Synertec : FY22 H1 Business & Financial Results Overview

FY22 H1 Business & Financial Results Overview

ASX Announcement

only24 February 2022

Melbourne, Australia: Diversified technology growth company, Synertec Corporation Limited (ASX: SOP, "Synertec" or "the Company") is pleased to provide the Company's financial results and a summary of key achievements for the half year ending 31 December 2021 ("FY22 H1", or the "Period").

Summary of Financial Results

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Summary FY22 H1 Financials

FY22 H1

FY21 H1

% Change

($'000s)

($'000s)

Total Revenue

5,846

3,517

Up 65%

Engineering Consultancy Services Revenue

4,302

2,185

Up 97%

Adjusted EBITDA

(844)

(1,171)

Up 28%

Adjusted Net Profit After Tax

(1,126)

(1,654)

Up 32%

Net Cash

7,140

2,626

Up 172%

Cash receipts from customers

6,005

4,392

Up 37%

Highlights

• Technology Business momentum building with key milestones achieved in all technologies

personal
	o MOU with Santos (ASX:STO) for development of Powerhouse AI-drivensolar-battery power system
	o Global certification of marine LNG Custody Transfer System (CTS) technology
	o Perpetual, exclusive and royalty-free Licence Agreement for Composite Dry Powder (CDP)
		technology in key global energy territories including Australia, Canada and the Americas
• Engineering Business performed strongly with circa $6 million in new contract wins
	o Team growth during CY2021 doubles billable capacity
	o	Appointment of General Manager Engineering
For
•	Total Revenue for the Period of $5.8 million, up 65% on the prior comparable period ("pcp")

o Revenue from Engineering Consultancy Services of $4.3m, up 97% on pcp

• Adjusted Group EBITDA loss of $0.8 million, a 28% improvement on pcp

o Engineering business EBITDA loss of $0.1 million, approaching break-even performance

• 1. Technology costs include Research and Development ("R&D") expenditure of $0.4 million
• Gross margins continue to strengthen with double that achieved in the financial year prior to COVID-19 (FY19)
• Net cash as at 31 December 2021 of $7.1 million (30 June 2021: $2.6 million)
• 1. Supported by $7.1 million (before costs) share placement ('Placement') in August 2021

1. Cash receipts from customers of $6.0 million, up 37% on pcp

1. Synertec operates with no working capital debt or covenants from its bank

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Operating Performance

Synertec Managing Director, Michael Carroll, commenting on the Period said:

"Synertec has achieved a pleasing first half result, delivering on all of our commitments made to the market at the time of our only$7.1m equity raise in August 2021. We have continued to enjoy considerable success across the Group, reaching a number of

important milestones during the Period.

"In previous announcements we clearly articulated to the market our key milestones in the development of our three near-term technologies. I am pleased to report that we are on track with, or ahead of, schedule in all three technologies.

"On 4 August 2021 we announced an MOU with Australia's leading independent oil and gas producer, Santos, to develop our innovative Powerhouse Project. Some six months later, and with great credit to our team, we are now part way through the

fabrication of our Powerhouse system. We are looking forward to site acceptance testing which is scheduled to commence in useQ4 of FY22.

"Our LNG Custody Transfer System was certified for marine settings by the world's leading classification body, DNV. This is an important achievement that offers Synertec and our partner, GasLog, significant potential exposure to growing demand for LNG-fuelled shipping.

"We also signed a perpetual, exclusive and royalty-free licence agreement with our partners, GreenTech, that provides us with the right to use Composite Dry Powder technology across a range of key global energy markets, including Australia, the Americas and Canada.

personal"Our Engineering Business rebounded strongly as the pace of planning and investment in critical infrastructure increased cross the economy. While COVID-19 remains a challenge for our business, we were able to significantly grow our team of

highly skilled engineers during the past year, and I'm proud to say, we're approaching 80 people strong, which is the largest team in the company's history.

"As a result of this expansion and increasing demand for engineering solutions, we have taken the step of appointing a General Manager Engineering. Mr. Andrew Lawrie joins the team with a strong background in critical infrastructure and water engineering services, and will provide strong business development and leadership capability.

