will either be released to income (in full or proportionately) or repayable (in full or
proportionately) depending on the performance target achieved by March 2026. Income has not been
recognised at 31 December 2023, as the Company cannot reliably measure compliance of the conditions
attaching to the grant with reasonable assurance to determine the grant has become receivable.
101
Annual Report - 31 December 2023
Note 22 Leases
This note provides information for leases where the Group is the lessee.
(i) Amounts recognised in the balance sheet
The balance sheet shows the following amounts relating to leases:
Consolidated
31 December
2023
US$
31 December
2022
US$
Right-of-use assets - Buildings
4,484,521
4,915,035
Lease liabilities
Current
Non-current
345,933
4,479,627
4,825,560
353,378
4,825,560
5,178,938
There were no additions to the right-of-use assets during the 2023 financial year. The movement of
$430,514 during the year ended 31 December 2023, relates to depreciation expense. Refer to Note 34,
Financial risk management, for a maturity analysis of lease liabilities.
(i) Amounts recognised in the statement of profit or loss and other comprehensive income
The statement of profit or loss and other comprehensive income shows the following amounts relating
to leases:
12 months
ended 31
December 2023
6 month period
ended 31
December 2022
US$
US$
Depreciation of right-of-use assets – Buildings
Interest expense
430,514
212,354
215,257
111,593
The total cash outflow for leases in the year ended 31 December 2023 and six-month financial period
ended 31 December 2022 was $565,732 and $278,334, respectively. The Company had no short-term
leases at 31 December 2023, and 2022.
102
Annual Report - 31 December 2023
Note 23 Unsecured Convertible Loan Notes and Derivative Financial Instruments
On 21 June 2023, the Group issued 45,221,586 convertible loan notes, with a face value of AUD$1.00 per
note, a coupon rate of 4%, and a maturity date of 7 June 2028, for proceeds of US$30 million to LGES. The
notes have a conversion price of AUD$1.60 per ordinary share. The convertible notes will mandatorily
convert into ordinary shares upon acceptance of the first purchase order under the purchase agreement
with LGES, although LGES may elect to convert some or all the notes prior to such time. No interest would
be payable on the notes in these circumstances.
The convertible notes may be redeemed or converted (at the election of LGES) on the maturity date, in
which case interest is payable in cash (in respect of a redemption) or "in-kind" (in the case of conversion).
The convertible notes are presented in the consolidated balance sheet as follows:
Borrowings (non-current liabilities)
(All in US$)
Initial recognition
Costs of issue of convertible notes
Interest expense*
Balance at 31 December 2023
Consolidated
2023
27,640,052
(43,614)
957,772
28,554,210
* Interest expense, for the year ended 31 December 2023, is calculated by applying the effective interest rate of
6.564% to the liability component.
Derivative financial instruments (non-current liabilities)
(All in US$)
Initial recognition
Costs of issue of convertible notes
Fair value gain
Effect of foreign currency movements
Balance at 31 December 2023
Consolidated
2023
2,359,948
(3,724)
(1,525,320)
35,374
866,278
The fair value of the conversion option (derivative financial liability) was determined using Monte Carlo
Simulation methodology. The derivative financial liability is carried at fair value at each reporting date,
with gains or losses being recognised in the consolidated statement of profit or loss and other
comprehensive income. The remainder of the proceeds were allocated to borrowings with the liability
recognised at amortised cost until extinguished on conversion or maturity of the notes. Interest is applied
using the effective interest rate.
Fair Value Hierarchy
The derivative financial liability is classified as a Level 3 fair value in the fair value hierarchy as one or more
of the significant inputs is not based on observable market data.
The valuation model is highly sensitive to the probability weights applied to the timing of the placement
of the purchase order, which is a significant unobservable input. In the event the purchase order is
placed before maturity date of the notes, the interest rate would become zero-coupon and, the fair
value of the derivative would decrease by $1.3 million.
103
Note 24
Borrowings
Annual Report - 31 December 2023
Current US$
31-Dec-23
Non-
Current
US$
Total
Current US$
US$
31-Dec-22
Non-
Current
US$
Total
US$
Secured
Bank loans (i)
1,167,301
33,044,170
34,211,471
971,159
34,066,811
35,037,970
Total secured borrowings
1,167,301
33,044,170
34,211,471
971,159
34,066,811
35,037,970
Unsecured
Convertible Notes
Other loans (ii)
-
28,554,210
28,554,210
-
-
-
174,388
1,622,121
1,796,509
114,155
1,010,777
1,124,932
Total unsecured borrowings
174,388
30,176,331
30,350,719
114,155
1,010,777
1,124,932
Total borrowings
1,341,689
63,220,501
64,562,190
1,085,314
35,077,588
36,162,902
(i) Secured liabilities and assets pledged as security
(a) On 1 December 2017, the Company purchased freehold land and buildings at 177 Bluewater Road,
Bedford Canada for CAD$1,225,195 and from where the BTS business now operates. The Company
entered into a loan facility of CAD $2,680,000 to purchase the land and buildings secured by a first
mortgage over the property. At 31 December 2023, the facility had been fully drawn down. The total
liability at 31 December 2023, is $1,827,703 (CAD $2,241,832). The facility is repayable in monthly
instalments ending 15 September 2044. The carrying amount of this asset at 31 December 2023 and
31 December 2022 was $2,842,406 and $3,160,854, respectively.
(b) On 28 May 2021, the Company purchased commercial land and buildings in Nova Scotia, Canada for
CAD$3,550,000 from which the Cathode business operates. The Company entered into a loan facility
to purchase the land and buildings. The total available under the facility is CAD $4,985,000 and it has
been drawn down to CAD$4,923,000 as at 31 December 2023. The total liability at 31 December 2023
is $3,574,365 (CAD $4,736,278). The full facility is repayable in monthly instalments, commencing
December 2022 and ending in November 2047. The Company’s freehold land and buildings at 110
Simmonds Drive, Dartmouth, Canada are pledged as collateral against the bank loan. The carrying
amount of this asset at 31 December 2023, and 31 December 2022 was $3,329,187 and $3,754,397,
respectively.
104
Annual Report - 31 December 2023
Note 24 Borrowings (continued)
(c) On 24 January 2022, the Company entered into a loan facility to purchase equipment. The total
amount available under the facility was CAD $2,300,000. At 31 December 2023, the facility had been
drawn down to CAD $500,000 and CAD $1,800,000 remains to be disbursed. The total liability at 31
December 2023 was $362,276 (CAD $480,040). The facility is repayable in monthly instalments,
commencing in December 2023 and ending in November 2033. Equipment being purchased with the
loan funds are pledged as collateral against the loan.
(d) On 28 July 2021, the Company purchased commercial land and buildings in Chattanooga, USA for
$42,600,000 to expand the NAM business. The Company entered into a loan facility with PNC Real
Estate for $30,100,000 to purchase the land and buildings. The loan has been fully drawn down at 31
December 2023. The total liability at 31 December 2023, is $28,447,128. The facility is repayable in
monthly instalments, which commenced in September 2021 and ending in August 2031. The land and
buildings at 1029 West 19th Street, Chattanooga, USA have been pledged as security for the loan, with
a carrying amount of $39,202,599 and $40,230,812 at 31 December 2023 and 31 December 2022
respectively. Lastly, the Company has pledged additional collateral with the Lender for capital
expenditures, insurance, tax and production.
