ReNu Energy Limited
Annual Report 2023

Plain-text annual report

:contents Executive Chairman’s & CEO’s letter Directors' Report 1 2 3 4 5 6 7 8 Introduction Remuneration governance Executive remuneration arrangements Executive remuneration outcomes for FY23 Executive contractual arrangements Non-executive Director remuneration arrangements Share based compensation Other statutory disclosures Auditor’s Independence Declaration to the Directors of ReNu Energy Limited Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Cash Flows Consolidated Statement of Changes in Equity Directors' Declaration Independent Auditor’s Report Corporate Governance & Shareholder Information Company Directory 1 6 20 20 21 23 24 26 28 30 33 34 35 36 37 73 74 78 81 : Executive Chairman’s & CEO’s letter Dear ReNu Energy Shareholders Since the last Annual Report, ReNu Energy Limited (ReNu Energy or the Company) has made strong progress towards an investment decision for the Company’s flagship Tasmanian green hydrogen projects and advanced its portfolio of investments in renewable and clean energy technologies. ReNu Energy’s green hydrogen projects are being undertaken through its wholly owned subsidiary, Countrywide Hydrogen Pty Ltd (Countrywide Hydrogen and collectively the Group), which the Company acquired in February 2022. Highlights of the Group’s progress during the period include: • Completion of project definition, technology and supplier selection and basis of design for the Tasmanian green hydrogen projects. • Signing a definitive Platform Agreement with Australian superannuation fund HESTA for co-investment in the Group’s green hydrogen projects. • Progressing green hydrogen offtake collaborations and partnerships, commencing the process to apply for ARENA and State government funding. • Announcing the Group’s refuelling strategy – to be the operator of Hydrogen Refuelling Stations (HRS) – and the launch of the Group’s refuelling brand: H2Co Energy. • Generating a fair value gain on the Company’s incubator investments of $2,943,752 off the back of Origin Energy agreeing to invest $4 million in Allegro for a 5% interest. • Expanding the Company’s portfolio with a $500,000 investment in battery casing technology company Vaulta for a 10% interest (with a further $250,000 invested in July 2023 for a cumulative 15% interest and the option to invest a further $250,000 for an interest up to 20%) and investing a further $1 million in Enosi for a cumulative 14% interest. • Completing an oversubscribed capital raising of $4.5m. We provide below a summary of activities for the period, our investment rationale and ambition for the year ahead. Green hydrogen The potential domestic market for green hydrogen (hydrogen produced using renewable electricity) is growing due to the appetite for decarbonising industry, road transport and natural gas networks, with many Australian companies having set emissions reductions targets they are striving to meet. Emissions reduction using hydrogen has also been endorsed as deliverable by Federal and State governments with multiple funding announcements made during the period. Road transport plays a critical role in the Australian economy and in 2022 the sector made up 19% of Australia’s emissions.1 With major companies and sectors targeting the delivery of their announced emissions 1https://www.dcceew.gov.au/energy/transport#:~:text=In%202022%20our%20transport%20sector,source%20of%20emissions%20by %202030. 1 reductions targets, the Group is focused on companies that have identified road transport as a target for decarbonising their operations. The Group’s domestic green hydrogen supply ambition is to implement its model in Tasmania first (Tasmania is 100 per cent self-sufficient in renewable electricity generation2) and then to replicate the model to suitable markets across mainland Australia and internationally. The Tasmanian model creates a hydrogen ecosystem by providing statewide access to green hydrogen – the proposed projects span three strategic locations near Hobart, Launceston and Devonport. We call it a Hydrogen HyWay. Each strategic location has been selected after analysing transport volumes and heavy vehicle movements and provides for an initial 5 megawatt (MW) electrolyser for hydrogen production with storage and a fuelling station. These projects are in harmony with recently announced new Tasmanian state funding to support 5-10MW hydrogen production facilities focused on domestic demand. The model provides the flexibility for one of the two locations in the north of the State to come online initially with the other to follow as demand increases. At the Brighton location near Hobart, the Group is collaborating with TasGas to provide the option for industrial customers to access 100% green hydrogen supply and to inject green hydrogen into the natural gas network, thereby assisting TasGas to achieve its strategic decarbonisation objective. Progress made on the Group’s Tasmanian green hydrogen projects during the period includes: • Working with the Group’s engineers, Wood, to complete project definition, technology selection and basic design. • Selection of Plug Power as the preferred contractor to supply 5MW proton exchange membrane (PEM) electrolysers, Fabrum as the preferred contractor to provide HRS, and Wasco as the construction contractor. • Launching the Group’s refuelling strategy – to be the operator of HRS – and the launch of the Group’s refuelling brand: H2Co Energy (with the Group’s intention to target a low hydrogen through customers purchasing green hydrogen directly from Countrywide Hydrogen rather than via third- party resellers). fuel cost Artist Impression • The signing of a definitive Platform Agreement with Australian superannuation fund HESTA for co- investment in the Group’s green hydrogen projects. • Working with TasGas to enable 100% green hydrogen delivery to industrial customers and blending of green hydrogen into the natural gas distribution network. • Partnering with 7R Logistics, with the Group to provide the green hydrogen necessary to commence the decarbonising of trucking in Tasmania. 2 https://www.stategrowth.tas.gov.au/__data/assets/pdf_file/0007/420586/Renewable_Energy_Tasmania_-_English.pdf 2 • Partnering with Walkinshaw Group to assess the feasibility of delivering right-hand-drive hydrogen fuel cell trucks throughout Australia with the Group building, and Walkinshaw supplying, the market. • Together with Deloitte, progressing ARENA grant funding applications. • Working with the Tasmanian state government to participate in its Renewable Hydrogen Action Plan and apply for financial support for the Group’s projects. On the mainland, ReNu Energy progressed the Melbourne Hydrogen Hub and Hydrogen Portland opportunities during the period, including evaluating land options, engaging with potential international project partners and assessing the development of a distributed hydrogen production network at these locations. Artist Impression ReNu Energy also progressed international green hydrogen opportunities with the signing of a memorandum of understanding with Anantara (a joint venture between ib vogt & Quantum Power) to study green hydrogen supply initially to Indonesia with potential to supply nearby countries in the Southeast Asian region. Renewable and clean energy investments A distinctive feature of ReNu Energy’s business model is to incubate and accelerate a portfolio of investments in early-stage renewable and clean energy technologies with the potential to trigger investment revaluations as the companies advance and to leverage potential synergies across the Group. Vaulta is a battery casing tech company that has developed and patented technology for battery disassembly, enabling replacement or re-purposing of individual cells leading to less battery waste and reduced landfill. ReNu Energy’s first investment in Vaulta occurred during the period and represents the Company’s fifth investment in Australian renewable and clean energy ingenuity. At the date of this report $750,000 has been invested for a 15% interest (with the Company having the ability to invest up to $1 million for an interest of up to 20%). Allegro is developing water based Redox Flow Batteries (RFBs) and supercapacitors that are clean, non-flammable, non-corrosive, recyclable with no reliance on scarce materials. At the core of both products is Allegro’s unique water-based electrolyte which enables energy storage that is less expensive and safer potentially than competing technology. ReNu Energy has invested $525,000 in Allegro for a 4.75% the period Origin Energy interest. During acquired a 5% equity stake in Allegro Energy for $4.0 million resulting in a revaluation of the carrying value of the Company’s interest to $3,398,752. Enosi has developed Powertracer, a software as a service clean energy solution that provides complete traceability of renewable energy, from production to consumption. Hourly time stamps will be critical pieces of data for electricity retailers and large corporates aiming to use 24/7 certified carbon free energy, which means matching the clean energy they buy to the energy they consume every hour of every day. Enosi is also working with several green hydrogen proponents 3 (including Countrywide Hydrogen) to be the certification partner for time and location matching of renewable energy supply to electrolysers to be certified as green. During the period ReNu Energy Limited invested a further $1 million in Enosi for a cumulative 14% interest. Uniflow is commercialising a unique, micro renewable energy generator – The Cobber – that uses solid biomass (such as agricultural waste) to create energy, delivering approximately 4.5kW of electrical power and 20kW thermal energy. Uniflow believes the Cobber is the only biomass fuelled, residential scale, combined heat and power (CHP) generator operating for demonstration anywhere in the world. Small scale biomass fuelled CHP systems have an important role to play in displacing fossil fuel generators in off grid applications. Uniflow has recently signed a provisional licensing agreement with Jauda Energy for potential licensing of the technology in Europe. Corporate During the period, the Board of ReNu Energy welcomed the appointment of The Honourable Peter Gutwein, former Tasmanian Premier and Treasurer, to the Board of its wholly owned subsidiary Countrywide Hydrogen Pty Ltd. Peter’s role at Countrywide Hydrogen includes assisting with commercial negotiations, advising on the processes for obtaining regulatory approvals and authorisations, and assessing the strategic, financial and commercial implications of the current and future green hydrogen projects. The Chairman, Boyd White, was appointed to an interim executive role during the period to apply his project delivery expertise to work with Chief Executive Officer and Executive Director - Hydrogen to take the Tasmanian green hydrogen projects to final investment decision. The Company completed a successful capital raising of $4.5 million during the period through the issue of 75.5 million new ReNu Energy shares at an issue price of $0.060. Subscribers also received one free attaching option for each share subscribed for. Financial results The loss for the period ($1,165,960) was 59% less than the corresponding period ($2,824,543) primarily due to favourable revaluations of the Company’s carrying value of investee companies ($2,943,752). Expenses were higher than the prior period due to increased green hydrogen project development expenditure, higher personnel costs and a full year amortisation of intangible assets arising from the Countrywide Hydrogen acquisition. ReNu Energy had net operating cash outflows for the year of $3,255,285 and at 30 June 2023 had cash and cash equivalents of $1,308,085. The Company is undertaking steps to raise capital to fund its 2024 financial year business plan and budget. The year ahead The Board and management believe there is a strong investment case now for green hydrogen: • Green hydrogen is currently enjoying unprecedented political, investment and business momentum globally. • Green hydrogen offers ways to decarbonise a range of sectors (including long-haul transport and natural gas networks) where it is proving difficult to meaningfully reduce emissions. • Technologies are available today that enable green hydrogen to be transformed into electricity, to reduce emissions and to fuel trucks, buses and cars. • Green hydrogen is one of the leading options for storing energy from renewables. • The recent investment in green hydrogen by major global corporates attests to green hydrogen being recognised as a fuel of the future. Likewise, the Board and management believe the investment case for ReNu Energy is strong: • First mover access to a green hydrogen ecosystem with the three Tasmanian locations providing statewide coverage. 4 • The Tasmanian model provides a showcase for rolling out to the mainland and internationally. • The domestic supply focus and ability to scale facilitates in the future creates a robust value proposition. • Strong partners and government support. • Revaluation events on the horizon, including but not limited to targeted final investment decision for the Tasmanian green hydrogen projects, positive earnings from green hydrogen production targeted from mid-2025, investee company revaluations and merger & acquisition activity. The Board and management believe that the Group is well positioned to: • Advance the Tasmanian green hydrogen projects to a final investment decision and progress the Group’s green hydrogen pipeline of projects. • Support and progress the Company’s other renewable and clean energy investments. Our purpose is to strategically drive the transition to a low carbon future by investing in renewable and clean energy technologies and projects. Our key priorities for the year ahead are to: • Continue our work to create a green hydrogen ecosystem in Tasmania. • Continue to explore expansion of green hydrogen opportunities onto mainland Australia and internationally. • Build value in and as appropriate, expand our portfolio of renewable and clean energy investments. On behalf of the Board, we acknowledge and thank our staff and contractors for their efforts and thank you, our shareholders, for your continued interest and support of ReNu Energy and the delivery of our purpose. Yours faithfully Boyd White Executive Chairman Greg Watson Chief Executive Officer & Company Secretary 5 : Directors’ report Director Profiles Your Directors submit their report for the year ended 30 June 2023. The names and details of the Directors of ReNu Energy Limited in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Name & Qualifications Experience Boyd White BBus(Acc) & MBA Chairman (until 14 May 2023) Executive Chairman (from 15 May 2023) Mr White has an accomplished record in the energy, infrastructure and mining sectors. He has over 30 years of business experience and brings strong strategic, commercial, M&A, financing and entrepreneurial skills to the ReNu Energy Board. Mr White has held executive roles internationally with US multinationals Halliburton Company and KBR Inc, and domestically with Tarong Energy, and Territory Generation. Mr White was a founding partner in ARC Developments International, providing energy advisory services and developing or acquiring renewable energy projects. Mr White is currently the Principal of New Energy Capital and, amongst other things, is developing a €500m bioenergy and geothermal business in Europe and involved in executive management, clean energy and capital raising activities in the small cap resources sector. Mr White holds a Bachelor of Business (Accounting) from Queensland University of Technology and an MBA from the University of Queensland. Mr White has had no other listed company directorships in the past three years. Mr White is a member of the Remuneration and Nominations Committee. On 15 May 2023, following a strategic review of business needs, Mr White assumed the role of Executive Chairman on an interim basis. In this capacity Mr White is working closely with the executive team to help drive strategy and assist with taking ReNu Energy's green hydrogen projects in Tasmania to final investment decision. 6 Directors’ Report (continued) Name & Qualifications Experience Tony Louka MBA & MAICD Non-executive Director Mr Louka has 24 years of industry experience in Board, executive and management roles in the energy supply chain, clean technology solutions as well as retail & industrial property sectors. Mr Louka is the Managing Director of Maxify Consulting a bespoke ESG & asset management advisory to various ASX corporates & innovative start-ups in the Asia Pacific. He has held previous management and executive roles at Woolworths Group, Ergon Energy and Emerson Network Power. He has also served as a Board Member of the Energy Users Association of Australia and the Transgrid Advisory Council. Mr Louka was appointed to the Board as a Non-executive Director on 27 September 2018. He was then appointed as interim Managing Director and Acting CEO on 20 September 2019 to oversee the company restructure. Mr Louka returned to his previous position of Non-executive Director effective 28 February 2020. Mr Louka has had no other listed company directorships in the past three years. Mr Louka is Chair of the Remuneration and Nominations Committee and a member of the Risk and Audit Committee. ReNu Energy has nominated Mr Louka as a Non-executive Director of investee company Enosi Australia Pty Ltd with the appointment taking effect on 20 June 2023. 7 Directors’ Report (continued) Name & Qualifications Experience Tim Scholefield BAppSc, MBA, GAICD, Cert Gov (Risk) Non-executive Director Mr Scholefield is a Director and senior executive with global experience in project delivery, operations, financial, commercial, governance and risk management. Mr Scholefield has more than 30 years’ experience across the resources and energy value chain including: exploration, production and operations; conventional, unconventional and renewable fuel sources; gas storage and offtake, power generation and the link to customers. Mr Scholefield is a Director and Principal of Pacific Energy Partners, a consultancy providing advice on renewable energy solutions and opportunities in the Pacific and Southeast Asia. He has served as a chair and participant on board committees evaluating and developing energy projects, managing joint venture and other stakeholder relationships and providing strategy, risk, commercial and governance support. He has experience leading small and large cross functional technical, financial, commercial, legal, project and operations teams; making recommendations and participating in acquisitions, divestments and greenfield and brownfield projects ranging in size from $USD 1 million to $USD 5 billion. Mr Scholefield holds a Bachelor of Applied Science from the University of South Australia, a MBA from Deakin University, a Certificate in Governance and Risk Management from the Governance Institute of Australia and is a Graduate of the Australian Institute of Company Directors. Mr Scholefield has had no other listed company directorships in the past three years. Mr Scholefield had executive responsibility to coordinate, implement and oversee the permanent abandonment of the Company's geothermal wells in the Cooper Basin and to assist the CEO in the assessment and renewable and clean energy recommendation opportunities. With the Company’s geothermal wells permanently abandoned during 2021 and a portfolio of renewable and clean energy investments secured, Mr Scholefield ceased his executive role on 31 December 2021. involvement for in Mr Scholefield is Chair of the Risk and Audit Committee. ReNu Energy has nominated Mr Scholefield as a Non-executive Director of investee company Vaulta Holdings Pty Ltd with the appointment taking effect on 20 July 2023. 