"I look forward to updating the market soon with further progress on our Powerhouse technology and growth in the Engineering Business which is expected to continue during the year."

Commentary

This commentary should be read in conjunction with the slides attached to this release.

ForSynertec generated revenue for the Period of $5.8 million, 65% higher than pcp (31 December 2020: $3.5 million). This result was underpinned by strong growth in engineering consultancy services revenue, which generated $4.3 million in revenue, an increase of 97% on pcp (31 December 2020: $2.2 million).

Gross margins further improved over the Period by five percentage points, to a level which is double the gross margin achieved in the financial year prior to COVID-19 (FY19). This improvement in margins reflects an ongoing trend towards a higher proportion of revenues being derived from consultancy services (generally higher margin than fixed price contracts) across all four of the Group's target sectors of critical infrastructure, water, energy and advanced manufacturing.

Adjusted EBITDA, which excludes the effects of non-operating and non-recurring items, was a loss of $0.8 million (31 December 2020: $1.2 million loss), including technology Research and Development ("R&D") costs of $0.4 million (31 December: $nil). The increase in R&D costs reflects the Company's investments in its Technology business growth opportunities that are currently being expensed for the benefit of R&D tax credits.

The Company's Adjusted Net Profit After Tax, which excludes the effects of costs incurred and subsidies received but not related to underlying operations, was a loss of $1.1 million (31 December 2020: $1.6 million loss).

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Environment Social Governance ("ESG") Reporting

Capital Management

Total Assets of $13.3 million (30 June 2021: $8.2 million) and Net assets of $7.6 million (30 June 2021: $2.1 million) includes onlycash of $7.1 million (30 June 2021; $2.6 million). The increase in net assets and cash balance reflects the net proceeds of

$6.7 million from the Company's oversubscribed share placement ("Placement") completed in August 2021.

The Placement of 71.4 million new shares at an issue price of $0.10 per share represented a 9% discount to the last closing price and 5-day VWAP. Net proceeds from the Placement will be principally used to provide balance sheet support to fund current growth initiatives within the Company's Technology business. The Placement was corner-stoned by high quality institutional investors, proving a strong endorsement for the Company and its ESG technology-led growth strategy.

Cash receipts from customers was $6.0 million (31 December 2020: $4.4 million), up 37% on pcp and debtor-days remain usestable within the Group's 30-40 day target range.

Synertec operates with no working capital debt or covenants from its bank.

Committed to building its ESG credentials, the Company is making regular ESG disclosures on its progress against the World Economic Forum ("WEF") Stakeholder Capitalism framework. During the Period, Synertec's ESG activity summary included:

• Sustainability integrated into Company strategy and values
• The company commenced inducting new employees under ESG guidelines and framework
• Risk management systems reviewed for inclusion of ESG factors
• Synertec commenced review of its social enterprise procurement strategy

personalOutlook

F llowing the successful Placement during the Period, Synertec's balance sheet is well positioned to support the Company's growth profile, and dual strategy of commercialising large near-termESG-focused Technology opportunities in the energy

ector and growing out a high-end Engineering solutions business.

Synertec will continue to progress the Powerhouse Project over the next 6 months, with plans to complete field testing, achieve sign-off and reach commercial terms with Santos. The Company will continue to work with its partner, GasLog, to progress CTS commercialisation opportunities, as well as progress field testing in central Australia of the CDP technology.

While COVID-19 challenges remain, demand for ESG-focused technologies in the energy sector continues to grow rapidly. Synertec will continue to invest in its people to drive further growth in engineering consultancy services and major projects during the second half of FY22, positioning it strongly for future periods.

For-ENDS-

For more information and all media enquiries, please contact:

Mr. David Harris

Executive Director & Company Secretary

Phone: [phone]

Email:[e-mail]

This ASX announcement is authorised by the Directors of Synertec Corporation Limited (ASX: SOP).

