ENECO REFRESH LTD — Annual Report 2024

Aug 29, 2024

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Eneco Refresh Limited ( ACN 079 681 244) 17 Denninup Way, Malaga WA 6090 Tel: (08) 9248 7222 Email: info@eneco-refresh.com.au Website: www.eneco-refresh.com.au

Appendix 4E

Preliminary Final Report period ending 30 June 2024

Results for announcement to the market

Financial Results			June 2024	June 2023
Revenue from ordinary activities	Up	6.67%	15,452,354	14,485,683
Comprehensive profit (Loss) from ordinary activities after tax attributable to members	Down	(1723%)	(1,585,841)	97,687

Dividends	2024 Final Dividend	2023 Final Dividend
Amount per Ordinary Security	nil	nil
Franked amount per Security	N/A	N/A
Record date for determining entitlements to final dividend	N/A

Net Tangible Asset Backing	June 2024	June 2023
Net tangible asset backing per ordinary security	$0.030	$0.034

ENECO REFRESH LIMITED and its controlled entities 1

COMMENTARY

The FY2024 year was certainly one with many challenges. There were several legacy issues which the management and board needed to address and close out. Despite the various issues Eneco Refresh Ltd (Eneco) managed to deliver a revenue growth of 7% compared to the same period last year.

When excluding the 2023 revenue of Darwin ($1.677m discontinued operations) we then see the real strength of the underlying business in delivering an actual revenue growth of 17.8%.

The end of year profit/loss financial result has been impacted negatively by various one-off treatments in the PNL which were necessary.

In 2024, Eneco incurred significant one-off costs related to the relocation and set up of our Victorian water and Plastics business’ because of the factory fire which occurred in February 2023. In addition to the set up and relocation costs the lease for the new location in Victoria is significantly more expensive than the previous premise.

We took a decision to write down numerous idle assets, old and obsolete or unfit for purpose materials as well as plant and equipment which had accumulated throughout our branch network. We also incurred additional costs as we went to market to source for a new COO after the unplanned departure of our former Chairman and CEO. In addition to this we ran a transitional hand over for 2 months to ensure stability and knowledge transfer and minimal disruption to our national customer base.

The business has seen its operating margin decline by 2% percentage points during the year as a direct result of higher labour, materials and distribution costs within Australia.

A breakdown by Cash Generating Units is presented below.

Revenue Western Australia (WA) New South Wales (NSW) Victoria (VIC) Northern Territory (NT) Queensland (QLD) Refresh Waters Refresh Plastics Total Profit/(Loss) Western Australia New South Wales Victoria Northern Territory Queensland Refresh Waters Refresh Plastics Corporate Expenses Total		FY 2024 $'000 4,883 3,134 2,088 62 2,836	FY 2023 $'000 3,950 2,849 1,636 1,677 2,556 12,668 1,818 14,486 (91) 308 27 705 151 1,100 (404) 696 (598) 98	Variance
				24% 10% 28% -96% 11% 3% 35% 7% 65% -13% -1563% -149% -214% -161% -30% -238% 5% -1718%
		13,003 2,449
		15,452
		(32) 267 (395) (344) (172)
		(676) (282)
		(958) (628)
		(1,586)

Please refer to note 7 and 9 for details on significant variations.

ENECO REFRESH LIMITED and its controlled entities 2

Refresh Waters

The bottled water market, whilst substantial in size, continues to present a challenging landscape within which to operate. Our main competitors in each state are predominantly all vying for the same market share with the major retailers. Domestic freight costs continue to rise with the international shipping cost also on the rise again for some of our raw materials. In addition to this the ‘cost of living crisis’ puts additional pressure on the retailers to maintain low pricing and to resist price rises from their suppliers.

The West Australian revenue exceeded expectations by growing 24% this financial year helped by a very long, hot summer. The Perth site revenue was almost $4.3m, which is a 22% increase with upcountry WA delivering a fantastic 29% increase by securing new mining customers. Operating margins in WA are below our target level and will receive great attention in this new year as continued growth must deliver a stronger bottom-line performance. The profit performance was further impacted with a write down of $150k in old and obsolete stock and a non-performing investment.

NSW delivered a growth of 10% which although slower than previous years was still a pleasing result. Year on Year profit was down slightly and was mainly impacted due to a write down of old and obsolete inventory and materials.

Following a disappointing FY23 in which Victorias revenue declined, Victoria performed the strongest of all the sites with a 28% increase in FY24. The water business was relocated during the year, and this created significant disruption and additional cost to the site. Occupancy costs, coupled with high material costs, a diesel generator to subsidise the electrical supply, plus a $20k write off from stock resulted in a significant loss for the financial year. As our largest loss state, management will direct a great deal of attention to the Victorian business in 2025.

