ENERGY TECHNOLOGIES LIMITED — Interim / Quarterly Report 2021

Feb 25, 2021

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Energy Technologies Limited (ASX:EGY)

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A specialised cable & wires manufacturer supplying the high value infrastructure sector 1H2021 RESULTS February 2021

1

Important Notice & Disclaimer

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This presentation has been prepared by Energy Technologies Limited (EGY or the Company). It should not be considered as an offer or invitation to subscribe for, or purchase any shares in EGY, or as an inducement to purchase any shares in EGY. No agreement to subscribe for securities in EGY will be entered into on the basis of this presentation or any information, opinions or conclusions expressed in the course of this presentation.

Although the Company believes that the expectations reflected in the forward looking statements included in this presentation are reasonable, none of the Company, its Directors or officers can give, or gives, any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this document will actually occur or that the assumptions on which those statements are based are exhaustive or will prove to be correct beyond the date of its making.

This presentation is not a prospectus, product disclosure document, or other offering document under Australian law or under the law of any other jurisdiction. It has been prepared for information purposes only. This presentation contains general summary information and does not take into account the investment objectives, financial situation and particular needs of an individual investor. It is not a financial product advice and the Company is not licensed to, and does not provide, financial advice.

This presentation may contain forward-looking statements which are identified by words such as ‘may’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’, or ‘intends’ and other similar words that involve risks and uncertainties. These statements are based on an assessment of past and present economic and operating conditions, and on a number of assumptions regarding future events and actions that, as at the date of this presentation, are expected to take place. Such forward-looking statements do not guarantee of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors many of which are beyond the control of the Company, its Directors and management.

Readers are cautioned not to place undue reliance on these forward-looking statements. Except to the extent required by law, the Company has no intention to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this presentation.

Readers should make their own independent assessment of the information and take their own independent professional advice in relation to the information and any proposed action to be taken on the basis of the information. To the maximum extent permitted by law, the Company and its professional advisors and their related bodies corporate, affiliates and each of their respective directors, officers, management, employees, advisers and agents and any other person involved in the preparation of this presentation disclaim all liability and responsibility (including without limitation and liability arising from fault or negligence) for any direct or indirect loss or damage which may arise or be suffered through use of or reliance on anything contained in, or omitted from, this presentation. Neither the Company nor its advisors have any responsibility or obligation to update this presentation or inform the reader of any matter arising or coming to their notice after the date of this presentation document which may affect any matter referred to in the presentation.

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Company Results

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Operating Result

	Energy Technologies - Profit & Loss	Energy Technologies - Profit & Loss	Energy Technologies - Profit & Loss
(A$'000, unless indicated)		HY21	FY20	Difference %
Sales revenue		4,054	5,222	(22.4)
COS		(4,455)	(4,544)	2.0
		(401)	678	(15.9)
Administrative		(2,544)	(2,175)	(17.0)
Finance costs		(743)	(405)	(83.4)
D&A		(1,120)	(844)	(32.7)
Operating Loss		(4,808)	(2,746)	(75.1)
Other Revenue		1,173	55
PBT		(3,635)	(2,691)	(35.1)

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• Sales in 2H effected by COVID shutdowns but mitigated by Jobkeeper Government payments & R&D tax rebates (other revenue)

• COS higher relative to Sales as the company commenced re-stocking

• Administrative costs higher as the continued switch to Rosedale came to an end

• Finance costs to remain high until all debt commitments are re-financed

• Other Revenue reflects Jobkeeper

• Company to pay down and refinance high-interest existing facilities in the short term, but maintain facilities for peak flows

4

Balance Sheet

Energy Technologies – Balance Sheet (FY18 – 1H FY20)	Energy Technologies – Balance Sheet (FY18 – 1H FY20)	Energy Technologies – Balance Sheet (FY18 – 1H FY20)
(A$'000, unless indicated) Assets	1H FY21	FY20	Significant movements
Cash	602	27	575
Trade and other Receivables	2,772	4,188	-1,416
Inventory Other	3,635 358	2,327 358	1,308
	7,367	6,900
PP&E	12,799	12,871
Deferred Tax	195	229
Right of Use Asset Intangibles	3,516 4,617	3,876 4,737
Other	278	216
	21,405	21,929
Total Assets	28,773	28,830
Liabilities
Trade and other Payables	4,825	6,269	-1,444
Debt	3,618	3,865
Leasing	773	882
Provisions	788	846
	10,004	11,862	-1,858
Debt		339
Leasing	3,172	3,395
Provisions	150	157
	3,321	3,891
Total Liabilities	13,326	15,753	-2,427
Net Assets	15,447	13,076	2,371

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FOCUS POINTS

Working cap optimisation through a combination of concentration on Receivables and Trading Finance facilities

Restructuring of debt obligations

Further investment in new PP& E

The company will increase Inventory over the next 18 months

5

Top Tier Client List

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Supplying some of the world’s largest companies. Many relationships established in last two years with opportunity to grow revenue.

