VivoPower International PLC
VivoPower International PLC is an international solar and critical power services
company, providing critical energy infrastructure generation and distribution
solutions to a diverse range of commercial and industrial customers, including
the development, construction, and sale of photovoltaic solar projects.
Nasdaq: VVPR
Contents
The Reports
Highlights
Chairman’s Statement
Chief Executive’s Review
Strategic Report
Directors’ Report
Corporate Governance
Remuneration Report
Independent Auditor’s Report to the Members of VivoPower International PLC
Financial Statements and Notes
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flow
Consolidated Statement of Changes in Equity
Notes to the Financial Statements
Parent Company Financial Statements and Notes
Company Statement of Financial Position
Company Statement of Cash Flow
Company Statement of Changes in Equity
Notes to the Company Financial Statements
Other Information
Company Information
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Highlights
Accomplishments for the Year ended 30 June 2020
12% growth in revenue from prior year (unaudited) despite COVID(1)
Gross profit up by 28% resulting from revenue growth and operational efficiencies
$1.7 million reduction in Corporate and Solar Development overheads
Adjusted EBITDA increased by $7.7 million to $3.9 million for the year
Cash declined from $7.1 million to $2.8 million reflecting working capital drawdown and
Q4 COVID impact
Strategic pivot to electric vehicles (EV)
*All references to $ are references to USD unless otherwise noted.
(1) Reflects comparison to 12 month period ended 30 June 2019 (following the change of financial year end), not the audited 12 month
period to 31 March 2019 (which reflects the prior financial year end)
Year Ended
30 June
Three Months
Ended 30 June
Year Ended
31 March
(US dollars in thousands, except per
share data)
2020
2019
(unaudited)
2019
2018
(unaudited)
Revenue
Gross profit
Operating profit/(loss)
Adjusted EBITDA (1)
48,710
43,545
13,617
7,825
6,093
1,657
9,111
1,665
2019
2018
39,036
33,647
6,310
5,123
2,169
(5,217)
3,935
(3,770)
(33)
404
(829)
(5,410)
(7,595)
(418)
(3,990)
(6,335)
Basic earnings per share (dollars)
Adjusted earnings per share (dollars) (2)
(0.38)
(0.12)
(0.83)
(0.11)
(0.13)
(0.83)
(2.06)
(0.66)
(0.07)
(0.12)
(0.68)
(1.92)
1. Adjusted EBITDA is a non-IFRS financial measure. We define Adjusted EBITDA as earnings before interest, taxes, depreciation and
amortisation, impairment of assets, impairment of goodwill, and one-off non-recurring costs, including restructuring expenses, non-recurring
remuneration and consulting fees. We believe that Adjusted EBITDA and Adjusted earnings per share provides investors and other users of
our financial information consistency and comparability with our past financial performance, facilitates period-to-period comparisons of
operations and facilitates comparisons with our peer companies, many of which use similar non-IFRS or generally accepted accounting
principles in the United States (“GAAP”) financial measure to supplement their IFRS or GAAP results, as applicable.
2. Adjusted earnings per share (EPS) is a non-IFRS financial measure. We define Adjusted EPS as net earnings less restructuring and non-
recurring costs, divided by the weighted average number of shares on issue during the period.
3
Chairman’s Statement
VivoPower International PLC for the year ended 30 June 2020
Chairman’s Statement
VivoPower International PLC (“VivoPower” or the “Company”) delivered on a year of revenue and profit
growth with a strong turnaround in operating results, despite the adverse impacts of COVID-19 lockdown
during the last quarter of the financial year.
Key developments for the fiscal year ended 30 June 2020 were as follows:
• Record annual revenues of $48.7m, an increase of 12% on the prior 12 months;
• Strong turnaround in adjusted (underlying) EBITDA of $7.7m to $3.9m, compared to a $3.8m EBITDA
loss in FY19;
• Statutory earnings per share (EPS) of ($0.38), an improvement of 54% versus ($0.83) EPS for the
previous 12 months whilst adjusted EPS improved 82% to ($0.12) from ($0.66) per share;
• Change of leadership with the Chairman and Chief Executive Officer role being combined and the
appointment of new independent directors based in New York, Washington DC and London
appointed to the board, bringing relevant technology, data analytics and enterprise software
experience to the Company;
• Secured Aevitas exchangeable noteholder and exchangeable preference shareholder approval to
facilitate the reconstitution of these securities into a simplified equity instrument, Aevitas
preference shares; and
• Secured management and development control from our joint venture partner, Innovative Solar
Systems (“ISS”) in relation to the US solar project portfolio.
In addition, following the completion of a 12 month strategic review, we have decided to expand into the
commercial electric vehicle (“EV”) and ancillary battery storage market. The decision to expand into EV was
driven by interest from VivoPower’s existing customer base. VivoPower expects to initially focus on providing
light electric vehicles (“LEV”) to customers in the mining and infrastructure sectors in Australia, before
expanding globally in these sectors. The light commercial vehicle fleet market (encompassing pick-up
trucks) is worth an estimated $12 billion in Australia alone, with the majority of the market represented by
the mining and infrastructure sectors. VivoPower’s EV strategy will be differentiated in that it comprises of a
holistic, three-pronged sustainable energy solution ("SES") to customers, which will include:
• EV and battery leasing;
• Critical power retrofits of premises (e.g. warehouses and depots) to enable optimised EV battery
charging and microgrids; and
• EV battery second life applications.
We will have a number of developments to announce over the coming months in relation to this new
strategy.
On behalf of the rest of the Board, I would like to take this opportunity to thank all of our stakeholders for
their support and engagement. Rest assured, the VivoPower team and the Board remain steadfastly
committed to overcoming challenges and transforming the Company to the benefit of our customers, our
staff and our community.
Kevin Chin
Chairman
7 September 2020
4
Chief Executive’s Review
VivoPower International PLC for the year ended 30 June 2020
Chief Executive’s Review
The financial year ended 30 June 2020 has been a turnaround year for VivoPower. We achieved record
revenues and delivered on our primary objective of returning to underlying EBITDA profitability. However,
results would most likely have been better but for the adverse impact of COVID-19 lockdowns which caused
extensive delays to scheduled works in the last quarter of the financial year (traditionally our busiest time of
year).
Having taken over the Chief Executive Officer role in March 2020, we had to quickly move to crisis
management mode in order to contend with the abrupt impact of COVID-19 lockdowns. However, the crisis
presented an opportunity to really stress test the Company’s business continuity plans and robustness of
our cultural values. I am very pleased to report that the Company’s business continuity plans were enacted
decisively by our various business unit leaders and worked exceptionally well. Importantly, we kept our team,
customers and suppliers safe. Furthermore, the entire management team has been resolute in navigating
their business units through the crisis, with assistance from a number of Arowana team members who were
parachuted in to support. Rather than remain on the defensive, we concurrently launched a seven point
hyper-turnaround programme, which at the time of writing, we are tracking significantly ahead of schedule
on.
For the financial year ended 30 June 2020, VivoPower delivered record annual Group revenues of $48.7m, up
12% year on year driven by strong growth in Aevitas. Gross profit increased 28% as a result of new pricing
initiatives as well as operational efficiencies. In addition, the Company recorded a $4.3m annual
improvement in solar development project net gains, resulting from the sale of VivoRex and Sun Connect
during the year, partly offset by write down of three abandoned projects in the ISS Joint Venture. Group
overheads were reduced by a further $1.7m, reflecting continued execution of lean management initiatives
in the Solar Development and Corporate Office segments, as well as a 2% reduction in Aevitas
(notwithstanding revenue growth). As a result, underlying adjusted EBITDA increased by $7.7m to $3.9m, as
compared to a $3.8m EBITDA loss in the previous corresponding period. However, we incurred $3.4m of non-
recurring and restructuring costs, primarily legal and other professional services fees in connection with the
litigation pertaining to the former Chief Executive Officer, Dr Philip Comberg as well as costs in relation to the
review of the ISS JV portfolio. Net interest costs were marginally improved at $3.1m, but shareholder loan
financing increased in Q4, to provide working capital support during the COVID-19 lockdowns. The statutory
net after tax loss of ($5.1m) for FY20 and earnings per share (“EPS”) of ($0.38) per share were an improvement
on the ($11.3m) loss and ($0.83) EPS for the previous financial year. On an adjusted underlying basis, EPS of
($0.12) was a significant improvement of 82% versus the ($0.66) result for the previous financial year.
In the United States, VivoPower activated its contractual rights to secure management control of its US solar
project portfolio from ISS, its joint venture (JV) partner in June 2020. This followed a detailed review of their
performance. The US solar market rebounded in FY20, with 12.1 GW of solar projects completed through the
first nine months but VivoPower's JV with ISS did not benefit from this industry trend due to issues
attributable to the contracted joint venture developer partner. As a result, there have been project delays
and 237 MW of projects have been discontinued with a further 492 MW put on hold, which prompted
VivoPower to initiate legal discussions with ISS. At the time of writing, negotiations are continuing with
VivoPower electing not to accept the initial offer from ISS to transfer its 50% economic interest in the JV to
VivoPower for $1 (which is conditional upon VivoPower foregoing any claims against ISS). Despite the
mothballing of some projects, VivoPower’s portfolio size would increase by 74% to circa 1.6 GW (or by 28%
to 1.2 GW excluding projects put on hold), if the offer had been accepted. Since taking control of the JV,
VivoPower has initiated a hyper-turnaround programme encompassing active portfolio management,
improved governance and stakeholder engagement with a view to maximising value in the medium to long
term.
5
Chief Executive’s Review (continued)
VivoPower International PLC for the year ended 30 June 2020
In Australia, VivoPower successfully sold its Sun Connect portfolio, achieving a multiple of invested capital
(MOIC) of 2x and an IRR of 20%. However, it was hampered in its development efforts, firstly due to regulatory
approval delays in relation to the 15 MW Yoogali solar farm and secondly, due to COVID-19 lockdowns in
relation to the Daisy Hill solar farm project. Nonetheless, industry tailwinds remain strong particularly in the
Company’s focus segment of the market, being the sub 15 MW space. The Australian solar team is also
building its battery storage experience, as this will be the next wave of growth in the market. Battery storage
capability will also complement our new EV and SES strategy.
In the UK, VivoPower has continued to reduce its overhead cost base. However, with the UK being a market
leader in talent for EVs and given battery storage has become economic across the UK, we will look to
judiciously recruit as needed.
Last, but not least, we are looking forward to executing on our new strategy encompassing commercial EVs
and battery storage. The seeds of this strategy were germinated three years ago and inspired by our friend,
Tony Seba, author of the book Clean Disruption and one of the renewable industry’s leading visionaries.
However, the market was not quite ready then whereas now, we have customer led interest in our three
pronged sustainable energy solution, encompassing EV, electric retrofit of premises to accommodate EV fast
charging (which Aevitas, our Critical Power services business is well equipped to do) and reuse of batteries
for second life applications. Importantly, EV and batteries are already economically viable for many mining
and industrial customers especially those in remote locations paying a very high premium for diesel. Our
focus will initially be on Australia but we intend to quickly expand into other major mining and infrastructure
markets globally.
Whilst COVID-19 has created dislocation, our view is that it has also accelerated societal, governmental and
corporate demand for a more sustainable energy future and further strengthened the tailwinds that were
already in existence. We look forward to completing the hyper-turnaround phase and transitioning swiftly to
executing on the strategic transformation of the Company.
Kevin Chin
Chief Executive Officer
7 September 2020
6
Strategic Report
VivoPower International PLC for the year ended 30 June 2020
Strategic Report
Principal Activities
VivoPower is an international solar and critical power services business and a certified B Corporation. The
Company’s main activity is the provision of critical energy infrastructure generation and distribution
solutions to a diverse range of government, commercial and industrial customers throughout Australia. It
also engages in the development, construction, and sale of photovoltaic (PV) solar projects in Australia and
the U.S. VivoPower is headquartered in London and has operations in the U.S., Australia and the UK.
Management analyses our business in three reportable segments: Critical Power Services, Solar
Development, and Corporate Office. Critical Power Services is represented by J.A. Martin Electrical Pty
Limited (“J.A. Martin”) and Kenshaw Electrical Pty Limited (“Kenshaw”) operating in Australia with a focus on
the design, supply, installation and maintenance of critical power, control and distribution systems,
including for solar farms. Solar Development is the development and sale of commercial, industrial and
utility scale PV solar power projects in the U.S. and Australia. Corporate Office is the Company’s corporate
functions, including costs to maintain the Nasdaq public company listing, comply with applicable SEC
reporting requirements, and related investor relations and is located in the UK. See Note 4.2 to our
consolidated financial statements included herein for a breakdown of our financial results by reportable
segment.
Critical Power Services
VivoPower, through its wholly-owned Australian subsidiaries, J.A. Martin and Kenshaw, provides critical
energy infrastructure generation and distribution solutions including the design, supply, installation and
maintenance of power and control systems to a customer base in excess of 700 active government,
commercial and industrial customers and is considered a trusted power adviser. J.A. Martin and Kenshaw
are headquartered in the Hunter Valley and Newcastle region, which is the most densely populated industrial
belt in Australia. Structural and cyclical factors have created a strong operating environment for our Critical
Power Services businesses, particularly the strong growth in infrastructure investment, recovery in the
mining sector, and increasing demand for data centres and solar farms.
J.A. Martin and Kenshaw are owned by VivoPower through a holding company called Aevitas, which was
formed in 2013 and acquired by VivoPower in December 2016.
The Critical Power Services businesses have several core competencies, encompassing a range of electrical,
mechanical and non-destructive testing services.
J.A. Martin Electrical Pty Limited
Founded in 1968, J.A. Martin is a specialized industrial electrical engineering and power services company
that has been servicing the largest commercial and industrial belt in Australia, the Newcastle and Hunter
Valley region in New South Wales, for more than 50 years.
J.A. Martin operates from two premises in New South Wales, including a factory in Newcastle which
manufactures and services customized industrial switchboards and motor control centres. It also has an
office and workshop facility in the Hunter Valley for servicing the infrastructure, mining and industrial sectors.
J.A. Martin’s core competencies include: customized industrial switchboard and motor control centre
design, manufacture and maintenance; industrial electrical engineering; project management for mining,
infrastructure and industrial applications; solar farm electrical contracting and engineering, procurement
and construction (“EPC”); electrical maintenance and servicing; and, industrial, mining and infrastructure
CCTV and data cabling. With 103 employees and a fleet of 76 vehicles, J.A. Martin has built a strong reputation
throughout eastern Australia for exceptional engineering and design, delivered on time and budget,
supported by a high-level of quality and service.
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Strategic Report (continued)
VivoPower International PLC for the year ended 30 June 2020
J.A. Martin serviced almost 250 customers in the fiscal year ended 30 June 2020 across a diverse range of
industries, including solar farms, grain handling and agriculture, water and gas utilities, cotton gins,
commercial buildings, mining, marine and rail infrastructure. J.A. Martin’s commitment to health and safety
and quality, as recognized by their AS 4801 and ISO 9001 certifications, has positioned them to service some
of the largest and most respected firms in the world.
With their history and core business centred in the industrial and mining sector of New South Wales, J.A.
Martin has taken a strong foothold in the Australian solar EPC market, focusing on the small and medium
sized solar project segment of the market. Since commencement of its solar business in 2016, J.A. Martin has
successfully and profitably completed over 100 MW of solar projects. The Australian solar generation market
is expected to experience strong growth over the coming years and J.A. Martin’s strategy has been to
deliberately focus on the less competitive small and medium sized solar project segment of the market.
According to the Australian Energy Market Operator (“AEMO”), 26 GW of new utility-scale, grid-connected
renewable energy assets will be required by 2040 to replace aging coal generators scheduled to be retired
by that time. AEMO forecasts periods when up to 90% of energy demand in Australia’s National Electricity
Market could be met by renewables in 2035. In addition, there is continued growth of behind the meter
ground mount and roof top solar installations as commercial, industrial and government entities respond to
concerns about energy security and costs by embracing cheaper solar power solutions. J.A. Martin has
recently completed the provision of electrical installation and services for its fourth solar farm, the 89 MWdc
Goonumbla Solar Farm near the town of Parkes, New South Wales, and has commenced work on three
further solar projects. VivoPower believes that the business is very well positioned competitively to leverage
the strong growth outlook for Australian solar.
Revenue is earned entirely within Australia and is comprised of the following activities:
Year Ended
30 June
Three Months Ended
30 June
Year Ended
31 March
(US dollars in thousands)
2020
2019
(unaudited)
Electrical installation projects
11,420
11,009
Electrical service contracts
Electrical switchboard
manufacturing
3,494
3,582
5,082
4,041
2019
774
2,986
1,813
2018
(unaudited)
1,030
2,244
2,466
2019
2018
8,375
6,165
7,361
9,425
4,949
4,372
Total revenue
18,496
20,132
5,573
5,740
20,685
19,962
There is no material seasonality which impacts J.A. Martin, however in FY2020, the business has faced some
operational disruptions due to the COVID-19 pandemic resulting in delays to commencement of several
projects and completion of scheduled works and hence revenue recognition. With the majority of electrical
equipment manufactured outside of Australia, the business has had to adapt to longer lead times from
suppliers. The continued implementation of workplace health and safety best practices and adherence to
public health directives has mitigated the impact of the pandemic to some degree and allowed the
continuation of operations, but this has adversely affected profitability margins.
With over 50 years of history, J.A. Martin sources its supplies from a large number of domestic and
international suppliers based on competitive pricing, reliable delivery, product performance, and past
business relationships. These relationships are integral to the realization of its commercial goals and ability
to meet the demands of customers in a competitive marketplace.
With almost 250 active customers for the year-ended 30 June 2020, the business is not reliant upon any one
customer, nor is the business dependent on any one patent, license, material contract, or process. Further,
there are no government regulations which are material to the business, beyond those generally applicable
to all businesses within the same statutory regime.
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Strategic Report (continued)
VivoPower International PLC for the year ended 30 June 2020
Kenshaw Electrical Pty Limited
Founded in 1981, Kenshaw has a differentiated mix of critical electrical power, critical mechanical power and
non-destructive testing capabilities for customers across a broad range of industries, operating from its
facilities in Newcastle, New South Wales, and Canberra, Australian Capital Territory. Kenshaw’s success has
been built on the capability of its highly skilled personnel to be able to provide a wide range of critical power
generation solutions, products and services across the entire life-cycle for electric motors, power generators,
mechanical equipment and non-destructive testing. From the head office in Newcastle, Kenshaw’s engineers
provide regular and responsive service to a long-standing client base of over 500 customers ranging from
data centres, hospitals, mining and agriculture to aged care, transport and utility services. It is well
positioned to expand its capabilities to battery energy storage solutions.
Kenshaw’s core competencies include: generator design, turn-key sales and installation; generator servicing
and emergency breakdown services; customized motor modifications; non-destructive testing services
including asset management of critical plant and equipment using diagnostic testing such as motor testing,
oil analysis, thermal imaging and vibration analysis; and industrial electrical services.
A growing market for Kenshaw is the data centre sector. The growing importance of big data, internet of
things and cloud computing have seen data centres take on an increasingly prominent role – a trend
accelerated by a surge in data storage and processing requirements resulting from increased levels of
remote working during the COVID-19 pandemic. According to the H1 2020 Asia Pacific Data Centre Trends
report from CBRE Group, Inc, Sydney, Australia experienced a 76% increase in total data centre capacity in
the year to Q1 2020. This was the largest increase across the tier 1 data centre markets in the Asia Pacific
region, which includes Singapore, Hong Kong SAR, Tokyo and Sydney. VivoPower believes Kenshaw is
benefiting from this growth through its long-term relationship with one of Australia’s leading data centre
companies.
A second key growth market for Kenshaw is hospitals and aged care facilities. Growth in aged care spending
is driven by both increasing provider costs and growth in the number of people aged 70 and over (the eligible
age for most aged care programs). According to the 2015 Intergenerational Report by the Australian Treasury
Department, the number of Australians aged 70 years and over is expected to more than triple over the next
40 years, reaching around 7 million people by 2055. Kenshaw has built up significant experience through
servicing longstanding customers such as Health Infrastructure New South Wales, Public Works Advisory,
Hunter New England Health, Anglican Care and BUPA, for which it delivers customized critical back up power
solutions and services as well as generator and thermal imaging services.
Continued contract wins in the active treatment hospital sector have also placed health care power
infrastructure as a key priority for growth over the coming years. The New South Wales Government has
committed a record AUD$10.1 billion over the four years to June 2023 for health infrastructure investment.
Revenue is earned entirely within Australia and is comprised of the following activities:
Year Ended
30 June
Three Months Ended
30 June
Year Ended
31 March
(US dollars in thousands)
2020
2019
(unaudited)
Generator sales and installation
23,579
16,373
Generator service and non-destructive
testing
4,199
4,384
2019
6,381
1,178
2018
(unaudited)
2019
2018
1,120
11,095
5,919
1,091
1,744
1,786
Motor sales and overhaul
1,565
1,660
377
470
4,276
3,965
Total revenue
29,343
22,417
7,936
2,681
17,115
11,670
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Strategic Report (continued)
VivoPower International PLC for the year ended 30 June 2020
There is no material seasonality which impacts this business, however in FY2020, Kenshaw has faced some
operational disruptions due to the COVID-19 pandemic resulting in delays to commencement of several
projects and completion of scheduled works and hence revenue recognition. The majority of electrical
equipment is manufactured outside of Australia, meaning the business has had to adapt to longer lead times
from suppliers. Strict adherence to workplace health and safety best practices has mitigated the impact of
the pandemic to some degree and allowed the continuation of operations in accordance with public health
directives, but this has adversely affected profitability margins.
Kenshaw’s relationship with its primary suppliers enables it to sell and service their equipment as dealers or
agents. It is a primary supplier and service agent for Cummins generators and WEG electric motors. Kenshaw
also maintains long term relationships with other equipment manufacturers such as Siemens, Toshiba and
Teco. This allows it to offer a complete solution to its clients with flexibility of product choice. While
equipment manufacturers are vital to success, VivoPower believes it is the working relationships with all of
its suppliers that allow Kenshaw to maintain a competitive advantage in delivering orders and projects.
For the year ended 30 June 2020, 69% (three months ended 30 June 2019: 76%; year ended 31 March 2019:
32%) of Kenshaw’s revenue was earned from one customer and this customer is expected to continue to
provide significant revenue in future years. However, with almost 500 active customers for the year ended 30
June 2020, the business is not solely reliant on this customer, nor is the business reliant on any one patent,
license, material contract, or process. Further, there are no government regulations which are material to
the business, beyond those generally applicable to all businesses within the same statutory regime.
Solar Development
VivoPower’s strategy in relation to solar development has been to minimize capital intensity and maximize
return on invested capital by pursuing a business model predicated on developing and selling projects prior
to construction and continually recycling capital rather than owning assets. Successful solar development
requires an experienced team that can manage multiple work streams on a parallel path, from initially
identifying attractive locations, to land control, permitting, interconnection, power marketing, and project
sale to investors. Rather than build a substantial team internally to accomplish all of these activities, our
business model is to joint venture on a non-exclusive basis with existing experienced project development
teams so that multiple projects can be advanced simultaneously and allow us to focus on provision of
capital, project management, and marketing and sale of projects. In Australia we have partnered with ITP
Renewables (“ITP”), a global leader in renewable energy engineering, strategy and construction, and energy
sector analytics. In the U.S., we partnered with ISS.
VivoPower Australia continues to engage in the development, construction, and sale of solar projects in
Australia, leveraging the customer relationships of J.A. Martin and Kenshaw and providing a pipeline of EPC
opportunities to J.A. Martin.
VivoPower USA assumed management control of its U.S. solar development joint venture in June 2020,
having spent the prior 12 months initially focused on monetizing the projects in the portfolio, on an
individual, group or whole of portfolio basis. VivoPower and its joint venture partner, ISS, were unable to
align on monetization in relation to any of the projects. VivoPower subsequently engaged in a detailed review
of the joint venture partner’s performance as a developer relative to the contractual agreement and decided
to exercise its rights to assume management control of the joint venture. This was announced in June 2020
but took effect post balance sheet date. VivoPower USA intends to refocus and revitalize the remaining
development programs for the joint venture projects in order to maximize the value of the portfolio with a
view to future monetization.
Since long-term investors typically value projects on the basis of long-term internal rates of return (“IRR”),
the development profit that may be created by a developer is the difference between the cost to develop
projects and the fair market value of such projects. We believe that successful project development results
in a significantly lower cost base than buying projects that are already developed. With this approach, we
believe that we can achieve attractive risk-adjusted returns in the current market. To achieve these returns,
Page | 10
Strategic Report (continued)
VivoPower International PLC for the year ended 30 June 2020
our strategy is to focus on managing capital in a disciplined manner during the early development stages
and seeking strategic investors with a low cost of capital once projects achieve an advanced stage.
The stages of solar development can be broadly characterized as: (i) early stage; (ii) mid-stage; (iii) advanced
stage; (iv) construction; and (v) operation. Our business model is to work through the development process
from early stage through to advanced stage, and then sell those projects that have completed the advanced
stage of development, also known as “shovel-ready” projects, to investors who will finance construction and
ultimately own and operate the project.
Early stage development is primarily focused on securing site control, data collection, community
engagement, preliminary permitting and offtake analysis. We consider site control to be achieved once we
have obtained purchase or lease options, easements or other written rights of access to the land necessary
for the construction and operation of the solar project.