The sale of the Northern Territory factory in Darwin was completed at the end of FY23 and this is reflected in the operating profit of $705k in that period however, some additional costs were incurred in FY24 as we carried some lease commitment after closure and due to a loss on asset disposal of $105k.

Eneco continues to own 7.7 hectares of land in the Northern Territory which is home to a natural spring water reserve which we utilise to supply water to a local bottling plant. This is providing a small but regular income which will continue throughout FY25.

Queensland delivered another good revenue growth of 11%, mainly driven by stronger sales into a major retailer. The profit performance was negatively impacted due to the write down of old and obsolete inventory and equipment and an adjustment to the annual rent expense. Management believe that Queensland is now poised for a return to profit and continued revenue growth in FY25.

Refresh Plastics

Following the fire in February 2023 in which the factory was destroyed, the business model changed. Management have established an outsourced production model to further reduce operating costs in this business as it was loss making even prior to the fire. This model has increased the expenditure on cost of goods whilst reducing the expenses associated with the occupancy and running of a factory.

As FY23 was negatively impacted through lost sales due to the fire the FY24 year looks somewhat better when compared. We can see that growth opportunities exist in this business segment but still have some concerns around the gross margins achievable. FY25 is a year in which management must formulate and execute on a plan for this business going forward.

The industrial special risk insurance claim relating to the fire in Victoria in 2023 was settled in FY24. The groups claim for reimbursement of the environmental cleaning costs amounting to $1.67m under our Public Liability policy remains in dispute and the Board is assessing steps to be taken to recover this expense. A $61k invoice for a claim consultant was recorded as expenses in FY24.

ENECO REFRESH LIMITED and its controlled entities 3

PRELIMINARY FINAL REPORT CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2024

Note Revenue 2a Cost of Sales 2b Gross Profit Other Income Other Expense Marketing Expenses Distribution Expenses Administrative Expenses Occupancy Expenses Results from operating activities Finance Income 2c Finance Costs 2d Profit/(Loss) before income tax Income tax expense Profit/(Loss) after income tax Other comprehensive income Item not reclassified subsequently to profit or loss: Fair value gain/(loss) on financial assets at fair value through OCI Total comprehensive loss for the period Basic and diluted profit/(loss) per share (cents)	Note	CONSOLIDATED 2024 $ 2023 $
		15,452,354 14,485,683 (10,198,299) (9,228,537)
		5,254,055 5,257,146 (153,765) 1,063,296 - - (804,253) (744,626) (2,021,025) (2,019,341) (2,589,857) (2,549,689) (1,224,158) (836,999)
		(1,539,003) 169,787 140,644 8,595 (187,482) (80,695)
		(1,585,841) 97,687 - -
		(1,585,841) 97,687 - -
		(1,585,841) 97,687
		(0.582) 0.036

The accompanying notes form part of the Statement of Comprehensive Income

ENECO REFRESH LIMITED and its controlled entities 4

PRELIMINARY FINAL REPORT CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2024

ASSETS Current Assets Cash and cash equivalents Trade and other receivables Prepayments Inventories Current tax asset Total Current Assets Non-Current Assets Property, plant and equipment Intangible assets Financial assets at fair value through OCI Investment in associate Right of use asset Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Short-term provisions and accruals Lease liabilities Total Current Liabilities Non-current Liabilities Long-term provisions Lease liabilities Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Share reserve Profit reserve Financial asset revaluation reserve Accumulated losses TOTAL EQUITY	Notes	CONSOLIDATED 2024 2023 $ $
	3 4 6 7 5	4,313,203 5,395,189 1,105,123 3,475,309 66,619 227,521 1,438,228 1,919,423 34,361 34,361
		6,957,534 11,051,803
		2,884,463 2,507,347 549,499 558,843 16,400 16,400 1 50,000 3,574,887 2,193,160
		7,025,250 5,325,750
		13,982,784 16,377,553
		1,133,731 3,385,376 611,873 784,444 516,959 379,017
		2,262,563 4,548,837
		- 13,712 3,312,367 1,821,309
		3,312,367 1,835,021
		5,574,930 6,383,858
		8,407,854 9,993,695
		18,320,875 18,320,875 191,712 191,712 356,409 356,409 50,683 50,683 (10,511,825) (8,925,984)
		8,407,854 9,993,695

The accompanying notes form part of the Statement of Financial Position

ENECO REFRESH LIMITED and its controlled entities 5

PRELIMINARY FINAL REPORT CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2024