Loan covenants
This loan imposes certain covenants to ensure that the following financial ratios are met:
•
net assets of $30.1 million to be maintained (exclusive of the land and buildings secured by this
loan and minimum liquidity of $3.1 million)
a debt service coverage ratio of 1.2 to 1 is to be maintained.
•
Compliance with loan covenants
The Company has complied with the financial covenants of its borrowing facilities during both the
twelve months ended 31 December 2023 and the six months ended 31 December 2022.
(ii) Other loans
ACOA Loans
In December 2017, the Company entered into a contribution agreement with Atlantic Canada
Opportunities Agency ("ACOA"), for CAD$500,000. At 31 December 2023, CAD$500,000 of the facility has
been drawn down. The funding was to assist with expanding the market to reach new customers through
marketing and product improvements. The facility is repayable in monthly instalments which commenced
in September 2019 and ending in May 2027.
In October 2018, the Company entered into another contribution agreement with ACOA, for
CAD$500,000. At December 31, 2023, CAD$500,000 of the facility has been drawn down. The funding was
to assist in establishing a battery cell manufacturing facility. The facility is repayable in monthly
instalments which commenced in January 2021 and ending in December 2026.
105
Annual Report - 31 December 2023
Note 24 Borrowings (continued)
In July 2021, the Company entered into a further contribution agreement with ACOA, for CAD$250,000.
At 31 December 2023, the facility has been fully drawn down. The funding was to assist in expanding the
BTS operations. The facility is repayable in monthly instalments commencing in January 2024 and ending
in December 2026.
In December 2021, the Company entered into a further contribution agreement with ACOA for
CAD$1,000,000. At 31 December 2023, it has been fully drawn down. The funding will be used to will
assist with purchasing equipment for the cathode pilot line and expansion of cell making capabilities. The
facility is repayable in monthly instalments commencing in January 2025 and ending in December 2036.
In March 2023, the Company entered into a further contribution agreement with ACOA for CAD$886,000.
At 31 December 2023, the facility has been fully drawn down. The funding will be used to will assist with
purchasing equipment for the cathode pilot line and expansion of cell making capabilities. The facility is
repayable in monthly instalments commencing in January 2025 and ending in December 2036.
(iii) Fair value
For all borrowings, other than the ACOA loan noted at (ii) above, the fair values are not materially
different to their carrying amounts, since the interest payable on those borrowings is either close to
current market rates or the borrowings are of a short-term nature.
The ACOA loans are interest free. The initial fair value of the ACOA loans were determined using a market
interest rate for equivalent borrowings at the issue date. This resulted in a day one gain of $100,152 in
FY2018 (December 2017 loan), a day one gain of $114,106 in FY2019 (October 2018 loan) and a day one
gain of $219,557 in the twelve months ended 30 June 2022.
106
Note 25 Contributed Equity
Annual Report - 31 December 2023
(a) Share capital
Ordinary shares
Fully paid
31-Dec-23
31-Dec-22
31-Dec-23
31-Dec-22
Shares
Shares
US$
US$
488,733,461
486,774,622
338,425,286
338,108,198
(b)
Date
Ordinary share capital
Details
1-Jul-22 Balance
7-Jul-22 Exercise of options
Exercise of share rights
8-Jul-22 Exercise of options
5-Aug-22 Exercise of performance rights
22-Dec-22 Exercise of performance rights
Share issue costs
31-Dec-22 Balance
15-Mar-23 Exercise of options
Exercise of performance rights
Exercise of options
12-Apr-23 Exercise of performance rights
1-May-23 Exercise of performance rights
29-Jun-23 Exercise of performance rights
21-Jul-23 Exercise of performance rights
1-Aug-23 Exercise of performance rights
21-Aug-23 Exercise of performance rights
29-Aug-23 Exercise of options
Exercise of share rights
1-Sep-23 Exercise of performance rights
20-Oct-23 Exercise of performance rights
24-Oct-23 Exercise of options
21-Nov-23 Exercise of performance rights
28-Nov-23 Exercise of performance rights
9-Dec-23 Exercise of performance rights
14-Dec-23 Exercise of performance rights
Share issue costs
31-Dec-23 Balance
Note
(e)
(f)
(e)
(c)
(c)
(e)
(c)
(e)
(c)
(c)
(c)
(c)
(c)
(c)
(e)
(f)
(c)
(c)
(e)
(c)
(c)
(c)
(c)
Number of
Shares
485,951,369
150,000
302,539
20,000
255,996
94,718
-
486,774,622
33,333
8,309
66,666
1,910
23,356
39,515
314,276
6,002
4,312
500,000
419,719
250,000
18,174
150,000
7,526
2,178
21,563
92,000
US$
338,011,842
92,097
-
12,283
-
-
(8,024)
338,108,198
11,080
-
40,273
-
-
-
-
-
-
225,729
-
-
-
52,439
-
-
-
-
(12,433)
488,733,461
338,425,286
107
Annual Report - 31 December 2023
Note 25 Contributed Equity (continued)
(c)
Exercise of performance rights
During the year ended 31 December 2023 699,961 ordinary shares were issued to non-KMP
employees, and 89,160 were issued to KMP Rashda Buttar, on the exercise of vested performance
rights.
During the six-month period ended 31 December 2022 350,714 ordinary shares were issued to non-
KMP employees on the exercise of vested performance rights.
(e)
Exercise of options
On 24 October 2023, 150,000 options were exercised at AUD$0.55 per share.
On 29 August 2023, 500,000 options were exercised at AUD $0.70 per share.
On 23 March 2023, 66,666 options were exercised at AUD$0.90 per share.
On 15 March 2023, 33,333 options were exercised at AUD$0.50 per share.
On 7 July 2022, 150,000 options were exercised at AUD$0.90 per share.
On 8 July 2022, 20,000 options were exercised at AUD$0.90 per share.
(f)
Exercise of Share Rights
On 29 August 2023, 419,719 ordinary shares were issued to Directors on the vesting of share
rights (See Note 27 - Share-based Payments).
On 7 July 2022, 302,539 ordinary shares were issued to Directors on the vesting of share rights
(See Note 27 – Share-based Payments).
(g)
Capital Management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going
concern, so that it can continue to provide returns for shareholders, benefits for other stakeholders
and to maintain an optimal capital structure to reduce the cost of capital.
The capital structure of the Group includes equity attributable to equity holders, comprising of
issued capital, reserves and accumulated losses. In order to maintain or adjust the capital structure,
the Company may issue new shares, sell assets to reduce debt or adjust the level of activities
undertaken by the company.
The Group monitors capital on the basis of cash flow requirements for operational, and exploration
and evaluation expenditure. The Group will continue to use capital market issues to satisfy
anticipated funding requirements.
The Group has no externally imposed capital requirements. The Group’s strategy for capital risk
management is unchanged from prior years.
108
Note 26 Reserves
Share-based payment reserve
Foreign currency translation reserve
Convertible loan note reserve
(a) Share-based payment reserve
Annual Report - 31 December 2023
Consolidated
31-Dec-23
US$
31-Dec-22
US$
42,462,654
(16,626,921)
4,523,095
37,161,498
(15,136,944)
4,523,095
30,358,828
26,547,649
Consolidated
31-Dec-23
US$
31-Dec-22
US$
Share-based payment reserve
42,462,654
37,161,498
Movements:
Opening balance
Performance rights cash settled in current period (refer note 29)
Equity settled share-based payments
Exchange differences
Closing balance
37,161,498
(296,432)
5,621,960
(24,372)
42,462,654
32,025,511
(133,878)
5,354,429
(84,564)
37,161,498
The share-based payment reserve includes items recognised as expenses on valuation of director,
employee and contractor options and performance rights.