Mid-stage development is focused on:
• Transmission or Distribution Interconnection Queue and Study: Identification of a point of
interconnection to the transmission or distribution system, obtaining a queue position with the
relevant electric system operator, and completing at least one feasibility, screening, or system
impact study (or equivalent). An interconnection study and its approval by the relevant transmission
or distribution system operator is a prerequisite to the design and construction of the facilities that
will interconnect the solar project with the transmission or distribution system.
• Environmental Impact Study and Permitting: Completion of an environmental impact study (or
equivalent) is often a prerequisite to obtaining zoning/use permits or development approvals.
Depending on the size and location of the project, we generally initiate the studies needed for an
environmental impact study approximately 18 months prior to the anticipated construction start
date and receive the material permits before an interconnection is agreed with the relevant utility.
To consider this milestone completed, we will have either finished an environmental impact study
or received the material permits or approvals for the construction and operation of our solar project.
The most important goal of the advanced stage is to obtain an interconnection agreement with the relevant
electric system operator and a revenue contract to sell power, usually through a Power Purchase Agreement
(“PPA”). Long-term PPAs range from 5 to 15 years with creditworthy off takers, typically obtained by
responding to requests for proposals or conducting bilateral negotiations with utility, commercial, industrial,
municipal, or financial enterprises. In certain markets with liquid electricity trading, it is possible to enter into
financial hedges to support a minimum price of power sold into such markets. More recently however, there
have been investors prepared to acquire solar projects operating on a merchant basis without a PPA, given
the ability to sell power into grids and make arbitrage profits.
A project in the advanced stage indicates a higher degree of confidence for successful completion. However,
completion of a project may become unachievable during any stage of development for a variety of reasons
including loss of land control, unsuitable studies, inability to obtain necessary permits or approvals,
uneconomic or unavailable interconnection, or increased construction costs. Should a project be deemed
not viable at any stage of development, the project will be discontinued. Accordingly, our focus is to
continuously and rigorously evaluate project viability through the earlier development stages and identify
projects which will not be viable as early as possible.
Once it has completed the advanced stage of development, a project is considered to be shovel-ready. At
this point, VivoPower seeks qualified investors to purchase projects in order to maximize the return on our
capital and opportunities from capital recycling. Potential purchasers are identified and engaged from those
parties known to VivoPower, its development partners, previous investors, and generally within the
renewable energy industry. In some cases, VivoPower may also opt to sell projects prior to completion of the
advanced stage depending on investor interest and market conditions.
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Strategic Report (continued)
VivoPower International PLC for the year ended 30 June 2020
Depending on the purchasing party and their particular investment objectives and capabilities, VivoPower
may enter into a development or project management agreement with them to manage construction on
their behalf. During the construction stage, key contracts such as the PPA and interconnection agreements
are finalized and executed (if not done previously). Costs to build and operate the project are determined
with selected contractors, internal technical resources and engineers. All the definitive contracts between
the project(s), financing parties and the EPC firm who will build the project will be executed, and after
construction is completed, the project is commissioned and interconnected to the grid, achieving its
commercial operations date (“COD”).
Once achieving COD, the operational stage begins, and the project generates electricity and sells power.
During this phase, VivoPower may provide ongoing services encompassing operations, maintenance and
optimization of these solar plants pursuant to long-term contracts. In addition, if a minority equity stake is
retained, VivoPower may realize revenues from the sale of power and/or environmental credits or
certificates.
The solar energy development industry is competitive. Competition within the industry is strong and can be
expected to continue to increase. Some of our competitors have substantially more operating experience,
access to financial, engineering, construction, business development or other resources important for solar
energy development, larger footprints or brand recognition. We compete with energy and infrastructure
funds and renewable energy companies and developers, as well as conventional power companies, to
acquire, invest in and develop energy projects. Competition in the solar energy sector can be significantly
affected by legal, regulatory and tax changes, as well as environmental and energy incentives provided by
governmental authorities.
The solar industry, as well as the greater renewable energy and electricity industry, is also in the midst of a
period of significant evolution. With more variable renewable resources being installed than ever before,
electrical grid operators, utilities, retailers and consumers are demonstrating increasing appetite for battery
energy storage technologies, both alongside renewable energy systems and on a standalone basis, to
smooth or “firm” their electricity generation and demand profiles. At the same time, the cost to install energy
storage assets, which was prohibitively high just a few years ago, is falling rapidly, resulting in increasingly
attractive economics for battery systems. While VivoPower continues to pursue new solar projects, the
Company is also accelerating its exploration of opportunities to develop storage assets, both combined with
and separate from its solar developments.
VivoPower’s business is affected by various regulatory frameworks, particularly ones relating to energy and
the environment. These include the rules and regulations of the Federal Energy Regulatory Commission
(“FERC”), the U.S. Environmental Protection Agency (“EPA”), AEMO, regional organizations that regulate
wholesale electrical markets, state agencies that regulate energy development and generation and
environmental matters, and foreign governmental bodies that occupy roles similar to the foregoing.
Our business is also affected by various policy mechanisms that have been used by governments to
accelerate the adoption of solar power or renewable energy technologies generally. Examples of such policy
mechanisms include rebates, performance-based incentives, feed-in tariffs, tax credits, accelerated
depreciation schedules and net metering policies. In some cases, such mechanisms are scheduled to be
reduced or to expire or could be eliminated altogether. Rebates are provided to purchasers of solar systems
based on the cost and size of the purchaser’s solar power system. Performance-based incentives provide
payments to a solar system owner based on the energy produced by their solar power system. Feed-in tariffs
(“FITs”) pay solar system owners for solar power system generation based on energy produced at a rate that
is generally guaranteed for a period of time. Tax credits and accelerated depreciation schedules permit an
owner of a solar project to claim applicable credits and deduct depreciation from income on an accelerated
basis on their tax returns. Net metering policies allow customers to deliver to the electric grid any excess
electricity produced by their on-site solar power systems, and to be credited for that excess electricity at a
rate that is often at or near the full retail price of electricity.
Page | 12
Strategic Report (continued)
VivoPower International PLC for the year ended 30 June 2020
In addition, many states in the U.S. and Australia have adopted renewable portfolio standards or similar
mechanisms which mandate that a certain portion of electricity delivered by utilities to their customers
come from eligible renewable energy resources. Some states have significantly expanded their renewable
portfolio standards in recent years.
Our business is also affected by trade policy and regulations. Examples include tariffs on solar modules and
solar cells. Such tariffs can have a significant impact on the pricing and supply of solar cells and solar
modules, and as a result impact the sale value and/or economic viability of projects.
Australia
VivoPower has developed and acquired a diverse portfolio of operating rooftop solar projects in Australia,
totalling 2.8 MW across 85 sites in every Australian state and the Australian Capital Territory. These projects
are fully contracted with commercial, municipal and non-profit customers under long-term PPAs. Pursuant
to the Company’s strategy to recycle development capital, we have profitably monetized nearly all of these
projects, having completed the sale of the Amaroo Solar Project (0.6 MW) in February 2018, the Express Power
Portfolio of solar projects (0.2 MW) in September 2018, the Juice Capital Portfolio of solar projects (0.3 MW)
in November 2018, and the Sun Connect Portfolio of solar projects (1.6 MW) between January and October
2019.
The sale of the remaining Sun Connect Portfolio projects in October 2019 was a significant event for the
Company during the past financial year. The Sun Connect portfolio was acquired in December 2015 and
originally consisted of 68 commercial and industrial sites totalling 1.6 MW spread across five Australian
states, with PPA end dates between 2033 and 2035. The Company invested considerable time and effort to
improve the portfolio including site performance evaluations, warranty replacements of faulty components
and customer communication. Prior to sale of the remaining portfolio, a total of 15 sites were sold through
individual transactions for gross proceeds of $305,000. In October 2019, the Company announced the sale of
the remaining 53 projects for USD$1.1 million, which VivoPower believes reflects an attractive return on
invested capital. Combined with proceeds from individual project sales and monthly PPA receipts, the sale
represented a 2.0x multiple of invested capital and an unlevered IRR of 20.1% before tax over the life of the
Company’s investment in the Sun Connect Portfolio.
VivoPower is continuing to develop and finance new small to medium sized solar projects throughout
Australia, both individually and with experienced partners. In July 2018, VivoPower entered into a definitive
investment agreement with ITP for the development of a portfolio of utility-scale solar projects in New South
Wales to an initial target of 50 MW. ITP is a global leader in renewable energy engineering, strategy and
construction, as well as in energy sector analytics. Under the terms of the investment agreement, VivoPower
funds up to 1.4 cents per watt (AC) of development costs per project in exchange for a 60% equity stake in
each project, with an opportunity to achieve a sale and transfer at multiple stages, as early as shovel-ready.
The projects will be developed on a merchant basis, with corporate offsite PPAs sought on an opportunistic
basis during the development period.
To date, the Company has commenced development of two solar projects under the ITP investment
agreement, the 15 MW Yoogali Solar Farm and the 5 MW Daisy Hill Solar Farm, both located in the Riverina
region of New South Wales. Both projects are in advanced stages of development, and discussions are
currently underway with various investors seeking to acquire the projects. Depending on the investor,
VivoPower may remain involved to construct the project for a development fee to be agreed.
VivoPower believes its continued focus and investment in the Australian solar market is strategic, not only
for the returns which VivoPower believes it can provide but also for the pipeline of potential EPC work it can
provide to J.A. Martin. Additionally, all projects jointly developed by VivoPower and ITP are designed with
the option to add or include battery storage. As the cost of energy storage technologies continues to decline
and revenue opportunities for grid-connected storage assets increase due to high levels of renewable
penetration within the Australian electrical grid, the economic feasibility of batteries co-located with solar
Page | 13
Strategic Report (continued)
VivoPower International PLC for the year ended 30 June 2020
projects is likely to improve and provide additional value potential for these projects. This is expected to be
a strategic opportunity for the Kenshaw arm of Aevitas, given its critical power credentials.
The Australian renewable energy market is expected to experience very strong growth over the coming years.
According to AEMO, 26 GW of new utility-scale, grid-connected renewable energy assets will be required by
2040 to replace the nearly two-thirds of Australia’s aging coal generators scheduled to be retired in that time.
Combined with investment in new transmission infrastructure and up to 19 GW in new energy storage
technologies, including big batteries and pumped hydro, AEMO foresees periods when up to 90% of energy
demand in Australia’s National Electricity Market could be met by renewables by 2035. VivoPower is well
positioned to be involved in the continued growth in both solar and energy storage.
Already the world leader in residential solar penetration, Australia will continue to add home rooftop solar,
while at the same time seeing a boom in larger-scale commercial, industrial and utility-scale installations
over the coming decades. With new solar already far less expensive than building or extending the lives of
existing coal and gas generators, and nearly cheaper than running existing coal, Australia’s solar boom is
expected to continue even in the absence of any additional incentives or other legislation. This will be
amplified by battery storage, which has now become economic without subsidies in most parts of Australia.
The Company believes that the combined project development, financing and construction expertise of
VivoPower and J.A. Martin uniquely positions us as a broad-spectrum service provider to the fast growing
Australian renewables market, with capabilities to develop, finance and deliver both grid-connected and
behind-the-meter solar and energy storage solutions for a range of commercial, industrial, corporate and
municipal customers.
United States
VivoPower’s key objective in the U.S. is to enhance the value of and then monetize its portfolio of U.S. solar
projects.
VivoPower’s portfolio of U.S. solar projects is held by Innovative Solar Ventures I, LLC (“ISS Joint Venture”), a
joint venture with an affiliate of ISS. VivoPower invested in the ISS Joint Venture in April 2017 and secured a
50% economic ownership in a diversified portfolio consisting originally of 38 solar projects in nine states
across the U.S. with a combined potential electrical generating capacity of 1.8 GW.
Under the terms of the ISS Joint Venture agreements, the Company committed to invest $14.1 million in the
ISS Joint Venture for its 50% equity interest, after reducing the commitment by $0.8 million in potential
brokerage commissions that have not been required and which have been credited towards the Company’s
commitment. The $14.1 million commitment is allocated to each of the 38 projects based on monthly capital
contributions determined with reference to completion of specific project development milestones under
an approved development budget for the ISS Joint Venture. To 30 June 2020, the Company contributed $13.1
million of the $14.1 million commitment to the ISS Joint Venture, leaving a remaining capital commitment
at 30 June 2020, of $1.1 million, which is recorded in trade and other payables.
With respect to any sale, 2/3 of the first $15 million of cumulative gross proceeds of project sales are
distributed to VivoPower, 1/3 of the following $15 million, and 50% thereafter.
Of the original 38 projects, 6 have been discontinued as we considered them less economically attractive
versus other projects and did not want to invest further capital in them. A further 9 projects have had their
development put on hold due to economic considerations subsequent to VivoPower assuming Manager and
Developer responsibilities of the ISS Joint Venture in April 2020. The projects are in various stages of
development as summarized below and all are being actively marketed for sale or further developed with an
expectation of full realization within the next 12 to 24 months. The reflection of projects in fiscal years is
based on the expected date the project will complete the advanced stage of development and be “shovel-
ready” and is for indicative purposes only as projects may be sold at any stage of development. Whilst a
significant number of projects have been discontinued or put on hold in the year ended 30 June 2020, the
Page | 14
Strategic Report (continued)
VivoPower International PLC for the year ended 30 June 2020
overall investment in the portfolio is not considered impaired, as the Company believes that the invested
cost in the ISS Joint Venture will be recovered by project sales.
Project
State
Capacity
(MW)
Development
Stage
Land
Control
Interconnection
Queue
Environmental
Studies
Early Stage
Mid Stage
Zoning / Use
Permit
Advanced Stage
Interconnection
Study
Interconnection
Agreement
Power Purchase
Agreement
FY2021 Solar Projects
TX 75
TX 137
TX 144
TX 145
TX 165
TX 305
KS 291
OK 339
KS 229
OK 267
Subtotal
FY2022 Solar Projects
TX 177
TX 195
TX 341
TX 207
NM 88
TX 107
TX 276
TX 307
SC 76
CO 239
GA 83
GA 86
GA 90
Subtotal
Projects On Hold*
GA 111
SC 129
SC 132
WA 211
KS 244
CO 269
CO 320
WA 370
CO 371
Subtotal
Projects Discontinued
FL 78
FL 168
FL 330
SC 97
SC 84
GA 112
Subtotal
TX
TX
TX
TX
TX
TX
KS
OK
KS
OK
10 Projects
TX
TX
TX
TX
NM
TX
TX
TX
SC
CO
GA
GA
GA
13 Projects
GA
SC
SC
WA
KS
CO
CO
WA
CO
9 Projects
FL
FL
FL
SC
SC
GA
6 Projects
55
28
82
62
62
41
34
69
69
41
543
34
41
28
83
87
93
55
55
21
55
27
27
27
634
27
28
28
56
34
55
41
74
86
429
75
43
41
28
30
20
238
Advanced
Advanced
Advanced
Advanced
Advanced
Advanced
Mid
Mid
Mid
Mid
Advanced
Advanced
Advanced
Mid
Mid
Mid
Mid
Mid
Mid
Early
Early
Early
Early
On Hold - FY20
On Hold - FY20
On Hold - FY20
On Hold - FY20
On Hold - FY20
On Hold - FY20
On Hold - FY20
On Hold - FY20
On Hold - FY20
Discontinued - FY20
Discontinued - FY20
Discontinued - FY20
Discontinued - FY19
Discontinued - FY19
Discontinued - FY19
Total Active & Deferred
32 Projects
Total US Projects
38 Projects
1,607
1,844
◆ Project has completed Interconnection Studies and executed an Interconnection Agreement, however, studies and agreement will likely
need to be redone.
* Development of these projects has been put on hold due to economic considerations.
Page | 15
Strategic Report (continued)
VivoPower International PLC for the year ended 30 June 2020
Financial Results
(US dollars in thousands)
Revenue from contracts with customers
Costs of sales
Gross profit
General and administrative expenses
Gain/(loss) on solar development
Depreciation of property and equipment
Amortisation of intangible assets
Operating profit/(loss)
Restructuring & other non-recurring costs
Finance expense
Loss before income tax
Income tax
Loss for the year
Adjusted EBITDA
Year Ended 30 June
2020
2019
(unaudited)
48,710
(40,885)
7,825
(5,479)
1,589
(898)
(868)
2,169
(3,410)
(3,149)
(4,390)
(713)
(5,103)
3,935
43,545
(37,452)
6,093
(7,195)
(2,668)
(411)
(1,036)
(5,217)
(2,404)
(3,345)
(10,966)
(353)
(11,319)
(3,770)
During the year ended 30 June 2020, the Group generated statutory revenue of $48.7 million, gross profit of
$7.8 million, operating profit of $2.2 million and a net loss of $5.1 million. For the year ended 30 June 2019,
the Group generated revenue of $43.5 million, gross profit of $6.1 million, operating loss of $5.2 million, and
a net loss of $11.3 million.
Adjusted EBITDA for the year ended 30 June 2020 was a profit of $3.9 million, compared to a loss of $3.8
million for the previous year. Adjusted EBITDA is a non-IFRS financial measure. We define Adjusted EBITDA
as earnings before interest, taxes, depreciation and amortization, impairment of assets, impairment of
goodwill, and one-off non-recurring costs, including restructuring expenses, non-recurring remuneration
and consulting fees.
The results of operations for the year ended 30 June 2020 reflect a period of significant growth for the Critical
Power Services business segment, primarily as a result of a number of new contracts for Kenshaw with data
centre and hospital sector customers. These have contributed to a $5.7 million growth in Critical Power
Services revenues, to $48.6 million in the year ended 30 June 2020, compared to $42.9 million in the year
ended 30 June 2019. Solar revenues of $0.1 million in the year ended 30 June 2020, resulted from Australian
solar projects, which was lower than the $0.6 million generated for the year ended 30 June 2019 due to the
cessation of distribution revenues from sold US projects.
The Group also recorded a net gain of $1.6 million on Solar Development projects, comprising of a gain on
sale of VivoRex, LLC in the U.S and the Sun Connect portfolio in Australia, partly offset by a loss on
discontinued projects in the ISS portfolio.
Page | 16
Strategic Report (continued)
VivoPower International PLC for the year ended 30 June 2020
The results for the year ended 30 June 2020 also reflect savings of $1.7 million in general and administrative
costs compared to the year ended 30 June 2019. There was significant effort to rationalize the cost base of
the Solar Development business and Corporate Office segments in the year.
Management analyses our business in three reportable segments: Critical Power Services, Solar
Development, and Corporate Office. Critical Power Services is represented by J.A. Martin and Kenshaw
operating in Australia with a focus on the design, supply, installation and maintenance of power and control
systems. Solar Development is the development and sale of commercial and utility scale PV solar power
projects in the U.S. and Australia. Corporate Office is all UK based corporate functions.
Year Ended 30 June 2020 Compared to Year Ended 30 June 2019:
Year Ended 30 June 2020
(US dollars in thousands)
Critical Power
Services
Solar
Development
Corporate
Office
Revenue
Costs of sales
Gross profit
General and administrative expenses
Gain/(loss) on solar development
Depreciation and amortisation
Operating profit/(loss)
Restructuring and other non-recurring
costs
Finance expense – net
Profit/(loss) before taxation
Income tax
Profit/(loss) for the period
48,638
(40,865)
7,773
(2,745)
41
(1,718)
3,351
(124)
(1,436)
1,791
15
1,806
69
(20)
49
(469)
1,548
(45)
1,083
(1,296)
(9)
(222)
(728)
(950)
3
-
3
(2,265)
-
(3)
(2,265)
(1,990)
(1,704)
(5,959)
-
(5,959)
Year Ended 30 June 2019
(US dollars in thousands)
Critical Power
Services
Solar
Development
Corporate
Office
Revenue
Costs of sales
Gross profit
General and administrative expenses
Loss on solar development
Depreciation and amortisation
Operating profit/(loss)
Restructuring and other non-recurring
costs
Finance expense – net
Loss before taxation
Income tax
Loss for the period
42,852
(37,110)
5,742
(2,798)
(21)
(1,225)
1,698
(23)
(1,615)
60
(367)
(307)
693
(342)
351
(1,671)
(2,542)
(216)
(4,078)
(297)
(99)
(4,474)
14
-
-
-
(2,726)
(105)
(6)
(2,838)
(2,084)
(1,634)
(6,552)
-
(353)
(4,460)
(6,552)
(11,319)
Page | 17
Total
48,710
(40,885)
7,825
(5,479)
1,589
(1,766)
2,169
(3,410)
(3,149)
(4,390)
(713)
(5,103)
Total
43,545
(37,452)
6,093
(7,195)
(2,668)
(1,447)
(5,217)
(2,404)
(3,345)
(10,966)
Strategic Report (continued)
VivoPower International PLC for the year ended 30 June 2020
The results of operations for the year ended 30 June 2020 further reflect $3.4 million restructuring and other
non-recurring costs. These comprise $1.0 million for legal and professional fees and $1.1 million provision
for the expected outcome of litigation related to disputes with a former Chief Executive Officer, Dr Philip
Comberg. In addition, $0.2 million of costs were incurred for workforce reduction and $1.1 million costs
related to project review and investigation costs for the ISS joint venture portfolio whilst still under
management and development responsibility of our joint venture partner, Innovative Solar Systems, LLC.
Restructuring and other detailed non-recurring costs are further described in Note 7 to the consolidated
financial statements.
Total finance expense for the year ended 30 June 2020 was $3.1 million, compared to $3.3 million for the
year ended 30 June 2019, with interest on convertible loan notes and preferred share financing in Critical
Power Services of $1.6 million and interest on the $19.0 million Arowana (AWN) shareholder loan of $1.2
million both in line with prior year. The reduction of $0.2 million compared to the prior year is a result of
larger foreign exchange losses incurred in the prior year.
As at 30 June 2020, the Group’s current assets were $20.5 million (as at 30 June 2019: $36.3 million; as at 31
March 2019: $29.8 million), which was comprised of $2.8 million (as at 30 June 2019: $7.1 million; 31 March
2019: $4.5 million) of cash and cash equivalents, $1.0 million restricted cash (as at 30 June 2019: $0.6 million;
31 March 2019: $1.3 million), $12.6 million (as at 30 June 2019: $15.0 million; 31 March 2019: $10.4 million) of
trade and other receivables, and $4.1 million (as at 30 June 2019: $13.5 million; 31 March 2019: $13.5 million)
of assets held for sale related to the ISS Joint Venture portfolio, with the remainder of the portfolio not
expected to be sold within a 12 month timeframe reclassified to non-current equity accounted investments.
Current liabilities were $19.7 million as at 30 June 2020, (as at 30 June 2019: $29.1 million; 31 March 2019:
$20.8 million). The decrease results from a $5.5 million reversal of contract liabilities and accrued contract
costs related to critical power contracts that were in process at 30 June 2019, and $4.0 million of amounts
repaid via capitalization into the refinanced parent company loan on 30 June 2020, being accrued loan
interest ($2.1 million) related party payables ($1.1 million) and short term related party loans ($0.8 million).
Current asset-to-liability ratio as at 30 June 2020 was 1.04:1 (as at 30 June 2019: 1.25:1; 31 March 2019: 1.43:1).
As at 30 June 2020, the Group had net assets of $17.9 million (as at 30 June 2019: $22.5 million; 31 March
2019: $24.0 million), including intangible assets of $29.8 million (as at 30 June 2019: $31.8 million; 31 March
2019: $32.4 million). Property, plant and equipment decreased from $3.0 million as at 30 June 2019 to $2.5
million as at 30 June 2020, reflecting depreciation less replacement capital expenditure.
Cash used for the year ended 30 June 2020, was $4.3 million, arising from cash outflow from operating
activities of $1.9 million, cash generated by investing activities of $0.3 million, and cash outflow from
financing activities of $2.6 million. At June 30, 2020, the Group had cash reserves of $2.8 million (30 June
2019: $7.1 million; 31 March 2019: $4.5 million) and debt of $26.0 million (30 June 2019: $21.7 million; 31
March 2019: $19.3 million), giving a net debt position of $23.1 million (30 June 2019: $14.6 million; 31 March
2019: $14.7 million).
Cash flows from investing activities in the current year comprised $1.0 million proceeds from sale of Sun
Connect Solar project assets in Australia and $0.4 million proceeds from sale of property, plant and
equipment in Critical Power Services businesses, offset by purchase of $0.9 million of property, plant and
equipment in Critical Power Services businesses and $0.3 million investment in Solar project assets in
Australia.
Cash outflows from financing activities totalled $2.2 million in the year ended 30 June 2020 comprising $1.3
million short term parent company loan, $0.3 million chattel mortgage borrowings and $0.3 million bank
loans, offset by $0.3 million repayment of parent company loans, $0.4 million lease liability repayments, $0.3
million net repayment of debtor finance borrowings, $0.4 million net transfer to restricted cash, and $3.1
million finance expenses.
Page | 18
Strategic Report (continued)
VivoPower International PLC for the year ended 30 June 2020
Principal Risks and Uncertainties
VivoPower is exposed to a number of risks and uncertainties which could have a material impact on the
Group’s long-term performance and could cause actual results to differ materially from historical and
expected results.
Market risk
The Group’s financial performance is tied very closely to the business activity within both the renewable
energy and the investment management sectors. Capital and project availability are identified as being key
market risks.
Operational risk
VivoPower operates within local, and national, laws and regulations which from time to time may change.