Balance at 1 July 2022 Fair value gain on available- for sale financial assets Total (Loss) for the year Balance at 30 June 2023 Balance at 1 July 2023 Fair value gain on available- for sale financial assets Total profit for the year Balance at 30 June 2024	Issued Capital Share Reserve Profit Reserve Financial Asset Revaluation Reserve Accumulated Losses Total 18,320,875 191,712 356,409 50,683 (9,023,671) 9,896,008 - - - - - - 18,320,875 191,712 356,409 50,683 (9,023,671) 9,896,008 - - - - 97,687 97,687 18,320,875 191,712 356,409 50,683 (8,925,984) 9,993,695
	18,320,875 191,712 356,409 50,683 (8,925,984) 9,993,695 - - - - - - 18,320,875 191,712 356,409 50,683 (8,925,984) 9,993,695 - - - - (1,585,841) (1,585,841) 18,320,875 191,712 356,409 50,683 (10,511,825) 8,407,854

The accompanying notes form part of the Statements of Changes in Equity

ENECO REFRESH LIMITED and its controlled entities 6

PRELIMINARY FINAL REPORT CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2024

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Receipt from insurance Government grants and tax incentives Net cash flows provided by operating activities Cash flows from investing activities Proceeds from sale of property, plant and equipment, and investment Purchase of property, plant and equipment Investment Net cash flows provided by / used in investing activities Cash flows from financing activities Repayments of borrowings Other- AASB 16 Prepayment for the Principal Net cash flows used in financing activities Net (decrease) / increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	CONSOLIDATED 2024 2023 $ $
	15,733,123 13,390,512 (18,002,320) (14,273,111) 140,644 8,595 2,233,392 1,000,000 - 25,000
	104,839 150,996
	413,845 5,050,735 (960,157) (406,944) - -
	(546,312) 4,643,791
	- - (640,513) (683,173)
	(640,513) (683,173)
	(1,081,986) 4,111,615 5,395,189 1,283,574
	4,313,203 5,395,189

The accompanying notes form part of the Statement of Cash Flows

ENECO REFRESH LIMITED and its controlled entities 7

PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2024

1. SEGMENT INFORMATION

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources.

In identifying its operating segments, management follows the geographical location of the Group’s bottled water business, but show Refresh Plastics separately. Corporate costs are included under “Other”. Segment information can be analysed as follows for the reporting period under review.

30 June 2024 Revenue from external customers EBITDA Depreciation Expense Finance Income Finance Costs Segment operating profit/(loss) Total assets Total liabilities 30 June 2023 Revenue from external customers EBITDA Depreciation Expense Finance Income Finance Costs Segment operating profit/(loss) Total assets Total liabilities	WA NSW VIC NT QLD Plastics OTHER (Corporate) TOTAL
	4,883,472 3,133,552 2,087,914 62,050 2,836,383 2,448,983 - 15,452,354 354,719 451,178 (60,761) (342,010) 124,982 (275,951) (725,001) (472,844) (376,452) (179,281) (239,689) (1,725) (259,525) (9,487) - (1,066,159) 39,535 - - - 948 3,532 96,629 140,644 (49,948) (5,315) (93,462) - (38,757) - - (187,482)
	(32,146) 266,582 (393,912) (343,735) (172,352) (281,906) (628,372) (1,585,841) 5,765,479 895,773 2,769,983 400,526 1,859,943 646,921 1,644,159 13,982,784 2,191,531 230,347 1,731,887 - 1,124,768 185,683 110,714 5,574,930 3,949,551 2,849,008 1,636,489 1,677,235 2,555,539 1,817,861 - 14,485,683 263,096 375,604 100,912 756,361 349,009 (33,310) (602,342) 1,209,330 (319,449) (58,851) (74,318) (51,941) (172,809) (362,173) (2) (1,039,543) 3,615 - - - 203 477 4,300 8,595 (38,187) (8,342) - - (25,387) (8,779) - (80,695)
	(90,925) 308,411 26,594 704,420 151,016 (403,785) (598,044) 97,687 7,439,660 1,470,430 1,121,018 1,112,331 1,875,578 2,863,487 495,048 16,377,552 1,563,957 656,175 184,745 189,157 1,010,385 2,473,026 306,412 6,383,857

