Carbon Revolution Limited (ASX:CBR)
	Appendix 4E Preliminary Final Report

1.	Reporting period.

2.	Results for announcement to the market.

3.	Statement of comprehensive income.

4.	Statement of financial position.

5.	Statement of cash flows.

6.	Statement of changes in equity.

7.	Dividends.

8.	Dividend or distribution reinvestment plans.

9.	Net tangible assets per security.

10.	Details of entities over which control has been gained or lost during the period.

11.	Details of associates and joint venture entities.

12.	Any other significant information needed by an investor to make an informed assessment of the entity’s financial performance and financial position.

13.	For foreign entities, which set of accounting standards is used in compiling the report (e.g. International Financial reporting Standards).

14.	Commentary on the results for the period.

	CARBON REVOLUTION LIMITED ABN 96 128 274 653
	FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023 Preliminary and Unaudited

Financial Report

		Note			2023 $’000				2022 $’000
Sale of wheels						37,477				38,276
Engineering services						530				464
Sale of tooling						253				1,596
Revenue		2.1				38,260				40,336
Cost of goods sold		3.2.1				(55,094	)			(57,445	)
Gross loss						(16,834	)			(17,109	)
Other income		2.2				3,096				4,320
Operational expenses						(2,997	)			(2,013	)
Research and development expenses		2.4				(16,180	)			(16,933	)
Administrative expenses						(14,566	)			(13,146	)
Marketing expenses						(1,494	)			(1,550	)
Capital raising transaction costs		4.7				(24,746	)			-
Finance costs		2.4				(5,502	)			(1,390	)
Loss before income tax expense						(79,223	)			(47,821	)
Income tax expense		5				-				-
Loss for the year after income tax						(79,223	)			(47,821	)
Other comprehensive loss
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences – foreign operations						(62	)			(147	)
Other comprehensive loss						(62	)			(147	)
Total comprehensive loss for the year, net of tax						(79,285	)			(47,968	)
Earnings per share
Basic		2.5			$	(0.38	)		$	(0.23	)
Diluted		2.5			$	(0.38	)		$	(0.23	)

		Note			30 June 2023 $’000				30 June 2022 $’000
Current assets
Cash and cash equivalents		4.1				19,582				22,693
Restricted trust fund		4.1				14,677				-
Receivables		3.1				6,430				14,483
Contract assets		2.1				8,239				5,909
Inventories		3.2				22,173				20,164
Other current assets						378				1,587
Total current assets						71,479				64,836
Non-current assets
Property, plant and equipment		3.3				62,638				57,616
Right-of-use assets		3.4				7,446				7,564
Intangible assets		3.5				16,774				14,364
Total non-current assets						86,858				79,544
Total assets						158,337				144,380
Current liabilities
Payables		3.6				15,474				9,502
Borrowings		4.2				13,829				18,686
Lease liability		3.4				645				579
Contract liability		2.1				748				458
Deferred income		3.7				1,919				1,028
Provisions		3.8				12,957				4,161
Total current liabilities						45,572				34,414
Non-current liabilities
Borrowings		4.2				70,833				4,333
Lease liability		3.4				7,368				7,461
Contract liability		2.1				1,755				323
Deferred income		3.7				15,235				5,211
Provisions		3.8				1,843				713
Total non-current liabilities						97,034				18,041
Total liabilities						142,606				52,455
Net assets						15,731				91,925
Equity
Contributed equity		4.4				386,432				383,822
Reserves		4.6				7,166				6,747
Accumulated losses						(377,867	)			(298,644	)
Total equity						15,731				91,925

		Note				Contributed equity				Share buyback reserve				Share based payment reserve				Accumulated losses				Foreign currency translation reserve				Total equity
							$’000				$’000				$’000				$’000				$’000				$’000
Balance as at 30 June 2021							381,890				(311	)			5,979				(250,823	)			(9	)			136,726
Net loss after tax for the full year							-				-				-				(47,821	)			-				(47,821	)
Other comprehensive loss for the full year							-				-				-				-				(147	)			(147	)
Total comprehensive loss for the full year							-				-				-				(47,821	)			(147	)			(47,968	)
Transactions with owners in their capacity as owners
Share-based payments			4.4				1,932				-				1,235				-				-				3,167
Total transactions with owners in their capacity as owners							1,932				-				1,235				-				-				3,167
Balance as at 30 June 2022							383,822				(311	)			7,214				(298,644	)			(156	)			91,925
Balance as at 30 June 2022							383,822				(311	)			7,214				(298,644	)			(156	)			91,925
Net loss after tax for the full year							-				-				-				(79,223	)			-				(79,223	)
Other comprehensive loss for the full year							-				-				-				-				(62	)			(62	)
Total comprehensive loss for the full year							-				-				-				(79,223	)			(62	)			(79,285	)
Transactions with owners in their capacity as owners
Share-based payments			4.4				2,610				-				481				-				-				3,091
Total transactions with owners in their capacity as owners							2,610				-				481				-				-				3,091
Balance as at 30 June 2023							386,432				(311	)			7,695				(377,867	)			(218	)			15,731