8 Directors’ Report (continued) Name & Qualifications Experience Susan Oliver AM FAICD B Property and Construction Melb University, Cert Fin Mngt Non-executive Director Geoffrey Drucker BEc, CPA Executive Director Ms Oliver is an accomplished leader with more than 25 years' experience at a director and senior executive level. Ms Oliver has extensive Board and governance experience as Chair and Non-executive Director with listed companies including Transurban Group, Centro Group restructure, Programmed Group, Coffey International, Simonds Homes and the Just Group. She serves on the global Investment Committee for IFM Investors and was founding Chair of Scale Investors retiring in June 2021. She is currently Chair of the Alice Anderson Fund Investment Committee for the Victorian government. Previously, Ms Oliver had a career in technology and futures consulting with Accenture, pioneer technology strategy company Invetech and leading the Commission for the Future for the Australian Government. She held senior roles in the public service in Housing and Industry departments in Victoria. Her Order of Australia was awarded for services to business and women. Ms Oliver holds a Bachelor of Property and Construction from Melbourne University and a Certificate in Financial Management. She is a Fellow of the Australian Institute of Company Directors. Ms Oliver has had no other listed company directorships in the past three years. Ms Oliver is a member of the Risk and Audit Committee and the Remuneration and Nominations Committee. Mr Drucker is an experienced senior executive with a background in the renewable energy sector spanning three decades. He has extensive expertise in the renewable sector including renewable project initiation experience. Mr Drucker commenced his career with State Electricity Commission of Victoria and has held roles with PwC and several private consultancies. His previous Board experience includes appointments with Methodist Ladies’ College where he was Vice Chairman for five of his nine-year tenure, the Variety Club of Australia and various private companies including business development consultants Corporate Kudos Pty Ltd and DYDX Pty Ltd. Through both companies he represented ASX-listed companies and Governments. Mr Drucker holds a Bachelor of Economics and has been admitted as a Certified Practising Accountant. Mr Drucker has had no other listed company directorships in the past three years. Mr Drucker is ReNu Energy’s largest individual shareholder having been a founder of Countrywide Hydrogen Pty Ltd. 9 Directors’ Report (continued) Chief Executive Officer and Company Secretary Greg Watson LLB, BCom, GDipLP, CA Mr Watson joined ReNu Energy as Chief Financial Officer and Company Secretary in September 2019 and was appointed as Chief Executive Officer in February 2020. He has a strong background in finance, tax, legal and company secretarial disciplines. Mr Watson has 17 years’ experience with listed and private companies in the resources and energy sectors. Mr Watson previously worked as CFO and Company Secretary at Capricorn Copper and has also held corporate roles at Anglo American, Barrick Gold, Equinox Minerals and Fortescue Metals. Mr Watson commenced his career at KPMG where he worked for 9 years. Mr Watson is a Chartered Accountant and holds a Bachelor of Laws and Bachelor of Commerce degrees, as well as a Graduate Diploma in Legal Practise. Corporate structure ReNu Energy Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is Corporate House, Kings Row 1, 52 McDougall Street, Level 2, Milton QLD 4064. The Directors present this financial report on ReNu Energy Limited (the Company) and its subsidiaries (collectively the Group) for the financial year ended 30 June 2023. Principal activities ReNu Energy’s purpose is to strategically drive the transition to a low carbon future. It does this by identifying and developing green hydrogen projects and investing in renewable and clean energy technologies to create stakeholder value. ReNu Energy’s vision is to be a leader in the renewable and clean energy sector in Australia striving for a sustainable future, producing green hydrogen and with a portfolio of domestic and international renewable and clean energy projects. Significant changes in the state of affairs Significant changes in the state of affairs of the Group during the financial period were: • • • • • Strong progress towards the Group’s final investment decision for its flagship Tasmanian green hydrogen projects, including the completion of project definition, technology and supplier selection and basis of design. The signing of a definitive Platform Agreement with Australian superannuation fund HESTA for co- investment in the Group’s green hydrogen projects. Progressing green hydrogen offtake collaborations and partnerships, commencing the process to apply for ARENA funding and State Government briefings. Increase in the carrying value of investee company Allegro Energy by $2.85m following Origin Energy acquiring a 5% equity stake. Expanding the Group’s portfolio with an investment in battery casing technology company Vaulta. 10 Directors’ Report (continued) Significant changes in the state of affairs (continued) • • The investment of a further $1 million in Enosi for a cumulative 14% interest. Completing an oversubscribed capital raising of $4.5m. There were no other significant changes in the state of affairs of the Company during the financial period. Operating and Financial Review The Company realised a loss before tax for the financial period as set out below: Non-IFRS Measure EBITDA – by business segment Hydrogen Renewable & clean energy investments Corporate Total Group EBITDA Equity Accounted Share of Profit/(Loss) Depreciation Amortisation & impairment Interest expense Income tax (expense)/benefit Loss after tax 2023 $ 2022 $ (1,500,736) (345,398) 2,917,975 (41,916) (2,124,913) (2,190,197) (707,674) (2,577,511) (78,141) (82,518) - (58,979) (453,370) (183,833) (3,558) 159,301 (4,220) - (1,165,960) (2,824,543) The above non-IFRS information has been audited. Financial Position The Group has net operating cash outflows for the year of $3,255,285 and as at 30 June 2023 has cash and cash equivalents of $1,308,085. Subsequent to year end, the Group paid the third tranche of $250,000 to acquire a further 5% interest in an associate, Vaulta Holdings Pty Ltd. At the date of this report, the Group had $335,035 in cash and cash equivalents. The Group completed an oversubscribed private placement to sophisticated and institutional investors on 29 November 2022, raising $4,530,000. Results The Group’s Underlying EBITDA loss of $707,674 (2022: $2,577,511) was less than the corresponding period primarily due to favourable revaluations of the Company’s carrying value of investee companies. Operating expenses were higher than the prior period due to increased green hydrogen project development expenditure and higher personnel costs as the Group’s flagship Tasmanian green hydrogen projects progress towards final investment decision. 11 Directors’ Report (continued) Operating and Financial Review (continued) Operational review During the year ended 30 June 2023 and in keeping with its purpose to strategically drive the transition to a low carbon future, ReNu Energy’s activities centred around progressing its Tasmanian green hydrogen projects and growing its portfolio of interests in renewable energy technologies and projects. The results for the year have reinforced the Board and management’s view of the strong investment case for green hydrogen where the initial focus is on domestic supply and the upside potential of its portfolio of investments. The Group has maintained first mover status in green hydrogen development through progressing an ecosystem in Tasmania that provides statewide coverage. The Tasmanian model provides a showcase for a national rollout. Key activities during the year included: Green hydrogen • • • Strong progress towards the Group’s final investment decision for its Tasmanian green hydrogen projects, including working with the Group’s engineers, Wood, to complete project definition, technology selection and basic design. Selection of Plug Power as the preferred contractor to supply 5MW Proton Exchange Membrane electrolysers, Fabrum as the preferred contractor to provide Hydrogen Refuelling Stations and Wasco as the construction contractor. The signing of a definitive Platform Agreement with Australian superannuation fund HESTA for co- investment in the Group’s green hydrogen projects. • Working with TasGas to tie in project design to enable 100% green hydrogen delivery to industrial customers and blending of green hydrogen into the natural gas distribution network. • • • • • Partnering with 7R Logistics and Walkinshaw Group to decarbonise trucking in Tasmania through green hydrogen offtakes and to provide hydrogen powered trucks. Together with Deloitte, progressing ARENA grant funding applications. Briefing the Tasmanian Premier Jeremy Rockliff and Energy Minister Guy Barnett on the projects’ progress and alignment with the Tasmanian Renewable Hydrogen Action Plan (the Tasmanian Government has ambitious plans for developing a world class green hydrogen sector and is committed to supporting the development of a domestic green hydrogen industry). Progressing the Group’s international green hydrogen opportunities through signing a MOU with Anantara (a joint venture between ib vogt & Quantum Power) to study green hydrogen supply initially to Indonesia with potential to supply nearby countries in the Southeast Asian region. Progressing the Melbourne Hydrogen Hub and Portland opportunities, including evaluating land options, engaging with potential international project partners and assessing the development of a distributed hydrogen production network at these locations. 12 Directors’ Report (continued) Operating and Financial Review (continued) Investee companies • Origin Energy acquiring a 5% equity stake in battery technology company Allegro Energy for $4 million resulting in a revaluation of the carrying value of the Group’s 4.86% interest to $3,398,752 which was achieved at a cost of investment of $545,000. • • Increasing the Company’s portfolio of investments in Australian renewable and clean energy ingenuity to five through an agreement with battery casing technology company Vaulta for the investment of up to $1 million and an interest of up to 20% ($750,000 invested for a 15% interest at the date of this report). The investment of a further $1 million in Enosi for a cumulative 14% interest. Enosi’s Powertracer product provides a grid-scale platform for 24/7 clean energy traceability. Corporate • Completing an oversubscribed capital raising of $4.5m through the issue of 75 million new ReNu Energy shares at an issue price of $0.06 per share by way of placement to professional and sophisticated investors. • The appointment of The Hon Peter Gutwein, former Tasmanian Premier and Treasurer, to the Board of Countrywide Hydrogen. • The appointment of the Chairman to an interim executive role to apply his project delivery expertise to work with CEO and Executive Director to take the Tasmanian green hydrogen projects to final investment decision. Material business risks The Group has various risk management policies and procedures in place to enable the identification, assessment and mitigation of business risks that may arise. This section of the Directors’ report describes the Group’s material business risks. Whilst the Group can mitigate some of the risks described below, many are beyond the control of the Group. For further information on the Group’s risk management framework refer to (https://renuenergy.com.au/why-invest-in- us/governance/). the corporate governance section of the website Offtake and commercialisation The Group's ability to successfully develop and commercialise its green hydrogen projects may be affected by numerous factors including but not limited to macro-economic conditions, obtaining required approvals, securing renewable power supply and customer offtakes, the rate of transition to fuel cell electric vehicles, delays in commissioning or ramp up, the hydrogen production facility not performing in accordance with expectations and cost overruns. If the Group is unable to mitigate these factors this could result in delays in the development of the projects or the Group not realising the development plans for the projects, which would have a material adverse effect on the Group’s business, financial performance and prospects. Future capital requirements The development of the Group’s green hydrogen projects will require substantial expenditure. No decision has been made in relation to the Group’s contribution to funding the development of the hydrogen projects. Subject to making a final investment decision with respect to the development of the hydrogen projects, the Group will require additional funding to procure equipment and undertake construction activities. 13 Directors’ Report (continued) Review and results of operations (continued) Although the Group believes that additional funding can be obtained, no assurances can be given that the Group will be able to raise this additional funding, which may be a combination of co-investment, Government grants, debt and equity financing. To meet such funding requirements, the Group may be required to undertake additional equity financing, which would be potentially dilutive to shareholders depending on their participation in any previous equity raising. Debt financing, if available, may involve certain restrictions on operating activities. The Group’s ability to achieve co-investment, Government grants or debt funding, and raise further equity, and the terms of such transactions will vary according to a number of factors, including the results achieved by the Group, Government policies, stock market conditions, the overall risk appetite of investors along with access to credit markets and other funding sources. An inability to obtain the required additional finance as and when required would delay progress on the development of the projects, which would have a material adverse effect on the Group’s business, financial performance and prospects. Loss of key personnel The Group relies heavily on the abilities of key employees and management. The Group's performance is reliant on its ability to both retain and attract skilled individuals and to appropriately incentivise them. Although the Group expects to be able to attract and retain skilled and experienced personnel, there can be no assurance that it will be able to do so. The Group intends to mitigate these risks by entering into service contracts with any new employees and, where appropriate, utilise existing and established incentive plans to maintain employees’ loyalty to the Group. Reliance on third party providers There is a risk that goods and services that are required for the Group’s hydrogen projects development are difficult to procure or will not be delivered on time or to the necessary quality or expected cost which may affect the operation of the projects. The Group does not have in place formal written contracts with all of its key suppliers. The deterioration of any such key relationships or a change in the circumstances or requirements of the key suppliers, or market conditions generally, could therefore have significant operational and financial implications for the Group. Moreover, a failure by any one of those suppliers to perform their services, or a disruption to the supply chain, may have an adverse effect on the operations of the Group and its financial performance. Changes in energy policy The Australian renewable hydrogen energy market is currently in its infancy stage of development. Due to the current low cost of producing electricity via traditional means, the commercialisation of green hydrogen projects currently relies, and is dependent upon, obtaining Government subsidies and grants sufficient to achieve a competitive cost per kilogram of renewable energy produced. Whilst the current environment is positive, the Government policies for Australia’s renewable energy industry are uncertain and subject to change. This may reduce new investment in the green hydrogen industry in Australia which could reduce the number of available new business prospects for the Group. Business performance may be impacted by changes in the design and rules of the existing energy market and the uncertainty that arises from debate in relation to the energy market’s future design and rules. These changes may result from orderly rules change processes or in response to political imperatives of the government or agencies of government from time to time. 14 Directors’ Report (continued) Review and results of operations (continued) Construction There is a risk that the hydrogen projects may not proceed as planned. This could be the result of matters within or outside the Group’s control. Examples may include weather events, natural disasters, contractor risk, regulatory intervention or failure to obtain or retain suitably qualified expertise. The occurrence of any such event could result in the projects costing more or not proceeding as planned, including delays in completion and/or commissioning or failure to perform to technical specifications. Any delays in or failure of construction or increases in costs may adversely affect the yield of the investment and consequently impact the Group's operating and financial performance. Emerging nature of the green hydrogen industry The prospects of the Group must be considered in the light of the emerging nature of its business and the risks, expenses and difficulties frequently encountered by companies in the early stages of project development. If the Group’s business model does not prove to be profitable, investors may lose their investment. Investee companies There is a risk that one or more of the Group’s investee companies will not succeed in scaling their renewable energy technologies and projects to a stage that will generate positive returns for the Group, and that may lead to a write-down in the carrying value of one or more investments. Climate change risk Climate-related factors that may affect the operations and proposed activities of the Group include: • The emergence of new or expanded regulations associated with the transitioning to a lower-carbon economy and market changes related to climate change mitigation. The Group may be impacted by changes to local or international compliance regulations related to climate change mitigation efforts, or by specific taxation or penalties for carbon emissions or environmental damage. • Climate change may cause certain physical and environmental risks that cannot be predicted by the Group, including events such as increased severity of weather patterns and incidence of extreme weather events and longer-term physical risks such as shifting climate patterns. Likely developments and expected results The Board and management believe that the Group is well positioned to: • • Advance the Tasmanian green hydrogen projects to a final investment decision in 2023 and progress the Group’s other green hydrogen projects. Support and progress the Group’s other renewable and clean energy investments and to assess opportunities for additional renewable & clean energy investment opportunities where the Group’s investment criteria is met. The Board and management believe the Group's outlook is strong through: • • • First mover access to a green hydrogen ecosystem with the Tasmanian locations providing statewide coverage and targeting first production mid-2025. The Tasmanian model providing a showcase for a national rollout. The Group’s domestic supply focus and ability to scale size providing a strong economic model with a target hydrogen price for road transport that competes favourably with diesel and yields zero emissions. 