Competitive risk
Having the ability to pay developers down-payments to secure pipeline is advantageous, but there is
competition from parties pursuing similar transactions. VivoPower expects greater competition from other
parties entering the sector with this capability.
People risk
Attraction and retention of key staff is essential to the continued success of the business. The Board
recognises that the future success of the Group will depend to a substantial extent not only on the ability
and experience of its senior management, but also on individuals and teams that support the projects. Staff
are remunerated appropriately, and employees are encouraged to develop their skills.
International risk
As the Group operates internationally, it is subject to the tax laws and regulations of several countries. In
addition, conducting business on different continents presents logistical and management challenges
whether related to local standards, business cultures or compliance. The Group takes careful steps to
comply with all applicable tax and other laws, rules and regulations.
Financial risk
It is the Group’s policy to manage identifiable financial risks. The Group operates internationally and so has
exposure to movements in exchange rates, in particular between the US Dollar, GB Pound and Australian
Dollar. The Group ensures that it holds sufficient cash amounts to meet all working capital requirements.
For further discussion on financial risk refer to Note 27 of the financial statements.
Employees
People are central to our business and the contribution of talented and motivated employees is vital to the
continued success of the Group. The Group has a policy of keeping employees informed of, and engaged in,
its business strategy through regular briefings and team meetings. Employee involvement at all levels is
encouraged.
It is a policy of the Group to recruit, develop and promote people on merit and to treat everyone equally
regardless of their race, ethnic origin or nationality, age, gender, sexual orientation, disability, religion or
belief.
The Group gives every consideration to applications for employment from disabled persons where the
requirements of the position may be adequately covered by the abilities of the applicant concerned. In the
event of members of staff becoming disabled, ways are examined to ensure that their employment with the
Group continues and that the appropriate training is arranged. It is the policy of the Group to ensure that the
training, career development and promotion of disabled employees should, as far as possible, be the same
as that of other employees.
Page | 19
Strategic Report (continued)
VivoPower International PLC for the year ended 30 June 2020
The table shows, as per required quoted company regulations, the number of staff of each gender employed
at the Company and their level of seniority.
Directors
Senior Manager
Employees
Total
Health and Safety
Female
Male
Total
0
7
14
21
5
17
165
187
5
24
179
208
The health and safety of the Group’s employees, customers, and visitors is of primary importance. The Group
is committed to creating and maintaining a safe and healthy working environment. Health and safety audits
and risk assessments, including fire risk assessments, are carried out regularly.
The Environment
The Group recognizes the importance of environmental responsibility and believes that its direct activities
have a positive impact on the environment as the Company facilitates greater use of renewable energy. In
addition, lightly damaged solar panels, that would have otherwise been bound for landfill, are donated to
charity.
Communities
VivoPower has maintained an active program of community involvement in the locations we operate,
including support for local children’s sport teams and engagement with other worthwhile causes supported
by our employees. In addition, as noted above, the Company donates lightly damaged solar panels to a
charity that provides aid to the impoverished, supports local education initiatives, and assists with charitable
renewable energy projects.
B Corporation Certification
VivoPower became certified as a B Corporation in April 2018. Consistent with this certification, the
shareholders approved changes to the Articles of Association of the Company at its annual general meeting
on 20 August 2018, to include:
(i)
the purposes of the Company are to promote the success of the Company for the benefit of its members
as a whole and, through its business and operations, to have a material positive impact on society and
the environment, taken as a whole;
(ii)
in exercising the powers of the Company, a Director shall have regard to, among other matters,
stakeholder interests such as:
a.
b.
the likely consequences of any decision in the long term;
the interests of the Company's employees;
c.
the need to foster the Company's business relationships with suppliers, customers and others;
d.
the impact of the Company's operations on the community and the environment;
e.
the desirability of the Company maintaining a reputation for high standards of business conduct;
and
f.
the need to act fairly as between members of the Company.
As a B Corporation, the Company is committed to continuously improve its B Corporation score and deliver
on the B Corporation triple bottom line of Planet, People and Profit.
Page | 20
Strategic Report (continued)
VivoPower International PLC for the year ended 30 June 2020
The Directors consider the Company’s ongoing commitment to B Corporation certification and continual
improvement thereunder as the primary means by which the Directors have had regard to the matters set
out in section 172(1) of the Companies Act 2006 when performing their duty to act in the way most likely to
promote the success of the Company for the benefit of its members as a whole.
The Strategic Report comprising pages 7 to 21 was approved by the Board and signed on its behalf by:
Kevin Chin
Executive Chairman
7 September 2020
Page | 21
Directors’ Report
VivoPower International PLC for the year ended 30 June 2020
Directors’ Report
The Directors are pleased to present their report and the audited financial statements of VivoPower
International PLC (“the Company”) and its subsidiary undertakings (together “the Group”) for the year ended
30 June 2020. Subsidiary and associated undertakings are listed in Note 13 to the financial statements.
Directors
The following table sets forth the names, ages and positions of our directors and executive officers. Unless
otherwise indicated, the business address for all of our directors and executive officers is The Scalpel, 18th
Floor, 52 Lime Street, London EC3M 7AF, UK.
Name
Directors:
Kevin Chin
Age Position
Appointed
Resigned
47 Non-Executive Director and
27 April 2016
Chairman
Matthew Cahir (1)(2)(3)
55 Non-Executive Director
16 June 2020
Peter Jeavons (1)(2)(3)
55 Non-Executive Director
16 June 2020
William Langdon (1)(2)(3)
59 Non-Executive Director
16 June 2020
Michael Hui
Shimi Shah
Peter Sermol
Ashwin Roy
Executive Officers:
40 Non-Executive Director
22 January 2020
49 Non-Executive Director
28 December 2017
16 June 2020
58 Non-Executive Director
21 December 2016
16 June 2020
45 Non-Executive Director
20 September 2019
16 June 2020
Kevin Chin
47 Executive Chairman and Chief
25 March 2020
Executive Officer
Art Russell
59
Interim Chief Executive Officer
Chief Financial Officer
26 February 2019
17 February 2020
1 December 2017
25 February 2019
(1)Member of the Audit and Risk Committee.
(2)Member of the Remuneration Committee.
(3)Member of the Nomination Committee.
The following sets forth biographical information regarding our directors and executive officers. There are
no family relationships between any director or executive officer and any other director or executive officer.
There are no other arrangements or understandings with major shareholders, customers, suppliers or
others, pursuant to which any person referred to above was selected as a director or member of senior
management, except that: Kevin Chin is the Chairman of AWN Holdings Limited (“AWN”), which is a beneficial
owner of 60.3% of VivoPower, and is the beneficial owner of 10.2% of VivoPower through The Panaga Group
Trust. Art Russell was employed by Arowana International UK Limited, a subsidiary of AWN, and was
seconded on a full-time basis to VivoPower.
Kevin Chin
Kevin Chin is the founder of Arowana, a diversified investment group with operating companies across the
U.K., U.S., Asia and Australia, as well as owning other unlisted companies and investments. One of those
operating companies is AWN, which is listed on the Australian Securities Exchange. AWN is the largest
shareholder in VivoPower.
Page | 22
Directors’ Report (continued)
VivoPower International PLC for the year ended 30 June 2020
Over his 25 plus year career, Mr. Chin has accumulated extensive experience in “hands on” strategic and
operational management having served as Chief Executive Officer, Chief Financial Officer and Chief
Operating Officer of various public and private companies across a range of industries, including solar
energy, software, traffic management, education, funds management and vocational education. He is the
author of the business book, HyperTurnaround! which chronicles his leadership of the privatization, rapid
turnaround and subsequent global scale up of a software company called RuleBurst Haley culminating in a
sale to Oracle. Mr. Chin regularly writes for Inc.com on topic such as turnarounds and growing pains
challenges. He also has significant international experience in private equity, buyouts of public companies,
mergers and acquisitions and capital raisings as well as funds management, accounting, litigation support
and valuations with prior roles at LFG, J.P. Morgan, PwC and Deloitte.
Mr. Chin holds a Bachelor of Commerce degree from the University of New South Wales where he was one of
the inaugural University Co-Op Scholars with the School of Banking and Finance. He is also a qualified
Chartered Accountant and a Fellow of FINSIA, where he was a curriculum writer and lecturer in the Master of
Applied Finance program. Mr. Chin resides primarily in London, UK.
Matthew Cahir
Matthew Cahir has had a 35-plus year career focused on the enterprise software, technology and
telecommunications sectors. In the last 15 years, he has held a number of global executive leadership roles,
including as Chief Executive Officer, President and Chief Operating Officer. His key expertise has been
working for private equity and venture capital backed firms focused on turning around distressed or
underperforming portfolio companies.
Mr. Cahir has worked for the Goldman Sachs backed Nuxeo, Exeter Group, the Francisco Partners backed
Mincom and RuleBurst Haley (acquired by Oracle) among others. He is a global expert and teacher in sales
strategy and execution and has worked with the world’s leading teams at firms that include Vista Equity
Partners, Accenture, Oracle, SAP and CA. He resides in Virginia, just outside of Washington, D.C.
Mr. Cahir is chairman of the Remuneration and Nominations Committee of the Company.
William Langdon
William Langdon has had a 25-plus year career in the software, technology and enterprise data sectors after
starting his career at Disney in finance and marketing. He served as Chief Financial Officer of venture backed
OmniTicket Network followed by a series of senior management roles at digital mapping leader NAVTEQ
(acquired by Nokia). After starting in European Sales, he became General Manager of the global Distribution
division and President of NAVTEQ’s first acquisition, a digital mapping company based in Seoul, South Korea.
Since that time, he has served in a series of senior management roles with venture-backed French
technology start-ups including Goldman Sachs backed Nuxeo and Intersec, backed by Highland Europe.
Mr. Langdon received his MBA from Yale University and is a member of the Singula Institute Board of
Directors. He resides in New York City, United States.
Mr. Langdon serves as chairman of the Audit and Risk Committee of the Company.
Peter Jeavons
Peter Jeavons has over 30 years’ experience working in a number of executive-level international roles
predominantly focused on leading technology and enterprise software solutions across many industry
sectors. His career has been spent working for small start-ups, medium-sized and large corporate
businesses, helping to drive strong growth, turnarounds and with involvement from both sides in successful
merger and acquisition activities. He specializes in policy, regulatory and legislative compliance-based
solutions and has a strong interest in how technology can help to drive sustainability and save the planet.
Mr. Jeavons was part of the global leadership team that sold a high-growth business to Oracle and then
successfully relaunched their regulatory compliance solution as a native SaaS platform internationally.
During his career he has also worked for companies including Infor, which is another large enterprise
Page | 23
Directors’ Report (continued)
VivoPower International PLC for the year ended 30 June 2020
software company and was responsible for the European business at Nuxeo, a Goldman Sachs backed, open
source, enterprise content management software provider.
Mr. Jeavons currently leads the EMEA business for First Insight, the market leader in machine-led, artificial
intelligence and predictive analytics for retailers. Mr. Jeavons completed his Non-Executive Director’s
diploma with Pearson in 2013 and is also supporting other software start-ups to scale their operations
internationally. He resides in London, UK.
Michael Hui
Michael Hui brings a unique background to the VivoPower Board given his dual Information Technology and
Law degrees and experiences. During his career, he has built significant expertise across a diverse range of
sectors in both an investment as well as an operational capacity.
Mr. Hui serves as the Director of Private Enterprise Investments (Australasia) for VivoPower’s largest
shareholder, AWN Holdings Ltd and also the broader Arowana group. In 2011, he joined Arowana as an
Investment Director, and since then he has worked across a range of Arowana’s operating businesses
including education and asset management. Mr. Hui led the formation and structuring of the Arowana
Australasian Special Situations Fund (AASSF) and most recently, the building of Arowana’s education
business, EdventureCo. His primary focus at present is driving corporate development (including mergers
and acquisitions and technology-based transformation), working alongside the leadership teams of Aevitas
and EdventureCo. Previously, Mr. Hui was co-founder and Chief Executive Officer of an online payments
business and spent more than 10 years as a lawyer practicing corporate and commercial law. He resides in
Brisbane, Australia.
Statement of Directors’ Responsibilities
The directors are responsible for preparing the Annual Report and Accounts for the Group and parent
company financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare Group and parent company financial statements for the
financial period. Under that law they have elected to prepare the Group financial statements in accordance
with International Financial Reporting Standards (IFRS) adopted by the European Union and applicable law
and have elected to prepare the financial statements for Company under the same methodology.
Under company law the directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group and parent company and of their profit or
loss for that period. In preparing each of the Group and parent company financial statements, the directors
are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
•
state whether applicable IFRSs adopted by the European Union have been followed, subject to any
material departures disclosed and explained in the financial statements; and,
• prepare the financial on the going concern basis unless it is inappropriate to presume that the Group
and parent company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Group’s and parent company’s transactions and disclose with reasonable accuracy at any time
the financial position of the Group and parent company and enable them to ensure that its financial
statements comply with the Companies Act 2006. They have general responsibility for taking such steps as
are reasonably open to them to safeguard the assets of the Group and parent company and to prevent and
detect fraud and other irregularities.
This annual report and financial statements together with the Notice of Annual General Meeting and other
information regarding the Group may be viewed on the Company’s website at www.vivopower.com.
Page | 24
Directors’ Report (continued)
VivoPower International PLC for the year ended 30 June 2020
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website. Legislation in the UK governing the preparation and dissemination of
the financial statements may differ from the legislation in other jurisdictions in which the Company operates,
including the U.S. and Australia.
The Directors consider the Company’s ongoing commitment to B Corp certification and continual
improvement thereunder, as discussed on page 20 of the Strategic Report, as the primary means by which
the Directors have had regard to the matters set out in section 172(1) of the Companies Act 2006 when
performing their duty to act in the way most likely to promote the success of the Company for the benefit of
its members as a whole.
Directors’ Insurance and Indemnities
The Directors have the benefit of the indemnity provisions contained in the Company’s Articles of Association
and the Company has maintained throughout the year directors’ and officers’ liability insurance for the
benefit of the Company, the Directors and its officers.
The Company has entered into qualifying third-party indemnity arrangements for the benefit of all its
Directors in a form and scope which comply with the requirements of the Companies Act 2006 and which
were in force throughout the year and remain in force.
Future Developments
A detailed description of the Group’s business operations, results for the year ended 30 June 2020, and likely
future developments are presented in detail in the Strategic Report.
Financial Instruments
The Group’s principal financial instruments are bank balances, cash and medium-term loans. The main
purpose of these financial instruments is to manage the Group’s funding and liquidity requirements. The
Group also has other financial instruments such as trade receivables and trade payables which arise directly
from its operations. The Board has overall responsibility for the establishment and oversight of the Group’s
risk management framework. Policy for managing risks is set by the Chief Executive Officer and is
implemented by the Group’s finance department. All risks are managed centrally with a tight control of all
financial matters. For additional information on the composition of financial instruments, management
objectives and policies, risk exposure and mitigation refer to Note 27 of the financial statements.
Going Concern
The financial statements have been prepared on a going concern basis, as Directors believe the Company
will be able to meet its liabilities as they fall due.
As at 30 June 2020, the Company had unrestricted cash totalling $2.8 million, compared to $7.1 million as at
30 June 2019, $4.5 million as at 31 March 2019 and $1.9 million as at 31 March 2018.
During the year ended 30 June 2020, the Company reduced general and administrative expenses within the
Solar Development and Corporate segments by a further $1.7 million per annum, and further reductions
have been implemented going forward, including switching to equity based remuneration for the Board of
Directors as part of the Company’s hyper-turnaround programme (which was commenced in March 2020
upon Kevin Chin assuming the Executive Chair and Chief Executive Officer roles). The Company’s Critical
Power Services segment represented by J.A. Martin Electrical Pty Limited and Kenshaw Electrical Pty Limited
produced $5.1 million EBITDA for the year ended 30 June 2020.
The Company is also engaged in a financing initiative with respect to these businesses, which is expected to
release restricted cash of $1.0 million and provide up to $1.0 million of additional working capital. Lastly, the
Company is actively engaged in a process to maximise value and ultimately monetizing its investment in the
ISS Joint Venture, with $4.1 million classified as assets held for sale; this investment is expected to be realized
Page | 25
Directors’ Report (continued)
VivoPower International PLC for the year ended 30 June 2020
in cash over the next 12 months. The Directors believe these actions provide sufficient cash to support
business operations and meet obligations as they become due through September 2021.
To ensure success of the business, the directors have prepared and reviewed additional plans to mitigate
any cash flow risk that may arise during the next twelve months, including uncertainties arising from COVID-
19. These actions include the implementation of further operational cost reductions and a further sale of
assets as required.
The Directors have examined going concern against a detailed profit, working capital, and cash flow forecast
to September 2021, which reflects the matters discussed in the foregoing paragraphs but does not reflect
any additional share issuance, new debt facilities other than disclosed above, nor sale of assets other than
in the ordinary course of business. Having reviewed the future plans and projections for the Company’s
business and its current financial position, the directors are satisfied that the Company has adequate
financial resources to continue to manage the business risks successfully and to remain in operational
existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in
preparing the financial statements.
Legal Proceedings
On 26 February 2018, Philip Comberg, formerly Chief Executive Officer and formerly a member of the Board
of Directors of VivoPower, filed a claim in the High Court of Justice Queen’s Bench Division in the UK against
VivoPower and a subsidiary, VivoPower International Services Limited (“VISL”). The claim is in respect of
payments alleged to be due to Mr. Comberg, damages, and restitution in relation to services allegedly
rendered by Mr. Comberg, interest and costs. In particular, Mr. Comberg claims VISL committed a repudiatory
breach of Mr. Comberg’s service agreement with VISL in connection with the termination of Mr. Comberg’s
employment in October 2017, and claims as damages amounts including £615,600 in unpaid amounts
allegedly relating to the notice period under the service agreement, £540,000 relating to shares of stock in
VivoPower that Mr. Comberg alleges were not delivered to him but were due, and, inter alia, amounts relating
to bonuses alleged to be due, fees relating to services Mr. Comberg claims he provided, as well as interest
and costs (collectively, the “Comberg Claims”).
On 9 April 2018, VivoPower and VISL filed a defence and counterclaims against Mr. Comberg. In the defence,
VivoPower and VISL denied that a repudiatory breach was committed by VISL and denied the other Comberg
Claims and asserted that Mr. Comberg was terminated for cause and/or by the acceptance on the part of
VISL of Mr. Comberg’s own repudiatory breach of Mr. Comberg’s service agreement. VivoPower and VISL also
filed counterclaims against Mr. Comberg alleging that Mr. Comberg had mismanaged the Company,
misrepresented information to the VivoPower Board, and failed to report his own wrongdoing in breach of
his services agreement and fiduciary duties to VivoPower and VISL.
On 26 November 2018, VivoPower and VISL agreed to a settlement of the counterclaims for an undisclosed
amount. No settlement has been reached with respect to Mr. Comberg’s claim. VivoPower and VISL continue
to strongly deny and defend the Comberg Claims.
After aborted attempts at settlement, the matter was heard in the UK High Court in the first two weeks of
March 2020. At the time of writing, the Company is still awaiting the verdict from the trial.
In the year ended 30 June 2020, the Company has incurred $0.9 million of legal fees in relation to this matter,
in addition to amounts incurred in prior periods. The Company has also made a provision at 30 June 2020,
for the expected outcome of the trial of $1.1 million, including allocation of costs, based on legal counsel
advice about the Company’s chances of success for the different elements of the claims.
In June 2020, the Company advised that it had secured management control of its U.S. solar development
joint venture company, Innovative Solar Ventures I LLC. Post year-end, the Company gained board control
of the joint venture. Subsequent to this change, the Company received a proposal from its joint venture
partner, ISS, where they offered to transfer ownership of their 50% of the joint venture portfolio to VivoPower
for US$1 consideration. The consequence of accepting this offer would be an uplift of 74% in the size of the
Page | 26
Directors’ Report (continued)
VivoPower International PLC for the year ended 30 June 2020
Company’s US solar development portfolio to 1,607 MW, when compared to the original starting portfolio of
922 MW (representing 50% of the 1,844 MW joint venture portfolio that the Company invested in back in April
2017) . However, the offer is conditional upon VivoPower forgoing any rights to future claims against ISS. At
the time of writing, negotiations remain ongoing between each party’s legal advisers as VivoPower is seeking
additional consideration over and above the offer which has been tabled.
Donations
During the year ended 30 June 2020, the Group made no political donations nor other political expenditures.
Greenhouse Gas Emissions
Due to the difficulty of calculation, it is not practical for the Company to obtain information on greenhouse
gas emissions resulting from our activities or operations or from use of purchased energy. Accordingly, no
disclosure is made in this regard.
Share Capital
As at 30 June 2020, there were 13,557,376 ordinary shares in issue. There were no new shares issued or
repurchased during the year. At the Company’s Annual General Meeting in 2017, the Directors were given
authority to allot shares up to an aggregate nominal amount of $1,560.00.
On 30 March 2017, the Company repurchased 129,805 shares at a price of $4.50 per share for a total of
$591,911, including commission and held them as treasury shares. During the three months ended 30 June
2019, 51,000 shares (year ended 31 March 2019: 75,805 shares) were awarded to employees under the
Company’s 2017 Omnibus Incentive Plan. Based on the closing market value of these shares on the day of
award, $61,560 (year ended 31 March 2019: $85,660) was expensed as employee compensation during the
three months ended 30 June 2019 and the remaining cost of $171,000 was charged against retained
earnings. The remaining 3,000 shares were awarded to employees in the year ended 30 June 2020 under the
Company’s 2017 Omnibus Incentive Plan.
There are no specific restrictions on the transfer of shares in the Company, which is governed by the Articles
of Association and prevailing legislation, nor is the Company aware of any agreements between holders of
securities that may result in restrictions on the transfer of shares or that may result in restrictions on voting
rights.
There are no persons holding securities carrying special rights regarding control of the Company, no special
rights attaching to shares under employee share schemes, no restrictions on voting rights, nor any significant
agreements that take effect, alter or terminate on change of control of the Company following a takeover,
with the exception of the conversion rights attached to the convertible preference shares and convertible
loan notes in Aevitas Group Limited as described in Note 23 to the consolidated financial statements.
Substantial Interests
The following table sets forth information with respect to beneficial ownership of our ordinary shares as of
the date of this Annual Report by each person known to us to beneficially own 5% or more of our ordinary
shares.
The beneficial ownership of VivoPower’s ordinary shares is determined based on 13,557,376 ordinary shares
issued and outstanding on 18 August 2020. Beneficial ownership is determined according to the rules of the
SEC, which generally provide that a person has beneficial ownership of a security if such person has or shares
the power to vote or direct the voting thereof, or to dispose or direct the disposition thereof or has the right
to acquire such powers within 60 days.
Page | 27
Directors’ Report (continued)
VivoPower International PLC for the year ended 30 June 2020
AWN Holdings Limited (2)
The Panaga Group Trust (1)
Number of Shares
Percentage of Issued Capital
8,176,804
1,241,531
60.3%
9.2%
(1) According to a Schedule 13D filed on 9 January 2017, on behalf of Kevin Chin, The Panaga Group Trust (the “Trust”), Panaga Group Pty
Ltd. (the “Trustee”), Mr. Chin, the Trust and the Trustee share sole voting and dispositive control over the shares reported. The business
address of these entities is Level 11, 110 Mary Street, Brisbane, QLD 4000, Australia.
(2) According to a Schedule 13D filed 31 January 2017, on behalf of AWN Holdings Limited (formerly Arowana International Limited) (“AWN”),
Arowana Australasian Special Situations Fund 1 Pty Limited (“Arowana Fund Co”), Arowana Australasian VCMP 2, LP (“Arowana Fund GP”),
Arowana Australasian Special Situations Partnership 1, LP (“Arowana Fund”), Arowana Energy Holdings Pty Ltd. (“Arowana Energy”), AWN,
as the controlling shareholder of each of Arowana Fund Co, Arowana Fund GP, Arowana Fund and Arowana Energy, may be deemed to
beneficially own 8,176,804 ordinary shares. This amount includes 5,718,879 ordinary shares held directly by AWN, 488,435 ordinary shares
directly held by certain entities controlled by AWN, 1,027,203 ordinary shares held by Arowana Fund and 942,287 ordinary shares held by
Arowana Energy. The business address of these entities is c/o AWN Holdings Ltd, at Level 11, 153 Walker Street, North Sydney, NSW 2060,
Australia.
Dividends
The Company has never declared or paid any dividends on our ordinary shares, and we currently do not plan
to declare dividends on our ordinary shares in the foreseeable future. Any determination to pay dividends to
holders of our ordinary shares will be at the discretion of our board of directors and will depend upon many
factors, including our financial condition, results of operations, projections, liquidity, earnings, legal
requirements, restrictions in our debt arrangements and other factors that our board of directors deem
relevant.
Articles of Association
The Company’s Articles of Association may only be amended by special resolution at a general meeting of
shareholders.
Auditors
PKF Littlejohn LLP has indicated its willingness to continue as auditor. In accordance with s489 of the
Companies Act 2006, a resolution to re-appoint them as auditors for the ensuing year will be put to the
members at the forthcoming Annual General Meeting.
The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are
each aware, there is no relevant audit information of which the Company’s auditors are unaware; and each
director has taken all the steps that he ought to have taken as a director to make himself aware of any
relevant audit information and to establish that the Company’s auditors are aware of that information. This
confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies
Act 2006.