		Note			2023 $’000				2022 $’000
Cash flow from operating activities
Receipts from customers						45,742				33,643
Receipt of grants and research and development incentives		3.7				15,446				3,767
Payments to suppliers and employees						(80,215	)			(81,005	)
Interest received						61				94
Capital raising transaction costs		4.7				(9,030	)			-
Borrowing costs		4.2				(20,676	)			-
Finance costs						(3,810	)			(2,475	)
Net cash used in operating activities		4.1.2				(52,482	)			(45,976	)
Cash flow from investing activities
Payments for property, plant and equipment		3.3				(13,082	)			(15,634	)
Payments for intangible assets		3.5				(4,874	)			(6,007	)
Sale proceeds from sale of property, plant and equipment		3.3				3				-
Net cash used in investing activities						(17,953	)			(21,641	)
Cash flow from financing activities
Proceeds from third party borrowings		4.2				124,963				33,657
Repayment of third-party borrowings		4.2				(43,212	)			(29,370	)
Reclass to restricted trust fund		4.2				(14,677	)			-
Capital raising transaction costs						-				(422	)
Repayment of lease liability						(604	)			(596	)
Net cash provided by financing activities						66,470				3,269
Net decrease in cash held						(3,965	)			(64,348	)
Cash at beginning of financial year						22,693				87,257
Effects of exchange rate changes on cash and cash equivalents						854				(216	)
Cash at end of financial year						19,582				22,693

1	BASIS OF PREPARATION		8
	1.1	Corporate information	8
	1.2	Basis of preparation	8
	1.3	Going concern	8
	1.4	Basis of consolidation	11
	1.5	Significant accounting judgements, estimates and assumptions	12
	1.6	Goods and Services Tax (“GST”)	12
2	OPERATING PERFORMANCE		13
	2.1	Revenue from contracts with customers	13
	2.2	Other income	14
	2.3	Segments	15
	2.4	Expenses	16
	2.5	Earnings per share	17
3	OPERATING ASSETS AND LIABILITIES		19
	3.1	Receivables	19
	3.2	Inventories	20
	3.3	Property, plant and equipment	21
	3.4	Leases	22
	3.5	Intangible assets	23
	3.6	Payables	24
	3.7	Deferred income	25
	3.8	Provisions	26
4	CAPITAL STRUCTURE AND FINANCING		28
	4.1	Cash and cash equivalents, restricted cash	28
	4.2	Borrowings and other financial liabilities	29
	4.3	Financial risk management	31
	4.4	Contributed equity	34
	4.5	Share-based payment plan arrangements	35
	4.6	Reserves	37
	4.7	Transaction costs	38
5	TAXES		39
	5.1	Income tax expense	39
	5.2	Deferred taxes	39
	5.3	Recognised deferred tax assets and liabilities in statement of financial position	40
	5.4	Carry forward unrecognised tax losses and R&D tax credits	40
6	OTHER NOTES		41
	6.3	Information about subsidiaries	41
	6.4	Deed of cross guarantee	41
	6.5	Directors and Key management personnel	43
	6.6	Transactions with related parties	43
	6.7	Parent entity disclosures	43
	6.8	Auditor’s remuneration	44
	6.9	Unrecognised items	44
	6.10	Changes in accounting policies	44
	6.11	Adoption of new and revised Australian Accounting Standards	44
	6.12	Subsequent events	45

1.1

Corporate information

1.2

Basis of preparation

•

Have been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards, and other authoritative pronouncements of the Australian Accounting Standards Board (“AASB”);

•

Have adopted all accounting policies in accordance with Australian accounting standards, and where a standard permits a choice in accounting policy, the policy adopted by the Group has been disclosed in these financial statements;

•

Do not early adopt any accounting standards or interpretations that have been issued or amended but are not yet effective;

•

Comply with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”);

•

Have been prepared for a for profit entity under the historical cost convention;

•

Are presented in Australian dollars, which is the Group’s functional and presentation currency;

•

Have been rounded to the nearest thousand dollars, unless otherwise stated, in accordance with ASIC Corporations (Rounding in Financial/Director’s Reports) Instrument 2016/191;

•

The Group has elected to present the statement of profit or loss and other comprehensive income using the function of expense method.