(b) Foreign currency translation reserve
Consolidated
31-Dec-23
US$
31-Dec-22
US$
Foreign currency translation reserve
(16,626,918)
(15,136,944)
Movements:
Opening balance
Exchange differences on translation of foreign operations
Closing balance
(15,136,944)
(1,489,974)
(12,691,406)
(2,445,538)
(16,626,918)
(15,136,944)
The foreign currency translation reserve records exchange differences arising on translation of a foreign
controlled subsidiary.
109
Annual Report - 31 December 2023
Note 27
Operating Segments
The Group has identified its operating segments based on the internal reports that are reviewed and used
by the Executive Key Management Personnel (Chief Operating Decision Makers or “CODMs”) in assessing
performance and determining the allocation of resources. The Group is managed primarily on an
operational basis. Operating segments are determined on the basis of financial information reported to
the Board.
The CODMs have identified three operating segments being Battery Materials, Battery Technology, and
Graphite Exploration. The Battery Materials segment develops and manufactures battery anode
materials, and the Battery Technology segment develops battery cell testing equipment, performs
consulting services and carries out research and development in battery development (inclusive of
cathode technology). The Graphite Exploration segment manages the maintenance and future
development of Mount Dromedary natural graphite deposit. The Company will reassess reportable
segments if and when the assets held for sale are sold. See Note 18 - Exploration and Evaluation Assets.
Basis of accounting for purposes of reporting by operating segments
a. Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board, being the CODMs with respect to
operating segments, are determined in accordance with accounting policies that are consistent
with those adopted in the financial report of the Group.
b. Segment assets
Where an asset is used across multiple segments, the asset is allocated to the segment that
receives the majority of the economic value from the asset. In most instances, segment assets
are clearly identifiable on the basis of their nature and physical location.
c. Segment liabilities
Liabilities are allocated to segments where there is a direct nexus between the incurrence of the
liability and the operations of the segment. Borrowings and tax liabilities are generally considered
to relate to the Company as a whole and are not allocated. Segment liabilities include trade and
other payables.
d. Unallocated items
The following items for revenue, expenses, assets and liabilities are not allocated to operating
segments as they are not considered part of the core operations of any segment:
-
-
-
-
-
-
-
-
interest income
corporate administrative and other expenses
income tax expense
corporate share-based payment expenses
corporate marketing and project development expenses
corporate cash and cash equivalents
corporate trade and other payables
corporate trade and other receivables.
110
Note 27
Operating Segments (continued)
Annual Report - 31 December 2023
e. Segment information
Segment performance
12 months ended 31 December
2023
Battery
Materials
Battery
Technology
Graphite
Exploration
Unallocated
Total
US$
US$
US$
US$
US$
Segment revenue
Other income
Interest income
Total income
-
8,054,529
37,360
1,936,862
-
-
37,360
9,991,391
Segment net loss from continuing
operations before tax
(32,344,084)
(7,388,442)
-
-
-
-
-
-
8,054,529
24,550
1,998,772
1,611,128
1,611,128
1,635,678
11,664,429
(6,515,735)
(46,248,261)
6 months ended 31 December
2022
Battery
Materials
Battery
Technology
Graphite
Exploration
Unallocated
Total
US$
US$
US$
US$
Segment revenue
Other income
Interest income
Total income
-
2,702,276
35,154
260,536
-
-
35,154
2,962,812
Segment net loss from continuing
operations before tax
(14,584,755)
(5,520,718)
-
-
-
-
-
-
-
19,416
19,416
US$
2,702,276
295,690
19,416
3,017,382
(7,758,541)
(27,864,014)
Segment assets
31 December 2023
Battery
Materials
Battery
Technology
Graphite
Exploration
Unallocated
Total
US$
US$
US$
US$
US$
Segment assets
147,476,907
20,367,755
2,225,693
93,272,688 263,343,043
31 December 2022
Battery
Materials
Battery
Technology
Graphite
Exploration
Unallocated
Total
US$
US$
US$
US$
US$
Segment assets
153,744,385
19,635,067
2,219,480 101,825,626 277,424,558
111
Note 27 Operating Segments (continued)
Annual Report - 31 December 2023
Segment liabilities
31 December 2023
Battery
Materials
Battery
Technology
Graphite
Exploration
Unallocated
Total
US$
US$
US$
US$
US$
Segment liabilities
69,102,062
9,874,301
430,405
79,406,768
-
31 December 2022
Battery
Materials
Battery
Technology
Graphite
Exploration
Unallocated
Total
US$
US$
US$
US$
US$
Segment liabilities
40,119,176
8,960,085
-
2,289,028
51,368,289
Geographical Segments
For the purposes of segment reporting, all segment activities relating to Graphite Exploration are carried
out in Australia and all segment activities relating to Battery Materials and Battery Technology are carried
out in North America.
For the twelve months ended December 31, 2023, North America, Asia, Australia, and Europe accounted
for 82%, 8%, 6% and 4% of revenues, respectively. For the six months ended December 31, 2022, North
America, Asia, Australia, and Europe accounted for 85%, 11%, 3% and 1% of revenues, respectively. For
the twelve months ended June 30, 2022, North America, Asia, and Europe accounted for 79%, 17% and
4% of revenues, respectively. For the twelve months ended June 30, 2021, North America, Asia, and
Europe accounted for 82%, 8% and 10% of revenues, respectively.
For the year ended December 31, 2023, the Company had two customers, included in consulting services
revenue stream, that accounted for approximately 17% and 15% of total revenues, respectively. For the
six months December 31, 2022, the Company had three major customers, included in the consulting
services revenue stream, that accounted for approximately 27%, 22%, and 11% of total revenue,
respectively and two major customers, included in the hardware revenue stream, that accounted for
approximately 25% and 12% of total revenues, respectively. For the year ended June 30, 2022, the
Company had two customers, included in the consulting services revenue stream, that accounted for
approximately 15%, and 12% of total revenues, respectively and one major customer, included in the
hardware and consulting services revenue streams, that accounted for 11% of total revenue. For the year
ended June 30, 2021, the Company had three customers, included in the consulting services revenue
stream, that accounted for approximately 17%, 14% and 10% of total revenues, respectively.
112
Annual Report - 31 December 2023
Note 28 Cash Flow Information
Reconciliation of profit / (loss) after income tax to net cash outflow from operating activities
Profit / (loss) for the period
Adjustments for
Share based payments
Borrowing costs
Loss on sale of fixed assets
Software written off
Fair value movement in derivative
Foreign exchange (gain) / loss
Amortisation & depreciation expense
Change in operating assets and liabilities:
(Increase)/decrease in trade receivables
(Increase)/decrease in inventories
(Increase)/decrease in other operating assets
(Increase)/decrease in deferred tax assets
Increase / (decrease) in trade creditors
Increase / (decrease) in income taxes payable
Increase / (decrease) in other operating liabilities
Consolidated
12 months
ended 31
December
2023
$
6 months
ended 31
December
2022
$
(46,248,261)
(27,864,014)
5,620,643
983,833
-
-
(1,512,859)
(137,781)
4,739,719
(567,851)
1,202,967
629,315
(200,992)
(1,368,063)
107,458
523,449
5,357,063
44,960
33,485
96,596
-
(1,368,856)
2,572,018
232,354
(1,383,644)
2,432,642
-
1,340,692
-
(359,867)
Net cash outflow from operating activities
(36,228,423)
(18,866,571)
113
Annual Report - 31 December 2023
Note 28 Cash Flow Information (continued)
(a) Net debt reconciliation
This section sets out an analysis of net debt and the movements in net debt for each period presented.