The Directors' Report comprising pages 22 to 28 was approved by the Board and signed on its behalf by:
Kevin Chin
Chairman
7 September 2020
Page | 28
Corporate Governance
VivoPower International PLC for the year ended 30 June 2020
Corporate Governance
The Company’s shares have been listed on NASDAQ since 29 December 2016. The Board is accountable to
the Company’s shareholders for good governance and this statement describes principles of corporate
governance that have been applied by the Company.
The Directors believe that good corporate governance, involving risk appraisal and management, prudent
decision-making, open communication and business efficiency, is important for the long-term benefit of the
stakeholders in the Group.
Board of Directors
The Board is collectively responsible for providing leadership of the Group within a framework of prudent
and effective controls and constructively challenges and helps to develop and communicate the Group’s
strategic aims.
The Board is comprised of the Chief Executive Officer and Chairman, and four non-executive directors. The
Board has determined that Peter Jeavons, Matthew Cahir and William Langdon are independent in
accordance with the listing rules of NASDAQ. All directors are given regular access to the Company’s
operations and personnel as and when required. Their biographies on pages 22 to 24 illustrate their relevant
corporate and industry experience to bring judgement on issues of strategy, performance, resources and
standards of conduct which are vital to the success of the Group.
The Board considers the overall strategic direction, development and control of the Group and reviews
trading performance, investment opportunities and other matters of significance to the Group. Various
decisions require Board approval, including but not limited to the approval of the annual budget, larger
capital expenditure proposals, acquisitions and disposals. Board papers, which are distributed to all
directors in advance of each meeting, follow a set agenda although further subjects are added for discussion
as the need arises.
The Board is scheduled to meet normally no less than six times per year to enable the Board to discharge its
duties effectively and to consider those matters which specifically require Board review and decision. In
addition, meetings are also convened on an ad hoc basis when there is urgent or delegated business which
cannot wait until the next scheduled meeting.
The following table sets out the number of meetings of the Board, excluding ad hoc meetings, and its
committees during the year ended 30 June 2020 and the attendance of the members at those meetings
(attended/eligible to attend):
Kevin Chin (1)
Peter Sermol
Shimi Shah
Ashwin Roy
Michael Hui
Peter Jeavons
William Langdon
Matthew Cahir
Board
16/ 17
13 / 14
14 / 14
12 / 12
8 / 8
3 / 3
3 / 3
3 / 3
(1)
Recused from attendance for one meeting
Audit & Risk
Committee
Remuneration
Committee
Nominations
Committee
3 / 4
2 / 3
3 / 3
1 / 1
-/-
1 / 1
1 / 1
1 / 1
-/-
-/-
-/-
-/-
-/-
1 /1
1 /1
1 /1
-/-
-/-
-/-
-/-
-/-
1 / 1
1 / 1
1 / 1
Page | 29
Corporate Governance (continued)
VivoPower International PLC for the year ended 30 June 2020
Audit and Risk Committee
The Audit and Risk Committee is comprised of William Langdon (who is Chair of the Audit and Risk
Committee), Matthew Cahir and Peter Jeavons, all of whom joined the committee on 16 June 2020, and have
been determined by the Board to be independent under the applicable Nasdaq listing standards. Ashwin
Roy served on the committee from his appointment on 20 September 2019 until his resignation on 16 June
2020. Shimi Shah and Peter Sermol also served on the committee until their resignations on 16 June 2020.
An invitation is also extended to the auditors to attend meetings of the Audit and Risk Committee in order to
discuss issues relating to the audit and financial control of the Group. The auditors also have direct access,
should they so require, to the Audit and Risk Committee. The Audit and Risk Committee has responsibility
within the terms of reference for, among other things, the planning and review of the Group’s annual and
interim financial statements, the supervision of its auditors in the review of such financial statements and
the review and monitoring of their independence.
The Audit and Risk Committee focuses particularly on the Group’s compliance with legal requirements and
accounting standards, and on ensuring that effective systems for internal financial control are maintained.
Remuneration and Nominations Committee
The Remuneration Committee is comprised of Matthew Cahir (chair of the Remuneration Committee),
William Langdon and Peter Jeavons, all of whom joined the committee on 16 June 2020, and each of whom
the Board has determined is independent under the applicable Nasdaq listing standards. Shimi Shah,
Ashwin Roy and Peter Sermol served on the committee until their resignations on 16 June 2020.
Nominations Committee
The Nominations Committee has been merged with the Remuneration Committee. It is comprised of William
Langdon, Matthew Cahir and Peter Jeavons, all of whom joined the committee on 16 June 2020, and each of
whom the Board has determined is independent under the applicable Nasdaq listing standards. Ashwin Roy
served on the committee from his appointment on 20 September 2019 until his resignation on 16 June 2020.
Shimi Shah and Peter Sermol served on the committee until their resignation on 16 June 2020. Edward
Hyams also served on the committee until his resignation on 16 November 2018.
Internal Control
The Board oversees management’s activities in relation to the systems of internal control. Management has
responsibility for maintaining the Group’s system of internal control and for reviewing its effectiveness. The
system of internal control is designed to manage rather than eliminate the risk of failure to achieve the
Group’s strategic business objectives and can only provide reasonable assurance against material
misstatement or loss.
The key elements of the system of internal control are:
Control environment
There is sufficient segregation of duties and authorisation controls on approval of customer and supplier
contracts, recruitment of staff, approval of purchases and payment of suppliers.
Page | 30
Corporate Governance (continued)
VivoPower International PLC for the year ended 30 June 2020
Financial reporting
The senior management team has regular meetings to discuss all aspects of the business and review
financial performance against budget and provides a monthly summary report to the Board. The Group has
a sustainable system of financial reporting and forecasting covering profits, assets, liabilities, cash flow and
capital expenditure. The systems include regular monitoring of cash, monthly reporting of financial results.
Budgets and business plans are prepared annually and reviewed by the Board.
Capital investment
For any significant investment, a detailed proposal is first approved by the Company’s Investment
Committee, then by the board of directors of VivoPower International Services Limited (“Services Board”).
Any major investment is always approved by the Board or the Services Board. The Company’s Investment
Committee process contains five stages to ensure the Company has an explicit understanding of a portfolio’s
purpose, objective and a clear definition of success in determining whether the portfolio achieves that
purpose and meets that objective. The five stages include:
(i) Completion of a Lead Qualification Form to provide a project overview, indicative returns, capital
required, risks, timeline and areas to consider in future diligence;
(ii) First Investment Committee Meeting (‘IC1’) to provide a comprehensive summary of the project
including detailed legal, technical, financial information and risks;
(iii) Second Investment Committee Meeting (‘IC2’) which includes everything in IC1 plus summary of
transaction documentation and update on diligence;
(iv) Board approval to fund the project, and formally recommend that project executes transaction
documentation; and
(v) Board approval to execute the transaction documentation.
Communications with Shareholders
The Company encourages two-way communications with shareholders. The Board endeavours to maintain
good relationships with its institutional shareholders by holding regular meetings after results are published
with further dialogue as requested.
The Company’s Annual General Meeting will be held on 6 October 2020. The notice of the meeting is sent to
shareholders at least 21 days before the meeting.
This annual report and financial statements together with the Notice of Annual General Meeting and other
information regarding the Group may be viewed on the Company’s website at www.vivopower.com.
Page | 31
Directors’ Remuneration Report
VivoPower International PLC for the year ended 30 June 2020
Remuneration Report
This report has been prepared in accordance with the provisions of the UK Companies Act 2006 and
Schedule 8 of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008
(as amended in 2013).
Statement by the Chairman of the Remuneration Committee
On behalf of the Remuneration Committee (the "Committee"), I am pleased to present the Remuneration
Report for the year ended 30 June 2020.
The Committee is comprised of William Langdon, Matthew Cahir and Peter Jeavons, all of whom joined the
Committee on 16 June 2020, and each of whom the Board has determined is independent under the
applicable Nasdaq listing standards. Shimi Shah and Peter Sermol served on the Committee until their
resignations on 16 June 2020.
The Committee has a written charter, a form of which is available free of charge on VivoPower’s website at
www.vivopower.com. The Committee’s duties, which are specified in our Remuneration Committee Charter,
include, but are not limited to:
• Setting the remuneration policy for all executive directors and executive officers, including pension
rights and any compensation payments;
• Reviewing the appropriateness and relevance of the remuneration policy;
• Determining total individual compensation packages;
• Reviewing and designing share incentive and share option plans, determining awards thereunder
and administering such plans;
• Approving design of and targets for performance-related pay schemes;
• Determining pension arrangements;
• Appointing compensation consultants;
• Approving contractual appointment terms for directors and senior executives; and
• Related duties.
The Company’s objective with respect to remuneration of directors is to attract and retain high-calibre
individuals who are able to bring an appropriately senior level of experience and judgement to bear on issues
of strategy, performance, resources and standard of conduct.
No changes are proposed to the Directors Remuneration Policy for Executive and Non-Executive Directors
as approved by shareholders on 5 September 2017.
The Company's Annual Report on Remuneration, disclosing the compensation paid to directors in respect
of the year ended 30 June 2020 is provided below.
Annual Report on Remuneration (audited)
Executive Directors
Kevin Chin was appointed as Executive Chairman and Chief Executive Officer of the Company with effect
from 25 March 2020. Prior to Mr Chin’s appointment, the Company had no Executive Directors since Carl
Weatherley-White, former Chief Executive Officer, resigned as a Director on 28 December 2017.
Page | 32
Directors’ Remuneration Report (continued)
VivoPower International PLC for the year ended 30 June 2020
Non-Executive Directors
The amount earned by each Director for the year ended 30 June 2020, three months ended 30 June 2019 and
the years ended 31 March 2019 and 2018 is set out in the table below:
Year ended 30 June
Three months
ended 30 June
Year ended 31
March
Salary and
fees
Bonus
and LTIP
Pension and
Other
Benefits
Long
Term
Incentive
Edward Hyams
Gary Hui
Shimi Shah
Peter Sermol
Michael Hui
Ashwin Roy
Peter Jeavons
William Langdon
Matthew Cahir
Kevin Chin
(Chairman)
-
-
£57,748
£57,748
£9,000
£30,438
£1,590
£1,590
£1,590
£156,559
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2020
Total
-
-
£57,748
£57,748
£9,000
£30,438
£1,590
£1,590
£1,590
2019
Total
2019
Total
2018
Total
-
-
£33,326
£53,000
£110,837
£126,636
£15,000
£81,063
£15,000
£15,000
£61,750
£113,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
£156,559
£48,750
£195,000
£195,000
Mr. Chin was officially appointed as a Non-Executive Director on 1 August 2016, and prior to this date he
acted for the benefit of the Company through his role as the Executive Chairman and Chief Executive Officer
of AWN from the date of incorporation (i.e. 1 February 2016).
Mr. Chin received £156,559 salary in the year ended 30 June 2020 as Chairman of the Board, and £58,602 as
Chief Executive. Of the Chairman fees recorded, £65,000 were settled as equity under a Bonus Stock Award
in lieu of cash, for which Mr. Chin was awarded 111,020 immediately vesting shares, granted on 31 March
2020 at a price of $0.75 per share (subject to all necessary approvals).
A total of £85,161 comprising Chairman and Chief Executive fees from 01 March 2020 to 30 June 2020 remain
outstanding as at the date of this report to Mr. Chin. He has also agreed to a 50% reduction in his fees as
Chairman and Chief Executive for the period from 1 July 2020 to 30 September 2020 to assist the Company
during the COVID-19 lockdown period.
In the period 1 April 2020 to 30 June 2020, Mr. Chin accrued an estimated 20,928 ($15,595) Performance Share
Units (“PSUs”) towards a maximum total 52,320 PSUs in the vesting period 1 April 2020 to 30 September 2020.
Actual numbers of PSUs vesting at the end of the vesting period are dependent on meeting quarterly
performance goals.
Matthew Cahir was appointed as a Non-Executive Director on 16 June 2020 and commenced that role on the
same date. Mr. Cahir has elected to receive equity remuneration, and earned 1,724 ($2,000) RSUs for the
period from 16 June 2020 to 30 June 2020.
Mr. Cahir also provides consulting services to the Company in relation to the ISS Joint Venture. In the year
ended 30 June 2020, Mr. Cahir charged a total of $421,800 for these consulting services, of which $229,721 of
outstanding and past due fees were settled as equity under a Bonus Stock Award in lieu of cash, for which
Mr. Cahir was awarded 306,295 immediately vesting shares, granted on 31 March 2020 at a price of $0.75 per
share.
Page | 33
Directors’ Remuneration Report (continued)
VivoPower International PLC for the year ended 30 June 2020
Peter Jeavons was appointed as a Non-Executive Director on 16 June 2020 and commenced that role on the
same date. Mr. Jeavons has elected to receive equity remuneration, and earned 1,724 ($2,000) RSUs for the
period from 16 June 2020 to 30 June 2020.
William Langdon was appointed as a Non-Executive Director on 16 June 2020 and commenced that role on
the same date. Mr. Langdon has elected to receive equity remuneration, and earned 1,724 ($2,000) RSUs for
the period from 16 June 2020 to 30 June 2020.
Michael Hui was appointed as a Non-Executive Director on 22 January 2020 and commenced that role on
the same date. For the period from 22 January 2020 to 30 June 2020, Mr. Hui received £9,000 fees for being a
Non-Executive Director.
In the period 1 April 2020 to 30 June 2020, Mr. Hui also accrued an estimated 4,200 ($3,150) PSUPSUs towards
a maximum total 5,250 PSUs in the vesting period 1 April 2020 to 30 September 2020. Actual numbers of PSUs
vesting at the end of the vesting period are dependent on meeting quarterly performance goals.
Ashwin Roy was appointed as a Non-Executive Director on 20 September 2019 and commenced that role on
the same date. For the period from 20 September 2019 to his resignation on 16 June 2020, Ashwin Roy
received £30,438 fees for being a Non-Executive Director. Shimi Shah resigned as a Non-Executive Director
on 16 June 2020 and received fees of £57,748 for being a Non-Executive Director for the period until her
resignation.
Peter Sermol resigned as a Non-Executive Director on 16 June 2020 and received fees of £57,748 for being a
Non-Executive Director for the period until his resignation.
There are no pension benefits available to Directors nor any additional benefit if a Director were to retire
early.
No discretion was exercised in the award of Directors’ remuneration.
No payments were made to any past Director during the period nor in connection with a Director’s loss of
office during the period.
There are no agreements with the Company and its Directors or employees for compensation for loss of
office or employment that occurs because of a takeover bid.
Page | 34
Directors’ Remuneration Report (continued)
VivoPower International PLC for the year ended 30 June 2020
Directors’ Interests
The Directors’ beneficial interest in the 13,557,376 issued ordinary shares of the Company as at 30 June 2020
are detailed below.
Name and Address of
Beneficial Owner (1)
Outstanding scheme interests at
30 June 2020
Number of
Shares
Beneficially
Owned
1,266,531(3) (4) (5)
-
-
Kevin Chin (2)
Matthew Cahir
Peter Jeavons
William Langdon
Michael Hui
All directors and executive
officers as a group (5 persons)
1,266,531
Unvested
scheme
interests (not
subject to
performance
measures)
Vested but
unexercised
scheme
interests
Total shares
subject to
outstanding
scheme
interests
-
-
-
-
-
-
111,020(6)
308,019(7)
1,724
1,724
-
422,487
-
-
-
-
-
-
Total of all
share interests
and
outstanding
scheme
interests, at 30
June 2020
1,377,551
308,019
1,724
1,724
-
Percentage of
Outstanding
Shares
10.2%
2.3%
-%
-%
-%
1,689,018
12.5%
(1) Unless otherwise indicated, the business address of each of the individuals is c/o VivoPower International PLC, The Scalpel, 18th Floor, 52
Lime Street, London EC3M 7AF, UK.
(2) The business address is c/o Arowana., at Level 11, 110 Mary Street, Brisbane, QLD 4000, Australia.
(3) Represents shares held by Borneo Capital Pty Limited and The Panaga Group Trust, of which Mr. Chin is a beneficiary and one of the
directors of the corporate trustee of such fund.
(4) Does not include shares held by AWN Holdings Limited, of which Mr. Chin is a director.
(5) In 2015, Arowana Partners Group, a private Australian company of which Mr. Chin is sole shareholder and director lent $607,470 to Gary
Hui’s private vehicle, Beira Corp, a British Virgin Islands entity, pursuant to a loan agreement. Beira Corp has not paid back the loan
together with accumulated interest upon its maturity and has been attempting to settle the loan in full by transferring 325,046 VivoPower
International PLC shares to Arowana Partners Group. This has been rejected by Arowana Partners Group on the basis that the value of
these shares is significantly below the outstanding loan and accumulated interest and that the transfer of such shares could be in
contravention of securities law if any transfer happened during blackout periods. This matter is now the subject of a legal dispute and
therefore the shareholding balances above do not reflect the VivoPower shares that Beira Corp currently holds.
(6) Vested but undelivered 111,020 shares under a Bonus Stock Award.
(7) Vested but undelivered 306,295 shares under a Bonus Stock Award.
Minimum shareholding requirements
The Company currently does not have any applicable shareholding guidelines. The Remuneration
Committee reserves the right to implement shareholding guidelines. If shareholding guidelines are
implemented, these will be disclosed in the relevant Annual Report on Remuneration.
Comparison to Company Performance
Performance graph and table and comparison to Chief Executive Officer pay
The following graph shows total shareholder return for the Company for the period from its listing on 29
December 2016 to 30 June 2020, relative to the Nasdaq Composite Index. The Nasdaq Composite Index is
considered an appropriate comparator for VivoPower:
Page | 35
Directors’ Remuneration Report (continued)
VivoPower International PLC for the year ended 30 June 2020
VivoPower and Nasdaq TSR
200
180
160
140
120
100
80
60
40
20
0
29-Dec-16
31-Mar-17
31-Mar-18
31-Mar-19
30-Jun-19
30-Jun-20
NASDAQ
VVPR
The following table shows details of the compensation paid to the individual(s) in the role of Chief
Executive Officer:
Single figure of remuneration
Bonus as % of maximum
LTIP as % of maximum
Year Ended
30 Jun 2020
Three
Months
Ended
30 Jun
2019
Year
Ended
Year
Ended
Three
Months
Ended
Year
Ended
Year
Ended
Three
Months
Ended
Year
Ended
31 Mar
2019
30 Jun
2020
30 Jun
2019
31 Mar
2019
30 Jun
2020
30 Jun
2019
31 Mar
2019
Kevin Chin
Art Russell
£71,081
N/A
N/A
£193,875
£66,094
£25,336
Carl Weatherley-White
N/A
N/A
£321,019
0%
0%
N/A
N/A
0%
N/A
N/A
0%
0%
0%
0%
N/A
N/A
0%
N/A
N/A
0%
15%
Kevin Chin was appointed Executive Chairman and Chief Executive Officer on 25 March 2020. The information
presented for 2020 reflects his compensation for the period of his tenure as Chief Executive Officer, from 25
March 2020 to 30 June 2020, in Mr Chin’s capacity as Chief Executive Officer. In addition, Mr Chin is paid in his
capacity as Chairman, as detailed above.
Art Russell was appointed Interim Chief Executive Officer on 26 February 2019, and he resigned on 17
February 2020. The information presented for the year ended 31 March 2019 reflects his compensation for
the period from his appointment on 26 February 2019 to 31 March 2019. The information presented for the
year ended 30 June 2020 reflects his compensation for the period from 1 July 2019 to his resignation on 17
February 2020.
Page | 36
Directors’ Remuneration Report (continued)
VivoPower International PLC for the year ended 30 June 2020
Carl Weatherley-White was appointed as Chief Executive Officer and a Director on 4 October 2017 and
resigned as a Director on 28 December 2017, remaining as Chief Executive Officer until his resignation on 12
February 2019. The information presented for the year ended 31 March 2018 reflects his compensation for
the period from 4 October 2017 to 31 March 2018. The information presented for the year ended 31 March
2019 reflects his compensation for the period from 1 April 2018 to 12 February 2019 and excludes £85,332 of
separation compensation due pursuant to his employment agreement.
Relative importance of pay
The table below shows the total pay for all of the Group’s employees compared to other key financial
indicators.
(US dollars)
Year Ended
30 June 2020
Three Months Ended
30 June 2019
Year Ended
31 March 2019
Employee remuneration
16,457,000
Distributions to shareholders
NIL
4,114,000
NIL
17,413,000
NIL
Implementation of Remuneration Policy
Executive Directors
The Company has had no Executive Directors since Carl Weatherley-White, former Chief Executive Officer,
resigned as a Director on 28 December 2017, until the appointment of Kevin Chin as Executive Chairman and
Chief Executive Officer on 25 March 2020.
Cash & Equity Compensation
Mr. Chin is employed by a personal service company, Arowana Partners Group Pty Ltd, which charges fees
for Mr. Chin’s services to VivoPower International Services Limited. Pursuant to a deed of variation dated
June 29, 2020, Mr. Chin’s original non-executive directorship appointment, dated August 1, 2016, was varied
to reflect Mr. Chin assuming the positions of Executive Chairman and Chief Executive Officer of VivoPower
International PLC, effective from March 25, 2020. The cost of Mr. Chin’s executive service agreement is paid
by VivoPower International Services Limited. The agreement provides for remuneration of £270,000 per
annum until June 30, 2021. This comprises an annual fee of £218,000 as Chief Executive, payable monthly in
arrears, in addition to his annual Chairman’s fee of £52,000. The remuneration includes the cost of any
support resources required by Mr. Chin to fulfil the roles. The Remuneration Committee is undertaking a
review of Mr. Chin’s compensation plan as Chief Executive Officer, to align to the new strategy and additional
responsibilities.
Mr. Chin has also been granted 87,200 RSUs and 261,600 PSUs in the Company, issued pursuant to the
Company’s Omnibus Incentive Plan adopted on 5 September 2017, at an issue price of $0.75 per share, based
on the Company share price on 25 March 2020. The RSUs vest annually over 5 years. The PSUs vest quarterly
over 3.25 years and are subject to achieving performance goals. This was approved by the Remuneration and
Nomination Committee of the Board on 16 June 2020.
Non-Executive Directors
Cash and Equity Compensation
The Committee will pay annual retainers to non-executive directors in line with the remuneration policy
approved by shareholders on 5 September 2017. The Committee intends to keep the value of annual
retainers under review and will consider from time to time whether the amount and terms on which retainers
are payable are appropriate given the Company’s economic position and wider market conditions. Any
changes to retainers will be compliant with the remuneration policy and will be disclosed in the
Remuneration Report for the relevant financial year.
Page | 37
Directors’ Remuneration Report (continued)
VivoPower International PLC for the year ended 30 June 2020
Directors receive an annual retainer for service on the Board, payable monthly in arrears, with supplementary
retainers payable for additional Board responsibilities, including membership of committees, as follows:
Annual retainer for Board membership
Annual retainer for the Chairman of the Board
$48,000
£52,000
The fee levels are reviewed on an annual basis and may be increased by the Company taking into account
factors such as the time commitment of the role and market levels in companies of comparable size and
complexity. Fees may be amended before any annual review to reflect any changes to the Director’s role or
Board committee memberships which occur during the period or when making a new appointment.
From 1 July 2019 to 24 March 2020, Mr. Chin received a salary of £195,000 per annum as Chairman of the
Board, including £30,000 per annum for activities related to the audit, nomination and remuneration
committees. As from 25 March 2020, Mr. Chin receives an annual fee of £52,000 as Chairman of the Board. Mr.
Chin also receives a salary in his capacity as Chief Executive Officer.
Non-executive independent directors appointed on 16 June 2020; Mr. Jeavons, Mr. Langdon and Mr. Cahir,
are eligible to elect to take up to 100% of their monthly fee as RSUs in the Company, issued pursuant to the
Company’s Omnibus Incentive Plan adopted on 5 September 2017. All RSUs earned during the probationary
period for each new director, being from 16 June 2020 to the 2020 Annual General Meeting scheduled in
October 2020, will vest upon completion of the Annual General Meeting. Mr. Jeavons, Mr. Langdon and Mr.
Cahir have all agreed to receive their remuneration in the form of RSUs in the Company. Beyond the
probationary period, Mr. Jeavons, Mr. Langdon and Mr. Cahir are eligible to continue to receive their
remuneration in the form of RSUs in the Company in lieu of cash, in which case they are entitled to an
additional annual up-front cash lump sum of $5,000.
Mr. Hui received a fee of £1,500 per meeting of the Board during an initial six-month probationary period to
22 July 2020, after which he is entitled to the annual retainer of $48,000 payable in cash.
Mr. Hui has also been granted 17,500 RSUs and 52,500 PSUs in the Company, in relation to his involvement
in management of Critical Power Services segment, and the hyper-turnaround programme. The Award was
issued pursuant to the Company’s Omnibus Incentive Plan adopted on 5 September 2017, at an issue price
of $0.75 per share, based on the Company share price on 25 March 2020. The RSUs vest annually over 5 years.
The PSUs vest quarterly over 3.25 years and are subject to achieving performance goals.
Benefits
The Committee will provide benefits to Non-Executive directors in line with the remuneration policy
approved by shareholders on 5 September 2017. The Committee intends to keep the value of benefits under
review and will consider whether the amount and terms on which benefits are provided are appropriate
given the Company’s economic position and wider market conditions. Any changes to benefits will be
compliant with the remuneration policy outlined above and will be disclosed in the Remuneration Report
for the relevant financial year.