1.3

Going concern

•

transaction costs related to the Business Combination of approximately A$35.7 million (of which A$4.4 million is expected to be payable prior to closing of the Business Combination, A$23.4 million on completion and A$7.9 million after completion); and

•

net cash outflows in the 12-month period unrelated to the Business Combination of approximately A$78.4 million, being cash inflows from customers (and grants), less operating costs, research and development costs, working capital needs and capital expenditure.

•

Craig-Hallum has been engaged by Twin Ridge to act as placement agent and capital markets advisor to support the Group in raising new capital. Craig-Hallum has in particular been engaged to identify and contact potential investors, formulate a strategy, coordinate due diligence and assist in preparing any offering documents;

•

Separately, Carbon Revolution is seeking to obtain a Structured Rquity Facility (“SEF”), which would involve the issue of SEF Preference Shares and SEF Warrants by MergeCo in exchange for up to US$100 million which is likely to be conditional and available in tranches; and

•

In addition, the Committed Equity Financing is in place under which Yorkville Advisors has agreed to purchase up to US$60 million in MergeCo Ordinary shares, subject to the terms of the Equity Purchase Agreement, including the CEF Ownership Restriction. Given this ownership restriction in particular, MergeCo is planning to use the CEF in combination with other funding sources.

•

the Group may not receive the customer support it may require, or management of capital expenditure may not be possible without impacting supply obligations to customers and its ability to meet the financial projections;

•

the Business Combination may not be completed, or may be materially delayed;

•

there may be no cash remaining in the Trust Account upon completion of the Business Combination if redemptions of Twin Ridge Class A Ordinary Shares are 100%;

•

there may be a delay in the availability of the Committed Equity Financing (the Committed Equity Financing will not be available until after the closing of the Business Combination and the filing by MergeCo with the SEC of a registration statement for the resale of the MergeCo Ordinary Shares, and such registration statement being declared effective by the SEC);

•

as the terms of the Committed Equity Financing will not require the Yorkville Advisors to purchase additional shares under the Committed Equity Financing beyond the CEF Ownership Restriction, the Group may have access to materially less than the US$60 million (A$90.3 million) Committed Equity Financing capital;

•

the Group may not be able to raise further equity funds from sources other than the Committed Equity Financing, in the amounts and within the timeframes necessary for the Group to remain solvent and to comply with its liquidity covenants, on satisfactory terms, or at all;

•

the relevant advisers may not agree to the Transaction Cost Deferrals; and

•

the 12 Month Cash Flow Projection is subject to achievement of the financial projections of Carbon Revolution for CY23 and CY24 (as relevant) detailed in the accompanying assumptions and risks applicable to these financial projections.

1.4

Basis of consolidation

•

assets and liabilities are translated at the closing rate at the reporting date;

•

income and expenses are translated at average exchange rates throughout the course of the year (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rates on the dates of the transactions); and

•

all resulting exchange differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve, a separate component of equity.

1.5

Significant accounting judgements, estimates and assumptions

Note 3.2 Inventories	Note 3.5 Intangible assets
Note 3.3 Property, plant and equipment	Note 5.5 Income tax
Note 3.7 Deferred income	Note 4.7 Transaction costs
Note 4.2 Borrowings and other financial liabilities

1.6

Goods and Services Tax (“GST”)

1.	Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority;

2.	Receivables and payables are stated inclusive of the amount of GST receivable or payable;

3.	The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the consolidated balance sheet;

4.	Cash flows are presented on a gross basis. The GST components of cash flows arising from investing and financing activities are presented as operating cash flows; and

5.	Commitments are disclosed net of GST.

2.1

Revenue from contracts with customers

		2023 $’000				2022 $’000
External revenue by product line
Sale of wheels			37,477				38,276
Engineering services			530				464
Sale of tooling			253				1,596
Total revenue			38,260				40,336

		2023 $’000				2022 $’000
External revenue by timing of revenue
Goods transferred at a point in time			19,307				15,730
Goods transferred over time			18,170				22,546
Services transferred at a point in time			253				1,277
Services transferred over time			530				783
Total revenue			38,260				40,336

		2023 $’000				2022 $’000
Contract asset
Opening balance			5,909				-
Additions			24,821				5,909
Advance payments			(13,064	)			-
Transfer to trade receivables			(9,427	)			-
Total contract asset			8,239				5,909

		2023 $’000				2022 $’000
Contract liability
Opening balance			781				-
Additions			2,505				781
Revenue recognised			(783	)			-
Total contract liability			2,503				781
Contract liability – current			748				458
Contract liability – non current			1,755				323
Total contract liability			2,503				781

2.2

Other income

		2023 $’000				2022 $’000
Government grants			2,777				3,506
Interest income			61				94
Foreign exchange gain			-				448
Other income			258				272
Total other income			3,096				4,320

2.2.1

Information about revenue and other income

•

the customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs;

•

the Group’s performance creates or enhances an asset that the customer controls as the Group performs; or

•

the Group’s performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.