About Synertec:

Synertec Corporation Ltd (ASX: SOP) is a diversified technology design and development growth company enabling a low carbon future through innovative technology solutions. Commercialising scalable, environmentally friendly and energy efficient technology for global markets in energy, critical infrastructure and advanced manufacturing through innovative partnerships with a portfolio of blue-chip customers, Synertec is proactively participating in the world's transition to a low carbon economy in a practical way for the benefit of future generations.

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only Synertec Corporation Limited

use(ASX: SOP)

FY22 H1 Business & Financial Results Overview

February 2022 ersonal

Disclaimer

This presentation has been prepared by Synertec Corporation Limited (the Company) on behalf of the Company and its subsidiaries (the Group).

onlyThe information in this presentation about the Group and its activities is current as at 24 February 2022. Statements in this presentation are made only as at 31 December 2021 and the information in this presentation remains subject to change without notice. The information in this presentation is of a general nature and does not purport to be complete, is provided solely for information purposes and should not be relied upon by the recipient.

No representation or warranty, express or implied, is made by the Company as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. This presentation does not purport to summarise all information that a person should consider when making an investment decision and should not form the basis of any decision by a person.

Reliance should not be placed on the information or opinions contained in this presentation. This presentation is for informational purposes only and is not a financial product or investment advice or recommendation to acquire

useany securities in the Group, and does not take into consideration the investment objectives, financial situation or particular needs of any particular investor.

An investment in the Company, is subject to known and unknown risks, some of which are beyond the control of the Company, including possible loss of income and the amount invested. The Company does not guarantee any particular rate of return or the performance of the Company nor does it guarantee the repayment or maintenance of capital or any particular tax treatment. Any person considering an investment in the Company should have regard to the risk factors outlined in this presentation when making their investment decision.

Past performance information given in this presentation is given for illustrative purposes only and should not be

ersonalre ied upon as (and is not) an indication of future performance of the Group.

Information, including forward-looking statements, forecasts and estimates of the financial condition, operations nd business of the Group and/or plans and objectives of the Group, contained in this presentation and/or

discussed with the Group's personnel should not be considered as a recommendation in relation to holding, purchasing or selling shares, securities or other instruments in the Company, or in any other company. Actual results may vary from such forecasts and estimates and any variation may be materially positive or negative.

Forward looking statements, forecasts and estimates, by their very nature, involve known and unknown risks and are subject to uncertainty and contingencies that may occur which are outside the control of the Group and that because of their nature may cause the actual results or performance of the Group to be materially different from the results or performance expressed or implied by such forward looking statements, forecasts and estimates. These forward-looking statements, forecasts and estimates may include matters that are not historical facts, and they are based on numerous assumptions regarding the Group's present and future business strategies and the political and economic environment in which the Group will operate in the future, which may not be reasonable, and are not guarantees or predictions of future performance. No representation is made that any of these statements or forecasts will come to pass or that any forecast result will be achieved, or that there is a reasonable basis for any of these statements or forecasts.

Forward-looking statements, forecasts and estimates speak only as at the date of this presentation and, to the full extent permitted by law, the Group disclaims any obligation or undertaking to release any updates or revisions to information to reflect any change in any of the information contained in this presentation (including, but not limited to, any assumptions or expectations set out in the presentation).

Before making or varying any decision in relation to holding, purchasing or selling shares in the Company, investors should not rely on this presentation and should make their own assessment of an investment in the Company and consider the appropriateness of that investment in light of their individual investment objectives and financial situation. In all cases, each person receiving this presentation should: (a) conduct their own research of the Group and their own analysis of the financial condition, assets and liabilities, financial position and performance, profits and losses, prospects and business affairs of the Group and its business, and the contents of this presentation; and (b) seek their own independent legal, financial, tax and other advice appropriate to their circumstances and their jurisdiction.

The presentation includes financial information that is not reported using the International Financial Reporting Standards (IFRS). The non-IFRS financial information is unaudited and has not been reviewed by the Company's external auditors. Non-IFRS financial information should not be considered as an indication of, or alternative to, an IFRS measure of profitability, financial performance or liquidity. Unless marked, all currency is denominated in Australian dollars.

Unless marked, all currency is denominated in Australian dollars.

Synertec Corporation Limited (ASX:SOP) | February 2022

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