Page | 38
Directors’ Remuneration Report (continued)
VivoPower International PLC for the year ended 30 June 2020
Consideration of Matters Relating to Directors’ Remuneration
Remuneration Committee
The members of the Committee during the year ended 30 June 2020 and their attendance at meetings of
the Committee, are set out below:
Shimi Shah
Peter Sermol
Kevin Chin
William Langdon
Peter Jeavons
Matthew Cahir
Attendance
0/0
0/0
0/0
1/1
1/1
1/1
No Non-Executive Directors are involved in deciding their own remuneration.
The Committee retained Pearl Meyer to advise the Committee on various matters, including the Equity
Incentive Plan. Pearl Meyer is a signatory to the Remuneration Consultants’ Code of Conduct. The Committee
has reviewed the operating processes in place at Pearl Meyer and is satisfied that the advice it receives is
independent and objective.
Shoosmiths LLP and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. provide the Company with legal
advice. Advice from Shoosmiths LLP and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. is made available
to the Remuneration Committee, where it relates to matters within its remit.
Statement of voting at general meeting
The Directors' Remuneration Policy for the year ended 31 March 2017 was approved by shareholders at the
Annual General Meeting held on 5 September 2017. The resolution to approve the remuneration policy was
approved by 99.0% of voting shareholders.
The Annual Report on Remuneration for the year ended 31 March 2018 was approved by shareholders at the
Annual General Meeting held on 20 August 2018. The resolution to approve the report was approved by
99.7% of voting shareholders.
The Annual Report on Remuneration for the year ended 31 March 2019 and for the three months ended 30
June 2019 was approved by shareholders at the Annual General Meeting held on 23 September 2019. The
resolution to approve the report was approved by 99.95% of voting shareholders.
The Remuneration Report was approved by a duly authorised Committee of the Board and signed on its
behalf by:
Matthew Cahir
Chair of the Remuneration and Nominations Committee
7 September 2020
.
Page | 39
Independent Auditor’s Report to the Members of VivoPower International PLC
VivoPower International PLC for the year ended 30 June 2020
Independent Auditor’s Report to the Members of VivoPower
International PLC
Opinion
We have audited the financial statements of VivoPower International PLC (the ‘parent company’) and its
subsidiaries (the ‘group’) for the year ended 30 June 2020 which comprise the Consolidated Statement of
Comprehensive Income, the Consolidated and Parent Company Statements of Financial Position, the
Consolidated and Parent Company Statements of Cash Flow, the Consolidated and Parent Company
Statements of Changes in Equity, and notes to the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union
and, as regards the parent company financial statements, as applied in accordance with the provisions of
the Companies Act 2006.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the parent
company’s affairs as at 30 June 2020 and of the group’s and the parent company’s loss for the year
then ended;
the group’s financial statements have been properly prepared in accordance with IFRSs as adopted
by the European Union;
the parent company’s financial statements have been properly prepared in accordance with IFRSs
as adopted by the European Union and as applied in accordance with the provisions of the
Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
group and parent company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to
report to you where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties
that may cast significant doubt about the group’s or the parent company’s ability to continue to
adopt the going concern basis of accounting for a period of at least twelve months from the date
when the financial statements are authorised for issue.
Page | 40
Independent Auditor’s Report to the Members of VivoPower International PLC
VivoPower International PLC for the year ended 30 June 2020
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative
thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope
of our audit and the nature, timing and extent of our audit procedures on the individual financial statement
line items and disclosures and in evaluating the effect of misstatements, both individually and on the
financial statements as a whole.
Based on our professional judgement, we determined materiality for the group financial statements as a
whole to be $995,000. This was calculated by applying a percentage to revenue (2%) and net assets (5%).
Benchmarks of revenue and net assets have been selected as we consider these to be the most significant
determinants of the group’s performance for shareholders. The group has revenue generating subsidiaries
in Australia, together with a portfolio of solar project assets in Australia and the U.S. There is no change to
the materiality benchmarks from prior periods.
The parent company materiality was $87,000 based upon 5% of the adjusted loss before tax in order to
ensure adequate coverage of expenditure.
Performance materiality is the application of materiality at the individual account or balance level set to
reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements as a whole. Performance materiality for the
group and parent company was set at 70% of overall materiality.
Component materiality for significant and/or material subsidiary undertakings ranged from $500,000 to
$50,000.
We agreed with the Audit Committee that we would report to them all individual audit differences identified
during the course of our audit in excess of $49,750 for the group and $4,350 for the parent company.
An overview of the scope of our audit
In designing our audit, we determined materiality, as above, and assessed the risk of material misstatement
in the financial statements. In particular, we looked at where the directors made subjective judgements, for
example in respect of significant accounting estimates. We also addressed the risk of management override
of internal controls, including evaluating whether there was evidence of bias by the directors that
represented a risk of material misstatement due to fraud.
The accounting records of all significant and/or material Australian subsidiary undertakings were audited by
component auditors, under the oversight of us as group auditor in accordance with International Standard
on Auditing 600, based upon component materiality and risk to the group.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on:
the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Page | 41
Independent Auditor’s Report to the Members of VivoPower International PLC
VivoPower International PLC for the year ended 30 June 2020
Key Audit Matter
How the scope of our audit responded to the key audit
matter
Revenue recognition
Our testing in this area included the following:
Revenue
for the year ended 30 June 2020
amounted to $48.7 million and details of the
related critical judgements and estimates are
disclosed in note 3.1.
There is a risk of material misstatement of revenue
from contracts with customers arising from the
following areas which makes this a key focus for
our audit:
•
•
identification of performance obligations
in customer contracts;
judging the timing of satisfaction of
performance obligations;
• allocation of transaction price;
• measuring the stage of completion for
long term contracts (outputs versus
inputs method) and
• determining the costs incurred to obtain
or fulfil contracts with customers.
• Reviewing the work undertaken by component
issued
in accordance with
regular
auditors
component
contact throughout the audit;
the
including
instructions,
• Updating and checking by walkthrough tests our
control
the
understanding
environment for the significant income streams;
internal
of
• Substantively testing a sample of contracts
concluded and in progress at the year-end,
including contract assets and liabilities and
deferred and accrued income;
• Testing the project stage of completion having
reference, where applicable, to independent
survey reports; and
• Reviewing post year-end cash receipts and
documents to test the completeness, cut-off and
accuracy of revenue around the year-end.
Recoverability of intangible assets
Our testing in this area included the following:
As at 30 June 2020 the carrying value of goodwill
and intangible assets was $29.8 million. Details of
these assets and the related critical judgements
and estimates are disclosed in notes 3.2 and 12.
• Reviewing and challenging management’s value
including the rationale
in use calculations
behind the key assumptions and cash flow
forecasts;
is
carrying
Each year management is required to assess
impaired and consider
whether goodwill
the
whether
recoverable amount using discounted cash flows.
Intangible assets subject to amortisation are
assessed for indicators of impairment.
value exceeds
the
The calculation of the recoverable amount is
dependent on various significant judgements and
estimates, including forecasts and discount rates.
The subjectivity of the judgements and estimates
and the significant carrying value of the assets
makes this a key area of focus for our audit.
• Checking the mathematical accuracy of the value
in use calculations;
• Performing sensitivity analysis on reasonably
possible changes in key assumptions and the
impact on the headroom;
• Assessing the accuracy of budgets and forecasts
used in prior periods to actual results;
• Performing an
independent assessment to
identify any indicators of impairment;
• Reviewing
reports,
independently prepared
including an assessment of the competence and
objectivity of the preparer; and
• Assessing the appropriateness of the group’s
disclosure in respect of the judgements and
estimates on whether an impairment exists and
Page | 42
Independent Auditor’s Report to the Members of VivoPower International PLC
VivoPower International PLC for the year ended 30 June 2020
the sensitivity analysis on the headroom (refer to
Note 12).
Other information
The other information comprises the information included in the annual report, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information. Our
opinion on the group and parent company financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material misstatements, we are required
to determine whether there is a material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in
accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the Strategic Report and the Directors’ Report for the financial period for
which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the group and the parent company and their environment
obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or
the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for
our audit have not been received from branches not visited by us; or
•
•
the parent company financial statements and the part of the directors’ remuneration report to be
audited are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the
preparation of the group and parent company financial statements and for being satisfied that they give a
true and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing
the group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable,
Page | 43
Independent Auditor’s Report to the Members of VivoPower International PLC
VivoPower International PLC for the year ended 30 June 2020
matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative
but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the
company and the company's members as a body, for our audit work, for this report, or for the opinions we
have formed.
David Thompson (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory auditor
7 September 2020
15 Westferry Circus
Canary Wharf
London E14 4HD
Page | 44
Consolidated Statement of Comprehensive Income
VivoPower International PLC for the year ended 30 June 2020
Consolidated Statement of Comprehensive Income
(US dollars in thousands, except per
share amounts)
Year Ended
30 June 2020
Note
Three Months
Ended
30 June 2019
Year Ended 31
March
2019
2018
Revenue from contracts with customers
4
5
11
12
6
7
9
9
10
Cost of sales
Gross profit
General and administrative expenses
(Loss)/gain on solar development
Depreciation of property, plant and
equipment
Amortisation of intangible assets
Operating profit/(loss)
Restructuring and other non-recurring
costs
Impairment of assets
Impairment of goodwill
Finance income
Finance expense
Loss before income tax
Income tax
Loss for the period attributable to
owners of the company
Other comprehensive income
Items that may be reclassified
subsequently to profit or loss:
Currency translation differences
recognised directly in equity
Total comprehensive loss for the period
attributable to owners of the company
48,710
(40,885)
7,825
(5,479)
1,589
(898)
(868)
2,169
(3,410)
-
-
33
(3,182)
(4,390)
(713)
(5,103)
13,617
39,036
33,647
(11,960)
(32,726)
(28,524)
1,657
6,310
5,123
(1,291)
(7,685)
(12,814)
38
(2,615)
(214)
(430)
1,356
(420)
(223)
(990)
(840)
(33)
(5,410)
(7,595)
(525)
(2,017)
(1,873)
-
-
-
-
-
4
(10,191)
(11,092)
9
(796)
(3,243)
(3,395)
(1,354)
(10,666)
(34,137)
(92)
(557)
6,258
(1,446)
(11,223)
(27,879)
(1,028)
(102)
(2,998)
222
(6,131)
(1,548)
(14,221)
(27,657)
Earnings per share attributable to owners of the company (dollars)
Basic
Diluted
24
24
(0.38)
(0.38)
(0.11)
(0.83)
(0.11)
(0.83)
(2.06)
(2.06)
Page | 45
Consolidated Statement of Financial Position
VivoPower International PLC for the year ended 30 June 2020
Consolidated Statement of Financial Position
(US dollars in thousands)
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Investments accounted for using the
equity method
Total non-current assets
Current assets
Cash and cash equivalents
Restricted cash
Trade and other receivables
Assets classified as held for sale
Total current assets
TOTAL ASSETS
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables
Income tax liability
Provisions
Loans and borrowings
Total current liabilities
Non-current liabilities
Loans and borrowings
Provisions
Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
Equity
Share capital
Share premium
Cumulative translation reserve
Other reserves
Accumulated deficit
Equity and reserve attributable to owners
Non-Controlling interest
Total Equity
TOTAL EQUITY AND LIABILITIES
Note
30 June 2020
30 June 2019
2019
2018
31 March
11
12
10
14
15
16
17
18
19
20
21
21
20
10
22
23
2,486
29,849
1,347
8,225
2,951
1,205
31,762
32,366
2,113
2,054
1,915
36,402
2,570
-
-
14,147
41,907
36,826
35,625
55,034
2,824
1,013
12,556
4,080
20,473
62,380
15,395
75
2,897
1,312
19,679
24,642
169
-
24,811
44,490
163
40,215
(3,307)
21,408
(40,773)
17,706
184
17,890
62,380
7,129
632
14,992
13,530
36,283
4,522
1,319
10,399
13,530
29,770
1,939
-
7,903
11,436
21,278
73,109
65,395
76,312
24,639
17,923
14,082
449
1,718
2,327
287
1,710
887
103
2,470
3,955
29,133
20,807
20,610
19,359
18,380
18,385
2,100
2,222
1
1
21,460
20,603
50,593
41,410
288
26
18,699
39,309
163
163
163
40,215
40,215
40,215
(2,279)
(2,177)
821
20,076
19,846
18,383
(35,659)
(34,062)
(22,579)
22,516
23,985
37,003
-
-
22,516
23,985
73,109
65,395
-
37,003
76,312
These financial statements were approved by the Board of Directors on 7 September 2020 and were signed
on its behalf by:
Kevin Chin, Chairman
Page | 46
Consolidated Statement of Cash Flow
VivoPower International PLC for the year ended 30 June 2020
Consolidated Statement of Cash Flow
(US dollars in thousands)
Cash flows from operating activities
Loss for the period
Income tax
Finance income
Finance expense
Impairment of goodwill
Impairment of assets
Depreciation of property, plant and
equipment
Amortisation of intangible assets
Gain/(loss) on solar development
Disposal of treasury shares
Increase in equity instruments
(Increase)/decrease in trade and other
receivables
(Decrease)/increase in trade and other
payables
(Decrease)/increase in provisions
Corporation tax payments
Net cash from/(used in) operating
activities
Cash flows from investing activities
Interest received
Proceeds on sale of property plant and
equipment
23
23
9
5
Purchase of property plant and equipment
11
Investment in capital projects
Proceeds on sale of capital projects
5
Net cash from/(used in) investing
activities
Cash flows from financing activities
Lease borrowings
Lease repayments
Financing agreements proceeds
Financing agreements repayments
Debtor finance borrowings / (repayments)
Loans from related parties
Repayment of loans from related parties
21
21
21
21
21
21
21
Note
Year Ended
30 June 2020
Three
Months
Ended
30 June
2019
Year Ended 31
March
2019
2018
(5,103)
(1,446)
(11,223)
(27,879)
713
(33)
3,182
-
-
898
868
(1,589)
-
113
-
-
913
(4)
796
3,243
(6,258)
(9)
3,395
11,092
10,191
420
840
-
-
430
990
2,615
(1,356)
86
815
-
-
-
-
214
223
(38)
62
368
2,411
(4,593)
(2,543)
11,457
(6,851)
6,716
3,841
5,822
1,295
(477)
(114)
(728)
1,182
-
-
-
(4,573)
2,188
(1,565)
8,897
-
432
(884)
(277)
1,023
294
-
(422)
-
-
(347)
1,300
(257)
-
-
4
9
464
2,297
(400)
(348)
(1,101)
-
84
(245)
(17,823)
11,981
-
(316)
11,856
(16,618)
-
(63)
-
-
150
766
-
(304)
4,000
(6,000)
751
-
-
(1,520)
519
(181)
2,000
-
-
770
-
Page | 47
Consolidated Statement of Cash Flow
VivoPower International PLC for the year ended 30 June 2020
(US dollars in thousands)
Repayment of bank loan
Bank loan borrowing
Chattel mortgage borrowings
Finance expense
Transfers from/(to) restricted cash
Net cash from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the
period
Effect of exchange rate movements on cash held
Cash and cash equivalents at the end of the
period
Note
21
21
21
9
16
15
15
.
Year
Ended
30 June
2020
-
344
300
(515)
(381)
22
Three
Months
Ended
30 June
2019
-
Year Ended 31
March
2019
-
2018
(1,023)
-
-
-
-
-
-
(796)
(3,243)
(3,395)
687
(1,319)
-
744
(7,635)
(1,310)
(4,257)
2,616
2,656
(9,031)
7, 129
4,522
1,939
10,970
(48)
(9)
(73)
-
2,824
7,129
4,522
1,939
Page | 48
Consolidated Statement of Changes in Equity
VivoPower International PLC for the year ended 30 June 2020
Consolidated Statement of Changes in Equity
(US dollars in
thousands)
Share
capital
Share
premium
Cumulative
translation
reserve
Other
reserves
(Accumulated
deficit)/retained
earnings
Non-
controlling
interest
Total
- 64,606
-
(27,657)
-
-
54
(27,603)
- 37,003
-
(14,221)
-
-
-
1,018
86
99
- (13,017)
- 23,985
-
20
- 24,005
-
(1,548)
-
-
(3)
62
-
(1,489)
- 22,516
-
-
-
-
184
(6,131)
971
6
344
184
At 1 April 2017
163
40,215
599
18,329
Total comprehensive loss
for the year
Other reserves
-
-
-
-
-
-
222
-
222
-
54
54
At 31 March 2018
163
40,215
821
18,383
Total comprehensive loss
for the year
Equity instruments
Disposal of treasury
shares
Other reserves
-
-
-
-
-
-
-
-
-
(2,998)
-
-
-
-
1,018
346
99
(2,998)
1,463
At 31 March 2019
163
40,215
(2,177)
19,846
Change in accounting
policy (see Note 2.16)
-
-
-
-
Restated at 1 April 2019
163
40,215
(2,177)
19,846
Total comprehensive loss
for the period
Equity instruments
Disposal of treasury
shares
-
-
-
-
-
-
-
-
(102)
-
-
-
(3)
233
5,300
(27,879)
-
(27,879)
(22,579)
(11,223)
-
(260)
-
(11,483)
(34,062)
20
(34,042)
(1,446)
-
(171)
At 30 June 2019
163
40,215
(2,279)
20,076
(35,659)
Total comprehensive loss
for the year
Equity instruments
Other reserves
Employee share scheme
NCI on intangible asset
additions
-
-
-
-
-
-
-
-
-
-
-
-
(102)
230
(1,617)
(1,028)
-
(5,103)
971
17
344
-
-
-
-
-
(11)
-
-
(1,028)
1,332
(5,114)
184
(4,626)
At 30 June 2020
163
40,215
(3,307)
21,408
(40,773)
184 17,890
For further information on Other Reserves please see Note 23.
Page | 49
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
1. Reporting entity
VivoPower International PLC (“VivoPower” or the “Company”) is a public company limited by shares and
incorporated under the laws of England and Wales and domiciled in the UK. The address of the Company’s
registered office is The Scalpel, 18th Floor, 52 Lime Street, London EC3M 7AF, UK.
In July 2019, the Board of Directors of the Company adopted a resolution to change the Company’s fiscal
year end from 31 March to 30 June, commencing 30 June 2019. Moving forward, this allows the Company to
align reporting periods with all of its Australian operations and majority shareholder, AWN Holdings Limited
(formerly Arowana International Limited). Accordingly, comparative information in these consolidated
financial statements refer to the three months ended 30 June 2019 and the year ended 31 March 2019. Any
amounts shown as at and for the year ended 30 June 2019 are unaudited.
The consolidated financial statements comprise the financial statements of the Company and its
subsidiaries (together referred to as the ‘Group’ and individually as ‘Group entities’). The ultimate parent
company into which these results are consolidated is AWN Holdings Limited (formerly Arowana International
Limited).
2. Significant accounting policies
2.1. Basis of preparation and significant accounting policies
VivoPower International PLC consolidated financial statements were prepared in accordance with
International Financial Reporting Standards (IFRS) endorsed by the EU, as issued by the International
Accounting Standards Board, IFRIC interpretations and the Companies Act 2006 applicable to companies
reporting under IFRS. The consolidated financial statements have been prepared under the historical cost
convention.
The preparation of financial statements with adopted IFRS requires the use of critical accounting estimates.
It also requires the management to exercise judgement in the process of applying the Company’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where the assumptions
and estimates are significant to the consolidated financial statements are disclosed in Note 3.
The financial statements have been prepared on a going concern basis, as the directors believe the Company
will be able to meet its liabilities as they fall due.
As at 30 June 2020, the Company had unrestricted cash totalling $2.8 million, compared to $7.1 million as at
30 June 2019, $4.5 million as at 31 March 2019 and $1.9 million as at 31 March 2018.
During the year ended June 30, 2020, the Company reduced general and administrative expenses within the
Solar Development and Corporate segments by a further $1.7 million per annum, and further reductions
have been implemented going forward, including switching to equity based remuneration for the Board of
Directors as part of the Company’s hyper-turnaround program (which was commenced in March 2020 upon
Kevin Chin assuming the Executive Chair and Chief Executive Officer roles). The Company’s Critical Power
Services segment represented by J.A. Martin Electrical Pty Limited and Kenshaw Electrical Pty Limited
produced $5.1 million EBITDA for the year ended June 30, 2020.
The Company is also engaged in a financing initiative with respect to these businesses, which is expected to
release restricted cash of $1.0 million and provide up to $1.0 million of additional working capital. Lastly, the
Company is actively engaged in a process to enhance value with a view to maximizing value and ultimately
monetizing its investment in the ISS Joint Venture, with $4.1 million classified as assets held for sale; this
investment is expected to be realized in cash over the next 12 months. The Directors believe these actions
provide sufficient cash to support business operations and meet obligations as they become due through
September 2021.
Page | 50
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
To ensure success of the business, the directors have prepared and reviewed additional plans to mitigate
any cash flow risk that may arise during the next twelve months, including uncertainties arising from COVID-
19. These actions include the implementation of further operational cost reductions and a further solar
development as required.
Based on the foregoing, the directors believe that the Company is well placed to manage its business risk
successfully, despite some current economic and political uncertainty. The directors therefore have a
reasonable expectation that the Company has adequate resources to continue in operational existence for
the foreseeable future. Thus, they have continued to adopt the going concern basis in preparing the financial
statements. All financial information presented in US dollars has been rounded to the nearest thousand.
2.2. Basis of consolidation
The consolidated financial statements include those of VivoPower International PLC and all of its subsidiary
undertakings.
Subsidiary undertakings are those entities controlled directly or indirectly by the Company. The Company
controls an investee when it is exposed to, or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its power over the entity. The results of the
subsidiaries acquired are included in the Consolidated Statement of Comprehensive Income from the date
of acquisition using the same accounting policies of those of the Group. All business combinations are
accounted for using the purchase method. The consideration transferred in a business combination is the
fair value at the acquisition date of the assets transferred and the liabilities incurred by the Group and
includes the fair value of any contingent consideration arrangement. Acquisition-related costs are
recognized in the income statement as incurred. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair value at the acquisition date.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies in line with those used by other members of the Group.
All intra-group balances and transactions, including any unrealized income and expenses arising from intra-
group transactions, are eliminated in full in preparing the consolidated financial statements. Unrealized
gains arising from transactions with equity accounted investees are eliminated against the investment to the
extent of the Group’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized
gains, but only to the extent that there is no evidence of impairment
Joint arrangements
The Company applies IFRS 11 to all joint arrangements. Under IFRS 11, investments in joint arrangements
are classified as either joint operations or joint ventures, depending on the contractual rights and obligations
of each investor. VivoPower has assessed the nature of its joint arrangement and determined it to be a joint
venture, which is accounted for using the equity method.
2.3. Intangible assets
All intangible assets, except goodwill, are stated at fair value less accumulated amortisation and any
accumulated impairment losses. Goodwill is not amortised and is stated at cost less any accumulated
impairment losses.
Goodwill
Goodwill arose on the effective acquisition of VivoPower Pty Ltd and Aevitas O Holdings Limited (“Aevitas”).
Goodwill is reviewed annually to test for impairment.
Page | 51
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
Other intangible assets
Intangible assets acquired through a business combination are initially measured at fair value and then
amortised over their useful economic lives.
Amortisation is calculated on a straight-line basis to write down the assets over their useful economic lives
at the following rates:
• Customer relationships – 10 years
• Trade names – 15 - 25 years
• Favourable supply contracts – 15 years
• Databases – 5 years
2.4. Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated
impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and
the costs directly attributable to bringing the asset into use.
When parts of an item of property, plant and equipment have different useful lives, they are accounted as
separate items (major components) of property, plant and equipment.
Depreciation is calculated on a straight-line basis so as to write down the assets to their estimated residual
value over their useful economic lives at the following rates:
• Computer equipment - 3 years
• Fixtures and fittings - 3 years
• Motor vehicles – 5 years
• Plant & equipment – 3.5 to 10 years
• Right-of-use assets – remaining term of lease: 2 months to 6 years
2.5. Assets classified as held for sale
Assets are classified as held for sale if their carrying amount will be recovered principally through a sale
transaction rather than through continuing use and a sale is considered highly probable. They are measured
at the lower of their carrying value and fair value less costs to sell. An impairment loss is recognised for any
subsequent write-down of the asset to fair value less costs to sell.
2.6. Leases
The Group leases offices, workshops, motor vehicles, and equipment for fixed periods of 2 months to 6 years,
but may have extension options. Extension options are not recognized by the Group in the determination of
lease liabilities unless renewals are reasonably certain.
Contracts may contain both lease and non-lease components. The Group allocates the consideration in the
contract to the lease and non-lease components based on their relative stand-alone prices. However, for
leases of real estate for which the Group is a lessee, it has elected not to separate lease and non-lease
components and instead accounts for these as a single lease component.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and
conditions. The lease agreements do not impose any covenants other than the security interests in the
leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.
Page | 52
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
Until 31 March 2019, leases of property, plant and equipment were classified as either finance leases or
operating leases, as further described below. From 1 April 2019, leases are recognized as a right-of-use asset
and a corresponding liability at the date at which the leased asset is available for use by the Group. The
Group has applied IFRS 16 – Leases using the modified retrospective approach.