		2023 $’000				2022 $’000
Revenue
International			38,260				40,336
Domestic			-				-
			38,260				40,336
Non-current assets
International			-				-
Domestic			86,858				79,544
			86,858				79,544

Finance costs		2023 $’000				2022 $’000
Interest on third party loans			2,676				552
Interest on lease liabilities			297				301
Finance costs			1,448				-
Supplier financing costs			446				213
Interest other			635				324
			5,502				1,390

		2023 $’000				2022 $’000
Wages and salaries			39,023				33,370
Post-employment benefits (defined contribution plans)			3,379				2,838
Share-based payments expense			3,091				3,167
			45,493				39,375

Property, plant and equipment			7,382				6,919
Right of use assets			696				656
Capitalised development costs			2,376				1,307
Patents and trademarks			89				84
			10,543				8,966

Research and development

16,180

16,933

2.4.1

Information about expenses

Class of fixed asset	Depreciation period		Depreciation method
Leasehold improvements	Shorter of 20 years or the remaining term of the lease		Straight line
Manufacturing plant and equipment	2 to 10 years		Diminishing value
Tooling	3 to 10 years		Diminishing value
Other equipment	3 to 5 years		Diminishing value

2.5

Earnings per share

		2023 $’000				2022 $’000
The following reflects the income used in the basic and diluted earnings per share computations:
a)    Earnings used in calculating earnings per share
Net loss attributable to ordinary equity holders of the parent			(79,223	)			(47,821	)
b)    Weighted average number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share			208,504				205,938
Effect of dilution
Share options			-				-
Weighted average number of ordinary shares adjusted for the effect of dilution			208,504				205,938
Loss per share (basic and diluted in cents)		$	(0.38	)		$	(0.23	)

​		2023 No.				2022 No.
ESOP			4,945,959				4,996,896
LTIP			3,151,950				3,334,183
Total			8,097,909				8,331,079

​		2023 No.				2022 No.
NED Plan			43,033				43,033
LTIP			688,142				718,345
STI			851,613				595,363
TESP			233,248				321,803
SRS			42,298				113,780
Total			1,858,334				1,792,324

3.1

Receivables

		2023 $’000				2022 $’000
Trade receivables
Not past due			4,220				7,591
Past due 1 – 30 days			623				3,433
Past due 31 – 90 days			443				1,445
Past due 90 days and over			216				684
			5,502				13,153
Allowance for impairment losses			(119	)			-
Trade receivables			5,383				13,153
Apprenticeship grant funding			25				479
Other receivables			267				236
GST recoverable			755				615
Trade and other receivables			6,430				14,483

3.1.1

Information about receivables

3.2

Inventories

		2023 $’000				2022 $’000
Current
Raw materials			13,301				7,646
Work in progress			5,772				9,688
Finished goods			3,649				4,318
Consumables and spare parts			2,560				3,276
Provision for impaired wheels			(3,109	)			(4,764	)
Inventories at the lower of cost and net realisable value			22,173				20,164

3.2.1

Information about inventories and significant estimates

•

Raw materials – recorded at standard cost, reassessed against actual costs quarterly;

•

Finished goods and work-in-progress – cost of direct materials, labour, outsourced processing costs and a proportion of manufacturing overheads based on normal operating capacity but excluding finance costs.

•

Consumables and spare parts – recorded at purchase price.  Consumables and spares are assessed for ongoing usefulness and written off if they are no longer likely to be of use.

3.3

Property, plant and equipment

		Capital works in progress $’000				Leasehold improve- ments $’000				Manufacturing equipment $’000				Tooling $’000				Other equipment $’000				Total $’000
Gross cost			18,950				5,649				40,454				14,326				2,784				82,163
Less accumulated depreciation			-				(1,355	)			(14,070	)			(7,618	)			(1,504	)			(24,547	)
At 30 June 2022			18,950				4,294				26,384				6,708				1,280				57,616
Gross cost			18,048				5,839				51,687				16,034				2,960				94,568
Less accumulated depreciation			-				(1,642	)			(18,467	)			(9,964	)			(1,857	)			(31,930	)
At 30 June 2023			18,048				4,197				33,220				6,070				1,103				62,638
Movement in carrying amounts
Balance at 30 June 2021			18,950				5,649				40,454				14,326				2,784				82,163
Additions			17,496				-				-				-				-				17,496
Transfer into/ (out of) capital WIP			(5,684	)			109				947				4,231				397				-
Depreciation expense			-				(281	)			(4,089	)			(2,173	)			(376	)			(6,919	)
Disposals/write-offs			-				-				(190	)			(87	)			(3	)			(280	)
Balance at 30 June 2022			18,950				4,294				26,384				6,708				1,280				57,616
Additions			11,478				-				-				-				-				11,478
Transfer of maintenance spares											953												953
Transfer into/ (out of) capital WIP			(13,306	)			189				11,233				1,709				175				-
Depreciation expense			-				(286	)			(4,397	)			(2,347	)			(352	)			(7,382	)
Disposals/write-offs			(27	)			-				-				-				-				(27	)
Balance at 30 June 2023			17,095				4,197				34,173				6,070				1,103				62,638