15 Directors’ Report (continued) • Investment returns through incubating and accelerating the Group’s portfolio of investments in renewable and clean energy technologies and projects. Dividend No dividends were declared or paid during the year ended 30 June 2023. The Directors do not propose to recommend the payment of a dividend in respect of the period ended 30 June 2023. Directors' interests in the Shares and Options of the Company As at the date of this report, the interests of the Directors in the shares of ReNu Energy Limited were: Director Boyd White Tony Louka Tim Scholefield Fully paid Ordinary Shares Loan Plan Shares Listed Options over ordinary shares 1,433,333 318,421 901,931 9,000,000 6,000,000 6,000,000 8,000,000 6,000,000 333,333 - - 83,333 - Geoffrey Drucker 34,627,291 Susan Oliver - Significant events after the reporting date No matter or circumstance has arisen since 30 June 2023 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years. Environmental regulations and performance As a renewable and clean energy developer and investor, environmental sustainability is at the heart of every activity ReNu Energy undertakes. The Group is required to carry out its activities in accordance with relevant laws and regulations. The Group is committed to minimising the impact of its activities on the natural landscape, waterways, flora and fauna in a manner consistent with environmental best practice standards. Indemnification and insurance of Directors and officers During the financial year, the Company paid premiums in respect of contracts insuring Directors, Secretaries, and executive officers of the Group and related entities against liabilities incurred as Director, Secretary or executive officer to the extent permitted by the Corporations Act 2001, subject to the terms, conditions, limitations and exclusions of the policy. Under the terms of the policy, the Group is precluded from disclosing details of premiums paid. The Company has entered into deeds of indemnity, insurance and access with each person who is, or has been, a Director of the Company. To the extent permitted by law and subject to the restrictions in s199A of the Corporations Act 2001, the Company must continually indemnify each Director against liability (including liability for costs and expenses) for an act or omission in the capacity as Director, subject to certain exclusions. No payment has been made to indemnify a Director during or since the end of the financial year. 16 Directors’ Report (continued) Indemnification of auditors The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an auditor of the Company or of any related body corporate against a liability incurred as such an auditor. Rounding The amounts contained in this report and in the financial report have been rounded to the nearest $1 (unless otherwise stated). Share Options Under the terms of the 23 November 2022 capital raising of $4.55 million by way of a placement to professional and sophisticated investors at $0.060 per share, subscribers were entitled to receive 1 attaching option for every share subscribed for, with a strike price of $0.07 and an expiry date of 31 December 2023. 12,583,348 options (Options) were issued on 29 November 2022 and granted quotation on the ASX on 30 November 2022. Shareholder approval was obtained at an extraordinary general meeting held on 31 January 2023 for the grant of options that exceeded the Company’s placement capacity and to Directors and associates that participated in the placement. These remaining 63,333,318 options were issued on 1 February 2023 and granted quotation on the ASX on 3 February 2023 respectively. Shareholder approval was obtained at an extraordinary general meeting held on 31 January 2023 for the grant of 12,500,000 options with an exercise price of $0.07 per share expiring on 31 December 2023 to the lead manager and broker of the capital raising (Broker Options). The Broker Options were issued on 1 February 2023 and granted quotation on the ASX on 3 February 2023. No share options holder has any right under the options to participate in any other share issue of the company or any other entity. 19,455 shares were issued on 2 December 2022 upon the exercise of 19,455 listed options ($0.07 each) raising $1,361. Directors’ meetings During the period, there were 12 Directors’ meetings held. The number of Directors’ meetings and the number of meetings attended by each of the Directors of the Company during the financial period are as follows: Directors’ meetings Risk & Audit Committee meetings Remuneration & Nominations Committee meetings A 5 5 5 5 4 H 5 5 5 5 5 A - 5 5 - 5 H - 5 5 - 5 A 2 2 - 2 - H 2 2 - 2 - Boyd White Tony Louka Tim Scholefield Geoffrey Drucker Susan Oliver A – Number of meetings attended H – Number of meetings held whilst in office / a Committee member 17 Directors’ Report (continued) Committee memberships as at 30 June 2023 was: Risk & Audit Committee – Membership comprises three Non-executive Directors: Tim Scholefield (Chair), Tony Louka and Susan Oliver. Remuneration & Nominations Committee – Membership comprises one Non-executive Director: Tony Louka (Chair); and two Executive Directors: Geoffrey Drucker and Boyd White. On 29 August 2023, Susan Oliver joined the Remuneration & Nominations Committee and Geoffrey Drucker stepped down. This occurred to ensure a majority of the members of the Committee are independent directors following Boyd White's appointment to an interim executive role on 15 May 2023. Auditor independence In accordance with section 307C of the Corporations Act 2001, the Directors received a declaration of independence from the auditor of ReNu Energy Limited which is listed immediately after this report and forms part of this Directors’ Report and can be found on page 29. Non-audit services The Company may decide to employ the auditor on assignments in addition to their statutory audit duties, where the auditor’s expertise and experience with the Company and/or the Group are important. Details of amounts paid or payable to the auditor (BDO Audit Pty Ltd) for audit and non-audit services provided during the year are set out in note 14 to the Financial Statements. During the year there were nil (2022: $90,000) fees paid or payable for non-audit services provided by the auditor of the parent entity, its related practices and non-related audit firms. The Board of Directors has considered the position and is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Board of Directors, in accordance with advice provided by the Risk and Audit Management Committee, are satisfied that the provision of non-audit services by the auditor, as set out in note 14 to the Financial Statements, 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 Risk and Audit Committee to ensure they do not impact the impartiality and objectivity of the auditor; and none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. Proceedings on behalf of the Company As far as the Directors are aware, no proceedings have been brought or intervened in on behalf of the Company with the leave of the Court, nor has any application for leave been made in respect of the Company, under section 237 of the Corporations Act 2001. Corporate governance The Directors recognise the need for the highest standards of corporate behaviour and accountability and therefore support and have adhered to the principles of Corporate Governance. The Company’s Corporate the Company’s website: http://renuenergy.com.au/about- Governance Statement us/governance/ is available on 18 Directors’ Report (continued) Remuneration Report (Audited) This Remuneration Report for the year ended 30 June 2023 outlines the remuneration arrangements in place for Directors and Executives of ReNu Energy Limited in accordance with the requirements of the Corporations Act 2001 and its Regulations. This information has been audited as required by section 308(3C) of the Act. The Remuneration Report is presented under the following sections: 1. Introduction 2. Remuneration governance 3. Executive remuneration arrangements A. Remuneration principles and strategy B. Approach to setting remuneration C. Details of Incentive Plans 4. Executive remuneration outcomes for FY23 (including link to performance) 5. Summary of executive contractual arrangements 6. Non-executive Director remuneration 7. Share based compensation 8. Other statutory disclosures 19 Directors’ Report (continued) Remuneration Report (Audited) 1. Introduction The Remuneration Report details the remuneration arrangements for Key Management Personnel (KMP) who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company directly or indirectly including any Director. For the purposes of this report, the term ‘executive’ encompasses the Chief Executive Officer and the executive management team of the Company. The KMP covered in this report are set out in the table below. Non-executive Directors (NEDs) Boyd White (ceased 15 May 2023) Tony Louka Tim Scholefield Susan Oliver Executive Directors Boyd White (commenced 15 May 2023) Geoffrey Drucker Other KMP Greg Watson KMP who ceased in prior year Nil Chairman Director Director Director Executive Chairman Executive Director Chief Executive Officer & Company Secretary 2. Remuneration governance Remuneration and Nominations Committee The Remuneration and Nominations Committee has the primary objective of assisting the Board in developing and assessing the remuneration policy and practices of the Directors, Chief Executive Officer (CEO) and senior executives. Specifically, the Board approves the remuneration arrangements of the CEO, the aggregate annual fixed remuneration salary review, short-term incentives and the methodology for awards made under long-term incentive plans following recommendations from the Remuneration & Nominations Committee. The Board also sets the aggregate remuneration of Non-executive Directors, which is then subject to shareholder approval, and individual Directors’ fees. Committee assessments incorporate the development of remuneration policies and practices which will enable the Group to attract and retain executives who will create value for shareholders. Executives will be fairly and responsibly rewarded having regard to the performance of the Group, the performance of the executive and the general market environment. 20 Directors’ Report (continued) Remuneration Report (Audited) (continued) The Remuneration & Nominations Committee meets as required throughout the year. The CEO attends Remuneration & Nominations Committee meetings by invitation, where management input is required. The CEO is not present during any discussions related to his own remuneration arrangements. Further information on the Remuneration & Nomination Committee’s role, responsibilities and membership can be found on the Company’s web site at www.renuenergy.com.au Use of remuneration consultants During the year Talesca Pty Ltd was engaged to provide Non-executive Director and Executive remuneration benchmarking data. The remuneration data provided was used as an input to the remuneration decisions by the Board only. The Board considered the data provided, together with other factors, in setting Executive’s remuneration. No remuneration recommendations, as defined by the Corporations Act 2001, were provided by remuneration consultants. 3. Executive remuneration arrangements 3A. Remuneration principles and strategy ReNu Energy's executive remuneration strategy is designed to attract, motivate and retain highly skilled executives and align the interests of executives and shareholders. To this end, the Company embodies the following principles in its remuneration framework: • Provide competitive salaries to attract high calibre executives. • Link executive performance rewards to medium and longer-term shareholder value creation through Key Performance Indicator (KPI) linked short term incentives. • Establish appropriate share price performance hurdles under long-term incentive plans to align executive reward with shareholder value creation, the achievement of which will depend on the Group achieving key corporate milestones that are integral to the Group’s successful completion of its business plan. The Group aims to reward its executives with a level and mix of remuneration commensurate with their position and responsibilities within the Group to: • Reward executives for Group, business division and individual performance against targets set by reference to appropriate benchmarks. • Link reward with the strategic goals and performance of the Group. • Ensure total remuneration is competitive by market standards. 3B. Approach to setting remuneration The key executives’ emoluments are structured to retain and motivate executives by offering a competitive base salary, a short-term annual cash or share based performance related component together with longer term performance incentives through the ReNu Energy Limited Loan Share Plan which aligns executives’ interests with those of shareholders. For the year ended 30 June 2023, remuneration consisted of the following key elements: • Fixed remuneration – base salary and superannuation; and 21 Directors’ Report (continued) Remuneration Report (Audited) (continued) • Variable remuneration under the Company’s Loan Share Plan, payable in Shares subject to the Company’s share price achieving specified hurdles. The level of fixed remuneration is set to provide a base level of remuneration which is both appropriate to the position and is competitive in the market. Fixed remuneration of the Chief Executive Officer is reviewed annually by the Remuneration and Nominations Committee and approved by the Board. Factors considered include the Group and individual performance, relevant comparative remuneration in the market and internal and, where appropriate, external advice. The Remuneration and Nominations Committee has access to external advice independent of management. Senior executives receive their fixed (primary) remuneration in cash. The fixed remuneration component of senior executives who are key management personnel is detailed in Table 1 of this report. 3C. Details of Incentive Plans Short term incentives The Company uses short term incentives to: • Reward employees for their contribution in ensuring that ReNu Energy achieves corporate key deliverables. • Encourage teamwork. • Enhance ReNu Energy attracting and retaining high calibre and high performing employees. • Link remuneration directly to the achievement of key organisational objectives. During the 2023 financial year no share-based payments were awarded to staff or executives. No Key Management Personnel were awarded any cash incentives for the financial year. Specific personal and corporate KPIs are set annually, and the award of short-term incentives will be determined in relation to achievement of the relevant KPI. Loan Share Plan At the 2017 AGM, shareholders approved a Loan Share Plan (LSP) to retain, motivate and attract executives and Directors and to better align the interests of employees and Directors with those of the Group and its shareholders by providing an opportunity for employees and Directors to acquire shares subject to the terms and conditions of the LSP (Plan Shares). The Plan Shares are issued or transferred to the participants in the LSP at market value, subject to shareholder approval in the case of Plan Shares issued to Directors and determined by the Board in its absolute discretion for executives who are not Directors. The Group may provide a limited recourse loan to participants to assist them to purchase Plan Shares (Loan). The Plan Shares will vest on the satisfaction of any applicable performance condition, service requirement or other conditions specified at the time of issue. During the 2023 financial year, no Plan Shares were issued or vested under the Loan Share Plan. 22 Directors’ Report (continued) Remuneration Report (Audited) (continued) Hedging of shares and options risk Currently no Director or officer uses hedging instruments to limit their exposure to risk on either shares or options in the Company. The Company’s policy is that the use of such hedging instruments is prohibited 4. Executive remuneration outcomes for FY23 Company performance and its link to the Company's remuneration principles and strategy The 2023 financial year saw the Group progress its flagship Tasmanian green hydrogen projects towards final investment decision and grow its portfolio of investments in renewable and clean energy technologies. The Board set specific measurable short-term targets for KMP for the 2023 financial year. Whilst a number of the targets were met, no share based or cash incentives were awarded to KMP for the 2023 financial year. It is intended that corporate and individual KPIs will again be set for the 2024 financial year, such that executives are rewarded for the achievement of milestones that are both measurable and outcomes based. These milestones will be set by the Board as they represent key drivers for creating short term shareholder value. The Company's Loan Share Plan has vesting conditions that are designed to align the interests of the executives and shareholders through the delivery of substantial increased shareholder value, through the Company's share price. The remuneration of senior executives who were KMP during the year ended 30 June 2023 is set out below: Table 1 – Remuneration of senior executives of the Group for the year ended 30 June 2023 Short-term* Post employment* Share-based payments** Salary $ Consulting Fees $ Superannuation $ Loan Share Plan Shares $ Bonus Shares $ Performance related % Total $ Name G.Watson 350,000 - 36,750 77,292 G. Drucker 260,000 - 27,300 61,834 B. White1 8,125 39,000 - - Totals 618,125 39,000 64,050 139,126 * Fixed remuneration ** Variable remuneration - - - - 464,042 349,134 47,125 860,301 - - - - 1 Mr White became Executive Chairman on 15 May 2023. Effective from this date he is engaged through an associated company, White Lotus Solutions Pty Ltd (trading as New Energy Capital). The above table contains his remuneration for the period 15 May 2023 to 30 June 2023. 23 Directors’ Report (continued) Remuneration Report (Audited) (continued) Table 2 – Remuneration of senior executives of the Group for the year ended 30 June 2022 Short-term* Post employment* Share-based payments** Name Salary $ Superannuation $ Loan Share Plan Shares $ Bonus Shares $ Total $ Performance related % G Watson 328,538 32,854 31,552 54,675 447,619 T Scholefield1 125,223 - 18,931 54,675 198,829 G Drucker2 100,000 10,000 25,242 - 135,242 Totals 553,761 42,854 75,725 109,350 781,690 12% 20% - - * Fixed remuneration ** Variable remuneration 1. T Scholefield is engaged through an associated company Pacific Energy Partners Pty Ltd. Mr Scholefield became a non-Executive director on 1 January 2022. The above table contains his remuneration (including consulting fees) for the period 1 July 2021 to 31 December 2021. A portion of Mr Scholefield remuneration is recoverable by the Group under agreements with third parties. 2 Geoffrey Drucker was appointed as Executive Director on 8 February 2022. 