Net debt
Cash and cash equivalents
Lease liability - repayable within one year
Borrowings – repayable within one year (including
overdraft)
Lease liability - repayable after one year
Borrowings – repayable after one year
Net cash (debt)
Cash and cash equivalents
Gross debt – fixed interest rates
Gross debt – variable interest rates
Net cash (debt)
Non-cash investing and financing activities
31 December
2023
US$
31 December
2022
US$
78,713,885
(345,933)
99,039,172
(353,378)
(1,341,689)
(1,085,314)
(4,479,627)
(63,220,501)
(4,825,560)
(35,077,588)
9,326,135
57,697,332
78,713,885
(35,176,279)
(34,211,471)
99,039,172
(6,303,869)
(35,037,971)
9,326,135
57,697,332
Liabilities from financing
activities
Borrowings
due within 1
year
Borrowings
due after 1
year
Total
US$
US$
US$
Cash
US$
Net debt as at 1 July 2022
142,737,362
(1,353,688)
(40,955,318)
100,428,356
Cash flows
(45,587,951)
655,178
-
(44,932,773)
Other non-cash movements
1,889,761
(740,182)
1,052,170
2,201,749
Net cash as at 31 December 2022
99,039,172
(1,438,692)
(39,903,148)
57,697,332
Cash flows
(18,653,649)
1,428,959
(30,752,830)
(47,977,520)
Other non-cash movements
(1,671,638)
(1,677,889)
2,955,850
(393,677)
Net cash as at 31 December 2023
78,713,885
(1,687,622)
(67,700,128)
9,326,135
Non-cash investing and financing activities disclosed in other notes are:
• Right of use assets – note 22
• Options and shares issued to employees – note 30
114
Annual Report - 31 December 2023
Note 29
Interests in Subsidiaries
Information about Principal Subsidiaries
The Group’s material subsidiaries at 31 December 2023 are set out in the following table. Unless
otherwise stated, each entity has share capital consisting solely of ordinary shares that are held by the
Group, and the proportion of ownership interest held equals the voting rights held by the Group. The
country of incorporation or registration is also their principal place of business. The functional currency
of each of the Company’s entities is the currency of the primary economic environment in which that
entity operates. The consolidated financial statements are presented in U.S. dollars (See Note 1 –
Summary of significant accounting policies).
Ownership interest held of
the Group
Place of business
/ country of
incorporation
31 December
2023
%
31 December
2022
%
Name of entity
MD South Tenements Pty Ltd
Australia
100%
100%
NOVONIX Battery Technology
Solutions Inc
NOVONIX Corp
NOVONIX Anode Material LLC
USA
USA
Canada
100%
100%
100%
100%
Investment
100%
100%
NOVONIX 1029 LLC
USD
100%
100%
Principal
activities
Graphite
exploration
Battery
technology
services.
Battery
materials
development
Real estate
borrower
115
Annual Report - 31 December 2023
Note 30 Share-Based Payments
Performance Rights and Options
Employees of the Group participate in the Group’s Long-Term Incentive Program (“LTIP”) comprising
grants of performance rights and options with varying vesting conditions. The performance rights and
options carry no dividend or voting rights. Performance rights and options may vest immediately or
dependent on the recipient remaining in employment, or achievement of performance related vesting
conditions, by the vesting date. Upon vesting, each performance right and option is convertible into one
ordinary share of NOVONIX Limited. If an executive ceases employment before the rights or options vest,
the rights or options will be forfeited, except in limited circumstances that they are approved by the Board
on a case-by-case basis.
Share Rights
Non-executive Directors participate on an annual grant of equity awards using a value-based approach,
which the Board has adopted by issuing Share Rights to Non-Executive Directors of the Company each
financial year with a fixed US dollar value of $110,000. As a consequence of the Company changing its
fiscal year end from 30 June to 31 December, Directors were scheduled to receive share rights for the
period 1 July 2023 to 31 December 2023 (“2023 partial year”) to align with the new fiscal year-end.
Shareholders approved the 2023 partial year share rights; however, they were not issued and will not be
issued. The Board has determined that one Director shall be granted his share rights for the period from
his appointment in October 2022 to 30 June 2023, subject to shareholder approval. We view this as an
additional sign to shareholders of the Board’s long-term commitment to the team and Company.
The share rights carry no dividend or voting rights. Upon vesting, each share right is convertible into one
ordinary share of NOVONIX Limited. If a non-executive director ceases to hold office before the share
rights vest, the rights will convert on a prorate basis.
The following table presents the composition of share-based payments expense for the year ended 31
December 2023 and the six-month period ended 31 December 2022.
Share-based payments expense for the year is derived as follows:
Share rights granted in current year
Share rights granted in prior year
Performance rights granted in current year
Performance rights granted in prior years
Options granted in prior years
Share based payment expense
Payment of withholding tax - Performance rights
Exchange differences
Movement in share-based payments reserve
12 months
6 months
ended
ended
31 December
2023
31 December
2022
US$
31,943
368,039
989,336
4,104,908
127,734
5,621,960
(296,432)
(24,373)
5,301,155
US$
444,480
-
2,274,551
2,582,698
52,700
5,354,429
(133,878)
(84,564)
5,135,987
116
Annual Report - 31 December 2023
Note 30 Share-Based Payments (continued)
Share Rights
A summary of movements of all share rights issued is as follows:
Share rights outstanding as at 1 January 2023
Granted
Forfeited
Exercised
Number on
issue
436,403
65,405
(16,684)
Number
Vested
16,433
-
-
(419,719)
(16,433)
Share rights outstanding as at 31 December 2023
65,405
-
During the year ended 31 December 2023, share rights were granted to a non-executive Director, Ron
Edmonds, subject to shareholder approval at the 2024 Annual General Meeting. The share rights are
convertible to ordinary shares on a 1:1 basis and vest on receipt of Shareholder approval. The value of
each share right was determined with reference to the market value of the underlying securities on grant
date. An expense of $31,943 was recognised for the year ended 31 December 2023. During the six months
ended December 31, 2022, share rights were granted to non-executive Directors following shareholder
approval at the Annual General Meeting on October 26, 2022. The share rights are convertible to ordinary
shares on a 1:1 basis and vested on 30 June 2023. The value of each share right was determined with
reference to the market value of the underlying securities on grant date. An expense of $444,480 was
recognised for the six months ended December 31, 2022. Further details of the share rights granted
during the year 31 December 2023, are set out in the table below:
Name
Grant date
Number
Vesting
date
Ron Edmonds
31 Dec 2023
31 Dec 2023
54,863
10,542
31 Dec 2023
31 Dec 2023
Total expense recognised
Fair value
Expiry
AUD
$0.74
$0.74
31 Dec 2024
31 Dec 2024
Expense
recognised
US$
26,794
5,149
31,943
117
Annual Report - 31 December 2023
Note 30 Share-Based Payments (continued)
Performance Rights
A summary of movements of all performance rights issued is as follows:
Number on
issue
Number
Vested
Performance rights outstanding as at 1 July 2022
5,057,277
Vested
Granted
Forfeited
Exercised
-
6,547,018
(128,503)
600,000
463,897
-
-
(463,897)
(463,897)
Performance rights outstanding as at 31 December 2022
11,011,895
-
Vested
Granted
Forfeited
Exercised
-
1,252,558
4,631,721
(962,688)
-
-
(1,252,558)
(1,252,558)
Performance rights outstanding as at 31 December 2023
13,428,370
-
Performance rights granted in the current period
During the twelve months ended December 31, 2023, performance rights (convertible to ordinary
shares on a 1:1 basis) were granted to Key Management Personnel, other employees and contractors
as set out in the table below. The value of each performance right was determined with reference to
the market value of the underlying securities on grant date.