3.3.1

Information about how the Group accounts for property, plant and equipment

3.4

Leases

Right-of-use assets		2023 $’000				2022 $’000
Cost at start of year			9,863				9,626
Additions			577				237
Closing balance at end of year			10,440				9,863
Accumulated depreciation at start of year			(2,299	)			(1,643	)
Depreciation charge for the year			(695	)			(656	)
Closing balance at end of year			(2,994	)			(2,299	)
Carrying amount			7,446				7,564
Lease liabilities
Current			645				579
Non-current			7,368				7,461
			8,013				8,040

		2023 $’000				2022 $’000
Depreciation charge of right of use assets			695				656
Interest expense			297				301
Expense relating to short-term leases (included in costs of goods sold and administrative expenses)			181				246

3.4.1

Information about leases and significant estimates

3.5

Intangible assets

		Development costs $’000				Patents and trademarks $’000				Total $’000
Gross cost			15,750				1,354				17,104
Less accumulated amortisation			(2,247	)			(493	)			(2,740	)
At 30 June 2022			13,503				861				14,364
Gross cost			20,442				1,537				21,979
Less accumulated amortisation			(4,623	)			(582	)			(5,205	)
At 30 June 2023			15,819				955				16,774
Movement in carrying amounts
Balance at 1 July 2021			8,890				859				9,749
Additions			5,920				86				6,006
Amortisation			(1,307	)			(84	)			(1,391	)
Balance at 30 June 2022			13,503				861				14,364
Additions			4,692				183				4,875
Amortisation			(2,376	)			(89	)			(2,465	)
Balance at 30 June 2023			15,819				955				16,774

3.5.1

Information about intangible assets and significant estimates

3.6

Payables

		2023 $’000				2022 $’000
Current
Unsecured liabilities
Trade payables			3,828				5,128
Accruals			10,836				3,746
Interest accrued			427				118
Other payables			383				510
			15,474				9,502

3.6.1

Information about payables

3.6.2

Accruals

3.7

Deferred income

Deferred income – government grants		2023 $’000				2022 $’000
Balance as at 1 July			6,239				5,842
Received during the year			13,000				3,202
Released to the statement of profit or loss			(2,085	)			(2,805	)
Balance as at 30 June			17,154				6,239
Current			1,919				1,028
Non-current			15,235				5,211
			17,154				6,239

3.8

Provisions

		Employee benefits $’000				Make good provision $’000				Warranty claims $’000				Transaction costs $’000				Total $’000
Current			2,666				-				1,495				-				4,161
Non-current			479				234				-				-				713
At 30 June 2022			3,145				234				1,495				-				4,874

		Employee benefits $’000				Make good provision $’000				Warranty claims $’000				Transaction costs $’000				Total $’000
Current			2,903				-				595				9,459				12,957
Non-current			531				247				1,065				-				1,843
At 30 June 2023			3,434				247				1,660				9,459				14,800

		Make good provision $’000				Warranty claims $’000				Total $’000
Movement in carrying amounts
Balance at 1 July 2021			218				1,159				1,377
Provided for/ (released) during the year			16				336				352
Balance at 30 June 2022			234				1,495				1,729
Provided for/(released) during the year			13				165				178
Balance at 30 June 2023			247				1,660				1,907

3.8.1

Information about individual provisions and significant estimates

		2023 $’000				2022 $’000
Loss after income tax			(79,223	)			(47,821	)
Non‑cash items from ordinary activities
Depreciation and amortisation			10,543				8,966
Share based payment expenses			3,091				3,167
Loss/ (Profit) on sale of plant and equipment			2				-
Movement in inventory provision			(1,656	)			(4,216	)
Write off of property, plant and equipment			-				280
Financing activity in prior financial year			-				(422	)
Other
Borrowing costs			(20,676	)			-
Changes in assets and liabilities
(Increase)/decrease in assets:
-     Receivables			8,053				(8,240	)
-     Contract assets			(2,330	)			-
-     Inventories			(1,306	)			2,231
-     Other assets			1,209				(533	)
Increase/(decrease) in liabilities:
-     Payables			7,229				(1,174	)
-     Contract liabilities			1,722				781
-     Deferred income			10,915				397
-     Provisions			9,926				608
Cash used in operating activities			(52,482	)			(45,976	)