5. Summary of executive contractual arrangements Remuneration arrangements for KMP are formalised in employment agreements. Details of these contractual agreements are provided below. Chief Executive Officer and Company Secretary – Greg Watson Mr Watson was appointed as Chief Financial Officer and Company Secretary on 9 September 2019 under an Employment Agreement dated 9 September 2019. Mr Watson was appointed Chief Executive Officer on 26 February 2020. Mr Watson entered into a variation to Employment Agreement commencing 1 January 2022. The key terms of Mr Watson’s employment are as follows: • Base remuneration of $350,000 per annum plus superannuation. • Discretionary short-term incentive up to a maximum of 30% of the base remuneration, to be awarded based on achievement of KPIs to be specified by the Board. • Long-term incentive (Loan Share Plan Shares) – Mr Watson was granted three equal tranches of shares, totalling 10,000,000 shares, pursuant to the Loan Share Plan (Plan Shares), following approval by shareholders at the extraordinary general meeting held on 1 February 2022. Each tranche vests if, within 10 years of issue, the Company’s share price achieves a 15-trading day volume weighted average price in excess of $0.15, $0.25 and $0.35 for each of the three tranches respectively. Unvested shares vest upon a change of control of the Company. The shares were issued at an Issue Price of $0.09 and Mr Watson was provided with an interest-free, non-recourse loan for the value of the shares. • Termination provisions as set out below: 24 Directors’ Report (continued) Remuneration Report (Audited) (continued) Notice period Payment in lieu of notice Resignation 3 months 3 months Failure by Company to pay remuneration or benefits None None Treatment of STI on termination Unvested awards forfeited Unvested awards forfeited Treatment of LTI on termination Unvested awards forfeited Unvested awards forfeited Change of strategic direction, material diminution of the officer’s duties or substantial change in location 1 month 6 months Unvested awards forfeited Where a change in control occurs, the Board may determine that Loan Share Plan Shares vest on terms and conditions determined by the Board Termination for cause 14 days None Termination without cause 6 months 6 months Unvested awards forfeited Unvested awards forfeited Unvested awards forfeited Unvested awards forfeited Executive Director – Geoffrey Drucker Mr Drucker was appointed Executive Director – Hydrogen, on completion of the Company’s acquisition of Countrywide Hydrogen Pty Ltd on 8 February 2022. Mr Drucker entered into a variation to Employment Agreement effective 1 March 2023. The key terms of Mr Drucker’s employment are as follows: • Base remuneration of $300,000 per annum plus superannuation. • Conditional remuneration of $60,000 plus superannuation in the event of meeting defined hydrogen project development milestones. • Discretionary short-term incentive up to a maximum of 30% of the aggregate of the base and conditional remuneration, to be awarded based on achievement of KPIs to be specified by the Board; • Long term incentive (Loan Share Plan Shares) – Mr Drucker was granted three equal tranches of shares, totalling 8,000,000 shares, pursuant to the Loan Share Plan (Plan Shares), following approval by shareholders at the extraordinary general meeting held on 1 February 2022. Each tranche vests if, within 10 years of issue, the Company’s share price achieves a 15-trading day volume weighted average price in excess of $0.15, $0.25 and $0.35 for each of the three tranches respectively. Unvested shares vest upon a change of control of the Company. The shares were issued at an Issue Price of $0.09 and Mr Drucker was provided with an interest-free, non-recourse loan for the value of the shares; • Termination provisions as set out below: 25 Directors’ Report (continued) Remuneration Report (Audited) (continued) Notice period Payment in lieu of notice Treatment of STI on termination Treatment of LTI on termination Resignation 3 months 3 months Failure by Company to pay remuneration or benefits None None Change of control 1 month 1 month Termination for cause 14 days None Termination without cause 6 months 6 months Executive Chairman – Boyd White Unvested awards forfeited Unvested awards forfeited Unvested awards forfeited Unvested awards forfeited Unvested awards forfeited Unvested awards forfeited Unvested awards forfeited The Board may determine that Loan Share Plan Shares vest on terms and conditions determined by the Board Unvested awards forfeited Unvested awards forfeited On 15 May 2023 following a strategic review of the Group’s business needs, Mr White assumed the role of Executive Chairman on an interim basis. In this capacity Mr White is working closely with the executive team, including CEO Greg Watson and Executive Director, Geoffrey Drucker, to help drive strategy and assist with taking ReNu Energy's green hydrogen projects in Tasmania to final investment decision. Mr White is engaged through an associated company, White Lotus Solutions Pty Ltd (trading as New Energy Capital). Mr White’s executive contract provides for an hourly rate of $250 (plus GST) to be capped at $2,000 (plus GST) for a full day worked for his consulting services. Mr White’s executive contract has no fixed period. Each party may terminate by giving 4 weeks' notice. The engagement can be terminated immediately if Mr White engages in misconduct, ceases to be a director in accordance with ReNu Energy's constitution, or is removed as a director in accordance with Part 2D.3 of the Corporations Act 2001 (Cth). The executive contract also contains provisions relating to the protection of intellectual property and confidential information, that are customarily found in executive agreements of similar nature. In addition, Mr White is paid $65,000 per annum for his Chairman services. 6. Non-executive Director remuneration arrangements Remuneration Policy The Board seeks to set aggregate remuneration at a level which provides the Group with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders. The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned among Directors is reviewed annually. The Board may consider advice from external consultants as well as the fees paid to Non-executive Directors of comparable companies when undertaking the annual review process. The amounts are set at a level that compensates the Directors for their significant time commitment in overseeing the progression of the Company’s business plan. 26 Directors’ Report (continued) Remuneration Report (Audited) (continued) The Constitution of ReNu Energy and the ASX Listing Rules specify that the aggregate remuneration of Non- executive Directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the directors as agreed. The latest determination was at the Annual General Meeting held on 28 November 2007 when shareholders approved a maximum aggregate remuneration of $700,000 per year. Structure Each Non-executive Director receives a fee for being a Director of the Company. The current fee structure is to pay Non-executive Directors a gross annual remuneration of $50,000 per annum with the Chairman paid $65,000 per annum. There are no additional fees paid for committee memberships. There are no retirement benefits offered to Non-executive Directors. The remuneration of Non-executive Directors for the year ended 30 June 2023 is detailed in Table 3 of this report and the remuneration for the comparative year ended 30 June 2022 is detailed in Table 4. Table 3 – Non-executive Directors’ Remuneration for the year ended 30 June 2023 Short-term* Post employment* Share-based payments** Directors’ fees Consulting Fees Superannuation Loan Share Plan Shares Bonus Shares Director B. White1 T. Louka2 T. Scholefield3 S. Oliver Totals $ 51,471 50,004 49,416 45,249 196,140 $ - - 107,923 - 107,923 $ 5,404 - 4,751 4,751 $ 69,563 46,375 46,375 46,375 14,906 208,688 $ - - - - - Total $ 126,438 96,379 156,715 96,375 527,657 1. Mr B. White was a Non-executive Director (Chairman) until 14 May 2023 The above table includes fees paid for the period 1 July 2022 to 14 May 2023. 2. Mr .T Louka is engaged through an associated company, Maxify Pty Ltd, to provide director services to the Company. 3. The Group engages Pacific Energy Partners Pty Ltd to provide consulting services. Mr T. Scholefield is one of two Directors and Principals of Pacific Energy Partners. The consultancy fees in the table comprise fees paid by the Group to Pacific Energy Partners Pty Ltd. Table 4 – Non-executive Directors’ Remuneration for the year ended 30 June 2022 Short-term* Post employment* Share-based payments** Directors’ fees Consulting Fees Superannuation Loan Share Plan Shares Bonus Shares Director B. White1 T. Louka2 T. Scholefield3 S. Oliver4 Totals $ 59,091 50,004 25,000 18,940 153,035 $ - - 41,158 - 41,158 1. Mr B. White was Chairman for the whole period. $ 5,909 - - 1,894 7,803 $ 28,397 18,931 - 18,931 66,259 $ 20,250 16,200 - - 36,450 2. Mr T Louka is engaged through an associated company, Maxify Pty Ltd, to provide director services to the Company. Total $ 113,647 85,135 66,158 39,765 304,705 27 Directors’ Report (continued) Remuneration Report (Audited) (continued) 3. Mr T. Scholefield is engaged through an associated company, Pacific Energy Partners Pty Ltd, to provide director services to the Company. Mr Scholefield was an Executive Director until 31 December 2021. The above table reflects the non-executive director fees and consulting fees (for services that are in addition to Non-executive Director responsibilities) for the period 1 January 2022 to 30 June 2022. Mr Scholefield’s share-based payments are captured in Table 2. A portion of the consulting fees was recoverable by the Group under agreements with third parties. 4. Ms S. Oliver was appointed on 8 February 2022. 7. Share based compensation Loan Share Plan Shares On 8 February 2022, the Company issued 45,000,000 ordinary shares (Plan Shares) to Directors and executives of the Company pursuant to the Loan Share Plan approved by shareholders at an extraordinary general meeting held on 1 February 2022. The Plan Shares are subject to the achievement of certain share price targets for ReNu Energy’s shares (Target Price) as follows: Vesting Condition Boyd White Tony Louka Tim Scholefield Susan Oliver Geoffrey Drucker Greg Watson Share Target Price* Number of Plan Shares Number of Plan Shares Number of Plan Shares Number of Plan Shares Number of Plan Shares Number of Plan Shares Total Plan Shares $0.15 $0.25 $0.35 Total Plan Shares 3,000,000 2,000,000 2,000,000 2,000,000 2,666,667 3,333,333 15,000,000 3,000,000 2,000,000 2,000,000 2,000,000 2,666,667 3,333,333 15,000,000 3,000,000 2,000,000 2,000,000 2,000,000 2,666,666 3,333,334 15,000,000 9,000,000 6,000,000 6,000,000 6,000,000 8,000,000 10,000,000 45,000,000 * The Target Price vesting condition will be satisfied where the Volume Weighted Average Price of the Company’s shares over any 15 day trading period is at least the Target Price. The Board may determine that Plan Shares vest if there is a change of control event. Each recipient has been provided with a 10-year, limited recourse, interest-free loan to fund the acquisition of the Plan Shares. The loan amount is calculated as $0.09 per Plan Share multiplied by the number of Plan Shares and is repayable in certain circumstances, including when employment with the Company ceases. The Company’s recourse against the employee is limited to the loan amount if the Plan Shares have vested, or otherwise the transfer back to the Company of the Plan Shares to which the loan relates. As the Company has no right to receive cash settlement for the loan (the directors and executive can elect to forfeit the shares), no loan receivable has been recognised by the Company. The effect of the contractual arrangements is equivalent to an option exercisable at the time of loan repayment at an exercise price of $0.09 per share. As a result, the grant of Plan Shares has been valued using an option pricing model and the fair value recognised in profit or loss over the expected vesting period. No shares were issued under the Loan Share Plan during the financial year ended 30 June 2023. 28 Directors’ Report (continued) Remuneration Report (Audited) (continued) The movements of Plan Shares, held directly, indirectly, or beneficially by each key management personnel member, including their related parties during the financial year ended 30 June 2023 is set out in Table 5 below. No Plan Shares have vested at the end of the reporting period. Table 5 – Loan shares affecting remuneration of directors and other KMP this financial year or future financial years Executive B. White T. Louka Balance at beginning of period (shares) 3,000,000 3,000,000 3,000,000 9,000,000 2,000,000 2,000,000 2,000,000 6,000,000 T Scholefield 2,000,000 S. Oliver 2,000,000 2,000,000 6,000,000 2,000,000 2,000,000 2,000,000 6,000,000 G Drucker 2,666,667 2,666,667 2,666,666 8,000,000 G. Watson 3,333,333 3,333,333 3,333,334 10,000,000 Total 45,000,000 Shares granted during the reporting period (shares) Fair value of shares granted at grant date ($) - - - - - - - - - - - - - - - - - - - Shares lapsed during the reporting period (shares) Balance as at the end of the reporting period (shares) - - - - - - - - - - - - - - - - - - 3,000,000 3,000,000 3,000,000 9,000,000 2,000,000 2,000,000 2,000,000 6,000,000 2,000,000 2,000,000 2,000,000 6,000,000 2,000,000 2,000,000 2,000,000 6,000,000 2,666,667 2,666,667 2,666,666 8,000,000 3,333,333 3,333,333 3,333,334 10,000,000 45,000,000 Grant date Expiry date 1/02/2022 1/02/2032 1/02/2022 1/02/2032 1/02/2022 1/02/2032 1/02/2022 1/02/2032 1/02/2022 1/02/2032 1/02/2022 1/02/2032 0.061 0.056 0.050 0.061 0.056 0.050 0.061 1/02/2022 1/02/2032 1/02/2022 1/02/2032 1/02/2022 1/02/2032 1/02/2022 1/02/2032 1/02/2022 1/02/2032 1/02/2022 1/02/2032 1/02/2022 1/02/2032 1/02/2022 1/02/2032 1/02/2022 1/02/2032 1/02/2022 1/02/2032 1/02/2022 1/02/2032 1/02/2022 1/02/2032 0.056 0.050 0.061 0.056 0.050 0.061 0.056 0.050 0.061 0.056 0.050 29 Directors’ Report (continued) Remuneration Report (Audited) (continued) 8. Other statutory disclosures Related party transactions with Directors The Group engaged Pacific Energy Partners Pty Ltd and White Lotus Solutions Pty Ltd (trading as New Energy Capital) to provide consulting services. Tim Scholefield is a Director and Principal of Pacific Energy Partners Pty Ltd. Consulting and Non-Executive Director fees of $112,089 were paid to Pacific Energy Partners during the year (2022: 166,381). The material terms of the engagement of Pacific Energy Partners are disclosed in section 4 of the Remuneration Report. The key resource from White Lotus Solutions Pty Ltd is Boyd White. Consulting and Executive Director fees of $47,125 were paid during the year (2022: $0). The material terms of the engagement of White Lotus Solutions are disclosed in section 4 of the Remuneration Report. At 30 June 2023 $22,345 was owing to Pacific Energy Partners Pty Ltd and $21,500 to White Lotus Solutions Pty Ltd in relation to June 2023 consulting fees. Geoffrey Drucker’s spouse, Ms Ingeborg Drucker, is employed as Group Communications Director of ReNu Energy Limited. Gross wages and salaries (including superannuation) of $215,475 were paid to Ms Drucker during the year (2022: $87,083). Shareholdings of Key Management Personnel The movements of the Company's ordinary shares, held directly, indirectly or beneficially by each Key Management Personnel member, including their related parties during the financial year ended 30 June 2023 are set out in Table 6 below. 30 Directors’ Report (continued) Remuneration Report (Audited) (continued) Table 6 - Shareholdings of Key Management Personnel Balance at Beginning of Period 1/07/2022 Acquired Under private placement1 On-market purchase/ (disposal) of shares Shares released from escrow2 Balance at End of Period 30/06/2023 Directors B. White - Unrestricted - Unvested3 T. Louka - Unrestricted - Unvested3 T. Scholefield - Unrestricted - Unvested3 G. Drucker 1,083,333 9,000,000 318,500 6,000,000 901,931 6,000,000 - 6,000,000 S. Oliver - Unrestricted - Unvested3 Executives G. Watson - Unrestricted - Unvested3 - Unrestricted - 166,666 - Unvested2,3 77,087,916 250,000 100,000 - - - - - - - - - - - - - - 1,433,333 9,000,000 318,500 6,000,000 901,931 6,000,000 17,271,978 17,438,644 (17,271,978) 59,815,938 - - - 6,000,000 - - - - - - - - - 1,043,333 500,000 (928,785) - 614,548 10,000,000 - - - - 10,000,000 117,522,894 Total 117,435,013 916,666 (828,785) 1. 2. 3. Shares taken up under the Private Placement announced on 23 November 2022. Shares issued to Mr Drucker and his spouse on the acquisition of Countrywide Hydrogen Pty Ltd subject to escrow commencing 8 February 2022: 100% for 12 months, 75% for 18 months and 50% for 24 months. 25% of the shares were released from Escrow on 1 February 2023 and a further 25% on 1 August 2023. Ordinary Shares issued under the Loan Share Plan are subject to vesting conditions – refer to section 6 of the Remuneration Report for further details. End of Remuneration Report (Audited) 31 Directors’ Report (continued) Signed in accordance with a resolution of the Directors. Boyd White Chairman Brisbane 18 September 2023 32 Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au Level 10, 12 Creek St Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia DECLARATION OF INDEPENDENCE BY A J WHYTE TO THE DIRECTORS OF RENU ENERGY LIMITED As lead auditor of ReNu Energy Limited for the year ended 30 June 2023, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of ReNu Energy Limited and the entities it controlled during the year. A J Whyte Director BDO Audit Pty Ltd Brisbane, 18 September 2023 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 33 : Consolidated statement of profit or loss and other comprehensive income FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Interest income Other income Total income Personnel expenses Other operating expenses General & administrative expenses Finance costs Total expenses Equity Accounted Share of Profit/(Loss) Loss before income tax expense Income tax (expense) / benefit Loss after income tax expense Other comprehensive income for the period Total comprehensive loss for the period attributable to the owners of the parent Earnings Per Share attributable to the owners of the parent Basic and Diluted Loss per share from continuing operations (cents per share) Basic and Diluted Loss per share (cents per share) Note 2023 $ 2022 $ 47,158 55,362 3A 2,973,235 87,540 3,020,393 142,902 3B 3C 3D 8 4 13 13 (2,040,170) (1,479,584) (1,213,828) (652,177) (1,009,957) (831,464) (3,558) (4,220) (4,267,513) (2,967,445) (78,141) (1,325,261) (2,824,543) 159,301 - (1,165,960) (2,824,543) - - (1,165,960) (2,824,543) (0.29) (0.29) (1.03) (1.03) The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 34 : Consolidated statement of financial position AS AT 30 JUNE 2023 Current assets Cash and cash equivalents Trade and other receivables Prepayments Total current assets Non-current assets Property, plant and equipment Investments at fair value through profit or loss Equity accounted investments Intangibles Total non-current assets Total assets Current Liabilities Trade and other payables Borrowings Employee provisions Total current liabilities Non-current liabilities Deferred tax Employee provisions Total non-current liabilities Total liabilities Net assets Equity Issued capital Other reserves Accumulated losses Total equity Note 2023 $ 2022 $ 18(A) 1,308,085 2,016,762 5 242,669 270,454 146,200 157,554 1,696,954 2,444,770 7 8 6 9 10 68,470 30,700 5,338,752 1,300,000 421,859 - 10,374,162 10,827,532 16,203,243 12,158,232 17,900,197 14,603,002 296,122 260,545 64,622 19,290 25,555 62,517 386,299 342,352 4 407,413 566,714 20,100 7,306 427,513 574,020 813,812 916,372 17,086,385 13,686,630 11 12 375,331,156 371,529,007 1,483,736 720,170 (359,728,507) (358,562,547) 17,086,385 13,686,630 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. 35 : Consolidated statement of cash flows FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Operating Activities Payments to suppliers and employees Proceeds from R&D tax incentive Payments for rehabilitation expenditure Net Goods and Services Tax received (paid) Interest received Interest paid Costs associated with investments made Net cash flows used in operating activities Investing Activities Investment in other entities Investment in associate Cash acquired on acquisition of subsidiary Derecognition of joint venture funds Net cash from / (used in) investing activities Financing Activities Proceeds from issue of shares Repayment of borrowings Repayment of lease liabilities Payment of additional lease bond Transaction costs of share issues Buy-back of unmarketable parcels of shares Net cash flow provided by financing activities Net decrease in cash and cash equivalents Add: Opening cash and cash equivalents at 1 July Note 2023 $ 2022 $ (3,319,901) (1,979,967) - - 41,295 634,061 (349,594) (123,858) 46,973 55,317 - (3,020) (23,652) (241,853) 18(B) (3,255,285) (2,008,914) 7 8 11 10 10 11 11 (1,095,000) (500,000) - - (1,275,000) - 384,343 (141,732) (1,595,000) (1,032,389) 4,556,361 3,622,800 - (76,168) (125) (338,460) - (106,162) (57,148) - (442,508) (427,126) 4,141,608 2,589,855 (708,677) (451,448) 2,016,762 2,468,210 Cash and cash equivalents at 30 June 18(A) 1,308,085 2,016,762 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. 