Rail Rail Road & Traffic Other Defence

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6

Executive Summary

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Company

Energy Technologies Limited (ASX:EGY) is 100% owner of Bambach Wires and Cables (Bambach), a major supplier of Australian manufactured low voltage copper cable products targeting specialised uses

Board of Directors
Brian Jamieson	Mr. Jamieson has over 40 years’ experience in the advisory, manufacturing, resources and
Non- Executive Chairman	technology industries in Australia and offshore. Mr. Jamieson was Chief Executive of Minter Ellison Melbourne from 2002-2005, Chief Executive Officer at KPMG Australia from 1998-2000,
	Managing Partner of KPMG Melbourne and Southern Regions from 1993-1998 and Chairman of
	KPMG Melbourne from 2001- 2002. Prior to the merger of Touche Ross & Co and Peat Marwick Hungerfords to form KPMG, Mr. Jamieson was the Managing Partner for Australia for Touche
	Ross & Co. He has over 30 years’ experience in providing advisory and audit services to a diverse
	range of public and large private companies. He is also a Fellow of the Institute of Chartered
	Accountants in Australia and New Zealand and a Fellow of the Australian Institute of Company
	Directors
Matthew DriscollBA, Grad. Dip.	30 years’ experience in capital markets, financial services and as a Company Director. NED for
App Fin. SF Fin., GAICD	Blina Minerals (ASX:BDI) and NED for BuyMyPlace.com.au (ASX:BMP). Experienced in online
Non- Executive Director	technologies, fintech, property and resources.
Ian Campbell	Mr Campbell joined Olex Cables in 1989 as Group General Manager and then as Managing
Non-Executive Director	Director of the Pacific Dunlop Cables Group until 1998.In 1998 Mr Campbell joined ASX-200
	listed GUD Holdings Ltd as its Managing Director and CEO until his retirement in mid-2013.
	Mr Campbell joined the BWX board in 2015 and was appointed Chairman in September 2018.
	Mr Campbell has been a non-executive director of Mirrabooka Investments Ltd since 2007. He
	was formerly a national councillor and Victorian Vice-President of the Australian Industry Group
Anthony Smith	Mr. Smith has over 30 years’ experience in finance with a variety of firms concentrating on small
Non-Executive Director	to medium sized companies in regard to corporate finance, institutional research sales and
	private wealth advice. During this time, he was charged with running these businesses along
	with titles of Head of Securities and Country Director of Austock Group and Phillip Capital. Mr
	Smith currently handles the investments at Cashel Family Office, a Melbourne based multi
	family office company and is a Non-Executive Director of IODM Limited
Yulin Hu	An Australian resident and leading businessman whose roles include the President of China City
Non-Executive Director	Construction Holdings Limited, a construction business in China with approximately 6bn RMB
	(A$1.1bn) turnover.

Key Metrics
Shares on issue (m)	171
Last traded price ($)	0.15
Market capitalisation ($m)	25.65
Net debt ($m)	5.07
Enterprise valuation ($m)	30.72

7

Near term action points

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ACTION POINTS STAGE COMPLETION DATE
Full machine commissioning at
75% July 2021
Rosedale
New machine commissioning 5% September 2021
Board refresh 90% Finalised in the short term
33% - New personnel
Finance personnel restructuring April 2021
commenced 15/1
Restructure debt commitments 20% April 2021
Re stock sales channel 10% June 2021
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Company Record & Capability

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Bambach Wire and Cables

Bambach Wire and Cables manufactures low voltage industrial and specialised copper cables

Founded in 1936 and is the oldest existing Australian cable manufacturer and 100% owned by Energy Technologies since 2012

New factory in Rosedale, VIC capable of processing up to 250 tonnes of finished product per month – a 10x throughput improvement from former Brookvale site

Significant investment to R&D leading to complete new ranges of cables for high value heavy industries

Main manufacturer (out of only two manufacturers) with braiding capability in Australia

Manufacturing inputs (eg copper) from Australian sources

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Rosedale, VIC
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The addition of silicon cable capability would make Bambach the only end-to-end supplier of locally manufactured silicon cables

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Advantages

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Specialised branded cables Considerable ‘know how’ & IP for new and custom product development Australian designed & manufactured (fast turnaround, high standards) using locally sourced input materials Transitioned to $7m factory in Rosedale, VIC with capacity for significant expansion Strategic Australian made – true downstream industry using Australian Copper Advantages Short lead times Competitive pricing Local service capability given State branches & experienced sales staff Innovation culture identifying new market opportunities, designing and manufacturing new products