4.2

Borrowings and other financial liabilities

		Interest rate %			Maturity		2023 $’000				2022 $’000
Current borrowings at amortised cost
Secured
Working capital facility			7.44	%	May 2023			-				6,843
Term loan			6.15	%	May 2023			-				2,889
Letter of credit facility			6.45	%	May 2023			-				4,000
								-				13,732
Unsecured
Term loan with customer			10.0	%	May 203			4,523				-
Supplier finance arrangement		6% + RBA cash rate						9,306				4,954
								13,829				18,686
Non-current borrowings at amortised cost
Secured
Term loan			6.15	%	December 2024			-				4,333
Term loan (USD)			8.50	%	May 2027			70,833				-
								70,833				4,333

•	agreed thresholds for revenue, assessed monthly on a rolling trailing six month basis with specific agreed targets for each testing period, with the first testing period being the 6 months expiring June 30, 2023;

•	agreed thresholds for EBITDA, assessed monthly on a rolling trailing six month basis with specific agreed targets for each testing period, with the first testing period being the 6 months expiring June 30, 2023;

•

maximum capital expenditure (capex) limits, assessed monthly and initially assessed on a rolling trailing six month basis with specific agreed maximum capex for each testing period with the first testing period being the 6 months expiring June 30, 2023, and moving to a rolling trailing 12 month basis in January 2024; and

•	liquidity ratios based on remaining months of liquidity (assessed monthly based on the monthly Adjusted EBITDA for the 3 most recent months) until the Adjusted EBITDA of the Group becomes positive, following which the measure will be based on a current ratio.

•	failure to make a payment due under the agreement by the due date;

•	existence of circumstances which could result in a Material Adverse Effect;

•	a change in control of the Carbon Revolution Group (prior to the Business Combination);

•	events of insolvency, judgment debt, asset seizure and impairment of security;

•	material misrepresentation; and

•	if any portion of the guaranty ceases to be in full force and effect.

4.3

Financial risk management

4.3.1

Market risk

a)

Foreign currency risk

2023		EUR $’000				USD $’000
Cash and cash equivalent			1,037				11,213
Restricted trust fund			-				14,285
Trade receivables			2,409				400
Trade payables			(823	)			(961	)
Supplier finance arrangement			(4,709	)			(414	)
Borrowing			-				(90,645	)
Balance sheet exposure			(2,086	)			(66,122	)

2022		EUR $’000				USD $’000
Trade receivables			5,650				-
Trade payables			(343	)			(233	)
Supplier finance arrangement			(3,253	)			(13	)
Balance sheet exposure			2,054				(246	)

		2023 $’000				2022 $’000
Net foreign exchange gain/(loss) included in other income/administration expense			(305	)			448

+/- 5% exchange rate		2023 $’000				2022 $’000
Impact on profit after tax			3,410				90
Impact on equity			(3,410	)			(90	)

b)

Interest rate risk

		Variable interest rate								Fixed interest rate								Total
		2023 $’000				2022 $’000				2023 $’000				2022 $’000				2023 $’000				2022 $’000
Financial assets
Cash			19,582				22,301				-				-				19,582				22,301
Restricted trust fund			14,285				-				-				-				14,285				-
Short term deposits			-				-				392				392				392				392
Total financial assets			33,867				22,301				392				392				34,259				22,693
Financial liabilities
Working capital facility			-				6,843				-				-				-				6,843
Term loan			-				-				4,523				-				4,523				-
Supplier finance arrangement			9,306				-				-				4,954				9,306				4,954
Letter of credit facility			-				4,000				-				-				-				4,000
Term loan			-				7,222				-				-				-				7,222
Term loan (USD)			-				-				90,645								90,645				-
Total financial liabilities			9,306				18,065				95,168				4,954				104,474				23,019

c)

Price risk

4.3.2

Credit risk

4.3.3

Liquidity risk

		On demand $’000				< 3 months $’000				3-12 months $’000				1-5 years $’000				> 5 years $’000				Total $’000
2023
Supplier finance arrangement			9,130				-				-				-				-				9,130
Term loan			-				-				4,523				-				-				4,523
Lease liabilities			-				158				487				2,830				4,538				8,013
Term loan (USD)			-				-				-				90,645				-				90,645
			9,130				158				5,010				93,475				4,538				112,311
2022
Working capital facility			-				6,843				-				-				-				6,843
Supplier finance arrangement			4,954				-				-				-				-				4,954
Letter of credit facility			-				-				4,000				-				-				4,000
Term loan			-				-				2,889				4,333				-				7,222
Lease liabilities			-				95				483				2,541				4,921				8,040
			4,954				6,938				7,372				6,874				4,921				31,059