962,688 performance rights were forfeited during the six months ended December 31, 2022, as not
all vesting conditions were met.
Further details of the performance rights are set out in the table below:
118
Note 30 Share-Based Payments (continued)
Name
Rashda Buttar
Nick Liveris
Chris Burns
Grant date
Number
Vesting date
April 13, 2023
April 5, 2023
April 13, 2023
253,401
December 31, 2025
549,035
December 31, 2025
1,604,871
December 31, 2025
Fair value
AUD
$1.09
$1.21
$1.09
Expiry
Cessation of employment
Cessation of employment
Cessation of employment
Expense recognised
US$
37,279
89,663
236,100
Annual Report - 31 December 2023
$1.41
Cessation of employment
392,726
¼ January 3, 2024
¼ January 3, 2025
¼ January 3, 2026
¼ January 3, 2027
4 equal annual
tranches commencing
on the anniversary of
employment
Non-KMP employees
January 3, 2023
1,030,325
Non-KMP employees
January 27, 2023
Non-KMP employees
February 6, 2023
Non-KMP employees
March 2, 2023
Non-KMP employees
Non-KMP employees
Non-KMP employees
Non-KMP employees
Non-KMP employees
May 8, 2023
July 11, 2023
July 14, 2023
July 24, 2023
July 31, 2023
Non-KMP employees
August 1, 2023
Non-KMP employees
August 21, 2023
Non-KMP employees
September 2, 2023
Non-KMP employees
November 9, 2023
Non-KMP employees
October 7, 2022
Non-KMP employees
November 28, 2022
58,636
18,942
43,078
124,505
42,506
85,618
39,960
69,290
170,019
125,862
300,000
57,019
37,587
21,067
$1.86
$1.80
$1.49
$0.99
$0.93
$1.05
$0.95
$0.93
$0.95
$1.08
$0.93
$0.75
$1.86
$2.18
Cessation of employment
Cessation of employment
Cessation of employment
Cessation of employment
Cessation of employment
Cessation of employment
Cessation of employment
Cessation of employment
Cessation of employment
Cessation of employment
Cessation of employment
Cessation of employment
Cessation of employment
Cessation of employment
Total number issued
4,631,721
Total expense recognised
16,084
10,739
19,645
28,534
6,806
15,850
6,124
9,812
24,805
17,137
31,574
2,238
27,243
16,976
989,336
119
Annual Report - 31 December 2023
Note 30 Share-Based Payments (continued)
Performance rights net settled for withholding tax obligations
The Group has an obligation to withhold tax on the vesting of performance rights for employee’s
resident in the USA and Canada. As consideration for the withholding tax, the Group reduces the
number of shares to be issued to the employees (net settled).
During the year the Group net settled the following share-based payments:
Name
Non-KMP employees
Rashda Buttar
Total
OPTIONS
Performance
rights vested
& exercised
Net settled
shares
844,449
158,110
449,961
89,160
Withholding
obligation
US$
251,128
45,304
296,432
A summary of movements of all options issued is as follows:
Options outstanding as at 1 July 2022
Granted to employees
Forfeited
Exercised
Options outstanding as at 31 December 2022
Vested options outstanding as at 31 December 2022
Forfeited
Exercised
Options outstanding as at 31 December 2023
Vested options outstanding as at 31 December 2023
Number
29,330,001
-
(66,667)
(170,000)
29,093,334
13,560,000
(133,334)
(749,999)
28,210,001
12,676,667
Weighted
Average
Exercise Price
AUD
$0.51
-
$0.50
$0.90
$0.51
$0.52
$1.30
$0.68
$0.50
$0.50
The weighted average remaining contractual life of options outstanding at 31 December 2023 was 3.4
years (31 December 2022: 3.8 years).
The range of exercise prices for options outstanding at 31 December 2023 was AUD$0.50 to
AUD$0.55, and at 31 December 2022 was AUD$0.50 to AUD$1.40.
There were no options granted during the twelve months ended 31 December 2023 and twelve
months ended 31 December 2022.
120
Annual Report - 31 December 2023
Note 31 Events After the Reporting Date
In February 2024, NOVONIX and Panasonic Energy, a leading manufacturer of EV batteries in North
America, each announced the signing of a binding off-take agreement for high-performance synthetic
graphite anode material to be supplied to Panasonic Energy’s North American operations from
NOVONIX’s Riverside facility in Chattanooga, Tennessee. Under the off-take agreement, Panasonic
Energy has agreed to purchase at least 10,000 tonnes of anode material for use in its North American
plants over the term of 2025-2028, subject to NOVONIX achieving agreed upon milestones regarding
final mass production qualification timelines prior to the fourth quarter of 2025. Panasonic Energy has
the right to reduce the 10,000 tonnes volume (by up to 20%) if these milestones are not achieved by
the required dates or to terminate the agreement if there is a substantial delay to achieving these
milestones. During the term, if additional volumes are requested by Panasonic Energy, NOVONIX shall
use its best efforts to deliver the increased volumes. The companies have agreed to a pricing structure
that incorporates a mechanism for adjusting the price in response to significant changes in NOVONIX’s
raw material costs.
There have been no other matters or circumstances that have arisen since the end of the financial
year which significantly affected or could significantly affect the operations of the Company, the
results of those operations or the state of affairs of the Company in future financial years.
Note 32 Related Party Transactions
During the year ended 31 December 2023 the Group entered into the following related party
transactions.
(a) On 5 April 2023, 1,604,871 performance rights were granted to Chris Burns as an LTI. The
performance rights (convertible to ordinary shares on a 1:1 basis) vest on 31 December
2025. 50% of the performance rights vest subject to continued employment over the vesting
period, and 50% vest subjec5 to the achievement of performance conditions. An expense of
$119,312 was recognised during the six-months ended 30 June 2023 relating to these
performance rights.
(b) On 5 April 2023, 253,401 performance rights were granted to Rashda Buttar as an LTI. The
performance rights (convertible to ordinary shares on a 1:1 basis) vest on 31 December
2025. 50% of the performance rights vest subject to continued employment over the vesting
period, and 50% vest subject to the achievement of performance conditions. An expense of
$18,839 was recognised during the six-months ended 30 June 2023 relating to these
performance rights.