Assets and liabilities arising from a lease are initially measured on a present value basis, with lease payments
discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the Group’s
incremental borrowing rate is used. The Group presents lease liabilities in loans and borrowings in the
Statement of Financial Position.
Lease payments are allocated between principal and finance cost. The finance cost is charged to the
Statement of Comprehensive Income over the lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each period.
Right-of-use assets are presented in property, plant and equipment and depreciated over the shorter of the
asset's useful life and the lease term on a straight-line basis.
Prior to 1 April 2019, leases were classified as finance leases whenever the terms of the lease transferred
substantially all the risks and rewards of ownership to the lessee. All other leases were classified as operating
leases. Assets held under finance leases were initially recognized as property, plant and equipment at an
amount equal to the fair value of the leased assets or, if lower, the present value of the minimum lease
payments at the inception of the lease, and then depreciated over their useful economic lives. Lease
payments were apportioned between the repayment of capital and interest. The capital element of future
lease payments was included in the Statement of Financial Position as a liability. Interest was charged to the
Statement of Comprehensive Income so as to achieve a constant rate of interest on the remaining balance
of the liability. Rentals payable under operating leases were charged to the Statement of Comprehensive
Income on a straight-line basis over the lease term. Operating lease incentives were recognized as a
reduction in the rental expense over the lease term.
2.7. Impairment of non-financial assets
Goodwill is allocated to cash-generating units for the purposes of impairment testing. The recoverable
amount of the cash-generating unit (‘CGU’) to which the goodwill relates is tested annually for impairment
or when events or changes to circumstances indicate that it might be impaired.
The carrying values of property, plant and equipment, investments and intangible assets other than goodwill
are reviewed for impairment only when events indicate the carrying value may be impaired.
In an impairment test the recoverable amount of the cash-generating unit or asset is estimated in order to
determine the existence or extent of any impairment loss. The recoverable amount is the higher of fair value
less costs to sell and the value in use to the Group. An impairment loss is recognized to the extent that the
carrying value exceeds the recoverable amount. In determining a cash-generating unit’s or asset’s value in
use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time-value of money and risks specific to the cash-generating unit
or asset that have not already been included in the estimate of future cash flows. All impairment losses are
recognized in the Statement of Comprehensive Income.
An impairment loss in respect of goodwill is not reversed. In the case of other assets, impairment losses
recognized in prior periods are assessed at each reporting date for any indications that the loss has
decreased or no longer exists. These impairment losses are reversed if there has been any change in the
estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent so
that the asset’s carrying amount does not exceed the carrying value that would have been determined, net
of depreciation or amortization, if no impairment loss had been recognized.
Page | 53
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
2.8. Financial Instruments
Financial assets and liabilities are recognized in the Group’s Statement of Financial Position when the Group
becomes a party to the contracted provision of the instrument. The following policies for financial
instruments have been applied in the preparation of the consolidated financial statements.
From 1 April 2018, the Company classifies its financial assets in the following measurement categories:
•
•
those to be measured subsequently at fair value through profit or loss; and
those to be measured at amortized cost.
The classification depends on the business model for managing the financial assets and the contractual
terms of the cash flows. Financial assets are classified as at amortized cost only if both of the following criteria
are met:
•
•
the asset is held within a business model whose objective is to collect contractual cash flows; and
the contractual terms give rise to cash flows that are solely payments of principal and interest.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value measurement is based on
the presumption that the transaction to sell the asset or transfer the liability takes place either:
•
•
in the principal market for the asset or liability; or
in the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group. The fair value of an asset
or a liability is measured using the assumptions that market participants would use when pricing the asset
or liability, assuming that market participants act in their economic best interest.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorized within the fair value hierarchy, described as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
•
•
•
Level 1 - quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2 - valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable; and
Level 3 - valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
Cash and cash equivalents
For the purpose of preparation of the Statement of Cash Flow, cash and cash equivalents includes cash at
bank and in hand.
Restricted cash
Restricted cash are cash and cash equivalents whose availability for use within the Group is subject to certain
restrictions by third parties.
Bank borrowings
Interest-bearing bank loans are recorded at the proceeds received. Direct issue costs paid on the
establishment of loan facilities are recognized over the term of the loan on a straight-line basis. The initial
payment is taken to the Statement of Financial Position and then amortized over the full length of the facility.
Page | 54
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
Trade and other receivables
Trade and other receivables are recognized initially at fair value and subsequently measured at amortized
cost using the effective interest method, less any allowance for the expected future issue of credit notes and
for non-recoverability due to credit risk. The Group applies the IFRS 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract
assets. To measure expected credit losses, trade receivables and contract assets have been grouped based
on shared risk characteristics. In the year ended 31 March 2018, the impairment was based on the incurred
loss model.
Trade and other payables
Trade and other payables are non-interest bearing and are stated at amortized cost using the effective
interest method.
Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares
are recognized as a deduction from equity, net of any tax effects.
Repurchase of share capital (treasury shares)
When share capital recognized as equity is repurchased as equity by the Company the amount of the
consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a
deduction from equity, and excluded from the number of shares in issue when calculating earnings per
share.
2.9. Taxation
Income tax expense comprises current and deferred tax.
Current tax is recognised based on the amounts expected to be paid or recovered under the tax rates and
laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is provided on temporary timing differences that arise between the carrying amounts of assets
and liabilities for financial reporting purposes and their corresponding tax values. Liabilities are recorded on
all temporary differences except in respect of initial recognition of goodwill and in respect of investments in
subsidiaries where the timing of the reversal of the temporary difference is controlled by the Group and it is
probable that it will not reverse in the foreseeable future. Deferred tax assets are recognised to the extent
that it is probable that future taxable profits will be available against which the asset can be offset. Deferred
tax is measured on an undiscounted basis using the tax rates and laws that have been enacted or
substantively enacted by the end of the accounting period.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets
and liabilities, they relate to income taxes levied by the same tax authority and the Group intends to settle
current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised
simultaneously.
Current and deferred tax are recognised in the Statement of Comprehensive Income, except when the tax
relates to items charged or credited directly to equity, in which case it is dealt with directly in equity.
2.10. Provisions
Provisions are recognised when the Group has a present obligation because of a past event, it is probable
that the Group will be required to settle that obligation, and it can be measured reliably.
Provisions are measured at the directors’ best estimate of the expenditure required to settle the obligation
at the date of Statement of Financial Position.
Page | 55
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
Where the time value of money is material, provisions are measured at the present value of expenditures
expected to be paid in settlement.
2.11. Earnings per share
The Group presents basic and diluted earnings per share (“EPS”) data for ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares, excluding the shares held as treasury shares. Currently there
are no diluting effects on EPS for ordinary shares, therefore, diluted EPS is the same as basic EPS.
2.12. Foreign currencies
The Company’s functional and presentational currency is the US dollar. Items included in the separate
financial statements of each Group entity are measured in the functional currency of that entity. Transactions
denominated in foreign currencies are translated into the functional currency of the entity at the rates of
exchange prevailing at the dates of the individual transactions. Foreign currency monetary assets and
liabilities are translated at the rates of exchange prevailing at the end of the reporting period.
Exchange gains and losses arising are charged to the Statement of Comprehensive Income within finance
income or expenses. The Statement of Comprehensive Income and Statement of Financial Position of
foreign entities are translated into US dollars on consolidation at the average rates for the period and the
rates prevailing at the end of the reporting period respectively. Exchange gains and losses arising on the
translation of the Group’s net investment foreign entities are recognized as a separate component of
shareholders’ equity.
Foreign currency denominated share capital and related share premium and reserve accounts are recorded
at the historical exchange rate at the time the shares were issued or the equity created.
2.13. Revenue from contracts with customers
Revenue comprises the fair value of the consideration received or receivable for the sale of services in the
ordinary course of the Group’s activities. Revenue is shown net of discounts, value-added tax, other sales
related taxes, and after the elimination of sales within the Group.
Revenue comprises development revenues, electrical installations, electrical servicing and maintenance and
generator sales. Revenue is recognised upon satisfaction of contractual performance obligations.
The Company adopted IFRS 15 “Revenue from Contracts with Customers” with effect from the date of
incorporation.
The Group has a number of different revenue streams and the key components in determining the correct
recognition are as follows:
Development revenue, which is revenue generated from development services relating to the building and
construction of solar projects, is recognised on a percentage completion basis as the value is accrued by the
end user over the life of the contract. The periodic recognition is calculated through weekly project progress
reports.
On longer-term power services projects such as large-scale equipment provision and installation, the
performance obligation of completing the installation is satisfied over time, and revenue is recognised on a
percentage completion basis using an input method. Revenue for stand-alone equipment sales is
recognised at the point of passing control of the asset to the customer. Other revenue for small jobs and
those completed in a limited timeframe are recognised when the job is complete.
Warranties are of short duration and only cover defective workmanship and defective materials. No
additional services are committed to which generate a performance obligation.
Page | 56
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
No adjustment is made for the effects of financing, as the Group expects, at contract inception, that the
period between when the goods and services are transferred to the customer and when the customer pays,
will be one year or less.
If the revenue recognised for goods and services rendered by the Company exceeds amounts that the
Company is entitled to bill the customer, a contract asset is recognised. If amounts billed exceed the revenue
recognised for goods and services rendered, a contract liability is recognised.
Incremental costs of obtaining a contract are expensed as incurred.
2.14. Employee Benefits
Pension
The employer pension contributions are associated with defined contribution schemes. The costs are
therefore recognised in the month in which the contribution is incurred, which is consistent with recognition
of payroll expenses.
Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the
related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing
plans if the Group has a present legal or constructive obligation to pay this amount because of past service
provided by the employee and the obligation can be reliably measured.
Short-term compensated absences
A liability for short-term compensated absences, such as holiday, is recognised for the amount the Group
may be required to pay because of the unused entitlement that has accumulated at the end of the reporting
period.
2.15. Restructuring and other non-recurring Costs
Restructuring and other non-recurring costs are by nature one-time incurrences and do not represent the
normal trading activities of the business and accordingly are disclosed separately on the Consolidated
Statement of Comprehensive Income in accordance with IAS 1 – Presentation of Financial Statements in
order to draw them to the attention of the reader of the financial statements. Restructuring costs are defined
in accordance with IAS 37 – Provisions, Contingent Liabilities and Contingent Assets as being related to sale
or termination of a line of business, closure of business locations, changes in management structure, or
fundamental reorganizations.
Other non-recurring costs include litigation expenses for former employees, including fees for legal services
and provisions under IAS 37 for legal hearing verdicts that are probable to result in a quantifiable financial
outflow by the Company.
Other non-recurring costs also include legal and professional costs for project review and investigation costs
for solar projects managed by the ISS Joint Venture partner.
2.16. New standards, amendments and interpretations
Effective 1 April 2019, the Group adopted the provisions of IFRS 16 – Leases on a modified retrospective basis,
recognizing the cumulative effect of initial application to opening retained earnings for the period.
Page | 57
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
At transition, for leases classified as operating leases under IAS 17, lease liabilities were measured at the
present value of the remaining lease payments, discounted at the Group’s incremental borrowing rate. The
Group used the following practical expedients when applying IFRS 16:
• Applied the exemption not to recognize right of use assets and liabilities for leases with less than 12
months of lease term;
• Excluded initial direct costs from measuring the right of use asset at the date of initial application;
and
• Apply a single discount rate to a portfolio of leases with similar characteristics.
The change in accounting policy affected the following items in the statement of financial position on 1 April
2019:
(US dollars in thousands)
Property, plant and equipment
Lease liability - current
Lease liability – non-current
Adjustment to opening retained earnings as at 1 April 2019
1,586
(587)
(979)
20
The adoption of IFRS 16 did not have a material impact on leases previously recorded as finance leases.
There are no other IASB and IFRIC standards that have been issued with an effective date after the date of
the financial statements which are expected to have a material impact on the Group.
3. Significant accounting judgements and estimates
In preparing the consolidated financial statements, the directors are required to make judgements in
applying the Group’s accounting policies and in making estimates and making assumptions about the
future. These estimates could have a significant risk of causing a material adjustment to the carrying value
of assets and liabilities in the future financial periods. The critical judgements that have been made in arriving
at the amounts recognised in the consolidated financial statements are discussed below.
3.1. Revenue from contracts with customers – determining the timing of satisfaction of
services
As disclosed in Note 2.13 the Group concluded that solar development revenue and revenue from other long-
term projects is recognized over time as the customer simultaneously receives and consumes the benefits
provided. The Group determined that the percentage completion basis is the best method in measuring
progress because there is a direct relationship between the Group’s effort and the transfer of services to the
customer. The judgement used in applying the percentage completion basis affects the amount and timing
of revenue from contracts.
3.2. Impairment of non-financial assets
The carrying values of property, plant and equipment, investments and intangible assets other than goodwill
are reviewed for impairment only when events indicate the carrying value may be impaired. Goodwill is
tested annually for impairment or when events or changes to circumstances indicate that it might be
impaired.
To assess impairment, estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time-value of money and risks specific to the
Page | 58
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
related cash-generating unit. Judgement was applied in making estimates and assumptions about the
future cash flows, including the appropriateness of discounts rates applied, as further disclosed in Note 12.
3.3. Operating profit/(loss)
In preparing the consolidated financial statements of the Group, judgement was applied with respect to
those items which are presented in the consolidated statement of comprehensive income as included within
operating profit/(loss).Those revenues and expenses which are determined to be specifically related to the
on-going operating activities of the business are included within operating profit/(loss).Expenses or charges
to earnings which are not related to operating activities, are one-time costs determined to be not
representative of the normal trading activities of the business, or that arise from revaluation of assets, are
reported below operating profit/(loss).
3.4. Litigation provision
The $1.1 million litigation provision recorded at 30 June 2020 is estimated by management making a
judgement, in conjunction with advice from legal counsel, on the probability of success of each element of
the claim, in accordance with IAS 37 – Provisions, Contingent Liabilities and Contingent Assets. Additional
allowance is made for anticipated costs.
3.5. Income taxes
In recognising income tax assets and liabilities, management makes estimates of the likely outcome of
decisions by tax authorities on transactions and events whose treatment for tax purposes is uncertain. Where
the outcome of such matters is different, or expected to be different, from previous assessments made by
management, a change to the carrying value of the income tax assets and liabilities will be recorded in the
period in which such determination is made. The carrying values of income tax assets and liabilities are
disclosed separately in the consolidated Statement of Financial Position.
3.6. Deferred tax assets
Deferred tax assets for unused tax losses amounting to $0.8 million at 30 June 2020 (30 June 2019:$1.005
million; 31 March 2019: $1.005 million; 2018: $1.585 million) are recognized to the extent that it is probable
that sufficient taxable profit will be available against which the losses can be utilized. Management
judgement is required to determine the amount of deferred tax assets that can be recognized, based upon
the likely timing and level of future taxable profits.
3.7. Share option reserve
As part of the Initial Public Offering Listing, VivoPower issued an amended and restated unit purchase option
(UPO) replacing the options issued by Arowana Inc. The options are viewed as a share-based award granted
to Early Bird Capital. The cost of the award is recognized directly in equity and is applied against capital
raising costs. As the option holder has the right to receive shares in the Company, the share-based payment
transaction would be equity settled. The fair value of the options was determined at the grant date, using
the Black Scholes Model, and not remeasured subsequently. As the options have no vesting conditions the
related expense was recognized immediately. The options lapsed during the year ended 30 June 2020.
3.8. Exchangeable preference shares and exchangeable notes
As part of the IPO listing process VivoPower acquired Aevitas. The instruments previously issued by Aevitas
were restructured to become exchangeable into VivoPower shares. The Company considered IAS 32
paragraph 16 in determining the accounting treatment. The Company has determined the instruments to be
Page | 59
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
treated as equity under the “fixed-for-fixed” rule meaning that both the amount of consideration
received/receivable and the number of equity instruments to be issued must be fixed for the instrument to
be classified as equity. Both elements are satisfied within the instruments.
4. Revenue and segmental information
The Group determines and presents operating segments based on the information that is provided internally
to the Board of Directors, which is the Group’s chief operating decision maker.
The Group considers that it has three reportable segments: Critical Power Services, Solar Development, and
Corporate Office. Critical Power Services is represented by J.A. Martin Electrical Pty Limited (“J.A. Martin”)
and Kenshaw Electrical Pty Limited (“Kenshaw”) operating in Australia with a focus on the design, supply,
installation and maintenance of power and control systems. Solar Development is the development and sale
of commercial and utility scale PV solar power projects in Australia and the U.S. Corporate Office is all UK
based corporate functions.
An operating segment is a component of the Group that engages in business activities from which it may
earn revenues and incur expenses, including any revenues and expenses that relate to the transactions with
any of the Group’s other components. Operating segments’ results are reviewed regularly by the Board of
Directors to assess their performance and make decisions about resources to be allocated to respective
segments, and for which discrete financial information is available.
Segment results that are reported to the Board of Directors include items directly attributable to a segment
as well as those that can be allocated to a segment on a reasonable basis.
4.1. Revenue
Revenue by geographic location is as follows:
(US dollars in thousands)
Australia
United States
United Kingdom
Total revenue
Year Ended 30
June
Three Months
Ended 30 June
2020
48,707
-
3
2019
13,507
110
-
Year Ended 31 March
2019
2018
37,889
31,985
1,147
1,662
-
-
48,710
13,617
39,036
33,647
Revenue by product and service is as follows:
(US dollars in thousands)
Electrical products and related services
Development fees
Other revenue
Total revenue
Year Ended 30
June
Three Months
Ended 30 June
2020
47,917
69
724
2019
13,484
-
133
Year Ended 31 March
2019
2018
37,799
31,631
90
1,147
828
1,188
48,710
13,617
39,036
33,647
Page | 60
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
The Group had one customer representing more than 10% of revenue for the year ended 30 June 2020 (three
months ended 30 June 2019: one; year ended 31 March 2019: one; 2018: none). Revenue recognized for this
customer amounted to $20.4 million in the Critical Power Services segment.
Page | 61
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
4.2. Operating segments
a)
Segment results of operations
Results of operations by reportable segment are as follows:
Year Ended 30 June 2020
(US dollars in thousands)
Critical Power
Services
Solar
Development
Corporate
Office
Revenue from contracts with customers
Costs of sales
Gross profit
General and administrative expenses
Gain/(loss) on solar development
Depreciation and amortisation
Operating profit/(loss)
Restructuring costs and other non-
recurring costs
Finance expense – net
Profit/(loss) before income tax
Income tax
Profit/(loss) for the period
48,638
(40,865)
7,773
(2,745)
41
(1,718)
3,351
69
(20)
49
(469)
1,548
(45)
1,083
3
-
3
(2,265)
-
(3)
(2,265)
(1,436)
1,791
15
1,806
(9)
(222)
(728)
(950)
(1,704)
(5,959)
-
(5,959)
Three Months Ended 30 June 2019
(US dollars in thousands)
Critical Power
Services
Solar
Development
Corporate
Office
(124)
(1,296)
(1,990)
(3,410)
Revenue from contracts with customers
Costs of sales
Gross profit
General and administrative expenses
Gain/(loss) on solar development
Depreciation and amortisation
Operating profit/(loss)
Restructuring and other non-recurring
costs
Finance expense – net
Profit/(loss) before income tax
Income tax
Profit/(loss) for the period
13,484
(11,864)
1,620
(567)
5
(422)
636
(15)
(358)
263
(92)
171
Total
48,710
(40,885)
7,825
(5,479)
1,589
(1,766)
2,169
(3,149)
(4,390)
(713)
(5,103)
Total
13,617
(11,960)
1,657
(1,291)
38
(437)
(33)
(525)
(796)
-
-
-
(518)
(8)
(1)
(527)
(471)
(389)
133
(96)
37
(206)
41
(14)
(142)
(39)
(49)
(230)
-
(1,387)
(1,354)
-
(92)
(230)
(1,387)
(1,446)
Page | 62
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
Year Ended 31 March 2019
(US dollars in thousands)
Critical Power
Services
Solar
Development
Corporate
Office
Revenue from contracts with customers
Costs of sales
Gross profit
General and administrative expenses
Loss on solar development
Depreciation and amortisation
Operating profit/(loss)
Restructuring and other non-recurring
costs
Finance expense – net
Loss before taxation
Income tax
Loss for the year
37,800
(32,317)
5,483
(2,823)
(30)
(1,272)
1,358
(8)
(1,354)
(4)
(572)
(576)
1,236
(409)
827
(2,148)
(2,585)
(140)
(4,046)
7
(221)
(4,260)
15
Year Ended 31 March 2018
(US dollars in thousands)
Critical Power
Services
Solar
Development
Corporate
Office
Revenue
Costs of sales
Gross profit
General and administrative expenses
Gain on solar development
Depreciation and amortisation
Operating profit/(loss)
Restructuring and other non-recurring
costs
Impairment of assets
Impairment of goodwill
Finance expense – net
Loss before taxation
Income tax
Loss for the year
31,807
(27,482)
4,325
(2,173)
213
(1,233)
1,132
(335)
-
-
(1,283)
(486)
(85)
(571)
-
-
-
(2,714)
-
(8)
(2,722)
(2,016)
(1,664)
(6,402)
Total
39,036
(32,726)
6,310
(7,685)
(2,615)
(1,420)
(5,410)
(2,017)
(3,239)
(10,666)
-
(557)
(4,245)
(6,402)
(11,223)
1,840
(1,042)
798
-
-
-
Total
33,647
(28,524)
5,123
(6,468)
(4,173)
(12,814)
1,143
(19)
(4,546)
(964)
(10,191)
(11,092)
(400)
(27,193)
6,291
-
(8)
(4,181)
(574)
-
-
(1,703)
(6,458)
1,356
(1,260)
(7,595)
(1,873)
(10,191)
(11,092)
(3,386)
(34,137)
52
6,258
(20,902)
(6,406)
(27,879)
Page | 63
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
b)
Segment net assets
Net assets by reportable segment are as follows:
As at 30 June 2020
(US dollars in thousands)
Critical Power
Services
Solar
Development
Corporate
Office
Assets
Liabilities
38,519
(14,481)
22,965
(1,697)
Total
62,380
896
(28,312)
(44,490)
Net assets/(liabilities)
24,038
21,268
(27,416)
17,890
As at 30 June 2019
(US dollars in thousands)
Critical Power
Services
Solar
Development
Corporate
Office
Assets
Liabilities
Net assets/(liabilities)
45,881
(21,171)
24,710
As at 31 March 2019
(US dollars in thousands)
Critical Power
Services
Solar
Development
Corporate
Office
Assets
Liabilities
Net assets/(liabilities)
35,472
(13,603)
21,869
As at 31 March 2018
(US dollars in thousands)
Critical Power
Services
Solar
Development
Corporate
Office
26,534
(5,766)
Total
73,109
694
(23,656)
(50,593)
20,768
(22,962)
22,516
29,538
(6,085)
Total
65,395
385
(21,722)
(41,410)
23,453
(21,337)
23,985
Total
76,312
41,270
621
(11,101)
(21,735)
(39,309)
30,169
(21,114)
37,003
Assets
Liabilities
Net assets/(liabilities)
34,421
(6,473)
27,948
5. Gain/(loss) on solar development
On 2 July 2019, the Company sold its 100% interest in VivoRex, LLC, for $1 and recorded a gain for accounting
purposes of $2.3 million as a result of the disposal of onerous contract obligations of $2.0 million and other
liabilities of $0.5 million, less cash and other current assets of $0.2 million. Results of operations for VivoRex,
LLC, are reported within the Solar Development operating segment, as disclosed in Note 4.2, and for the year
ended 30 June 2020 accounted for $nil (three months ended 30 June 2019: $0.1 million; year ended 31 March
2019: $1.959 million; 2018: $0.645 million) of the operating loss reported for this segment.
The Company also recorded a gain on sale of $0.5m for Solar projects in Australia, related primarily to the
sale of its 100% interest in the Sun Connect portfolio in October 2019. The gain on sale of SC OCo Pty Ltd of
$0.3 million, comprised proceeds $1.0 million, less disposal of $0.8 million net book value of intangible assets
and $0.1 million other net liabilities. Results of operations for the Sun Connect portfolio are reported within
the Solar Development operating segment, as disclosed in Note 4.2.
The Company also recorded a $1.2 million loss on discontinued solar development projects in the ISS Joint
Venture.
Page | 64
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
The loss on solar development for the year-ended 31 March 2019, totalling $2.6 million, is comprised of a
$1.9 million provision for onerous contracts related to future obligations to purchase Solar Renewable
Energy Certificates (“SRECs”) from the NC Projects, discontinued solar development projects in the ISS Joint
Venture ($0.8 million), and a correction to the gain on the sale of Amaroo solar project reported in the prior
year ($0.3 million), offset by a gain on sale of the NC Projects ($0.4 million).
On 25 May 2018, the Company sold its 14.5% and 10.0% equity interests in the NC-31 and NC-47 projects,
respectively, to the majority investor at the fair market value of these projects. The proceeds of sale, net of
transaction costs, were $11.4 million. A gain on sale of $0.4 million was realized after the impairment was
recognized in the prior year.