4.3.4

Fair value risk

4.4

Contributed equity

		30 June 2023 # Ordinary shares				30 June 2022 # Ordinary shares				30 June 2023 $’000				30 June 2022 $’000
Ordinary shares – fully paid			211,877,653				206,326,138				386,432				383,822
Ordinary shares – restricted			274,852				527,889				-				-
Total share capital			212,152,505				206,854,027				386,432				383,822

2022		Date	# Shares					Issue Price					$’000
Balance		1 July 2021			205,421,449								381,890
Shares issued under Employee Share Plan					904,689								1,932
Balance of fully paid shares		30 June 2022			206,326,138								383,822

2023		Date		# Shares				Issue Price					$’000
Balance		1 July 2022			206,326,138								383,822
Shares issued under Employee Share Plan					5,551,515								2,610
Balance of fully paid shares		30 June 2023			211,877,653								386,432

4.4.1

Information about contributed equity

4.5

Share-based payment plan arrangements

a)

Elapse of three years from the date of grant; or

b)

Listing of the Company’s shares on the ASX or earlier release of exercise restrictions by the board.

		2023				2022
Grant date			-			Dec 2021
Number of employees granted shares			-				266
Value of shares granted per employee (on FTE and length of service pro-rata basis)			-			$	279-$1,000
Total number of shares			-				255,281
Fair value at grant date			-			$	1.01

•

Issue date 23 December 2019

•

Exercise price $2.60 (IPO price)

•

Vesting date – 23 December 2022

•

Term of 5 years (exercise window from 23 December 2022 to 23 December 2024)

•

Issue date 20 December 2021

•

Exercise price $1.60

•

Vesting date – 28 October 2024

•

Term of 5 years (exercise window from 28 October 2024 to 28 October 2026)

4.6

Reserves

		2023 $’000				2022 $’000
Share-based payments			7,695				7,214
Share buyback			(311	)			(311	)
Foreign currency translation			(218	)			(156	)
			7,166				6,747

4.6.1

Information about reserves

4.7

Transaction costs

		2023 $’000				2022 $’000
Transaction costs recognised in the profit and loss statement			24,746				-
Transaction costs recognised in trade payables			541				-
Transaction costs recognised in accruals			5,716				-
Transaction costs recognised in provisions			9,459				-
Transaction costs recognised in the operating cash flow			9,030				-

5.1

Income tax expense

		2023 $’000				2022 $’000
Consolidated statements of profit or loss
Current income tax charge/benefit			-				-
Adjustment for current tax relating to prior periods			-				-
Deferred income tax relating to the origination and reversal of temporary differences			-				-
			-				-

		2023 $’000				2022 $’000
The prima facie tax benefit on loss before tax differs from the income tax expense as follows:
Accounting loss before tax			(79,223	)			(47,821	)
Benefit at the Australian statutory income tax rate of 30% (2022: 30%)			23,767				14,346
Tax impact of:
Non-deductible expenses			(4,859	)			(5,083	)
Non-assessable income							-
Impact of different tax rates in foreign jurisdictions			29				54
Current year taxable loss not recognised			(18,937	)			(9,317	)
Income tax benefit			-				-

5.2

Deferred taxes

5.3

Recognised deferred tax assets and liabilities in statement of financial position

		2023 $’000				2022 $’000
Deferred tax liabilities relating to temporary differences:
Receivables			-				(25	)
Intangible assets			(4,746	)			(4,050	)
Property, plant and equipment			(12,841	)			(6,551	)
			(17,587	)			(10,626	)
Deferred tax assets related to temporary differences:
Provisions and accruals			6,981				3,785
Capital raising costs			7,833				1,960
Other			91				89
			14,905				5,834
Net deferred tax liability			(2,682	)			(4,792	)
Less: temporary differences not recognised			2,682				4,792
Net deferred tax recognised in the statement of financial position			-				-

5.4

Carry forward unrecognised tax losses and R&D tax credits

6.3

Information about subsidiaries

		Country of		% equity interest
Name	Principal activities	incorporation		2023				2022
Carbon Revolution Operations Pty Ltd	Carbon fibre wheels	Australia			100				100
Carbon Revolution Technology Pty Ltd	Carbon fibre wheels	Australia			100				100
Carbon Revolution (USA) LLC	Carbon fibre wheels	United States			100				100
Carbon Revolution (UK) Limited	Carbon fibre wheels	United Kingdom			100				100