(c) On 5 April 2023, 549,035 performance rights were granted to Nick Liveris as an LTI. The
performance rights (convertible to ordinary shares on a 1:1 basis) vest on 31 December
2025. 50% of the performance rights vest subject to continued employment over the vesting
period, and 50% vest subject to the achievement of performance conditions. An expense of
$40,818 was recognised during the six-months ended 30 June 2023 relating to these
performance rights.
(d) During the year ended 31 December 2023, Phillips 66 were paid fees totalling $59,534 for
Ms Zhanna Golodryga's and Mr Suresh Vaidyanathan’s services to the Group as Directors.
121
Annual Report - 31 December 2023
Note 32
Related Party Transactions (continued)
(e) Ms. Zhanna Golodryga and Mr. Suresh Vaidyanathan are not permitted to receive
remuneration in their personal capacity under the terms of their employment with Phillips
66 and terms of engagement with the Group. Accordingly, all fees earned by them are paid
directly to Phillips 66.
During the six-month period ended 31 December 2022 there were the following related party
transactions:
(a) On 26 October 2022, the following Share rights were issued to non-executive Directors. The
share rights are convertible to ordinary shares on a 1:1 basis, and will vest on 30 June 2023:
a. Tony Bellas (Director) – 69,995 share rights
b. Andrew Liveris (Director) – 69,995 share rights
c. Robert Cooper (Director) – 69,995 share rights
d. Zhanna Golodryga (Director) – 69,995 share rights
e. Robert Natter (Director) – 69,995 share rights
f.
Jean Oelwang (Director) – 69,995 share rights
An expense of $412,522 relating to these share rights has been recognised during the six-
month period ended 31 December 2022.
(b) On 26 October 2022, the following Share rights were issued to non-executive Directors. The
share rights are convertible to ordinary shares on a 1:1 basis, and vested immediately:
a. Robert Natter (Director) – 7,263 share rights
b. Jean Oelwang (Director) – 9,170 share rights
An expense of $31,932 relating to these share rights has been recognised during the six-
month period ended 31 December 2022.
(c) On 1 July 2022, 2,275,400 performance rights were granted to Chris Burns as an LTI for the
period 1 July 2022 to 30 June 2023. The performance rights (convertible to ordinary shares
on a 1:1 basis) vest on 30 June 2025. 50% of the performance rights vest subject to
continued employment, and 50% vest subject to the achievement of performance
conditions. An expense of $777,119 was recognised during the six-months ended 31
December 2022 relating to these performance rights.
(d) On 1 July 2022, 359,300 performance rights were granted to Rashda Buttar as an LTI for the
period 1 July 2022 to 30 June 2023. The performance rights (convertible to ordinary shares
on a 1:1 basis) vest on 30 June 2025. 50% of the performance rights vest subject to
continued employment, and 50% vest subject to the achievement of performance
conditions. An expense of $122,712 was recognised during the six-months ended 31
December 2022 relating to these performance rights.
122
Annual Report - 31 December 2023
Note 32
Related Party Transactions (continued)
(e) On 1 July 2022, 482,441 performance rights were granted to Rashda Buttar as a true-up
grant. Rashda Buttar has previously received a grant of performance rights upon being hired,
however following the implementation of equity guidelines, a true-up grant was required
to make her whole in relation to the new guidelines. The performance rights (convertible to
ordinary shares on a 1:1 basis) vest annual in four equal tranches from 1 July 2023 through
to 1 July 2026. All performance rights vest subject to continued employment. An expense of
$197,860 was recognised during the six-months ended 31 December 2022 relating to these
performance rights.
(f) On 26 October 2022, 778,400 performance rights were granted to Nick Liveris as an LTI for
the period 1 July 2022 to 30 June 2023 and 667,831 performance rights for FY2022. The
performance rights (convertible to ordinary shares on a 1:1 basis) vest on 30 June 2025. 50%
of the performance rights vest subject to continued employment, and 50% vest subject to
the achievement of performance conditions. An expense of $265,848 was recognised during
the six-months ended 31 December 2022 relating to these performance rights.
(g) During the six-month period ended 31 December 2022, Phillips 66 were paid fees totalling
$30,000 and issued share rights to the value of $68,758, for Ms Zhanna Golodryga services
to the Company as a Director. Ms Zhanna Golodryga is not permitted to receive
remuneration, including any equity incentives, in her personal capacity under the terms of
her employment with Phillips 66 and terms of engagement with the Company. Accordingly,
all fees earned by Ms Zhanna Golodryga are paid directly to Phillips 66.
There were no other related party transactions during the current or prior financial periods. For details
of disclosures relating to key management personnel, refer to Note 7.
Note 33
Commitments and Contingencies
(a)
Exploration commitments
Commitments for payments under exploration permits
in existence at the reporting date but not recognised as
liabilities payable
Consolidated
31 December
2023
US$
31 December
2022
US$
2,000
4,000
So as to maintain current rights to tenure of various exploration tenements, the Group will be required
to outlay amounts in respect of tenement exploration expenditure commitments. These outlays,
which arise in relation to granted tenements are noted above. The outlays may be varied from time
to time, subject to approval of the relevant government departments, and may be relieved if a
tenement is relinquished.
Exploration commitments are calculated on the assumption that each of these tenements will be held
for its full term. But, in fact, commitments will decrease materially as exploration advances and ground
that is shown not to be prospective is progressively surrendered. Expenditure commitments on
prospective ground will be met out of existing funds, farm-outs, and new capital raisings.
123
Annual Report - 31 December 2023
Note 33
Commitments and Contingencies (continued)
(b) Capital commitments
Significant capital expenditure contracted for at the end of the reporting period but not recognised
as liabilities is as follows:
Consolidated
31 December
2023
US$
31 December
2022
US$
Property, plant, and equipment
9,321,453
16,315,454
The capital commitments relate to purchases of property, plant and equipment in connection with the
expansion of our business and development of our technologies in the NAM and BTS business
segments and are expected to be recognised within the next twelve months.
(c) Legal Proceedings
The Group is currently not a party to any material legal proceedings. From time to time, the Group
may become involved in legal proceedings arising in the ordinary course of business. Such claims or
legal actions, even if without merit, could result in the expenditure of significant financial and
management resources and potentially result in civil liability for damages.
124
Annual Report - 31 December 2023
Note 34 Financial Risk Management
This note explains the Group’s exposure to financial risks and how these risks could affect the Group’s
future financial performance. Current year profit and loss information has been included where
relevant to add further context.
The Group’s financial instruments consist mainly of deposits with banks and accounts receivable and
payable.
The totals for each category of financial instruments, measured in accordance with IAS 39: Financial
Instruments: Recognition and Measurement as detailed in the accounting policies to these financial
statements, are as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through profit or loss
Total financial assets
Financial liabilities
Trade payables
Lease liabilities
Borrowings
Total financial liabilities
Consolidated
Notes
31 December
2023
US$
31 December
2022
US$
11
12
17
20
22
24
78,713,885
4,358,833
16,666,665
99,739,383
1,342,369
4,825,560
64,562,190
70,730,119
99,039,172
11,984,834
16,490,271
127,514,277
4,108,380
5,178,938
36,162,902
45,450,220
The Board has overall responsibility for the determination of the Group’s risk management objectives
and policies. The overall objective of the Board is to set policies that seek to reduce risk as far as
possible without unduly affecting the Group’s competitiveness and flexibility.
Market risk
Market risk is the risk that the change in market prices, such as foreign exchange rates, interest rates
and equity prices will affect the Group’s income or the value of its holdings of financial instruments.