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Manufacturing: Rosedale

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Larger & faster machines can process 200-250 tonnes of copper per month

10x increased capacity with room to expand, plus Government support for regional development & employment

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122 acres of available land for expansion with ample skilled workers in region

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Specialised Product Mix

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Wide scope: ~1,300 different cable products for industry uses – sales targeting 38% gross margin (vs <10% for commoditised cable products)

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Branded: Customers request Bambach cable brand products by name – several new brands to be launched

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High standards: Produced to ISO 9001 Australian standards and other Federal & State regulations and industry requirements

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Australian made: Made in Australia with ~92% of materials sourced from Australia – low AUD positive for Copper inputs

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Approved products: Specialised cables approved for organisation use (eg ARTC, Queensland Rail, PTA WA and Transport NSW)

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Differentiated specialised products: R&D and experience creates unique products (eg braids and ropes) specific to industry & Australian needs

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Capability for custom orders: Ability to make to order specific to JIT project needs (~4 weeks delivery time vs 8+ weeks for competitors)

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Branded Cables
NEW NautX: Marine cables
NEW FlareX: Fire-safe cables
NEW ImmerseX: Pump cables
NEW SearX: Fire-rated cables
NEW RailX: Rolling stock cables
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TrackSure & TrackDrive: Rail signal cables
LoadFlex: Street lighting cables
Traffi-Cab: Traffic cables
AlarmFlex: Fire alarm cables
SafeX: Fire safe cables
VariFlex: Low electronic emission cables
Control: control & measurement of equipment
Bespoke: bespoke cables
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Primed for New Growth

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	Historic:	Historic:	New facility:	New facility:
	Brookvale, NSW		Rosedale, VIC
Factory	•	Small facility with low throughput	•	$7 million investment to large factory with high
				throughput (10x larger footprint)
Capacity	•	Limited production of 25 tonnes of copper wire	•	Expansion to ~250 tonnes of copper wire cable /
		cable / month, with most suppliers in Melbourne		month + located next to rail line
Revenue	•	Reached maximum revenue capability (~$1.2m per	•	Significant capacity to increase revenue
		month)	•	Expansion into silicon cables to service Navy
				construction contracts, add plugs / harnesses,
				enter medium voltage product market
Expansion capability	•	None	•	122 acres provides significant expansion capacity
Workflow	•	Double-handling/poor workflow	•	Optimised through fit-out to maximise efficiency
Overheads	•	High	•	~60% lower, including ~$1m cost saving on rent
Automation	•	Low (with poor utilisation)	•	High (7x the volume of product with no increase to
				work) – ~45 FTEs required to service demand
Demand	•	Pent-up demand ($0.5-1.0m orders / month) that	•	Ability to meet demand and grow
		could not be fulfilled	•	Many immediate contracts to fulfil
Fulfilment	•	Slow turnaround between product	•	Ability to fulfil order quickly (~4 weeks)

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National Distribution

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6 State distribution branches located in main Australian cities and a manufacturing facility in Rosedale, VIC

• Each ~600 sq ft branch staffed by:

• 1x storeman

• 2x sales / business development staff

• Branches provide:

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Brisbane
Adelaide
Perth Newcastle
Sydney
Melbourne
Rosedale
(manufacturing)
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• Warehousing & storage, particularly for branded, specialised products

• Local sales & customer engagement capability

• Market (pricing) intelligence & competitor analysis feedback

• Local brand presence

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Strategic Advantage

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	Specialised Cables	Asian-sourced Cables	Eu-sourced Cables
High value & margin industries
Approved for specific projects
Turnaround times for custom product	~4 weeks	~8-12 weeks	>12 weeks
Custom manufacturing capability
Knowledge & process advantage
Sales channels developed
Suitable for Australian Defence & essential industries
Suitable for ‘Brand Australia’ insourcing initiatives
Price of goods	Competitive	Competitive	Expensive
Quality of output	High	Variable	High
Manufacturing input costs	AUD linked	Relies on imports	High
Preference to local manufacturing
Reseller/importer of other/s manufactured product

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Client Lifecycle

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Product creation

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Approval & Quote & Order & Standards Proposal Delivery

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Repeat Orders

• • • • •

• R&D and custom ISO AS/NZS Significant Receive order Repeat sales to production of 9001:2015 inbound enquiry • organisations that Fulfil from

• new product lines standards • have successfully Dedicated sales existing inventory used Bambach

• • • Decades of Industry approval team in place to or make to order products

• knowhow & for use convert prospects •

• capability • Average client Type approval for tenure of several

• • Developed >5,000 products by years

• customised government products since organisations incorporation

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