6. Operating profit/(loss)
Operating profit/(loss) is stated after charging/(crediting):
Year Ended
30 June 2020
Three Months
Ended
30 June 2019
Year Ended 31 March
2019
2018
(US dollars in thousands)
Amortization of intangible assets
Depreciation of property, plant and
equipment
Operating lease costs – land and buildings
Operating lease costs – motor vehicles
Operating lease costs – other equipment
Gain/(loss) on foreign exchange
Auditors’ remuneration – audit fees
Auditors’ remuneration – audit related
services
Auditors’ remuneration – tax services
Directors emoluments
868
898
-
-
-
33
161
-
11
398
Gain/(loss) on disposal of assets
1,589
7. Restructuring and other non-recurring costs
223
214
-
-
-
-
97
-
-
104
38
990
430
548
65
33
-
253
26
28
611
(2,615)
840
420
304
-
-
59
414
-
13
1,131
1,356
(US dollars in thousands)
Corporate restructuring – workforce
reduction
Corporate restructuring – litigation
provision
Corporate restructuring – professional fees
Project review and investigation costs
Total
Year Ended
30 June 2020
Three Months
Ended
30 June 2019
Year Ended 31 March
2019
2018
163
1,104
1,031
1,112
3,410
-
-
518
7
525
102
-
1,776
139
734
-
566
573
2,017
1,873
Page | 65
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
Restructuring and other non-recurring costs by nature are one-time incurrences, and therefore, do not
represent normal trading activities of the business. These costs are disclosed separately in order to draw
them to the attention of the reader of the financial information and enable comparability in future periods.
During a prior fiscal period, the Board undertook a strategic restructuring of the business to align operations,
personnel, and business development activities to focus on a fewer number of areas of activity. Associated
with this restructuring was the departure of a number of employees and contractors from the business. The
workforce reduction cost represents the total salary, benefit, severance, and contract costs paid in the year
or accruing to these individuals in the future for which no services will be rendered to the Company.
Professional fees represent legal fees incurred to resolve certain disputes related to some of these
separations in both the current and prior year. Project review and investigation costs relate to the ISS Joint
Venture portfolio in the U.S. and relate to work undertaken in connection with the decision to secure
management control.
8. Staff numbers and costs
The average number of employees (including directors) during the period was:
Sales and Business Development
Central Services & Management
Production
Total
Year Ended 30
June 2020
Three Months
Ended
30 June 2019
Year Ended 31 March
2019
2018
11
27
171
209
9
31
139
179
9
32
138
179
9
37
148
194
Their aggregate remuneration costs comprised:
(US dollars in thousands)
Salaries, wages and incentives
Social security costs
Pension contributions
Short-term compensated absences
Total
Year Ended 30
June 2020
Three Months
Ended
30 June 2019
Year Ended 31 March
2019
2018
13,565
803
792
1,296
16,456
3,310
14,327
14,299
213
185
406
1,044
788
1,254
834
848
996
4,114
17,413
16,977
Directors’ emoluments for the year ended 30 June 2020 were $397,844 (three months ended 30 June 2019:
$103,925; year ended 31 March 2019: $611,450; 2018: $1,130,570) of which the highest paid director received
$205,673 (three months ended 30 June 2019: $62,136; year ended 31 March 2019: $254,084; 2018: $407,682).
Director emoluments include employer social security costs.
Page | 66
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
Key Management Personnel:
(US dollars in thousands)
Year Ended
30 June 2020
Three Months
Ended
30 June 2019
Year Ended 31 March
2019
2018
Salaries, wages and incentives
1,009
388
2,354
Social security costs
Pension contributions
Equity incentives
Short-term compensated absences
79
36
111
-
28
13
27
-
176
45
130
-
2,281
217
64
-
13
Total
1,235
456
2,705
2,575
Key management personnel are those below the Board level that have a significant impact on the operations
of the business. The number of key management personnel, including directors for the year ended 30 June
2020 was 7 (three months ended 30 June 2019: 10; year ended 31 March 2019: 10; 2018: 11).
9. Finance income and expense
(US dollars in thousands)
Finance income
Foreign exchange gains
Interest received
(US dollars in thousands)
Finance expense
Related party loan interest payable
Convertible loan notes and preference
shares interest payable
Financing agreement finance cost payable
Debtor invoice finance cost payable
Lease liabilities interest payable
Bank interest payable
Provisions – unwinding of discount
Foreign exchange losses
Other finance costs
Total finance expense
Year Ended
30 June 2020
Three Months
Ended
30 June 2019
Year Ended 31 March
2019
2018
33
-
-
-
-
4
-
9
Year Ended
30 June 2020
Three Months
Ended
30 June 2019
Year Ended 31 March
2019
2018
1,653
1,185
-
174
95
-
-
-
75
3,182
387
307
-
51
22
6
42
(19)
-
796
1,588
1,284
206
164
1
-
-
-
-
1,636
1,220
217
-
55
17
-
93
157
3,243
3,395
Page | 67
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
10. Income tax
a)
Tax charge/(credit)
(US dollars in thousands)
Current tax
UK tax
Foreign tax
Total current tax
Deferred tax
Current period
UK tax
Foreign tax
Total deferred tax
Year Ended
30 June 2020
Three Months
Ended
30 June 2019
Year Ended 31 March
2019
2018
-
53
53
-
(202)
(564)
(766)
-
29
(29)
(162)
(217)
2,279
(162)
(188)
2,250
-
-
70
70
-
267
(636)
-
(370)
4,378
(369)
4,008
Total income tax
(713)
(92)
(557)
6,258
The difference between the total tax charge and the amount calculated by applying the weighted average
corporation tax rate applicable to each of the tax jurisdictions in which the Group operates to the profit
before tax is shown below.
(US dollars in thousands)
Year Ended
30 June 2020
Three Months
Ended
30 June 2019
Year Ended 31 March
2019
2018
Loss before income tax
Group weighted average corporation tax
rate
Tax at standard rate
Effects of:
Expenses that are not deductible for tax
purposes
Adjustment to prior year tax provisions
Deferred tax assets not recognized on tax
losses
Total income tax for the period Recognized
in the Consolidated Statement of
Comprehensive Income
(4,390)
24.6%
1,080
(106)
-
(1,354)
(10,666)
(34,137)
22.0%
21.8%
22.8%
297
2,325
7,772
(49)
-
41
(3,872)
(64)
2,358
(1,687)
(340)
(2,859)
-
(713)
(92)
(557)
6,258
Page | 68
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
b)
Deferred tax
(US dollars in
thousands)
Deferred tax assets
Deferred tax
liabilities
Net deferred tax
asset/(liability)
As at 30 June
As at 31 March
2020
1,347
-
1,347
2019
2,113
(1)
2,112
2019
2,054
(1)
2,053
2018
2,570
(26)
2,544
These assets and liabilities are analysed as follows:
Deferred tax assets
31 March 2018
Credit/(charged) to comprehensive income
31 March 2019
Credit/(charged) to comprehensive income
30 June 2019
Credit/(charged) to comprehensive income
30June 2020
Deferred tax assets
31 March 2018
Credit/(charged) to comprehensive income
31 March 2019
Credit/(charged) to comprehensive income
30 June 2019
Credit/(charged) to comprehensive income
30 June 2020
Tax losses
Other timing
differences
1,585
(580)
1,005
-
1,005
(191)
814
985
64
1,049
59
1,108
(575)
533
Accelerated
Allowances
Other timing
differences
(8)
7
(1)
-
(1)
1
-
(18)
18
-
-
-
-
-
Total
2,570
(516)
2,054
59
2,113
(766)
1,347
Total
(26)
25
(1)
-
(1)
1
-
Deferred tax has been recognized in the current period using the tax rates applicable to each of the tax
jurisdictions in which the Group operates. Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities.
Page | 69
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
11. Property, plant and equipment
(US dollars in thousands)
Computer
Equipment
Motor
Vehicles
Plant &
Equipment
Fittings &
Equipment
Right-of-
Use
Assets
Cost
At 31 March 2018
Foreign exchange
Additions
Disposals
At 31 March 2019
Change in accounting policy
(Note 2.16)
642
(46)
73
1,997
(148)
55
(126)
(275)
543
1,629
-
(371)
1,520
(112)
205
(584)
1,029
-
Total
4,333
(319)
348
(985)
3,377
174
(13)
15
-
176
-
-
-
-
-
-
2,152
1,781
Restated at 1 April 2019
543
1,258
1,029
176
2,152
5,158
Foreign exchange
Additions
Disposals
At 30 June 2019
Foreign exchange
Additions
Disposals
At 30 June 2020
(5)
7
-
545
(11)
36
(94)
476
(13)
45
(8)
(11)
222
-
1,282
1,240
(26)
359
(252)
1,363
(26)
189
(171)
1,232
(2)
16
-
190
(4)
9
-
(20)
110
-
(51)
400
(8)
2,242
5,499
(46)
(113)
570
1,163
(483)
(1,000)
195
2,283
5,549
(US dollars in thousands)
Computer
Equipment
Motor
Vehicles
Plant &
Equipment
Fittings &
Equipment
Depreciation
At 31 March 2018
Foreign exchange
Charge for the year
Disposals
At 31 March 2019
Change in accounting policy
(Note 2.16)
Restated at 1 April 2019
Foreign exchange
Charge for the period
Disposals
422
(34)
89
(97)
380
1,173
(93)
222
(223)
1,079
-
(123)
380
(3)
27
-
956
(12)
1
(8)
761
(59)
106
(165)
645
-
645
(7)
17
-
62
(5)
12
-
68
-
68
-
6
-
Right-of-
Use
Assets
-
-
-
-
-
Total
2,418
(191)
430
(486)
2,172
318
195
318
2,367
(3)
163
-
(25)
214
(8)
Page | 70
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
(US dollars in thousands)
Computer
Equipment
Motor
Vehicles
Plant &
Equipment
Fittings &
Equipment
At 30 June 2019
Foreign exchange
Charge for the period
Disposals
At 30 June 2020
404
(7)
55
(79)
373
937
(15)
171
(257)
836
655
(11)
107
(4)
747
74
(1)
13
-
86
(US dollars in thousands)
Computer
Equipment
Motor
Vehicles
Plant &
Equipment
Fittings &
Equipment
Right-of-
Use
Assets
Total
478
2,548
(3)
552
(37)
898
(6)
(346)
1,021
3,063
Right-of-
Use
Assets
Total
Net book value
At 31 March 2018
At 31 March 2019
At 30 June 2019
At 30 June 2020
12. Intangible assets
(US dollars in thousands)
Goodwill
Other intangible assets
220
163
141
103
824
550
344
527
759
385
585
485
112
108
116
109
-
-
1,915
1,205
1,764
2,951
1,262
2,486
As at 30 June
As at 31 March
2020
21,919
7,930
2019
22,387
9,375
2019
22,622
9,744
2018
24,482
11,920
Total
29,849
31,762
32,366
36,402
Page | 71
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
a)
Goodwill
Goodwill arose on the purchase of Aevitas O Holdings Pty Ltd and VivoPower Pty Ltd on 29 December 2016.
(US dollars in thousands)
As at 1 July / 1 April
Revaluations
Goodwill previously not recognized
Impairment
Reclassifications
Additions
Foreign exchange
As at 30 June
As at 31 March
2020
22,387
2019
22,622
2019
2018
24,482
30,393
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(468)
(235)
(1,860)
3,597
627
(11,092)
138
-
819
Carrying value at 30 June / 31 March
21,919
22,387
22,622
24,482
The carrying amounts of goodwill by Cash Generating Unit (“CGU”) are as follows:
(US dollars in thousands)
Aevitas O Holdings Pty Ltd (allocated to the
Critical Power Services segment)
VivoPower Pty Ltd (allocated to the Solar
Development segment)
As at 30 June
As at 31 March
2020
12,483
2019
12,751
2019
2018
12,884
13,949
9,436
9,636
9,738
10,533
Total
21,919
22,387
22,622
24,482
The Group conducts impairment tests on the carrying value of goodwill annually, or more frequently if there
are any indications that goodwill might be impaired. The recoverable amount of the Cash Generating Unit
(“CGU”) to which goodwill has been allocated are determined from value in use calculations. The key
assumptions in the calculations are the discount rates applied, expected operating margin levels and long-
term growth rates. Management estimates discount rates that reflect the current market assessments while
margins and growth rates are based upon approved budgets and related projections.
The Group prepares cash flow forecasts using the approved budgets for the coming financial year and
management projections for the following two years. Cash flows are also projected for subsequent years as
management believes that the investment is held for the long term. These budgets and projections reflect
management’s view of the expected market conditions and the position of the CGU’s products and services
within those markets.
The CGU represented by Aevitas O Holdings Pty Ltd was assessed to have a value in excess of its carrying
value and hence no additional adjustments to goodwill were considered necessary. Key assumptions used
in the assessment of impairment were discount rate based on the weighted average cost of capital of 10.6%
(30 June 2019: 8.8%; 31 March 2019: 8.8%; 2018: 9.2%) and annual growth rate of 3.0% per annum. No
Page | 72
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
sensitivity analysis is provided as the Company expects no foreseeable changes in the assumptions that
would result in impairment of the goodwill.
The CGU represented by VivoPower Pty Ltd was assessed to have a value in excess of its carrying value and
hence no additional adjustments to goodwill were considered necessary. Key assumptions used in the
assessment of impairment were weighted average cost of capital of 10.9% (30 June 2019: 11.0%; 31 March
2019: 11.0%; 2018: 12.1%), an average annual growth rate in years 1-5 of 53% during the initial expansion
phase, and a long-term growth rate of 3.0% from year 6 onwards.
If the weighted average cost of capital of VivoPower Pty Ltd had been 1% higher than management’s
estimates, the Group would have had to recognize an impairment of $1.5 million. If project realizations in
years 1-5 result in an EBITDA 10% less than management’s estimates, the Group would have had to recognize
an impairment of $0.9 million. If the long-term growth rate in year 6 onwards was 2% instead of 3%, the
Group would have had to recognize an impairment of $1.2 million.
Page | 73
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
b)
Other intangible assets
(US dollars in thousands)
Customer
relationships
Trade
names
Favourable
Supply
Contracts Databases
Other
Total
Cost
At 31 March 2018
Foreign exchange
Disposals
At 31 March 2019
Foreign exchange
Additions
Disposals
At 30 June 2019
Foreign exchange
Additions
Disposals
At 30 June 2020
Amortization
At 31 March 2018
Foreign exchange
Amortization
Disposals
At 31 March 2019
Foreign exchange
Amortization
At 30 June 2019
Foreign exchange
Amortization
Disposals
At 30 June 2020
Net book value
At 31 March 2018
At 31 March 2019
At 30 June 2019
At 30 June 2020
5,799
2,680
(439)
(263)
(204)
-
5,097
2,476
(55)
-
(50)
(26)
-
-
4,992
2,450
(103)
461
(968)
(51)
-
-
4,577
(348)
-
4,229
(44)
-
-
4,185
(86)
-
-
154
(12)
-
142
(1)
-
-
141
(3)
-
-
98
13,308
(11)
(1,013)
(72)
(335)
16 11,960
-
12
-
(126)
12
(50)
28 11,796
(1)
-
(9)
(244)
461
(977)
4,382
2,399
4,099
138
18 11,036
677
(75)
483
(21)
237
(22)
169
-
1,064
384
(6)
100
1,158
(24)
404
(133)
(4)
41
421
(9)
160
-
1,405
572
5,122
4.033
2,443
2.092
3,834
2,029
2,977
1,827
406
(38)
289
-
657
(7)
70
720
(15)
273
-
978
4,171
3,572
3,465
3,121
68
(6)
49
-
111
(1)
12
122
(2)
13
-
-
-
-
-
-
-
-
-
18
-
1,388
(141)
990
(21)
2,216
(18)
223
2,421
(50)
868
(133)
133
18
3,106
86
31
19
5
98
16
28
11,920
9,744
9,375
-
7,930
Page | 74
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
Customer relationships, trade names and favourable supply contracts have an average remaining period of
amortization of 10 years, 13 years and 13 years respectively.
Additions in the year comprise investment in the Daisy Hill and Yoogali Solar projects in Australia, which the
Group owns a 60% effective equity share of through its investment in the IT Power project companies.
Intangible assets of $0.5 million include 100% of the intangible assets invested. The non-controlling interest
share of $0.2 million is reflected in equity. These project development costs are categorised in customer
relationships.
Intangible assets disposed of in the year relate to the Sun Connect portfolio, as described in note 5. Sun
Connect portfolio costs were categorised in customer relationships.
13. Investment in subsidiaries
The principal operating undertakings in which the Group’s interest at 30 June 2020 is 20% or more are as
follows:
Subsidiary undertakings
ordinary shares held Registered address
Percentage of
VivoPower International Services Limited
VivoPower USA LLC
VivoPower US-NC-31, LLC
VivoPower US-NC-47, LLC
VivoPower (USA) Development, LLC
VivoPower Pty Ltd
VivoPower WA Pty Ltd
VVP Project 1 Pty Limited
Amaroo Solar Pty. Ltd.
SC Tco Pty Limited
SC Hco Pty Limited
SC Fco Pty Limited
Yoogali Solar Farm Pty Ltd
Daisy Hill Solar Farm Pty Ltd
Aevitas O Holdings Pty Ltd
Aevitas Group Limited
Aevitas Holdings Pty Ltd
Electrical Engineering Group Pty Limited
J.A. Martin Electrical Limited
Kenshaw Electrical Pty Limited
VivoPower Philippines Inc.
VivoPower RE Solutions Inc.
V.V.P. Holdings Inc. *
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
60%
60%
100%
99.9%
100%
100%
100%
100%
64%
64%
40%
28 Esplanade, St Helier, Jersey, JE2 3QA
251 Little Falls Drive,
Wilmington, DE, USA 19808
153 Walker St,
North Sydney NSW, Australia 2060
Unit 10A, Net Lima Building, 5th Avenue
cor. 26th Street, E-Square Zone, Crescent
Park West, Bonifacio Global City, Taguig,
Metro Manila
Page | 75
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
Associate and Joint Venture
Undertakings
Percentage of
shares held
Registered address
Innovative Solar Ventures I, LLC
VVPR-ITP TopCo Pty Limited
50%
50%
251 Little Falls Drive, Wilmington, DE, USA 19808
153 Walker St, North Sydney NSW, Australia 2060
* V.V.P. Holdings Inc. is controlled of VivoPower Pty Ltd notwithstanding only owning 40% of the ordinary share capital.
14. Investments accounted for using the equity method
(US dollars in thousands)
%
Owned
Innovative Solar Ventures I, LLC
50%
US-NC-31 Sponsor Partner, LLC
14.45%
US-NC-47 Sponsor Partner, LLC
10%
Total
As at 30 June
As at 31 March
2020
8,225
-
-
8,225
2019
2019
-
-
-
-
-
-
-
-
2018
14,147
-
-
14,147
In April 2017, the Company entered into a 50% joint venture with an early-stage solar development company,
Innovative Solar Systems, LLC, to develop a diversified portfolio of 38 utility-scale solar projects in 9 different
states, representing a total electricity generating capacity of approximately 1.8 gigawatts, through an
investment entity called Innovative Solar Ventures I, LLC (the “ISS Joint Venture”).
Under the terms of the ISS Joint Venture, the Company has committed to invest $14.1 million in the ISS Joint
Venture for its 50% equity interest, after reducing the commitment by $0.8 million in potential brokerage
commissions that have not been required and which have been credited towards the Company’s
commitment. The $14.1 million commitment is allocated to each of the projects based on monthly capital
contributions determined with reference to completion of specific project development milestones under
an approved development budget for the ISS Joint Venture. To 30 June 2020, the Company contributed $13.1
million of the $14.1 million commitment to the ISS Joint Venture, leaving a remaining capital commitment
at 30 June 2020, of $1.1 million, which is recorded in trade and other payables. Three projects within the
portfolio were discontinued in the year ended 30 June 2020, resulting in a write-off of capitalized costs of
$1.2 million related to those projects, as shown in Note 5.
The joint venture was accounted for as an investment under the equity method at 31 March 2018.During the
year ended 31 March 2019, the Company made the decision to sell its portfolio of solar projects held within
the ISS Joint Venture, and the Joint Venture assets were reclassified as assets held for sale. In the year ended
30 June 2020, sale of the entire portfolio was not successful. The Company has commenced a process to
take control of the portfolio from the Joint Venture partner, and this is expected to result in a slower project
realization timeframe, Accordingly, the portion of the investment that is expected to be realized in near term
sales within 12 months has remained in assets held for sale. The remainder of the portfolio has been
reclassified back to investments accounted for under the equity method.
Costs of $1.1 million associated with a detailed review of the portfolio and sales campaign have been
expensed as a restructuring and other non-recurring cost, as described in Note 7.
Page | 76
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
15. Cash and cash equivalents
As at 30 June
As at 31
March
(US dollars in thousands)
Cash at bank and in hand
2020
2,824
2019
7,129
2019
4,522
2018
1,939
The credit ratings of the counterparties with which cash was held are detailed in the table below.
(US dollars in thousands)
2020
2019
2019
As at 30 June
As at 31
March
A+
A
A-
AA-
Total
16. Restricted cash
-
-
554
2,270
2,824
252
233
-
6,644
7,129
17
14
-
4,491
4,522
2018
891
69
-
979
1,939
(US dollars in thousands)
Bank guarantee security deposit
Preferred supplier agreement escrow
Total
As at 30 June
As at 31
March
2020
1,013
-
1,013
2019
632
-
632
2019
2018
816
503
1,319
-
-
-
At 30 June 2020, there is a total of $1.0 million (30 June 2020, $0.6 million; 31 March 2019: $0.8 million) of cash
which is subject to restriction as security for bank guarantees provided to customers in support of
performance obligations under power services contracts.
Page | 77
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
17. Trade and other receivables
(US dollars in thousands)
2020
2019
2019
2018
As at 30 June
As at 31
March
Current receivables
Trade receivables
Contract assets
Prepayments
Other receivables
Current tax receivable
Total
3,112
3,382
432
5,475
155
6,193
3,929
2,919
1,951
-
5,899
1,800
628
2,072
-
5,333
120
391
2,059
-
12,556
14,992
10,399
7,903
In accordance with IFRS 15, contract assets are presented as a separate line item. The Company has not
recognized any loss allowance for contract assets.
Analysis of trade receivables:
(US dollars in thousands)
Trade and other receivables
Less: credit note provision
Total
As at 30 June
As at 31
March
2020
3,119
(7)
3,112
2019
6,195
(2)
6,193
2019
5,929
(30)
2018
5,335
(2)
5,899
5,333
The maximum exposure to credit risk for trade receivables by geographic region was:
As at 30 June
As at 31
March
(US dollars in thousands)
USA
United Kingdom
Australia
Total
2020
-
-
3,112
3,112
The aging of the trade receivables, net of provisions is:
(US dollars in thousands)
0-90 days
Greater than 90 days
Total
As at 30 June
2020
3,055
57
3,112
2019
108
-
6,085
6,193
2019
6,093
100
6,193
2019
2018
78
-
5,821
5,899
129
12
5,192
5,333
As at 31
March
2019
5,765
134
2018
5,326
7
5,899
5,333
Page | 78
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
18. Assets classified as held for sale
(US dollars in thousands)
%
Owned
Innovative Solar Ventures I, LLC
50%
US-NC-31 Sponsor Partner, LLC
14.45%
US-NC-47 Sponsor Partner, LLC
10%
As at 30 June
As at 31 March
2020
4,080
-
-
2019
13,530
-
-
2019
13,530
-
-
2018
6,595
4,841
Total
4,080
13,530
13,530
11,436
As more fully disclosed in Note 14, the Company’s portfolio of U.S. solar projects is held through 50%
ownership in the ISS Joint Venture. During the year ended 31 March 2019, the Company made the decision
to sell its portfolio of U.S. solar projects and accordingly, the investment has been reclassified to current
assets as assets held for sale. Assets classified as held for sale are included within the Solar Development
segment in Note 4.2.
Reconciliation of the ISS Joint Venture investment is as follows:
(US dollars in thousands)
Capital commitment
Commission credit
Discontinued projects
Acquisition costs
Net assets
As at 30 June
As at 31
March
2020
15,044
(770)
(2,079)
110
2019
15,044
(770)
(848)
104
2019
2018
15,044
14,904
(770)
(848)
104
(757)
-
-
12,305
13,530
13,530
14,147
Allocation of the net book value of the equity accounted investment in the ISS Joint Venture, between
current assets held for sale, and non-current investments (as disclosed in Note 14), is as follows:
As at 30 June
As at 31
March
(US dollars in thousands)
Assets classified as held for sale
Investments accounted for using the equity
method
2020
4,080
8,225
2019
13,530
2019
13,530
2018
-
-
-
14,147
Net assets
12,305
13,530
13,530
14,147
Page | 79
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
The table below provides summarized financial information for the ISS Joint Venture. The information
disclosed reflects the amounts presented in the financial statements of ISS Joint Venture, amended to reflect
adjustments made by the Company when using the equity method, including fair value adjustments and
modifications for differences in accounting policy. The summarized financial information for the ISS Joint
Venture does not represent the Company’s share of those amounts.
(US dollars in thousands)
Current assets
Non-current assets
Net assets
As at 30 June
As at 31
March
2020
2
23,277
23,279
2019
1,187
27,107
28,294
2019
1,187
2018
1,373
27,107
26,921
28,294
28,294
No summarized statement of comprehensive income has been presented as there were no movements in
comprehensive income in the year (30 June 2019: nil; 31 March 2019: nil; 2018: nil).