The Group is not exposed to market risks other than interest rate risk.
Foreign currency risk
Foreign exchange risk arises from future transactions and recognised assets and liabilities
denominated in a currency that is not the functional currency of the relevant Group entity. Exposure
to foreign currency risk may result in the fair value or future cash flows of a financial instrument
fluctuating due to movement in foreign exchange rates of currencies in which the Group holds
financial instruments which are other than the USD.
125
Annual Report - 31 December 2023
Note 34 Financial Risk Management (continued)
With instruments being held by overseas operations, fluctuations in the Canadian dollar may impact
on the Group’s financial results.
The following table shows the foreign currency risk as on the financial assets and liabilities of the
Group’s operations denominated in currencies other than the functional currency of the operations.
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in
United States dollars, was as follows:
31 December
31 December
31 December
31 December
2023
CAD $
2022
CAD $
-
-
-
-
-
25,038
2023
USD $
32,748,324
2,427,380
37,283
2022
USD $
55,708,444
3,296,587
2,424,565
Cash at bank
Trade receivables
Trade payables
Cash flow and fair value interest rate risk
The Group’s main interest rate risk arises from long-term borrowings with variable rates, which expose
the Group to cash flow interest rate risk. During the six-month period ended 31 December 2022, the
Group’s borrowings at variable rates were denominated in Canadian and US dollars.
As the Group has interest-bearing cash assets, the Company’s income and operating cash flows are
exposed to changes in market interest rates. The Company manages its exposure to changes in
interest rates by using fixed term deposits.
At 31 December 2023, if interest rates had changed by -/+ 100 basis points from the year-end rates
with all other variables held constant, post-tax profit / (loss) for the year would have been $445,024
(six-month period ended 31 December 2022: $635,007) lower/higher, as a result of higher/lower
interest income from cash and cash equivalents.
Credit risk
Credit risk is managed on a Group basis. Credit risk arises primarily from cash and cash equivalents
and deposits with banks and financial institutions. For bank and financial institutions, only
independently rated parties with a minimum rating of ‘AAA’ are accepted.
For trade and other receivables, amounts are considered as “past due” when the debt has not been
settled, in line with the terms and conditions agreed between the Company and the customer to the
transaction. Due to a strong credit approval process, the Company has a minimal history of bad debt
write-offs.
126
Annual Report - 31 December 2023
Note 34 Financial Risk Management (continued)
The balance of receivables that remain within initial trade terms are considered to be of high credit
quality. The credit quality of financial assets that are neither past due nor impaired can be assessed
by reference to external credit ratings (if available).
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities to
meet obligations when due.
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows. No
finance facilities were available to the Group at the end of the reporting period.
All financial assets mature within one year. The maturity of all financial liabilities is set out in the table
below.
Financing arrangements
The Group’s undrawn borrowing facilities as at 31 December 2023 totals $1,382,547 which relates to
the loan facilities secured over commercial land and buildings (refer note 23).
Maturities of financial liabilities
As at 31 December 2023, the contractual maturities of the Group’s non-derivative financial liabilities
were as follows:
Contractual maturities
of financial liabilities
At 31 December 2023
Trade payables
Lease liabilities
Less than
6 months
6 - 12
months
Between 1-
2 years
Between 2 -
5 years
Over 5
years
Total
contractual
cash flows
Carrying
amount
5,760,061
286,800
-
286,800
-
537,600
-
1,720,800
-
3,107,000
5,760,061
5,939,000
5,760,061
4,825,560
Borrowings
1,252,522
1,257,764
2,572,146
6,856,494 32,120,763
44,059,689 64,562,190
Total non-derivatives
7,299,383
1,544,564
3,109,746
8,577,294 35,227,763
55,758,750 75,147,811
END OF FINANCIAL REPORT – 31 DECEMBER 2023
127
Annual Report - 31 December 2023
Directors’ Declaration
In the Directors’ opinion:
(a)
the financial statements and notes set out on pages 58 to 127 are in accordance with the
Corporations Act 2001, including:
(I)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements, and
giving a true and fair view of the consolidated entity’s financial position as at 31
December 2023 and of its performance for the financial period ended on that date,
and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable.
Note 1 confirms that the financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Managing Director and Chief Financial Officer
required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
R Natter
Director
Brisbane, 28 February 2024
128
Independent Auditor’s Report to the Members
Annual Report - 31 December 2023
Independent auditor’s report
To the members of NOVONIX Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of NOVONIX Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a)
giving a true and fair view of the Group's financial position as at 31 December 2023 and of its
financial performance for the year then ended
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
the consolidated balance sheet as at 31 December 2023
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the notes to the consolidated financial statements, including material accounting policy information
and other explanatory information
the directors’ declaration.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & 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.
PricewaterhouseCoopers, ABN 52 780 433 757
480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
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Annual Report - 31 December 2023
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report, which indicates that the Group incurred a net loss of
$46.3 million and net operating cash outflows of $36.2 million during the year ended 31 December 2023,
and is dependent upon raising additional funding to finance its ongoing expansionary activities. These
conditions, along with other matters set forth in Note 1, indicate that a material uncertainty exists that may
cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in
respect of this matter.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion
on the financial report as a whole, taking into account the geographic and management structure of the
Group, its accounting processes and controls and the industry in which it operates.
Audit Scope
•
Our audit focused on where the Group made subjective judgements; for example, significant
accounting estimates involving assumptions and inherently uncertain future events.
•
In designing the scope of our audit, we considered the structure of the Group, which includes three
continuing business segments being Battery Materials (NAM), Battery Technology (BTS), and
Graphite Exploration (MDG), as well as Corporate and Other operations.
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 for the current period. The key audit 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. Further, any commentary on the outcomes of a particular audit
procedure is made in that context. We communicated the key audit matters to the
Audit and Risk Management Committee.
In addition to the matter described in the Material uncertainty related to going concern section, we have
determined the matters described below to be the key audit matters to be communicated in our report.
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Annual Report - 31 December 2023
Key audit matter
How our audit addressed the key audit matter
Our procedures in relation to assessing the fair
value of the investment in KORE Power included,
amongst others:
• Evaluating the Group's assessment of fair
value at 31 December 2023, by reference to
actual share transactions, including capital
raising activities undertaken by KORE Power,
and market observable inputs, including share
price movements of listed peer companies;
• Reading relevant publicly available information
to obtain an understanding of KORE Power
and considering whether there were any
events that occurred during the year which
could have an impact on the valuation of the
KORE Power investment, including reading
publicly available information on peer
companies to KORE Power; and
• Assessed the reasonableness of the related
disclosures in the notes to the consolidated
financial statements against the requirements
of Australian Accounting Standards.
Assessment of the fair value of the investment
in KORE Power Inc
(Refer to note 15 Financial assets at fair value
through profit or loss) $16.7 million
On 31 January 2022, the Group entered into a
Securities Purchase Agreement with KORE Power
Inc. (“KORE Power”). The Group acquired
3,333,333 shares of KORE Power, representing
approximately 5% of the common equity of KORE
Power, for total consideration of $25.0 million,
settled through a combination of 50% cash and
50% through the issue of 1,974,723 ordinary
shares of the Group.
During the second half of 2022, KORE Power
issued 5,000,000 shares which diluted the Group’s
shareholding to 3.7%.
The investment is accounted for as a financial
asset measured at fair value through profit or loss.