36 : Consolidated statement of changes in equity FINANCIAL YEAR ENDED 30 JUNE 2023 At 1 July 2022 Loss for the period Other comprehensive income Total comprehensive income for the year Transactions with owners in their capacity as owners: Shares issued Exercise of options - listed Share issue costs Share based payment (note 15) Share Based Payment Reserve Issued Capital (Note 12) Accumulated Losses Total Equity $ $ $ $ 371,529,007 720,170 (358,562,547) 13,686,630 - - - 4,555,000 1,361 (338,460) (415,752) - - - - - - 763,566 (1,165,960) (1,165,960) - - (1,165,960) (1,165,960) - - - - 4,555,000 1,361 (338,460) 347,814 At 30 June 2023 375,331,156 1,483,736 (359,728,507) 17,086,385 FINANCIAL YEAR ENDED 30 JUNE 2022 At 1 July 2021 Loss for the period Other comprehensive income Total comprehensive income for the year Transactions with owners in their capacity as owners: Shares issued Shares issued relating to business combination Buy-back of unmarketable parcels Share issue costs Share based payment (note 15) Share Based Payment Reserve Issued Capital (Note 12) $ 358,435,465 - - - 3,622,800 10,772,762 (427,126) (442,508) (432,386) $ - - - - - - - - 720,170 Accumulated Losses Total Equity $ $ (355,738,004) 2,697,461 (2,824,543) (2,824,543) - - (2,824,543) (2,824,543) - - - - - 3,622,800 10,772,762 (427,126) (442,508) 287,784 At 30 June 2022 371,529,007 720,170 (358,562,547) 13,686,630 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. 37 Notes to the Financial Statements Note 1 – Corporate information The financial report of ReNu Energy Limited (the Company) and its subsidiaries (collectively the Group) for the year ended 30 June 2023 was authorised in accordance with a resolution of the Directors on 18 September 2023. ReNu Energy Limited is a for profit Company limited by shares, incorporated and domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange. The nature of the operations and principal activities of the Group are described in the Directors’ Report. Note 2 – Summary of significant accounting policies A. Basis of preparation The financial report is a general purpose financial report which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has also been prepared on a historical cost basis. B. Compliance with IFRS The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. C. New or amended Accounting Standards and Interpretations adopted The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. There were no standards that had any significant impact on the Group’s accounting policies. D. Going Concern The financial statements have been prepared on the 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. As disclosed in the financial statements, the Group has net operating cash outflows for the year of $3,255,285 and as at 30 June 2023 has cash and cash equivalents of $1,308,085. The Group also generated a loss after tax of $1,165,960. Subsequent to year end, the Group paid the third tranche of $250,000 to acquire a further 5% interest in an associate, Vaulta Holdings Pty Ltd. At the date of this report, the Group had $335,035 in cash and cash equivalents. The ability of the Group to continue as a going concern is dependent upon completing a successful capital raise within the next four to six weeks. It is intended that the Company will undertake a capital raise by means of a placement to sophisticated and institutional investors with the intention to raise up to $5,000,000. Steps have already been undertaken towards completing this capital raise. The Directors believe completing a successful capital raise within the timeframe is reasonable based on steps already undertaken and the Company’s recent history in raising capital. The Group completed an oversubscribed private placement to sophisticated and institutional investors on 29 November 2022, raising $4,530,000. Upon completion of a successful capital raise, the ongoing ability for the Group to continue as a going concern and meet its debts and commitments will be managed through the execution of the following: 38 Notes to the Financial Statements (continued) • • Effective cash flow management. Securing appropriate projects and related funding for project investment. • Raising additional capital or securing other forms of financing, as and when necessary to meet the levels of expenditure required for the Group to advance its strategy of investing in renewable and clean energy technologies and developing green hydrogen projects. These conditions give rise to material uncertainty which may cast significant doubt over the Group’s ability to continue as a going concern. The Directors are satisfied that the Group has access to sufficient funds to extinguish creditors and liabilities in the ordinary course of business for at least the next 12 months from the date of signing this report and accordingly have applied the going concern basis of accounting in preparing the financial statements. Should the Group be unable to continue as a going concern, it may be required to realise its assets and extinguish its liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial report. The financial statements do 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. E. Basis of consolidation The consolidated financial statements comprise the financial statements of the Group as at 30 June 2023. Subsidiaries are all entities which the Group controls. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: • • • Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee). Exposure, or rights, to variable returns from its involvement with the investee. The ability to use its power over the investee to affect its returns. The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary. Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. 39 Notes to the Financial Statements (continued) Material controlled entity/subsidiaries The consolidated financial statements include the financial statements of the ultimate parent company, ReNu Energy Limited, and its controlled entities. Principal subsidiaries, all of which are incorporated in Australia, are listed in the following table: Name Countrywide Hydrogen Pty Ltd (formerly Countrywide Renewable Hydrogen Limited) Principal activities Hydrogen project origination Countrywide Renewable Energy Pty Ltd Dormant Equity Interest % 2023 2022 100 100 100 100 Equity accounted investments An equity accounted associate is an entity over which the Group has significant influence but not control or joint control. Investments in associates are accounted for using the equity method. Under the equity method, the share of the profits or losses of the associate is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in associates are carried in the statement of financial position at cost plus post-acquisition changes in the consolidated entity's share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Dividends received or receivable from associates reduce the carrying amount of the investment. When the consolidated entity's share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term receivables, the consolidated entity does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. The consolidated entity discontinues the use of the equity method upon the loss of significant influence over the associate and recognises any retained investment at its fair value. Any difference between the associate's carrying amount, fair value of the retained investment and proceeds from disposal is recognised in profit or loss. The following entity has been included in the consolidated financial statements using the equity method: Name Vaulta Holdings Pty Ltd Principal activities Assembly and sale of batteries designed for re-use and repair using patented battery casing technology Equity Interest % 2023 2022 10 - F. Property, plant & equipment Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation is provided on a straight-line basis on all property, plant and equipment. All classes are depreciated over periods ranging from 3 to 25 years (2022: 3 to 25 years). The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the profit or loss during the reporting period in which they are incurred. 40 Notes to the Financial Statements (continued) Derecognition and disposal An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. G. Impairment of non-financial assets At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount. Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for a cash- generating unit (CGU). In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. Impairment losses are recognised in the profit or loss in the year the loss is recognised. H. Cash and cash equivalents Cash and cash equivalents on the Statement of Financial Position comprise cash at bank and on hand and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. For the purposes of the Consolidated Statement of Cash Flows, cash includes cash on hand and in banks and short-term deposits with an original maturity of three months or less, net of outstanding bank overdrafts. I. Contributed equity Ordinary shares are classified as equity. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. J. Trade and other payables Trade payables and other payables are carried at cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. K. 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. Borrowings are removed from the Statement of Financial Position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in other income or finance costs. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Transaction costs of borrowings Fees and other costs incurred in relation to the establishment of borrowing facilities are treated as transaction costs to the extent that it is probable that some or all of the facility will be drawn down and are included in the initial fair value of the financial liability. Costs for facilities which do not eventuate or for which the probability of utilisation is not probable are expensed in profit or loss. 41 Notes to the Financial Statements (continued) L. Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. M. Employee benefits (i) Wages, salaries and annual leave Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised in other payables or provisions in respect of employees' services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for sick leave are recognised when the leave is taken and are measured at the rates paid or payable. (ii) Long service leave The liability for long service leave is recognised in the provision for employee entitlements. Long service leave not expected to be settled within 12 months of the reporting date are measured at 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. (iv) Share-based payments The Group provides benefits to employees (including Directors) in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’). The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. That cost is recognised, together with a corresponding increase in other capital reserves in equity, over the period in which the performance and/or service conditions are fulfilled in employee benefits expense. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The expense or credit recognised in the Statement of Profit or Loss and Other Comprehensive Income for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense. No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions for which vesting is conditional upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. When the terms of an equity-settled award are modified, the minimum expense recognised is the grant date fair value of the unmodified award provided the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction or is otherwise beneficial to the employee as measured at the date of modification. When the award is cancelled by the entity or by the counterparty any remaining element of the fair value of the award is expensed immediately through the profit or loss. 42 Notes to the Financial Statements (continued) N. Income recognition The Group’s primary income relates to contributions from the joint licensee for geothermal remediation. Interest income Interest income is recorded as the interest accrues, using the effective interest rate (EIR) in accordance with AASB9. The EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset. O. Government grants Government Grants (including R&D tax incentives) are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Government grants relating to rehabilitation costs are recorded as an offset against expenditure. To the extent the government grant is greater than the associated expenditure the residual amount is recorded as other income. When the grant relates to an expense item, it is recognised as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate. Where the grant relates to an asset or liability, the fair value is credited to a deferred income account until such time as all conditions associated with the grant are met. Once these conditions are achieved the credit is allocated to the relevant asset or liability. The amount of the grant is then released to net income over the expected useful life (by way of reduced depreciation or amortisation) of the relevant asset. P. Earnings per share Basic earnings per share is determined by dividing the profit/(loss) after tax by the weighted average number of ordinary shares outstanding during the financial period. Diluted earnings per share is determined by dividing the profit/(loss) after tax adjusted for the effect of earnings on potential ordinary shares, by the weighted average number of ordinary shares (both issued and potentially dilutive) outstanding during the financial period. Q. Income tax Current income tax The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the Group operates and generates taxable income. Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Deferred tax Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences, except: • When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. 43 Notes to the Financial Statements (continued) • In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except: • When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. • In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognised subsequently if new information about facts and circumstances change. The adjustment is either treated as a reduction in goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or recognised in profit or loss. R. Other taxes Revenues, expenses and assets are recognised net of the amount of GST except: • where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and • receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Cash flows are included in the Statement of Cash Flow on a net basis and the GST component arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. 44 Notes to the Financial Statements (continued) S. Segment reporting A business segment is a distinguishable component of the entity that is engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. Operating segments are identified on the basis of internal reports that are regularly reviewed and used by the Board of Directors in order to allocate resources to the segment and assess its performance and are reported in note 24. T. Parent Entity financial information The financial information for the parent entity, ReNu Energy, included in note 22, has been prepared on the same basis as the consolidated financial statements. U. Comparative figures When required by Accounting Standards, comparative figures are adjusted to conform to changes in presentation for the current financial year. V. Rounding of amounts The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, relating to the 'rounding off' of amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance with that Instrument to the nearest dollar. W. Financial Assets Classification The Group classifies its financial assets in the following measurement categories: • • those to be measured subsequently at fair value (either through Other Comprehensive Income (OCI), or through profit or loss); and those to be measured at amortised cost. The classification depends on the Group’s business model for managing the financial assets and the contractual terms of the cash flows. For financial 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). The election is made on an investment-by-investment basis. All other financial assets are classified as measured at fair value through profit or loss (FVPL). The Group reclassifies debt investments when and only when its business model for managing those assets changes. Initial recognition and measurement Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. 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. When the fair value of financial assets and liabilities differs from the transaction price on initial recognition, the group recognises the difference as follows: 45 Notes to the Financial Statements (continued) (a) when the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e.: a Level 1 input) or based on a valuation technique that uses only data from observable markets, the difference is recognised as a gain or loss. (b) In all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is determined individually. It is amortised over the life of the instrument, deferred until the instrument’s fair value can be determined using market observable inputs, or realised through settlement. Debt instruments Subsequent measurement of debt instruments depends on the group’s business model for managing the asset and the cash flow characteristics of the asset. The Group has cash and cash equivalents and trade and other receivables as financial assets. Consequently, the measurement category most relevant to the group is as follows: • Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses), together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss. Equity instruments Equity instruments are instruments that meet the definition of equity from the issuer’s perspective; that is, instruments that do not contain a contractual obligation to pay and that evidence a residual interest in the issuer’s net assets. The Group subsequently measures all equity investments at fair value through profit or loss. Gains and losses on equity investments at FVPL are included in the ‘net gains/(losses) on financial assets at fair value through profit or loss’ in the statement of profit or loss and other comprehensive income. Impairment The Group assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. Derecognition other than modification Financial assets, or portion thereof, are derecognised when the contractual rights to receive the cash flows from the assets have expired, or when they have been transferred and either (i) the Group transfers substantially all the risks and rewards of ownership, or (ii) the Group neither transfers nor retains substantially all the risks and rewards of ownerships and the Group has not retained control. X. Right-of-use assets A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. 46 Notes to the Financial Statements (continued) The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. Right-of-use assets has been included in property, plant and equipment in the statement of financial position. Y. Lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. Lease liability has been included in borrowings in the statement of financial position. Z. Business combinations The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired. The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss. On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group's operating or accounting policies and other pertinent conditions in existence at the acquisition- date. Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss. Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non- controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre- existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in the acquirer. 47 Notes to the Financial Statements (continued) AA. Intangible assets Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period. Goodwill Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed. Customer contracts Customer contracts acquired in a business combination are amortised on a straight-line basis over the period of their expected benefit, being their finite life of 5 years. BB. Impairment of non-financial assets Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. CC. Significant accounting judgements, estimates and assumptions The carrying amounts of certain assets and liabilities are often determined based on judgement, estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are: Share-based payment transactions The Group measures the cost of equity-settled transactions with employees and directors by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share- based payments will have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Refer to note 15 for further information. 