6.4

Deed of cross guarantee

		2023 $’000				2022 $’000
Sale of wheels			37,477				38,276
Engineering services			530				464
Sale of tooling			253				1,596
Revenue			38,260				40,336
Cost of goods sold			(55,094	)			(57,445	)
Gross margin			(16,834	)			(17,109	)
Other income			2,953				4,170
Operational expenses			(2,993	)			(2,009	)
Research and development expenses			(16,180	)			(16,933	)
Administrative expenses			(14,824	)			(13,242	)
Marketing expenses			(1,478	)			(1,518	)
Capital raising transaction costs			(24,746	)			-
Finance costs			(5,502	)			(1,390	)
Loss before income tax expense			(79,604	)			(48,031	)
Income tax expense			-				-
Loss for the year after income tax			(79,604	)			(48,031	)
Other comprehensive income			-				-
Total comprehensive loss for the year, net of tax			(79,604	)			(48,031	)

		2023 $’000				2022 $’000
Current assets
Cash and cash equivalents			19,278				22,594
Restricted trust fund			14,677				-
Receivables			6,283				14,397
Contract assets			8,239				5,909
Inventories			22,046				20,042
Other current assets			378				1,587
Total current assets			70,901				64,529
Non-current assets
Property, plant and equipment			62,638				57,616
Right of use asset			7,446				7,564
Intangible assets			16,774				14,364
Total non-current assets			86,858				79,544
Total assets			157,759				144,073
Current liabilities
Payables			15,521				9,502
Borrowings			13,829				18,686
Lease liability			645				579
Contract liability			748				458
Deferred income			1,919				1,028
Provisions			12,957				4,161
Total current liabilities			45,619				34,414
Non-current liabilities
Borrowings			70,833				4,333
Lease liability			7,368				7,461
Contract liability			1,755				323
Deferred income			15,235				5,211
Provisions			1,843				713
Total non-current liabilities			97,034				18,041
Total liabilities			142,653				52,455
Net liabilities			15,106				91,618
Equity
Contributed equity			386,432				383,822
Reserves			7,376				6,894
Accumulated losses			(378,702	)			(299,098	)
Total equity/ (deficiency in equity)			15,106				91,618

6.5

Directors and Key management personnel

		2023 $				2022 $
Compensation by category
Short-term employment benefits			2,211,445				2,195,825
Post-employment benefits			99,352				96,132
			2,310,798				2,291,957

6.6

Transactions with related parties

6.7

Parent entity disclosures

		2023 $’000				2022 $’000
Results of parent entity
Loss for the year			95,919				48,445
Other comprehensive loss			-				-
Total comprehensive loss for the year			95,919				48,445
Financial position for the parent entity at year end
Current assets			2,565				14,253
Total assets			20,616				106,550
Current liabilities			(22,326	)			(12,545	)
Total liabilities			(22,326	)			(15,433	)
Total equity of the parent company comprising of
Contributed equity			386,432				383,822
Reserves			7,384				6,903
Accumulated losses			(395,527	)			(299,608	)
Total equity/ (deficiency in equity)			(1,710	)			91,117

6.8

Auditor’s remuneration

		2023 $				2022 $
Audit Services
Audit and review of the financial report			760,000				152,500
Reaudit of FY21 and FY22 under PCAOB standards for the proposed merger transaction			965,000				-
			1,725,000				152,500

6.9

Unrecognised items

6.9.1

Guarantees

6.9.2

Capital commitments

6.9.3

Contingent liabilities

6.10

Changes in accounting policies

6.11

Adoption of new and revised Australian Accounting Standards

6.9.1

New and amended Australian Accounting Standards that are effective for the current year

6.9.2

New and revised Australian Accounting standards and interpretations on issue but not yet effective

	Standard and Interpretation		Effective for annual reporting periods beginning on or after		Expected to be initially applied in the financial year ending
	AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-Current, AASB 2020-6 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current – Deferral of Effective Date and AASB 2022-6 Amendments to Australian Accounting Standards – Non-current Liabilities with Covenants		1 January 2024		30 June 2025
	AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and Definition of Accounting Estimates		1 January 2023		30 June 2024
	AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction		1 January 2023		30 June 2024
	AASB 2022-5 Amendments to Australian Accounting Standards – Lease Liability in a Sale and Leaseback		1 January 2024		30 June 2025
	AASB 2022-7 Editorial Corrections to Australian Accounting Standards and Repeal of Superseded and Redundant Standards		1 January 2023		30 June 2024

6.12

Subsequent events