At 31 December 2023, these financial assets were
classified as Level 3 in the fair value hierarchy as
the valuation incorporates significant inputs that
are not based on observable market data.
This was a key audit matter because of the:
• Significance of the investment to the
Consolidated Balance Sheet; and
• Judgement required by the Group in assessing
the fair value of the KORE Power investment.
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Annual Report - 31 December 2023
Key audit matter
How our audit addressed the key audit matter
Assessment of the fair value of the unsecured
convertible loan notes issued to LG Energy
Solution, Ltd.
(Refer to note 22 Unsecured convertible loan
notes and derivative financial instruments) $28.6
million and $0.9 million
On 21 June 2023, the Group issued 45,221,586
unsecured convertible loan notes (the “convertible
notes”), with a face value of AUD $1.00 per note,
a coupon rate of 4% and a maturity date of 7 June
2028 for proceeds of US$30.0 million to LG
Energy Solutions, Ltd (LGES).
For accounting purposes, the convertible notes
were initially measured at fair value less
transaction costs, and subsequently carried at
amortised cost. The conversion option is an
embedded financial derivative that is measured at
fair value at each reporting date, utilising a
valuation model based on a market approach.
At 31 December 2023, these financial liabilities
were classified as Level 3 in the fair value
hierarchy as the valuation incorporates significant
inputs that are not based on observable market
data.
This was a key audit matter because of the:
• Significance of this transaction to the Group’s
operations and Consolidated Balance Sheet;
• Complexity in applying relevant Australian
Accounting Standards to account for the
convertible notes; and
• Judgements applied in the valuation of both the
financial liability and embedded derivative
components of the convertible notes.
Our procedures in relation to assessing the
accounting for the convertible notes and the
associated financial derivative included:
• Reading the convertible notes agreement with
LGES as well as vouching the receipt of the
US $30.0 million to bank statements to obtain
an understanding of the key terms and
conditions attaching to the convertible notes;
• With the assistance of PwC valuation experts,
we assessed the appropriateness of the
valuation methodology adopted by the Group;
• With the assistance of PwC valuation experts,
we assessed the accuracy of the modelled
valuation of both the financial liability and
embedded derivative components of the
convertible notes at the initial recognition date
and also at the date of the consolidated
financial statements;
• Assessed the appropriateness of the
significant inputs and assumptions used in the
valuation model, including the Group’s
assumption on the probability weights applied
to the timing of the placement of the purchase
order;
• Assessed whether the initial and subsequent
measurement of both the financial liability and
embedded derivative components of the
convertible notes were in accordance with the
requirements of Australian Accounting
Standards; and
• Assessed the reasonableness of the related
disclosures in the notes to the consolidated
financial statements against the requirements
of Australian Accounting Standards.
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Annual Report - 31 December 2023
Key audit matter
How our audit addressed the key audit matter
Recoverability of Construction work in
progress assets
(Refer to note 14 Property, plant and equipment -
Construction work in progress) $72.0 million
The Group has continued to invest in engineering
works, modifications, and furnace technology.
The consolidated balance of Construction work in
progress at 1 January 2023 was $56.7 million.
During the year, a further $17.3 million was spent,
bringing the total balance to $72.0 million.
Costs should be capitalised in line with the
requirements of Australian Accounting Standards.
This was a key audit matter because of the:
• Significance of the Capital work in progress
balance to the Consolidated Balance Sheet,
including the additions made during the year;
• Judgement applied in determining whether
costs met the criteria for capitalisation and / or
remain required for the project to which they
relate; and
• Consideration of the timing of when the assets
should be transferred from Construction work
in progress to the appropriate Property, plant
and equipment class to commence
depreciation.
Our procedures in relation to assessing costs
capitalised to Construction work in progress
included:
• Developed an understanding of and evaluated
the Group’s cost capitalisation policy;
• Assessed the processes and controls
implemented by the Group for the
measurement of capitalised costs;
• Compared costs capitalised to Construction
work in progress to supporting documentation
on a sample basis, including assessing
whether the costs meet the criteria for
capitalisation with reference to Australian
Accounting Standards;
• Obtained representations from management of
the Group on the future intended use and
recoverability of the assets in Construction
work in progress; and
• Assessed for a sample of items in
Construction work in progress whether the
items were not in use at year-end, and
therefore have appropriately not yet been
capitalised to the appropriate Property, plant
and equipment asset class and were not
depreciated during the year.
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Annual Report - 31 December 2023
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report for the year ended 31 December 2023, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon through our opinion on the financial report. We have
issued a separate opinion on the remuneration report.
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 on the other information that we obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the 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 at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf.
This description forms part of our auditor's report.
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Annual Report - 31 December 2023
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in the directors’ report for the year ended
31 December 2023.
In our opinion, the remuneration report of Novonix Limited for the year ended 31 December 2023 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.
PricewaterhouseCoopers
Michael Crowe
Partner
Brisbane
28 February 2024
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Annual Report - 31 December 2023
Shareholder Information
The shareholder information set out below was applicable as at 19 February 2024.
A
Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
Class of equity security
1 - 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Ordinary shares
15,797
10,187
2,959
3,243
330
32,516
There were no holders of less than a marketable parcel of ordinary shares.
B
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Ordinary shares
Name
Phillips 66 Company
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
Argo Investments Limited
J P Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited – A/c 2
Carpe Diem Asset Management Pty Ltd
BNP Paribas Nominees Pty Ltd ACF Clearstream
BNP Paribas Noms Pty Ltd
Andrew Liveris
BNP Paribas Nominees Pty Ltd
Mutual Trust Pty Ltd
Comsec Nominees Pty Limited
George Chapman
David Andrew Stevens
Ms Zhen Tian
Allegro Capital Nominees Pty Ltd
Loch Exploration Pty Ltd
National Nominees Limited
KORE Power, inc
Total
Number held
78,050,122
48,932,672
31,699,766
13,550,000
12,478,248
10,684,890
9,047,622
8,660,144
7,766,416
5,069,995
4,263,029
4,132,794
4,026,733
3,600,000
2,900,000
2,605,000
2,600,000
2,277,551
2,160,240
1,974,723
256,479,945
% of issued shares
15.97
10.01
6.48
2.77
2.55
2.19
1.85
1.77
1.59
1.04
0.87
0.85
0.82
0.74
0.59
0.53
0.53
0.47
0.44
0.40
52.46
136
Unquoted equity securities
Performance rights
Share options
Annual Report - 31 December 2023
Number on issue
13,430,249
28,210,001
Number of holders
73
14
Holders of more than 20% of unquoted share options on issue
Andrew Liveris
Christopher Burns
Number held
9,000,000
9,500,000
% of total on issue
31.9%
33.7%
Holders of more than 20% of unquoted performance rights on issue
Christopher Burns
C
Substantial holders
Substantial holders in the company are set out below:
Ordinary shares
Phillips 66 Company
D
Voting rights
Number held
5,292,271
% of total on issue
39.4%
Number held
Percentage
78,050,122
15.97%
The voting rights attaching to each class of equity securities are set out below:
(a)
(b)
(c)
(d)
ordinary shares: on a show of hands every member present at a meeting in person or by
proxy shall have one vote and upon a poll each share shall have one vote.
performance rights: no voting rights
share options: no voting rights
share rights: no voting rights.
END OF SHAREHOLDER INFORMATION
137