48 Notes to the Financial Statements (continued) Impairment assessment of goodwill The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 2 BB. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of a number of key assumptions given the early stage of development of the underlying projects. In assessing the impairment of goodwill arising from the acquisition of Countrywide Hydrogen Pty Ltd during the prior period, the Group assessed Countrywide Hydrogen Pty Ltd to include three cash-generating units being hydrogen development projects in Melbourne, Portland and Tasmania. It is not possible to allocate the goodwill to the planned hydrogen projects on a non-arbitrary basis given the synergies between the projects at this early stage of development. Because of this the recoverable amount of goodwill was determined at the hydrogen operating segment level. Refer to note 6 for further information. Impairment of non-financial assets other than goodwill The Group assesses impairment of non-financial assets other than goodwill at each reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions. Intangible assets – customer relationships The Group determined that customer relationships that Countrywide Hydrogen Pty Ltd held at the time of acquisition met the accounting criteria to be recognised as identifiable intangible assets. This involved significant judgement regarding the nature of the relationships and took into consideration the memorandums of understanding (MOUs) that had been entered into and that these are not potential contracts with new customers, rather they illustrate that Countrywide Hydrogen Pty Ltd has information about the customer, regular contact with them and the customer can make direct contact with the company. The valuation of the customer relationship intangible asset was assessed by adopting an income-based methodology utilising an estimate of discounted cash flows arising from the MOUs. The key assumptions were similar to those detailed in note 6 for the impairment testing of goodwill. Valuation of investments at fair value through profit or loss Investments at fair value through profit or loss are investments in companies that are not publicly traded. Determination of the fair value of these investments involves considerable judgement. Reference is made to the price at which these companies most recently raised funds, along with consideration whether events or circumstances have occurred subsequent to raising funds that is likely to result in a material change in the fair value of the investment. Classification of investments as associates The Group recognises an investment as an associate, and therefore adopts equity accounting for the investment rather than recognising at fair value through profit or loss, if the Group has significant influence over the investment. Whether or not the Group has significant influence over an investment is a matter of considerable judgement. Factors taken into consideration include the percentage of equity interest, participation in policy-making decisions and representation on the board. If the percentage of equity interest is greater than 20%, it is presumed that the Group has significant influence over the investment unless it can be clearly demonstrated this is not the not the case. The converse applies. At 30 June 2023 the group held a 10% interest in Vaulta Holdings Pty Ltd with an option to acquire an additional 10% interest and to appoint a director to the board. It was considered that the Group does have significant influence over Vaulta Holdings Pty Ltd for the year ended 30 June 2023. 49 Notes to the Financial Statements (continued) Note 3A – Income Other income Recoupment of remediation costs R&D tax incentive received1 2023 $ 2022 $ 29,483 48,412 - 14,098 Net fair value gains/(losses) on investments at fair value through profit or loss 2,943,752 - Other income 1. Total R&D incentive received or receivable is in relation to geothermal remediation activities Note 3B – Personnel expenses Loss before income tax has been determined after charging the following specific items: Personnel expenses Termination payments Share based payments1 1. Refer to note 15 Note 3C – Other operating expenses Depreciation of operational plant & equipment Hydrogen Project Advisory and Consultancy fees Write down of geothermal assets Amortisation expense Impairment of goodwill Investment & acquisition costs - 25,030 2,973,235 87,540 2023 $ 2022 $ 1,575,434 1,191,800 116,922 - 347,814 287,784 2,040,170 1,479,584 2023 $ 11,765 725,041 - 453,370 - 23,652 1,213,828 2022 $ 2,282 58,994 165,215 183,833 - 241,853 652,177 50 Notes to the Financial Statements (continued) Note 3D – General & administrative expenses Governance External advisory Facility, IT and communications Travel Insurance Depreciation on right of use asset Investor and public relations Other Note 4 – Income tax Income tax expense 2023 $ 253,398 157,066 92,263 2022 $ 241,179 162,487 48,004 84,431 35,653 155,137 70,753 177,522 19,387 153,222 56,697 88,901 45,321 1,009,957 831,464 2023 $ 2022 $ The prima facie tax benefit on loss of 25.0% (2022 – 25.0%) differs from the income tax provided in the financial statements as follows: Prima facie tax benefit on loss 331,315 706,136 Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Change in R&D incentive for the prior year1 Other income/(expenses) Adjustments for current tax of prior periods Deferred tax assets for tax losses and other temporary differences not recognised - 3,525 (117,375) (176,912) 82,310 - (136,949) (532,748) Income tax benefit / (expense) 159,301 - 1 Change in R&D incentive represents amounts received in excess of carrying receivable balances 51 Notes to the Financial Statements (continued) Note 4 – Income tax (continued) Income tax expense comprises: Current tax Deferred tax Total income tax expense Tax losses (879,320) 1,038,621 (535,595) 535,595 159,301 - 2023 $ 2022 $ Unused tax losses for which no deferred tax asset has been recognised1 269,704,568 263,864,332 Potential tax benefit at 25.0% (2022 – 25.0%) 67,426,142 65,966,083 Deferred income tax Deferred income tax at the end of the reporting period relates to the following: Deferred tax liabilities Deferred tax liabilities not offset against deferred tax assets (407,413) (566,714) Other deferred tax liabilities offset against deferred tax assets (A) (743,454) 42,667 Total deferred tax liabilities (1,150,866) (524,047) 2023 $ 2022 $ Deferred tax assets Losses available for offset against future taxable income: Company Subsidiary Other deferred tax asset Total deferred tax assets (B) Net deferred tax assets (A) + (B) Deferred tax assets not recognised1 67,096,580 65,966,083 329,562 - 250,229 58,878 67,676,371 66,024,961 66,932,917 66,067,628 (66,932,917) (66,067,628) Recognised net deferred income tax assets - - 1 Deferred tax assets arising from tax losses and temporary differences are only brought to account to the extent that it offsets the Group's deferred tax liabilities arising from temporary differences. As the Group does not have a history of taxable profits, the deferred tax assets associated with tax losses and temporary differences in excess of the Group’s deferred tax liabilities arising from temporary differences is not yet regarded as probable of recovery at 30 June 2023.When the Group does generate taxable profits, the company will also need to consider at that point if it passes the continuity of ownership test or the same or similar business test. 52 Notes to the Financial Statements (continued) Note 4 – Income tax (continued) Movement in deferred tax assets Balance at the beginning of the year (Charged)/credited to profit or loss: Tax losses Trade and other payables Provisions Adjustment for deferred tax of prior periods Change in tax rate Balance at the end of the year Movement in deferred tax liabilities Balance at the beginning of the year (Charged)/credited to profit or loss: Leases Intangible assets Gain on financial assets Adjustment for deferred tax of prior periods Recognition of DTL of acquired entities Change in tax rate Balance at the end of the year Note 5 – Trade and other receivables Current Cash held as security Trade receivables GST Receivable Interest receivable Other receivables and deposits Total current trade and other receivables 2023 $ 2022 $ 66,024,960 68,188,722 937,992 535,595 109,109 (6,259) 610,569 (42,478) (3,038) (20,440) (2,633,401) 67,676,371 66,024,960 2023 $ (524,047) 2022 $ (1,151) (4,224) (3,290) 113,343 45,958 (735,938) - - 1,105 - (566,714) - 44 (1,150,866) (524,047) 2023 $ 2022 $ 150,211 150,052 13,249 24,105 52,369 65,400 41 19 55,063 2,614 242,669 270,454 53 Notes to the Financial Statements (continued) Note 5 – Trade and other receivables (continued) Assets pledged as security Of the cash held as security $150,211 (2022: $150,052) for bank guarantees (refer note 19). Foreign exchange, interest rate and liquidity risk Information about the Group’s exposure to foreign exchange risk, interest rate risk and liquidity risk is provided in note 21. Trade and other receivables are non-interest bearing. Fair value and credit risk The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above. Refer to note 21 for more information on the risk management policy of the Group. Impairment The Group assesses impairment on a forward looking basis for its trade and other receivables carried at amortised cost. The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. No expected credit loss has been recognised by the Group during the year. Note 6 – Intangibles Intangibles (including goodwill) at cost Less: accumulated amortisation and impairment Total Intangibles Reconciliation of Intangibles Customer relationships Cost Accumulated amortisation Goodwill Cost Impairment Carrying amount 30 June Reconciliations 2023 $ 2022 $ 11,011,365 11,011,365 (637,203) (183,833) 10,374,162 10,827,532 2,266,855 (637,203) 1,629,652 2,266,855 (183,833) 2,083,022 8,744,510 8,744,510 - - 8,744,510 8,744,510 10,374,162 10,827,532 Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: 54 Notes to the Financial Statements (continued) Note 6 – Intangibles (continued) FINANCIAL YEAR ENDED 30 JUNE 2023 Balance at 30 June 2022 Additions through business combinations Impairment of Assets Amortisation Expense Balance at 30 June 2023 FINANCIAL YEAR ENDED 30 JUNE 2022 Balance at 30 June 2021 Goodwill $ Customer relationships $ Total $ 8,744,510 2,083,022 10,827,532 - - - - - - - (453,370) (453,370) 8,744,510 1,629,652 10,374,162 Goodwill $ Customer contracts $ - - Total $ - Additions through business combinations 8,744,510 2,266,855 11,011,365 Impairment of Assets Amortisation Expense Balance at 30 June 2022 Impairment testing - - - - (183,833) (183,833) 8,744,510 2,083,022 10,827,532 The Group assessed Countrywide Hydrogen Pty Ltd to include three cash-generating units being hydrogen development projects in Melbourne, Portland and Tasmania. Goodwill acquired through the prior period business combination is monitored at the hydrogen operating segment level. This is the lowest level at which the goodwill is monitored as it is not possible to allocate the goodwill to the planned hydrogen projects on a non-arbitrary basis given the synergies between the projects at this early stage of development. The proposed hydrogen development projects are as follows: Location Tasmania1 Melbourne Portland Project size 5MW facility 10MW facility 10MW facility 1. The Group plans to develop two 5MW facilities. The recoverable amount of the Group’s goodwill has been determined by a value-in-use calculation using a discounted cash flow model, based on a 20-year project life. Key assumptions are those to which the recoverable amount of an asset or cash generating unit is most sensitive. Each of the key assumptions has been based on a range of possible values reflecting an estimated 10%, 50% and 90% chance of occurring. The key assumptions in the following table were used in the discounted cash flow model. The values disclosed in the table represent the mean of the range of possible values. Utilising the Company’s available carry forward tax losses has not been factored into the value-in-use calculations. 55 Notes to the Financial Statements (continued) Note 6 – Intangibles (continued) Key assumption Approach to determining the value assigned to the key assumption Discount rate Reflects management’s estimate of the time value of money and the Group’s expected weighted average cost of capital, the risk-free rate and the volatility of the share price relative to market movements. It also reflects that for the key assumptions, adjustments to the cash flows have been made to arrive at risk-adjusted expected cash flows. A 16.3% cost of equity has been assumed. Federal and State grant funding Takes into consideration government announcements of funding to be made available for projects and funding already provided for other projects that don’t belong to the Group. Grant funding included in the model was based on the project location and size as follows: • • for a 5MW facility the mean value is $12.5 million. for 10MW facility the mean value is $21.6 million. Capital expenditure Determined based on estimates provided by a global engineering consultancy engaged by the Company working on similar projects and discussions/pricing from key equipment vendors. The capex assumptions also include a contingency appropriate to the status of the project. Capital expenditure included in the model was based on the project location and size as follows: • • for a 5MW facility the mean value is $31.2 million. for 10MW facility the mean value is $54 million. Hydrogen sales price Depending on the use case for the facility, management considered the diesel displacement breakeven point for heavy vehicles, business demand to decarbonise operations, the opportunity to blend hydrogen in natural gas pipelines, conversations on expected price with potential customers and hydrogen sale prices in overseas markets. A mean hydrogen sales price of $10.40/kg has been modelled for all development projects. Power price Determined considering estimates of current behind-the-meter and national energy market peak and off- peak power costs, potential project partner purchase price agreements and government subsidies. Power price included in the model was based on the project location and supplier as follows: • • for the Tasmania projects the mean value is $60/MWh. for Melbourne and Portland projects the mean value is $74/MWh. First hydrogen sales Determined considering the key milestones to be achieved before financial close and expected construction timeframe based on discussions with the Company’s engineering consultant and considering current supply chains. Although first sales may occur earlier, sales commencing during calendar years 2025 (for the Tasmania) and 2027 (for the Melbourne and Portland) have been modelled. Annual growth rate An annual growth rate of 1.5% has been applied to expenditure and 2.5% to sales. The rate applied to expenditure considers the long term supply contracts envisaged, the ability to achieve real savings through synergies as multiple projects come online and operational efficiencies once commercial production is reached. The sales escalation considers assessments on diesel price growth, including IEA forecasts and road user charge increases applied to diesel fuel. 56 Notes to the Financial Statements (continued) Note 6 – Intangibles (continued) Sensitivity Based on the above the recoverable amount of the cash generating units exceeded the carrying amount of intangible assets by $2.6 million. The Directors have made judgements and estimates in respect of impairment testing goodwill. Should these judgements and estimates not occur the resulting goodwill carrying amount may decrease. The key sensitivities are as follows: • The discount rate would need to increase to 16.9% (a movement of 0.6%) before goodwill would need to be impaired. • Federal and State Government grant funding would need to be 3% less than the mean value modelled across the projects before goodwill would need to be impaired. • • • • • If the mean value of capital expenditure across the projects increase by 3%, the carrying amount of goodwill would need to be impaired. If the mean value of the hydrogen price decreases by 1%, the carrying amount of goodwill would need to be impaired. If the mean value of the power price increases by 3%, the carrying amount of goodwill would need to be impaired. If the first hydrogen sales for the Tasmanian project were delayed by 9 months which in turn will delay the first hydrogen sales for the Melbourne and Portland projects by 9 months, the carrying amount of goodwill would need to be impaired. If the gap between the annual growth rate in expenditure and the growth rate in sales decreases by 0.5% then the carrying amount of goodwill would need to be impaired. Note 7 – Investments at fair value through profit or loss Investment in Uniflow Power Limited(1) Investment in Enosi Australia Pty Ltd(2) Investment in Allegro Energy Pty Ltd(3) 2023 $ 2022 $ 350,000 350,000 1,590,000 500,000 3,398,752 450,000 5,338,752 1,300,000 57 Notes to the Financial Statements (continued) Note 7 – Investments at fair value through profit or loss (continued) (1) Shares held in Uniflow Power Limited (Uniflow) with a fair value of $350,000, an Australian unlisted public company, commercialising a micro renewable energy generator – The Cobber. The shares held equate to 5.0% of Uniflow equity. (2) Shares held in Enosi Australia Pty Ltd (Enosi) with a fair value of $1,590,000. During year ended 30 June 2023 the Company invested a further $1,000,000 at an issue price of $0.3511 per share. The Company assessed the fair value of the cumulative investment at this share price generating a $90,000 gain on financial assets (Note 3A). Enosi is an Australian company that has developed Powertracer, a grid-scale renewable energy trading and tracing solution. The shares held equate to 14% of Enosi equity. (3) Shares held in Allegro Energy Pty Ltd (Allegro) with a fair value of $3,398,752. Allegro is an Australian battery technology company that has developed a water-based electrolyte for use in redox flow batteries and supercapacitors. Allegro raised an additional $4 million in share capital in June 2023 at an issue price of $32/share. The total shares held by ReNu Energy equate to a 4.86% interest. The Company has assessed the fair value of its cumulative investment at $28/share, after taking into account the terms of the June 2023 capital raise. This generated a $2.854m gain on financial assets (Note 3A). Note 8 – Equity Accounted Investments Interests in associates Name of entity Vaulta Holdings Pty Ltd Ownership interest Carrying amount 2023 10% 2022 0% 2023 $ - 2022 $ - Vaulta is a battery casing technology company based in Brisbane, Australia. Refer to note 2CC for significant judgment/assumptions made in relation to equity accounting investments where the Group own less than 20% ownership interest. Subsequent to year end, the Group acquired a further 5% of the share capital of Vaulta Holdings Pty Ltd bringing the total ownership interest at the date of this report to 15%. 58 Notes to the Financial Statements (continued) Note 8 – Equity Accounted Investments (continued) The following table illustrates the summarised financial information of the Group’s investment in Vaulta Holdings Pty Ltd: 2023 $ 223,741 149,300 373,041 122,888 - 122,888 250,153 25,015 396,843 421,859 2023 $ 327,358 (781,414) (781,414) (78,141) 2023 $ - 500,000 (78,141) 421,859 2022 $ - - - - - - - - - - 2022 $ - - - - 2022 $ - - - - Summarised financial information for associate Summarised Balance Sheet Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Equity Reconciliation to carrying amount Share of equity (10%) Goodwill Carrying amount of investment in associate Summarised statement of comprehensive income Revenue Profit/(loss) before tax Income Tax Profit / (loss) after tax Group’s share of profit / (loss) at 10% Reconciliation of the consolidated entity's carrying amount Opening carrying amount Investment Share of profit / (loss) after income tax Closing carrying amount 59 Notes to the Financial Statements (continued) Note 9 – Trade and other payables Current Trade creditors Accrued and other liabilities Trade creditors and accruals Terms and conditions 2023 $ 2022 $ 105,683 190,439 296,122 143,437 117,108 260,545 Accounts payable and accrued liabilities are non-interest bearing. Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the Company. All amounts are normally settled within 30 days, and discounts for early payment are normally taken where it is considered advantageous for the Company to do so. Due to the short-term nature of these payables, their carrying value is assumed to approximate their fair value. Note 10 – Borrowings Current borrowings Lease liability Total current borrowings Lease liabilities 2023 $ 64,622 64,622 2022 $ 19,290 19,290 Set out below are the carrying amounts of lease liabilities (included under borrowings) and the movements during the period: Changes in lease liabilities 2023 $ 2022 $ At 1 July Additions Interest Lease payments At 30 June Current Non-current 19,290 117,942 3,558 (76,168) 64,622 64,622 - 64,622 14,369 60,870 1,199 (57,148) 19,290 19.290 - 19,290 The maturity analysis of lease liabilities are disclosed in Note 21. Fair value of borrowings The fair values of borrowings are not materially different from their carrying values as interest rates on those borrowings are either close to current market rates or the borrowings are of a short-term nature. 60 Notes to the Financial Statements (continued) Note 11 – Issued capital Authorised Shares 2023 $ 2022 $ 440,502,123 (2022 – 364,566,012) fully paid ordinary shares 375,331,156 371,529,007 MOVEMENT IN ORDINARY SHARE CAPITAL: NUMBER OF SHARES ISSUE PRICE $ PER SHARE 30/06/21 Balance at end of financial year 132,762,923 $ 358,435,465 9/12/2021 Share Issue(1) 8/02/2022 Share issue(2) 8/02/2022 Share issue(3) 8/02/2022 Share issue(4) 18/02/2022 Share issue(5) 21/04/2022 Share issue(4) 11/05/2022 Share buy-back (6) 30/05/2022 Share Issue (7) 26,400,000 0.09 2,376,000 1,800,000 0.081 145,800 45,000,000 124,680,158 13,853,318 9,979,362 (7,909,749) 18,000,000 - - 0.08 9,974,413 0.09 1,246,800 0.08 0.054 798,349 (427,126) Share issue costs – options issued to corporate advisor and lead manager Share issue costs 30/06/2022 Balance at end of financial year 29/11/2022 Share Issue(8) 2/12/2022 Exercise of Options - listed(9) 2/02/2023 Share issue(10) 364,566,012 75,500,000 19,445 416,666 0.06 0.07 0.06 Share issue costs – options issued to corporate advisor and lead manager Share issue costs (578,186) (442,508) 371,529,007 4,530,000 1,361 25,000 (415,752) (338,460) 30/06/2023 Balance at end of financial year 375,331,156 (1) 26,400,000 shares issued on 9 December 2021 in respect of a private placement to sophisticated and institutional investors at 440,502,123 $0.09 per share. (2) 1,800,000 bonus shares awarded to the Board and CEO in December 2021 and approved by shareholders on 1 February 2022. The award was in recognition of work completed during 2021, including addressing long standing liabilities from previous operations, achieving reduced operating costs, raising capital and implementing a strategy to be one of the only ASX listed companies focussed on acquiring strategic stakes in and nurturing renewable and clean energy projects and technologies. The shares were issued on 8 February 2022. (3) 45,000,000 Loan Share Plan Shares (Plan Shares) issued to executives and Directors (pursuant to the terms of the Loan Share Plan approved by shareholders at the Company’s 2017 annual general meeting) with vesting conditions that require the Company’s share price achieving a price which represents a significant increase in shareholder value in relation to the share price at the time that the Plan Shares were granted. The issue of the Plan Shares was approved by shareholders at the extraordinary general meeting of the Company held on 1 February 2022 and the shares were issued on 8 February 2022. (4) 134,659,520 ordinary shares issued to the shareholders of Countrywide Hydrogen Pty Ltd (CH) as consideration for the acquisition of 100% CH (Consideration Shares), comprising 124,680,159 Consideration Shares were issued on 8 February 2022 today and a further 9,979,361 Consideration Shares issued on 21 April 2022 to the three founders of CH following preparation of completion accounts. 61 Notes to the Financial Statements (continued) Note 11 – Issued capital (continued) (5) 13,853,318 shares issued to eligible applicants under the Company’s Share Purchase Plan on 18 February 2022 at $0.09 per share. (6) 7,909,749 shares bought back under the Company’s unmarketable parcels buyback facility on 18 February 2022 at $0.054 per shares. (7) 18,000,000 shares issued as security for the Company’s At The Market (ATM) Facility with Acuity Capital (Collateral Shares) for nil cash consideration. The Company may at any time cancel the ATM as well as buy back (and cancel) those shares for no cash consideration (subject to shareholder approval). The ATM provides the Company with up to $5,000,000 of standby equity capital until 31 July 2024. (8) 75,500,000 shares issued on 29 November 2022 in respect of a private placement to sophisticated and institutional investors at $0.060 per share. (9) 19,455 shares issued on 2 December 2022 upon the exercise of 19,455 listed options at $0.070 each. (10) 416,666 shares requiring shareholder approval, issued on 2 February 2023 in respect of a private placement to sophisticated and institutional investors at $0.060 per share. Terms and conditions of contributed equity Ordinary Shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company. Refer to note 15 for the terms and conditions of shares issued relating to Loan Share Plan. Note 12 – Reserves Share based payment reserve Reconciliation of Reserves Carrying amount at beginning Net share-based payments expense recognised Nature and purpose of reserves Share based payment reserve 2023 $ 2022 $ 1,483,736 720,170 1,483,736 720,170 720,170 763,566 1,483,736 - 720,170 720,170 The employee share-based payment reserve is used to record the value of share loan plan shares granted to employees and directors, including Key Management Personnel, as part of their remuneration. The share based payment reserve also records the value of share options issued to Peak Asset Management, as corporate advisor. Refer to note 15 for further details. 62 Notes to the Financial Statements (continued) Note 13 - Earnings per share Basic and diluted earnings/(loss) per share attributable to the equity holders of the Company: From continuing operations From discontinued operations The following reflects the income and share data used in the calculations of basic and diluted earnings per share: Net profit/(loss) attributable to equity shareholders: From continuing operations From discontinued operations 2023 Cents per share 2022 Cents per share (0.29) - (0.29) 2023 $ (1.03) - (1.03) 2022 $ (1,165,960) (2,284,543) - - (1,165,960) (2,824,543) 2023 Shares 2022 Shares Weighted average number of ordinary shares used in calculation of basic and diluted earnings per share 408,805,106 222,737,484 As the Group has generated a loss, potential ordinary shares have been deemed to be anti-dilutive. Note 14 – Remuneration of Auditors Auditors of the Group - BDO Audit and review of the financial statements Preparation of Independent Expert’s Report Total services provided by BDO 2023 $ 144,825 - 2022 $ 76,298 90,000 144,825 166,298 During the year $nil (2022: $90,000) fees were paid or payable for non-audit services provided by the auditor of the parent entity, its related practices and non-related audit firms. Note 15 – Share based payments Loan Share Plan Shares For the year ended 30 June 2023, an amount of $347,814 has been recognised as a share-based payment expense in the profit or loss (2022: $287,784) for shares issued to executives of the Company during the year ended 30 June 2022 pursuant to the Loan Share Plan approved by shareholders at and Extra Ordinary General meeting on 1 February 2022. At the 2017 AGM, shareholders approved a Loan Share Plan (LSP) to retain, motivate and attract executives and to better align the interests of employees with those of the Group and its shareholders by providing an opportunity for employees to acquire shares subject to the terms and conditions of the LSP (Plan Shares). 63 Notes to the Financial Statements (continued) Note 15 – Share based payments (continued) The Plan Shares are issued or transferred to the participants in the LSP, determined by the Board in its absolute discretion, at market value. The Group may provide a limited recourse loan to eligible employees who are invited to participate in the LSP to assist them to purchase Plan Shares (Loan). On 8 February 2022, the Company issued 45,000,000 ordinary shares (Plan Shares) to executives of the Company pursuant to the Loan Share Plan approved by shareholders at an Extraordinary General Meeting on 1 February 2022. The Plan Shares will only vest if the executive has been employed for 6 months from the grant date and the achievement of certain share price targets for ReNu Energy’s shares (Target Price) as follows: Share Target Price* Number of Plan Shares $0.15 $0.25 $0.35 15,000,000 15,000,000 15,000,000 Total Plan Shares * The Target Price vesting condition will be satisfied where the Volume Weighted Average Price of the Company’s shares over any 15-day trading period is at least the Target Price. 45,000,000 Plan Shares will also vest if there is a change of control event. Each recipient has been provided with a 10-year, limited recourse, interest-free loan to fund the acquisition of the Plan Shares. The loan amount is calculated as $0.09 per Plan Share multiplied by the number of Plan Shares and is repayable in certain circumstances, including when employment with the Company ceases. The Company’s recourse against the employee is limited to the loan amount if the Plan Shares have vested, or otherwise the transfer back to the Company of the Plan Shares to which the loan relates. The issue price of the shares was $0.09 each with an aggregate loan value of $4.05 million. Plan Shares 2023 Grant date Exercise price Expiry date Balance at the start of the year Number Granted during the year Number Forfeited during the year Number 01/02/2022 $0.090 01/02/2032 45,000,000 Weighted average fair value $0.071 - - - - Balance at the end of the year1 Number 45,000,000 $0.071 1. No Plan Shares were exercisable at the end of the year and the weighted average remaining contractual life of the Plan Shares at the end of the year was 8.59 years (2022: nil). As the company has no right to receive cash settlement for the loan (the executive can elect to forfeit the shares), no loan receivable has been recognised by the company. The effect of the contractual arrangements is equivalent to an option exercisable at the time of loan repayment and at an exercise price of $0.09 per share. As a result, the grant of shares under the Loan Share Plan has been valued at grant date using an option pricing model and the fair value recognised in profit or loss over the expected vesting period. 64 Notes to the Financial Statements (continued) Note 15 – Share based payments (continued) Listed Options • 12,500,000 listed options were issued on 1 February 2023 to Peak Asset Management for acting as corporate adviser and lead manager to the November 2022 private placement. The 12,500,000 listed options granted to Peak Asset Management are accounted for as a share-based payment in respect of the services provided. The fair value at grant date is estimated using a Black Scholes model, taking into account the terms and conditions upon which the options were granted. The contractual life of each option granted is 1.1 years. There is no cash settlement of the options. The fair value of options granted of $0.0333 per option was estimated on the date of grant, using the following assumptions: Exercise Price ($) 0.07 Dividend yield (%) nil Expected volatility (%) 128 Risk-free interest rate (%) 3.19 Expected life of share options (years) 1.1 Share price ($) 0.067 An amount of $415,752 has been included in the statement of changes in equity for the year ended 30 June 2023 under ‘Share Capital’ (being a cost of raising capital) relating to the fair value of the options granted to Peak Asset Management in November 2022. • 75,916,666 listed options issued in two tranches (12,583,348 issued on 29 November 2022 and 63,333,318 issued on 1 February 2023) as part of the November 2022 share placement to professional and sophisticated investors where subscribers received one (1) free attaching option for every share subscribed for. The options have an exercise price of $0.07 per share and expire on 31 December 2023. Share options outstanding at the end of the year have the following expiry dates and exercise prices: Grant date Expiry Date Exercise Price Share options 30 June 2023 Share Options 30 June 2022 $0.07 $0.07 $0.07 $0.07 $0.07 $0.07 20,756,872 6,600,000 5,000,000 3,463,403 12,583,348 75,833,318 20,776,317 6,600,000 5,000,000 3,463,403 - - 124,236,941 35,839,720 0.5 years 1.5 years 30 August 2021 31 December 2023 10 December 2021 31 December 2023 1 February 2022 31 December 2023 18 February 2022 31 December 2023 29 November 2022 31 December 2023 1 February 2023 31 December 2023 Total Weighted average remaining contractual life of options outstanding at end of period 65 Notes to the Financial Statements (continued) Note 16 – Key Management Personnel Compensation of Key Management Personnel Short-term employee benefits Post-employment benefits Share based payment expense 2023 $ 2022 $ 961,188 747,955 78,956 50,657 347,814 287,784 1,387,958 1,086,396 Further information on remuneration of KMP is shown in the Remuneration Report contained within the Directors’ Report. Note 17 – Related party disclosures Related party transactions with Directors The Group engaged Pacific Energy Partners Pty Ltd and White Lotus Solutions Pty Ltd (trading as New Energy Capital) to provide consulting services. Tim Scholefield is a Director and Principal of Pacific Energy Partners Pty Ltd. Consulting and Non-Executive Director fees of $112,089 were paid to Pacific Energy Partners during the year (2022: $166,381). The material terms of the engagement of Pacific Energy Partners are disclosed in section 4 of the Remuneration Report. The key resource from White Lotus Solutions Pty Ltd is Boyd White. Consulting and Executive Director fees of $47,125 were paid during the year (2022: $0). The material terms of the engagement of White Lotus Solutions are disclosed in section 4 of the Remuneration Report. Geoffrey Drucker’s spouse, Ms Ingeborg Drucker, is employed as Group Communications Director of ReNu Energy Limited. Gross wages and salaries (including superannuation) of $215,475 were paid to Ms Drucker during the year (2022; $87,083). The above transactions are included in the following: Personnel expenses External Advisory Hydrogen Project Advisory and Consultancy fees Facility, IT and communications Amounts included in Trade and other payables: 2023 $ 2022 $ 283,845 253,464 1,375 89,375 94 43,845 - - - - 66 Notes to the Financial Statements (continued) Note 18 - Notes to the Statement of Cash Flows 2023 $ 2022 $ A. Reconciliation of cash Cash balance comprises: Cash at bank Total cash B. Reconciliation of the operating loss after tax with the net cash flows used in operations Loss after income tax Depreciation and amortisation Impairment of Goodwill Share based payments expense Equity Accounted Share of Loss Write down of geothermal assets / PPE 1,308,085 2,016,762 1,308,085 2,016,762 (1,165,960) (2,824,543) 535,887 242,811 - 347,814 287,784 78,141 - 1,339 165,215 Income tax expense/(benefit) (159,301) Items treated as cash flows from investing activities: Net fair value gains/(losses) on investments at fair value through profit or loss (2,943,752) - - Changes in Operating Assets & Liabilities (Increase)/decrease in receivables and prepayments Increase/(decrease) in other creditors and accruals Increase / (decrease) in provisions 39,138 573,861 35,577 (470,474) (24,168) 16,432 Net Cash Flow used in Operating Activities (3,255,285) (2,008,914) Note 19 – Contingent liabilities Bank guarantees The Group’s bankers have issued bank guarantees as security for relevant Government authorities in respect of tenement rehabilitation obligations of the Company: $150,211 (2022: $150,052). As noted in note 5, these amounts are secured over cash deposits. 67 Notes to the Financial Statements (continued) Note 20 – Subsequent events Subsequent to year end, the Group acquired a further 5% of the share capital of Vaulta Holdings Pty Ltd bringing the total ownership interest at the date of this report to 15%. No other matter or circumstance has arisen since 30 June 2023 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years. Note 21 – Financial risk management The Group’s principal financial instruments comprise cash, short-term deposits, borrowings investments in equity shares at fair value through profit or loss. The Group has various other financial assets and liabilities such as trade receivables and trade payables which arise directly from its operations. The Group does not trade in financial instruments. The main risks arising from the Group’s financial instruments are credit risk, liquidity risk and market risk (price risk). Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 to the financial statements. Primary responsibility for identification and control of financial risks rests with the board of Directors, however the day-to-day management of these risks is under the control of the Chief Executive Officer. The Board agrees the strategy for managing future cash flow requirements and projections. (A) Credit risk The Group’s maximum exposures to credit risk at balance date in relation to financial assets, is the carrying amount of those assets as recognised on the reporting of financial position. There are no derivative financial instruments currently being used by the Group to offset its credit exposure. The Group trades only with recognised, creditworthy third parties for material transactions and as such collateral is not requested nor is it the Group's policy to securitise its trade and other receivables. The Group’s retail business does have exposure to small business customers for whom credit records may not be readily available, however individual exposures have not been assessed as posing a material credit risk to the Group. (B) Liquidity risk The Group’s objective is to maintain adequate capital to finance its current operations and near-term growth opportunities while maintaining sufficient funds to meet its obligations in the event of a business downturn. The Group plans to introduce conservative levels of debt financing to fund its growth plans, with repayment profiles which match the expected cash flows from the relevant business operations. The Group’s financial liabilities and their contractual maturities are: Contractual maturities of financial liabilities 2023 Trade payables Lease liabilities Less than 6 months $ 105,683 24,591 Between 6 months & 1 year $ Between 1 year & 2 years $ Between 2 years & 5 years $ Total contractual cash flows $ Total carrying value $ 105,683 64,622 170,305 9,993 20,985 9,053 Total financial liabilities 130,274 9,993 20,985 9,053 68 Notes to the Financial Statements (continued) Note 21 – Financial risk management (continued) 2022 Trade payables Lease liabilities Less than 6 months $ 143,437 14,800 Between 6 months & 1 year $ Between 1 year & 2 years $ Between 2 years & 5 years $ Total contractual cash flows $ - - - 463 973 3,054 Total financial liabilities 158,237 463 973 3,054 Total carrying value $ 143,437 19,290 162,727 (C) Market risk Currency risk The Group does not have any material exposure to foreign currency risk (2022: nil) but may cover the expected cost of firm orders denominated in foreign currencies with forward contracts from time to time. Interest rate risk The Group’s cash balances are held in a combination of interest-bearing term deposits and bank accounts. For each 10% movement in the interest rate, the Group’s profit/loss after tax would increase/decrease by $13,00 if the year end cash balance was invested at those rates for 12 months. The Group’s borrowings are at fixed rates of interest and there is no exposure to interest rate risk. Equity Price Risk The Group’s unlisted equity investments are susceptible to market price risk arising from uncertainty about future values of the investment securities. The Group manages the equity price risk through diversification. At the reporting date, the exposure to non-listed equity investments at fair value was $5,338,752. Sensitivity analyses of these investments have been provided in note 23. Note 22 – Information relating to ReNu Energy Limited (The Parent) Current Assets Total Assets Current Liabilities Total Liabilities Contributed Equity Accumulated Losses Share Based Payment Reserve Profit or (loss) of the Parent Entity Total comprehensive income (loss) of the Parent Entity 69 2023 $ 2022 $ 1,474,543 2,133,345 18,005,691 14,618,751 (379,314) (806,827) (317,883) (891,903) 375,331,156 371,529,007 (359,616,028) (358,522,328) 1,483,736 720,170 17,198,864 13,726,849 (1,093,700) (2,784,323) (1,093,700) (2,784,323) Notes to the Financial Statements (continued) Note 23 – Fair Value Measurement Fair value hierarchy The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three-level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: Unobservable inputs for the asset or liability Consolidated – 30 June 2023 Assets Investments at fair value through profit or loss Total assets Level 1 $ Level 2 $ Level 3 $ Total $ - - - - 5,338,752 5,338,752 5,338,752 5,338,752 There were no transfers between levels during the financial half-year. The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their short-term nature. Valuation techniques for fair value measurements categorised within level 2 and level 3 Unquoted investments in ordinary shares have been valued using the price at which the respective entities most recently raised funds. Level 3 assets and liabilities Movements in level 3 assets and liabilities during the current financial year are set out below: Consolidated – 30 June 2023 Balance at 1 July 2021 Additions Net fair value gains/(losses) on investments at fair value through profit or loss Balance at 30 June 2022 Additions Ordinary shares at fair value through profit or loss $ - 1,300,000 - 1,300,000 1,095,000 Total $ - 1,300,000 - 1,300,000 1,095,000 Net fair value gains/(losses) on investments at fair value through profit or loss 2,943,752 2,943,752 Balance at 30 June 2023 5,338,752 5,338,752 70 Notes to the Financial Statements (continued) Note 23 – Fair Value Measurement (continued) The level 3 assets and liabilities unobservable inputs and sensitivity are as follows: Unobservable Inputs Sensitivity Share Price 10% change in share price of each investee company would increase/decrease fair value by $533k Note 24 - Segment Information The Company operates in two segments: (i) hydrogen and (ii) renewable and clean energy investments. All operations are located in Australia. Operating segments are identified on the basis of internal reports that are regularly reviewed and used by the CEO and Board of Directors (chief operating decision makers) in order to allocate resources to the segment and assess its performance. The financial information presented to the chief operating decision makers uses EBITDA as a measure to assess performance. Unless otherwise stated, all amounts reported to the CEO and Board of Directors as the chief operating decision makers are in accordance with the Group’s accounting policies. The following table represents the Group’s segment information for the year ended 30 June 2023: Year Ended 30 June 2023 Hydrogen Revenue and income - Other income - Interest income Expenses EBITDA Share of loss from associate Income tax (expense)/benefit Depreciation Amortisation Interest expense $ - - (1,500,736) (1,500,736) - 159,301 (13,302) (453,370) (2,126) Renewable & Clean Energy Investments $ Corporate* $ Total $ 2,943,752 29,483 2,973,235 - 47,155 47,155 (25,777) 2,917,975 (78,141) - - - - (2,201,551) (3,728,064) (2,124,913) - - (69,216) - (1,432) (707,674) (78,141) 159,301 (82,518) (453,370) (3,558) Profit /(Loss) after tax (1,810,233) 2,839,834 (2,195,562) (1,165,960) Assets Segment assets Unallocated assets 10,421,260 5,760,611 - 16,181,871 - - 1,718,326 1,718,326 Total Assets 10,421,260 5,760,611 1,718,326 17,900,197 * Related to corporate overheads which cannot be attributable to each individual segment. 71 Notes to the Financial Statements (continued) Note 24 - Segment Information (continued) Year Ended 30 June 2022 Hydrogen Revenue and income - Other income - Interest income Expenses EBITDA Depreciation Amortisation Interest expense $ - - (345,398) (345,398) - (183,833) - Renewable & Clean Energy Investments $ Corporate* $ - - 87,540 55,362 Total $ 87,540 55,362 (41,916) (2,333,099) (2,720,413) (41,916) - - - (2,190,197) (2,577,511) (58,979) - (4,220) (58,979) (183,833) (4,220) Profit /(Loss) after tax (529,231) (41,916) (2,253,395) (2,824,543) Assets Segment assets 10,827,532 1,300,000 - 12,127,532 Unallocated assets Total Assets - - 2,475,470 2,475,470 14,603,002 * Related to corporate overheads which cannot be attributable to each individual segment. 72 : Directors’ declaration In accordance with a resolution of the Directors of ReNu Energy Limited, I state that: 1. In the opinion of the Directors: The consolidated financial statements, comprising the consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows and accompanying notes are in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its performance for the period ended on that date; and (b) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and Corporations Regulations 2001; (c) (d) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 2; and there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2. This directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the Corporations Act 2001. for the financial year ended 30 June 2023. On behalf of the Board. Boyd White Chairman Brisbane 18 September 2023 73 Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au Level 10, 12 Creek St Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia INDEPENDENT AUDITOR'S REPORT To the members of ReNu Energy Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of ReNu Energy Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2023, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ declaration. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial performance for the year ended on that date; and (ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material uncertainty related to going concern We draw attention to Note 2(D) in the financial report which describes the events and/or conditions which give rise to the existence of a material uncertainty that may cast significant doubt about the group’s ability to continue as a going concern and therefore the group may be unable to realise its assets and discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this matter. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 74 Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 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. Impairment assessment of Intangible assets (including Goodwill) Key audit matter How the matter was addressed in our audit The Group’s disclosures in respect to intangible assets (including goodwill), detailing the allocation of Goodwill to the Group’s cash generating units (CGU’s), setting out the key assumptions for the value-in-use calculations and the impact of possible changes in these assumptions would have on the impairment assessment, is included in Note 6. The carrying value of goodwill represents a significant asset of the Group and is required to be annually tested for impairment. This annual impairment test was significant to our audit because management’s assessment process, including the determination of CGUs and calculation of value-in-use calculations is complex and highly judgmental as the cashflows are based on a pre-revenue basis and pre- development basis. Management’s assessment process involves an extended period of forecasting due to the nature of the project, and includes estimates and assumptions relating to expected future market or economic conditions. The impact of inputs used in management’s assessment required significant auditor attention. Our procedures included, amongst others: •• Evaluating management’s determination of the CGU’s to ensure they are appropriate, including being at a level no higher than the operating segments of the entity •• Obtaining and gaining an understanding of the Group’s value in use models, testing the mathematical accuracy and critically evaluating management’s methodologies and their key assumptions. •• •• •• •• •• Evaluating the Group’s inputs used in the value-in-use calculations, including those relating to forecast revenue, costs, capital expenditure, operation start dates and discount rate. Performing sensitivity analysis on the key assumptions in the model. These included hydrogen sales price, power price, operations start dates and annual growth rates, grant funding probability and discount rate. Involving our internal specialists to assess the discount rate applied against comparable market information. Involving our internal specialists to assess management’s impairment assessment process is in accordance with accounting standards. Evaluating the adequacy of the related disclosures in the financial report. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 75 Valuation of investments at fair value through profit or loss Key audit matter How the matter was addressed in our audit The Group’s disclosures in respect of investments at fair value through profit of loss, including how the fair value of these investments is determined, is included in Note 7 and Note 23. The valuation of investments at fair value through profit or loss was significant to our audit because these investments are a significant asset of the Group and determining the fair value can involve significant judgement as the investments are in companies that are not publicly traded. Our procedures included, amongst others: •• •• •• Evaluating the appropriateness of using the most recent capital raise as a basis for determining fair value, taking into consideration the timing of the capital raise and any special terms attached to the capital raise Considering management’s assessment of the performance of the investment post the most recent capital raise Reviewing management’s assessment of whether the Group is in a position to exercise significant influence over the individual investment. Other information The directors are responsible for the other information. The other information comprises the information contained in the directors’ report for the year ended 30 June 2023, but does not include the financial report and our auditor’s report thereon, which we obtained prior to the date of this auditor’s report, and the annual report, which is expected to be made available to us after that date. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information identified above 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. When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and will request that it is corrected. If it is not corrected, we will seek to have the matter appropriately brought to the attention of users for whom our report is prepared. 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. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 76 In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 15 to 27 of the directors’ report for the year ended 30 June 2023. In our opinion, the Remuneration Report of ReNu Energy Limited, for the year ended 30 June 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. BDO Audit Pty Ltd A J Whyte Director Brisbane, 18 September 2023 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 77 : Corporate Governance & Shareholder Information The Board of Directors of ReNu Energy Limited is responsible for the corporate governance of the Company and are committed to achieving and demonstrating the highest standards of corporate governance. ReNu Energy Limited’s corporate governance practices were in place throughout the year ended 30 June 2023 and were fully compliant with the Australian Securities Exchange Corporate Governance Council’s Corporate Governance Principles and Recommendations (4th Edition) except for the following: - Companies should Recommendation 1.5 disclose in each annual report the measurable objectives for achieving gender diversity set by the Board in accordance with the diversity policy, progress towards achieving them, and disclose at the end of each reporting period the proportion of women employees in the whole organisation, women in senior executive positions and women on the Board. The Company has adopted a Diversity Policy that encourages the participation to all people and provision of opportunity interested in working for the ReNu Energy group. As the Company has a relatively small workforce with many roles requiring specific skills that may not be widely available, the Company: • • has not deemed it appropriate to set specific numeric these could be inappropriately skewed by the small sample size; and targets as does not believe it appropriate to publish the specific employment numbers as Company does not believe this information adds any meaningful value due to its small workforce. Recommendation 2.5 – The Chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity. The Chairman was appointed to an interim executive role effective 15 May 2023. The Company believes the appointment of Mr Boyd White to an interim executive role is appropriate as Mr White is able to bring, and does bring, quality independent judgment and project delivery expertise to work with the Chief Executive Officer and Executive Director to take the Company’s Tasmanian green hydrogen projects to final investment decision. ReNu Energy’s Corporate Governance Statement can be downloaded in the Governance section of our website http://renuenergy.com.au/about- us/governance/. 78 Distribution of Fully Paid Ordinary Shares Analysis of number of equity holders by size and holding as at 13 October 2023. Range 100,001 and Over 50,001 to 100,000 10,001 to 50,000 5,001 to 10,000 1,001 to 5,000 1 to 1,000 Total Twenty Largest Holders Securities % of issued capital No. of holders % of holders 375,548,111 29,088,313 34,226,198 3,577,857 859,972 201,672 84.68 6.56 7.72 0.81 0.19 0.05 443,502,123 100.00 487 378 1,440 419 322 668 3,714 13.11 10.18 38.77 11.28 8.67 17.99 100.00 Rank Name Shares Held % of issued capital 1 2 3 4 5 6 7 8 9 10 11 12 12 13 14 15 16 17 18 19 20 GEOFFREY CHARLES DRUCKER INGEBORG URSULA DRUCKER STEPHEN MARK NOSSAL 10 BOLIVIANOS PTY LTD ACUITY CAPITAL INVESTMENT MANAGEMENT PTY LTD MR YAN ZHANG GE-STAR PTY LTD WHITE LOTUS SOLUTIONS PTY LTD NORTH WESTERN SURVEYS PTY LTD MR ANTHONY JAMES COTTER & MRS DEBORAH JOANNE COTTER LOUKA MANAGEMENT PTY LTD SUSAN OLIVER & CO PTY LTD TIM SCHOLEFIELD MR PATRICK KOK CITICORP NOMINEES PTY LIMITED MR NOEL RUSSELL CAMERON & DR BELINDA CAROLINE GOAD MR GREGORY JOHN HOWLETT & MRS MARGARET WILHELMINA HOWLETT BNP PARIBAS NOMINEES PTY LTD INDEVCO GROUP HOLDINGS PTY LIMITED SHARESIES NOMINEE LIMITED RY-KIN CONSTRUCTIONS NO2 PTY LTD 42,627,291 34,627,291 29,205,696 22,375,037 18,840,000 10,300,000 10,000,000 9,000,000 8,999,255 8,449,123 6,200,000 6,000,000 6,000,000 3,000,000 2,690,639 2,664,159 2,500,000 2,208,343 2,157,888 2,074,045 2,000,000 9.61 7.81 6.59 5.05 4.25 2.32 2.25 2.03 2.03 1.91 1.40 1.35 1.35 0.68 0.61 0.60 0.56 0.50 0.49 0.47 0.45 Substantial Shareholders The names of substantial shareholders who have notified the Company in accordance with 671B of the Corporations Act 2001 are: Total 231,918,767 52.29 Rank Name Shares held % of issued capital 1 2 3 4 GEOFFREY CHARLES DRUCKER INGEBORG URSULA DRUCKER STEPHEN MARK NOSSAL 10 BOLIVIANOS PTY LTD 42,627,291 34,627,291 29,205,696 22,375,037 9.61 7.81 6.59 5.05 79 Voting Rights Annual Report The voting rights attaching to each class of equity securities are set out below: (a) 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. (b) Options: No voting rights. Securities Exchange Listing The shares of the Company are listed under the symbol RNE on the Australian Securities Exchange Limited. The Company’s home branch is Sydney. Shareholder Enquiries their Shareholders with shareholdings should contact the Company’s Share Registry as follows: queries about Link Market Services Locked Bag A14 Sydney South NSW 1235 Telephone Australia: 1300 554 474 Telephone International: +61 1300 554 474 Fax +61 2 9287 0303 Email: registrars@linkmarketservices.com.au Change of Address Issuer sponsored shareholders should notify the share registry immediately upon any change in their address quoting their Securityholder Reference Number (SRN). This can be done by phoning the share registry, by writing to them, or at through www.linkmarketservices.com.au. Changes in addresses for broker sponsored holders should be directed to the sponsoring brokers with the appropriate Holder Identification Number (HIN). portal their web The Company’s Annual Report is posted on its web site immediately upon release to ASX. Shareholders will not be mailed a copy of the Annual Report unless they have specifically opted in to request one. Notice of Meeting and Proxy Voting The Company offers online voting and shareholders may elect to receive the Company’s notice of meeting and proxy form via email. The Company encourages this form of electronic communication. Voting can be undertaken online, by logging in to the Link website using the holding details as shown on the proxy form. Shareholders who do not register for online access will continue to receive these documents by post. Shareholder who would like to opt in to receive these documents by email should their communication preferences at the share registry’s web portal at www.linkmarketservices.com.au register Consolidation of Multiple Shareholdings If you have multiple shareholding accounts that you wish to consolidate into a single account, please advise the Share Registry in writing. If your holdings are broker sponsored, please contact the sponsoring broker directly. Register for Email Alerts Please note, that as a shareholder you can register through the ‘Email Alerts’ section of our web site to receive electronic communications from the Company. Registration will provide you with an email advice with a to www.renuenergy.com.au each time a relevant announcement is made by the company and posted on this site. At www.renuenergy.com.au shareholders can view: link • • • Annual and half-year Reports Securities Exchange Announcements ReNu Energy Share Price Information • General Shareholder Information 80 : Company Directory BOARD OF DIRECTORS Mr Boyd White (from 20 December 2019) (Executive Chairman) Tim Scholefield (from 6 December 2019) (Non-executive Director) Mr Tony Louka (from 5 October 2018) (Non-executive Director) Mr Geoffrey Drucker (from 8 February 2022) (Executive Director) Ms Susan Oliver (from 8 February 2022) (Non-executive Director) CEO AND COMPANY SECRETARY Mr Greg Watson (from 28 February 2020) PRINCIPAL AND REGISTERED OFFICE Corporate House, Kings Row 1 Level 2, 52 McDougall Street, Milton, QLD 4064 Telephone: +61 7 2102 3654 POSTAL ADDRESS PO Box 2046, MILTON QLD 4064 INTERNET www.renuenergy.com.au EMAIL info@renuenergy.com.au ABN 55 095 006 090 BANKER Westpac Banking Corporation AUDITOR BDO Audit Pty Ltd SOLICITOR Thomson Geer Lawyers SHARE REGISTRY Link Market Services Limited Phone: +61 1300 554 474 Fax: +61 2 9287 0309 Postal address: Locked Bag A14, Sydney South NSW 1235 Website: www.linkmarketservices.com.au Email: registrars@linkmarketservices.com.au SECURITIES EXCHANGE LISTING ReNu Energy Limited shares are listed on the Australian Securities Exchange. Ticker: RN 81  

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