ENECO REFRESH LIMITED and its controlled entities 8

PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2024

2. REVENUE AND EXPENSES

a. Revenue Production and distribution of bottled water and accessories Production and distribution of plastic products b. Cost of Sales Inventory expensed Inventory write-off/(write-back) c. Finance Income Interest received d. Finance Costs Finance charges payable under finance leases and hire purchase contracts e. Employee Benefits Expense Wages and salaries Workers compensation costs Superannuation costs Provisions for annual and long service leave Other employee benefits expense f. Depreciation & Amortisation Depreciation expense Amortisation-trademark	CONSOLIDATED 2024 2023 $ $
	13,003,371 12,667,822 2,448,983 1,817,861
	15,452,354 14,485,683
	10,481,788 9,253,471 (283,488) (24,934)
	10,198,300 9,228,537
	140,644 8,595
	140,644 8,595
	187,482 80,695
	187,482 80,695
	4,694,468 4,936,905 74,977 109,654 443,294 468,179 (176,853) (36,793) 321,630 269,784
	5,357,516 5,747,729
	1,066,159 1,036,214 - 3,329
	1,066,159 1,039,543

ENECO REFRESH LIMITED and its controlled entities 9

PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2024

3. TRADE AND OTHER RECEIVABLES

	CONSOLIDATED	CONSOLIDATED
	2024	2023
Current	$	$
Trade receivables	1,106,230	1,322,637
Provision for expected credit losses	(11,649)	(12,824)
Other receivables	10,542	2,165,496
	1,105,123	3,475,309
Movement in the provision for expected credit losses of trade receivables:
Balance at the beginning of the year	12,824	16,327
Additional provision for expected credit losses of trade receivables	-	(789)
Receivables written off during the year as uncollectable	(1,175)	(2,714)
Balance at the end of the year	11,649	12,824

Allowance for expected credit losses

The Group has recognised $1,175 (2023: $2,714) in profit or loss in respect of the expected credit losses for the year ended 30 June 2024.

4. INVENTORIES

Raw materials (at cost) Finished goods (at cost) Total inventories at cost Provision for slow moving inventories	CONSOLIDATED 2024 2023 $ $
	831,475 1,127,987 606,753 831,320
	1,438,228 1,959,307 - (39,884)
	1,438,228 1,919,423

The total inventory write-off of $283,488 for slow moving and obsolete items utilized the carrying provision of $39,884 from FY23.

5. TRADE AND OTHER PAYABLES

Current Trade payables Other payables	CONSOLIDATED 2024 2023 $ $
	735,098 3,008,731 398,633 376,645
	1,133,731 3,385,376

Trade payables are non-interest bearing and are normally settled on 60-day terms.

ENECO REFRESH LIMITED and its controlled entities 10

PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2024

6. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (OCI)

On 30 June 2024, Refresh Eneco owns 16,400,000 shares in Eve Health Group Ltd, which is listed on the Australian Securities Exchange (ASX:EVE). This is carried in its books at $0.001 per share, being the last traded price on ASX on 30 June 2024. The fair value changes have been accounted for through OCI.

7. INVESTMENT IN ASSOCIATE

The investee company Jas Refresh Pty Ltd, has been incurring losses for several years with no immediate plans for recovery. Consequently, the investment was written down to $1 in FY24 to reflect the unsuccessful project.

8. ACQUISITION

Nil.

9. SIGNIFICANT EVENTS

In FY24, a total Insurance settlement of $2,233,392 was received for the property damage and business interruption resulting from the 2023 fire. During the same period, $1,790,000 was paid to CSA Specialised Services for the environmental clean-up following the fire. Additionally, claim preparation cost of $60,874 related to the insurance settlements were recorded as one-off expenses.

Relocation costs of $70,782 were incurred in Victoria due to the move from Keysborough warehouse to Dandenong following the fire.

To reflect the net realisable value of inventory, a total write-off of $283,488 was recorded for slow moving and obsolete items, including a carrying provision of $39,884.

The Darwin branch ceased the production on 30 June 2023, but the sales for Darwin plants and equipment, and inventories was completed in August 2023. The exist costs amounted to $228,990, with a loss of $104,894 resulting from sales of the plant and equipment.

10. EVENTS AFTER THE BALANCE SHEET DATE

Nil.

11. CONTINGENT ASSETS & LIABILITIES

There is no contingent liability between 30 June 2024 and the date of this report.

12. BASIS FOR PREPARATION

This preliminary final report has been prepared in accordance with ASX listing rule 4.3A and the disclosure requirements of ASX Appendix 4E. The accounting policies adopted in the preparation of the preliminary final report are consistent with those adopted in the preparation of the annual financial report.

13. UNAUDITED APPENDIX 4E

This report is in the process of being audited.

ENECO REFRESH LIMITED and its controlled entities 11