Business context and reporting period
NOVONIX Limited’s Form 20-F is an annual report for the fiscal year ended June 30, 2022, with FY2021 as the primary comparable period. It is not a quarterly filing. Financial statements are prepared under IFRS and presented in Australian dollars (A$), unless otherwise noted.
The company operates Battery Technology Solutions (BTS), providing battery-testing equipment and R&D services; NOVONIX Anode Materials (NAM), developing synthetic graphite; and a graphite exploration segment under strategic review. BTS was the only segment generating customer revenue in FY2022. NOVONIX’s ADSs began trading on Nasdaq in February 2022; each ADS represents four ordinary shares.
Financial performance and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | A$8.42 million | A$5.23 million |
| Cost of goods and services | A$3.01 million | A$0.97 million |
| Net loss | A$71.44 million | A$18.08 million |
| Operating cash flow | A$(40.35) million | A$(8.17) million |
| Investing cash flow | A$(147.35) million | A$(26.42) million |
| Financing cash flow | A$249.32 million | A$132.69 million |
| Cash and cash equivalents at year-end | A$207.08 million | A$136.66 million |
| Total borrowings | A$53.63 million | A$6.26 million |
| Lease liabilities | A$7.76 million | A$7.53 million |
Revenue increased 61%, driven by BTS hardware sales (A$3.52 million, up from A$1.41 million) and consulting services (A$4.90 million, up from A$3.82 million). Derived gross profit was approximately A$5.41 million, or 64% of revenue, before other operating expenses. Basic and diluted loss per share were A$0.15, versus A$0.05 in FY2021. The filing reports net current assets of A$223.91 million and net cash of A$145.70 million after borrowings and lease liabilities.
Operating and investing cash outflows rose substantially as the company expanded facilities and invested in production equipment; FY2022 investing outflow included A$115.46 million for property, plant and equipment. Financing inflow included A$208.29 million from share issuance and A$45.86 million of borrowings. Year-end ordinary shares outstanding were 485,951,369.
Material changes versus FY2021
- Net loss widened by A$53.36 million. Notable FY2022 charges included A$20.19 million of share-based compensation, A$10.95 million fair-value loss on the KORE Power investment, A$5.83 million of Nasdaq-listing expenses, and increased R&D, employee, occupancy and insurance costs.
- Foreign-exchange gain was A$7.17 million, compared with a small loss in FY2021; other income rose to A$2.20 million, including grants and a A$0.30 million day-one gain on an interest-free loan.
- Property, plant and equipment increased to A$151.18 million from A$31.58 million, reflecting expansion including the Chattanooga Riverside facility. Total assets rose to A$439.56 million from A$202.86 million.
- Phillips 66 invested US$150 million for approximately 16% of NOVONIX in September 2021. NOVONIX also acquired an approximately 5% stake in KORE Power for US$25 million, paid half in cash and half in NOVONIX shares; the investment was subsequently marked down.
Outlook, commentary and key risks
Management targets synthetic graphite capacity of 10,000 tonnes per annum (tpa) in 2023, 40,000 tpa in 2025 and 150,000 tpa in 2030. Management said existing cash was expected to support expansion toward 10,000 tpa, but further growth, including later capacity targets and cathode development, may require additional funding. The company expects continued losses until significant anode-material production, which was not expected before 2023 and could occur later or not at all.
Execution depends on commissioning and scaling Generation 3 furnaces, achieving customer qualification, production yields and cost targets, and securing funding and supply arrangements. Samsung SDI and SANYO Electric qualification discussions and memoranda do not guarantee long-term orders. A five-year KORE Power supply agreement provides for deliveries ramping from 3,000 tpa in 2024 to 12,000 tpa in 2027, subject to execution and production readiness. NAM had not generated synthetic-graphite sales by the report date.
The auditor issued an unmodified opinion on the IFRS financial statements but highlighted substantial doubt about the company’s ability to continue as a going concern, citing recurring losses, operating cash outflows and dependence on additional funding. Management stated that the going-concern basis was appropriate, while acknowledging the funding uncertainty. The company also reported material weaknesses in financial-reporting controls and concluded disclosure controls were not effective as of June 30, 2022; the auditor had not attested to internal-control effectiveness.
Other material risks include dependence on a limited number of BTS customers (the top five represented 58% of FY2022 revenue), manufacturing scale-up and customer-qualification risk, competition and market adoption, potential future financing and dilution, foreign-exchange exposure, and environmental, regulatory and supply-chain risks. The company reported no material legal proceedings and no dividends paid or planned for the foreseeable future.
Important facts for investors to verify
- Whether Generation 3 commissioning, customer qualification and the 10,000-tpa 2023 target are achieved, and whether later capacity targets remain feasible.
- Cash burn, committed expansion spending, loan covenants and the timing, amount and terms of any additional capital needs.
- Whether the KORE Power supply agreement converts into deliveries as scheduled, and the valuation assumptions behind the A$10.95 million investment loss and remaining carrying value.
- Progress remediating the disclosed material weaknesses and establishing effective disclosure and financial-reporting controls.
- Revenue concentration, customer qualification milestones, and the status and binding terms of arrangements with Samsung SDI and SANYO Electric.