Reconciliation to carrying amounts of the ISS Joint Venture (including amounts disclosed within Investments
accounted for using the equity method, see Note 14):
(US dollars in thousands)
Opening net assets
Initial investment
Commission credit
Commission credit on abandonments
Commission credit
Project swaps
Abandoned projects
Net assets
VivoPower share in %
VivoPower share in $
Commission credit
Acquisition costs
Net Assets
As at 30 June
As at 31
March
2020
28,294
-
(1,546)
144
90
-
(2,592)
24,390
50%
2019
28,294
-
-
-
-
-
-
2019
28,294
2018
-
-
29,808
1,514
(1,514)
-
-
281
(1,795)
-
-
-
28,294
50%
28,294
28,294
50%
50%
12,195
14,148
14,148
14,147
-
110
(721)
103
(721)
103
-
-
12,305
13,530
13,530
14,147
Page | 80
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
19. Trade and other payables
(US dollars in thousands)
Trade payables
Accruals
Related party payable
Payroll liabilities
Sales tax payable
Contract liabilities
Other creditors
Total
As at 30 June
As at 31
March
2020
4,807
370
504
1,383
496
6,013
1,822
2019
5,554
2,247
1,527
1,209
1,054
10,095
2,953
2019
5,675
1,952
1,378
1,165
764
4,978
2,011
2018
3,806
3,008
1,838
504
310
1,544
3,072
15,395
24,639
17,923
14,082
In accordance with IFRS 15 – Revenue from Contracts with Customers, contract liabilities are presented as a
separate line item. Contract liabilities relate to the Company’s obligation to transfer goods or services to
customers for which the Company has received consideration (or the amount is due) from customers.
Contract liabilities are recorded as revenue when the Company fulfils its performance obligations under the
contract.
Of the $10.1 million contract liabilities balance at 30 June 2019 and $5.0 million balance at 31 March 2019,
$2.4 million was not recognized as revenue in the year ended 30 June 2020 and remained outstanding at 30
June 2020 due to contract postponement; now budgeted in the first half of the year ending 30 June 2021. All
other contract liabilities balances at 30 June 2019, 31 March 2019, 2018 and 2017 were recognized as revenue
in the subsequent accounting period.
Page | 81
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
20. Provisions
(US dollars in thousands)
2020
2019
2019
2018
As at 30 June
As at 31
March
Current provisions
Employee entitlements
Litigation
Warranty
Employee terminations
Onerous contracts
Total
Non-current provisions
Employee entitlements
Onerous contracts
Total
Total
1,561
1,104
232
-
-
1,510
1,459
1,474
-
-
112
96
-
-
157
94
-
-
616
380
2,897
1,718
1,710
2,470
169
-
169
148
1,952
2,100
227
1,995
2,222
288
-
288
3,066
3,818
3,932
2,758
Employee entitlements include long term leave and vacation provisions.
The employee terminations provision represents severance and contract termination costs associated with
employees and contractors who departed the business as a result of the restructuring more fully disclosed
in Note 7.
The onerous contracts provision recognized the forecast losses associated with contracts to purchase Solar
Renewable Energy Certificates from the NC-31 and NC-47 projects until 2027.The expected losses were
discounted at the Company’s borrowing rate on long-term debt of 8.5%. The provision formed part of the
disposed net assets of VivoRex LLC, sold on 2 July 2019, as more fully disclosed in Note 5.
On 26 February 2018, the Company’s former Chief Executive Officer, Phillip Comberg, filed a legal claim
alleging the Company committed a repudiatory breach of his service agreement in connection with the
termination of his employment on 4 October 2017. Mr. Comberg is claiming damages of £615,600 related to
the notice period in his service agreement, £540,000 related to shares in the Company he alleges were due
to him, and other unquantified amounts related to bonuses and past services fees alleged to be due. On 9
April 2018, the Company filed a defence and counterclaim, denying that a repudiatory breach was
committed by the Company and denying the other claims asserted by Mr. Comberg, claiming that Mr.
Comberg was terminated for cause.
On 26 November 2018, the Company agreed to a settlement of the counterclaims against Mr. Comberg for
an undisclosed amount. No settlement has been reached with respect to Mr. Comberg’s claim. The Company
continues to strongly deny and defend the claim.
After aborted attempts at settlement, the matter was heard in the UK High Court in the first two weeks of
March 2020. At the time of writing, the Company is still awaiting the verdict from the trial.
In the year ended 30 June 2020, the Company has incurred $0.9 million of legal fees in relation to this matter,
in addition to amounts incurred in prior periods. The Company has also made a provision at 30 June 2020,
for the expected outcome of the trial, of $1.1 million, including allocation of costs, based on legal counsel
advice about the Company’s chances of success for the different elements of the claims.
Page | 82
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
(US dollars in
thousands)
At 31 March 2018
Foreign exchange
Charged/(credited) to
profit or loss:
Additional provisions
Reverse unused
provisions
Provisions utilized
At 31 March 2019
Foreign exchange
Charged/(credited) to
profit or loss:
Additional provisions
Reverse unused
provisions
Unwinding of discount
Provisions utilized
At 30 June 2019
Foreign exchange
Charged/(credited) to
profit or loss:
Additional provisions
Reverse unused
provisions
Disposals
Provisions utilized
At 30 June 2020
Employee
Entitlements
Employee
Terminations
Onerous
Contracts Litigation Warranty
Total
1,762
(140)
510
(26)
(420)
1,686
(18)
146
(41)
-
(116)
1,657
(41)
1,659
(72)
-
(1,473)
1,730
616
-
243
(87)
(614)
158
-
-
-
-
(45)
113
-
176
(28)
380
-
1,804
-
(96)
2,088
-
-
-
42
(82)
2,048
-
-
-
-
(2,048)
(261)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,758
(140)
2,557
(113)
(1,130)
3,932
(18)
146
(41)
42
(243)
3,818
(41)
1,104
232
3,171
-
-
-
-
-
-
(100)
(2,048)
(1,734)
1,104
232
3,066
Page | 83
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
21. Loans and borrowings
(US dollars in thousands)
2020
2019
2019
2018
As at 30 June
As at 31
March
Current liabilities
Debtor invoice financing
Lease liabilities
Shareholder loans
Chattel mortgage
Financing agreement
Bank loan
Other borrowings
Total
Non-current liabilities
Lease liabilities
Shareholder loan
Chattel mortgage
Bank loan
Total
Total
508
641
-
51
-
66
46
901
660
766
-
-
-
-
751
136
-
-
-
-
-
-
285
1,670
-
2,000
-
-
1,312
2,327
887
3,955
715
23,400
249
278
24,642
25,954
1,117
18,242
-
-
19,359
21,686
138
293
18,242
18,092
-
-
-
-
18,380
18,385
19,267
22,340
In June 2020, the Company refinanced its shareholder loan due to AWN Holdings Limited (“AWN”), the
Company’s majority shareholder, capitalizing current and non-current shareholder loans, accrued interest
and related party trade payables, into a new shareholder loan.
The new shareholder loan bears interest at 10.0% per annum plus a line fee of 2.0% per annum, payable
monthly in advance. However, no interest or line fee settlements are required until after a corporate liquidity
event has occurred. No repayment of principal is required until July 2021, and then is repayable in 9 equal
monthly instalments until March 2022. Security granted to AWN comprises a Specific Security Deed over the
assets of Aevitas O Holdings Pty Ltd and general security over the assets of VivoPower International PLC.
In February 2020, the Company agreed an unsecured bridging loan with AWN to provide additional liquidity
to the Company. Interest on the loan was charged at 10.0% per annum. A total of $1.3 million was advanced
to the Company under the bridging loan, which was capitalized, including interest thereon, into the
refinanced shareholder loan, in June 2020.
In May and June 2020, the Company obtained $0.3m government backed loans in Australia to provide
additional liquidity during the COVID-19 pandemic.
In addition to lease liabilities, in the year ended 30 June 2020, J.A. Martin Electrical Pty Limited and Kenshaw
Electrical Pty Limited have also taken out vehicle financing in the form of chattel mortgages, totalling $0.3
million.
In August 2018, the Company secured a $3.6 million (AU$5 million) debtor finance facility to support the
growing working capital requirements of its critical power services businesses. The facility is secured by a
Page | 84
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
fixed charge over the debtors’ book and floating charge over all other assets of J.A. Martin Electrical Pty
Limited and Kenshaw Electrical Pty Limited.
The obligations under lease liabilities are as follows:
Minimum lease Payments
Present value of minimum lease
payments
As at 30 June
As at 31 March
As at 30 June
As at 31 March
2020
2019
2019
2018
2020
2019
2019
2018
(US dollars in
thousands)
Amounts payable under
lease liabilities:
Less than one year
695
692
147
291
649
660
Later than one year but
not more than five
759
1,299
143
327
707
1,117
1,454
1,991
Future finance charges
(98)
(214)
Total lease obligations
under lease liabilities
1,356
1,777
290
(16)
274
618
(40)
578
1,356
1,777
-
-
1,356
1,777
136
138
274
-
274
285
293
578
-
578
22. Called up share capital
As at 30 June
As at 31
March
(US dollars in thousands)
2020
2019
2019
2018
Allotted, called up and fully paid
Ordinary shares of $0.012 each
$162,689
$162,689
$162,689
$162,689
Number allotted
Ordinary shares of $0.012 each
13,557,376
13,557,376
13,557,376
13,557,376
At 1 April 2018
Issue of new shares
At 31 March 2019
Issue of new shares
At 30 June 2019
Issue of new shares
At 30 June 2020
No. of shares
13,557,376
-
13,557,376
-
13,557,376
-
13,557,376
Page | 85
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
23. Other reserves
(US dollars in thousands)
Equity instruments
Share option reserve
Capital raising costs
Treasury shares
Equity incentive costs
Foreign exchange
Total
As at 30 June
As at 31
March
2020
27,057
-
(6,009)
-
344
16
2019
26,087
3,713
(9,722)
(13)
-
11
2019
2018
26,090
25,072
3,713
3,713
(9,722)
(9,722)
(246)
(592)
-
11
-
(88)
21,408
20,076
19,846
18,383
Equity instruments are convertible preference shares and convertible loan notes in Aevitas Group Limited
(“Aevitas Group”) which must convert to shares of VivoPower at $10.20 per share no later than 30 June 2021.
The Company has classified these instruments as equity under the “fixed-for-fixed” rule meaning that both
the amount of consideration received/receivable and the number of equity instruments to be issued is fixed.
There are 2,473,367 convertible preference shares outstanding with a face value of AU$3.00 per share and
mature on 30 June 2021. The value held in reserves of AU$11,059,348 represents their face value plus the
dividends accrued to 30 June 2020. Convertible preference shares are subordinated to all creditors of Aevitas
Group, rank equally amongst themselves, and rank in priority to ordinary shares of Aevitas Group.
There are 2,473,367 convertible loan notes outstanding with a face value of AU$7.00 per share and mature
on 30 June 2021. The value held in reserves of AU$25,075,203 represents their face value plus the dividends
accrued to 30 June 2020. The convertible loan notes rank equally with the unsecured creditors of Aevitas
Group.
Dividends or interest is payable quarterly in arrears at a rate of 7% on the capitalized value to 29 December
2016, the date at which they became convertible to VivoPower shares. At maturity, or if a trigger event such
as a change of control of Aevitas Group or VivoPower, a listing event, or a disposal of substantially all of the
assets of Aevitas Group has occurred, the convertible preference shares and convertible loan notes in Aevitas
Group convert to VivoPower ordinary shares at a price of US$10.20 per share.
In connection with the acquisition of Aevitas Group, the Company entered into a guarantee of the obligations
of Aevitas Group under the terms of the preference shares and loan notes.
As disclosed more fully in Note 29, on 10 July 2020, a proposal to reconstitute the Aevitas convertible
preference shares and convertible loan notes as an Aevitas preference share was approved at an
extraordinary meeting of the ordinary shareholders, exchangeable preference shareholders and
exchangeable noteholders of Aevitas Group Limited.
The share option reserve represents 828,000 share options granted to Early Bird Capital as part of the initial
public share offering. The options entitled the holder to buy VivoPower ordinary shares at US$8.70 at any
time before 30 April 2020. The options were originally accounted for as a share-based award and
accordingly, the cost of the award was recognized directly in equity and was applied against capital raising
costs. The fair value of the options was determined at the grant date, using the Black Scholes Model, and not
remeasured subsequently. The options lapsed in April 2020, accordingly the reserve has been released and
credited against capital raising costs.
On March 30, 2017, the Company repurchased 129,805 shares at a price of $4.50 for a total sum of $591,911,
including commission, and held them as treasury shares. During the year ended 31 March 2019, 75,805 of
Page | 86
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
these shares were awarded to employees under the Company’s 2017 Omnibus Incentive Plan. Based on the
closing market value of these shares on the day of award, $85,660 was expensed as employee compensation
and remaining cost of $260,011 was charged against retained earnings.
During the year ended 30 June 2020, share incentives were granted to employees and directors of the
Company, under the Company’s 2017 Omnibus Incentive Plan. Of the share awards granted, $344,000 of
shares fully vested or had a vesting period commencing in the year ended 30 June 2020.
24. Earnings per share
The earnings and weighted average numbers of ordinary shares used in the calculation of earnings per share
are as follows:
(US dollars in thousands)
Loss for the year/period
Year Ended
30 June 2020
Three Months
Ended
30 June 2019
Year Ended
31 March 2018
2019
2018
(5,103)
(1,446)
(11,223)
(27,879)
Weighted average number of shares in issue
(‘000s)
13,557
13,557
13,557
13,557
Basic earnings/(loss) per share (dollars)
Diluted earnings/(loss) per share (dollars)
(0.38)
(0.38)
(0.11)
(0.11)
(0.83)
(0.83)
(2.06)
(2.06)
25. Contingencies
As described in Note 20, the Company has participated in a court hearing in March 2020 in relation to the
legal claims by the Company’s former Chief Executive Officer, Phillip Comberg. In addition to the probable
financial outcome of the trial of $1.1 million, further elements of the claim will also be ruled upon in the
verdict. These are considered by the Company to be much lower risk than those that have been provided for,
and the Company may have further recourse to appeal beyond the initial verdict. Accordingly, no provision
has been made in the financial statements in respect of the other claims brought by Mr Comberg.
26. Pensions
The Group’s principal pension plan comprises the compulsory superannuation scheme in Australia, where
the Group contributes 9.5%. A pension scheme is also in place for UK employees, where the Group
contributes 4%. The pension charge for the year represents contributions payable by the Group which
amounted to $0.79 million (3 months ended 30 June 2019: $0.27 million; year ended 31 March 2019: $0.76
million; 2018: $0.90 million.
Page | 87
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
27. Financial instruments
(US dollars in thousands)
2020
2019
2019
2018
As at 30 June
As at 31
March
Financial assets at amortized cost
Trade and other receivables
Cash and cash equivalents
Restricted cash
Total
Financial liabilities at amortized cost
Loans and borrowings
Trade and other payables
Total
8, 587
2,824
1,013
8,144
7,129
632
7,971
4,522
1,319
7,392
1,939
-
12,424
15,905
13,812
9,331
25,954
7,504
21,686
12,281
19,267
11,016
22,340
11,724
33,458
33,967
30,283
34,064
The amounts disclosed in the above table for trade and other receivables and payables do not agree to the
amount reported in the Company’s Consolidated Statement of Financial Position as they exclude prepaid
expenses, payroll and sales tax payable, current tax receivables and contract assets and liabilities, which do
not meet the definition of financial assets or liabilities.
(a)
Financial risk management
The Group’s principal financial instruments are bank balances, cash and medium-term loans. The main
purpose of these financial instruments is to manage the Group’s funding and liquidity requirements. The
Group also has other financial instruments such as trade receivables and trade payables which arise directly
from its operations.
The Group is exposed through its operations to the following financial risks:
•
Liquidity risk
• Credit risk
•
•
Interest rate risk
Foreign currency risk
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk
management framework. Policy for managing risks is set by the Chief Executive Officer and is implemented
by the Group’s finance department. All risks are managed centrally with a tight control of all financial matters.
(b)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Group considers that it has no significant liquidity risk. The Group held unrestricted cash resources of $2.8
million at 30 June 2020 (30 June 2019: $7.1 million; 31 March 2019: $4.5 million; 2018: $1.9 million). The ratio
of current assets to current liabilities at 30 June 2020 is 1.04 (30 June 2019: 1.25; 31 March 2019: 1.43; 2018:
1.03). During the year ended 31 March 2019, the Group established a $3.6 million debtor finance facility to
support its working capital requirements, of which only $0.5 million was drawn at 30 June 2020 (30 June
2019: $0.9 million; 31 March 2019: $0.8 million). In addition, the Group maintains near-term cash flow
forecasts that enable it to identify its borrowings requirement so that remedial action can be taken if
necessary.
Page | 88
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
Contractual maturities of financial liabilities, including interest payments, are as follows:
As at 30 June 2020
(US dollars in thousands)
Contractual maturity of financial liabilities
Less
than 1
year
Total
1-3
years
3-5
years
More
than 5
years
Trade and other payables (financial liabilities)
7,504
7,504
-
Borrowings
Lease liabilities
Total
24,598
1,356
688
649
23,873
654
33,458
8,841
24,527
-
37
53
90
-
-
-
As at 30 June 2019
(US dollars in thousands)
Contractual maturity of financial liabilities
Less
than 1
year
Total
1-3
years
3-5
years
More
than 5
years
Trade and other payables (financial liabilities)
12,281
12,281
-
Borrowings
Lease liabilities
Total
23,397
3,859
19,538
1,991
692
1,077
37,669
16,832
20,615
-
-
222
222
-
-
-
As at 31 March 2019
(US dollars in thousands)
Contractual maturity of financial liabilities
Less
than 1
year
Total
1-3
years
3-5
years
More
than 5
years
Trade and other payables (financial liabilities)
11,016
11,016
-
Borrowings
Lease liabilities
Total
22,480
2,556
19,924
290
147
143
33,786
13,719
20,067
-
-
-
-
-
-
-
As at 31 March 2018
(US dollars in thousands)
Contractual maturity of financial liabilities
Less
than 1
year
Total
1-3
years
3-5
years
More
than 5
years
Trade and other payables (financial liabilities)
11,724
11,724
-
-
Borrowings
Lease liabilities
Total
(c)
Credit risk
25,896
5,498
14,111
6,287
619
291
328
-
38,239
17,513
14,439
6,287
-
-
-
The primary risk arises from the Group’s receivables from customers and contract assets. The majority of the
Group’s customers are long standing and have been a customer of the Group for many years. Losses have
occurred infrequently. The Group is mainly exposed to credit risks from credit sales, but the Group has no
Page | 89
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
significant concentrations of credit risk and keeps the credit status of customers under review. Credit risks of
customers of new customers are reviewed before entering into contracts. The debtor exposure is monitored
by Group finance and the local entities review and report their exposure on a monthly basis.
The Group does not consider the exposure to the above risks to be significant and has therefore not
presented a sensitivity analysis on the identified risks.
The credit quality of debtors neither past due nor impaired is good. Refer to Note 17 for further analysis on
trade receivables.
(d)
Foreign currency risk
The Group operates internationally and is exposed to foreign exchange risk on sales and purchases that are
denominated in currencies other than the respective functional currencies of the Group entities to which
they relate, primarily with respect to GBP and USD, but also between USD and AUD.
The Group’s investments in overseas subsidiaries are not hedged as those currency positions are either USD
denominated and/or considered to be long-term in nature.
The Group is exposed to foreign exchange risk on the following balances at 30 June 2020:
• Cash and cash equivalents $2.3 million denominated in AUD and $0.1 million denominated in GBP.
• Restricted cash $1.0 million denominated in AUD.
• Trade and other receivables $12.3 million denominated in AUD and $0.2 million denominated in
GBP.
• Trade and other payables $10.6 million denominated in AUD and $1.5 million in GBP.
• Borrowings $2.5 million denominated in AUD.
• Provisions $2.0 million denominated in AUD and $1.1 million in GBP.
The non-current shareholder loan of $23.4 million is denominated in USD, upon which there is no foreign
currency risk.
(e)
Interest rate risk
As a result of the related party loan agreement the Group is exposed to interest rate volatility. However, the
interest rate is fixed for the medium term, therefore, the risk is largely mitigated for the near future. The Group
will continue to monitor the movements in the wider global economy.
28. Related party transactions
AWN is the ultimate controlling party by virtue of its 60.3% shareholding in VivoPower. Kevin Chin, Chairman
and Chief Executive Officer of VivoPower, is also Chief Executive of AWN. During the period, a number of
services were provided to the Group from AWN and its subsidiaries; the extent of the transactions between
the two groups is listed below.
On 30 June 2020, the Company completed a refinancing transaction on its shareholder loan. Under the terms
of the refinancing, the new loan applies normal commercial terms, with interest at 10.0% per annum and
line fee of 2%. Both interest and line fee are payable monthly in advance, except that until the Company
achieves a corporate liquidity event such as a business sale or capital raise, the interest and line fee will
accrue without payment. Principal is repayable in equal monthly instalments commencing July 2021 until
March 2022. The new refinanced loan capitalized and settled existing related party balances with Arowana,
as detailed below, for a total principal as at 30 June 2020 of $23,303,288.
Prior to the refinancing, VivoPower was indebted to Arowana via a shareholder loan on normal commercial
terms with interest at 8.5% per annum payable monthly in advance and principal repayable in equal monthly
Page | 90
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
instalments of $75,000 for ten months beginning April 2018, with the remainder repayable in 21 equal
monthly instalments commencing July 2020. At 30 June 2019 the principal balance due to Arowana by
VivoPower under this loan was $18,242,636 (31 March 2019: $18,242,636; 2018: $18,992,636), and this amount
plus unpaid interest of $2,185,701 was settled as part of the parent company loan refinancing transaction on
30 June 2019, leaving nil balance at 30 June 2020.
Prior to the refinancing, VivoPower was also indebted to Arowana via a shareholder loan on normal
commercial terms with interest at 10.0% per annum payable monthly in arrears and principal repayable
upon release of restricted cash held as bank guarantee security as disclosed in Note 16 to the consolidated
financial statements. Of the principal balance as at 30 June 2019 of $765,681, $320,530 was repaid in the year
ended 30 June 2020, whilst the remaining $445,151 plus interest was capitalized in the parent company loan
refinancing, settled on 30 June 2020 as part of the parent company loan refinancing. At 30 June 2019 the
principal balance due to Arowana by VivoPower under this loan was $765,681 (31 March 2019: nil; 2018: nil).
A $1,300,000 bridge loan was provided to VivoPower by Arowana during the year ended 30 June 2020. The
loan plus accrued interest of $43,231 was also settled as part of the parent company loan refinancing on 30
June 2020.
Directors fees for Kevin Chin in the amount of $207,181 were charged to the Company by Arowana Partners
Group Pty Limited, a company of which Mr. Chin is a shareholder and director, during the year ended 30 June
2020. At 30 June 2020 the Company had an account payable to Arowana Partners Group Pty Limited of
$105,620 (30 June 2019; $88,516; 31 March 2019: $47,990; 2018: $42,188) in respect of these services.
Art Russell, Interim Chief Executive Officer, was employed by Arowana International UK Limited, a subsidiary
of Arowana until his resignation on 17 March 2020, and seconded to VivoPower; $277.306 was charged to the
Company during the year ended 30 June 2020. At 30 June 2020, the Company had an account payable of
$185,253 (30 June 2019: $116,923; 31 March 2019: $32,657; 2018: $80,026) in respect of these services.
Michael Hui, non-executive director of VivoPower International PLC, is also an employee of Arowana. During
the year ended 30 June 2020, Mr. Hui invoiced the Company $11,131 for director fees from the date of his
appointment to the Board in January 2020. At 30 June 2020, the Company had an account payable of $1,878
in respect of these services.
From time to time, costs incurred by Arowana on behalf of VivoPower are recharged to the Company. During
the year ended 30 June 2020, $108,785 was recharged to the Company. At 30 June 2020, the Company has
a payable to Arowana in respect of recharges of $202,024 (30 June 2019: $1,268,670; 31 March 2019:
$1,268,670; 2018: $1,802,003). On 30 June 2020 $1,066,666 of the recharge balance was settled and
capitalized in the refinanced AWN loan.
Aevitas is indebted to the following subsidiaries of AWN via their holdings in Aevitas convertible loan notes,
which are accounted for as equity instruments within other reserves, as more fully described in Note 23 to
the consolidated financial statements, and for which they earned $659,090 of interest during the year ended
30 June 2020. The outstanding amount represents the face value plus interest accrued to 30 June 2020:
• Arowana Australasian Special Situations 1A Pty Ltd: 666,666 Aevitas convertible loan notes with an
outstanding amount of $4,729,996;
• Arowana Australasian Special Situations 1B Pty Ltd: 666,667 Aevitas convertible loan notes with an
outstanding amount of $4,730,003; and,
• Arowana Australasian Special Situations 1C Pty Ltd: 666,667 Aevitas convertible loan notes with an
outstanding amount of $4,730,003.
Subsidiaries of Arowana hold the following convertible preferred shares of Aevitas, which are accounted for
as equity instruments within other reserves, and for which they earned $282,467 of dividends during the year
ended 30 June 2020. The outstanding amount represents the face value plus dividends accrued to 30 June
2020:
Page | 91
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
• Arowana Australasian Special Situations 1A Pty Ltd: 388,889 Aevitas convertible preferred shares
with an outstanding amount of $1,216,880;
• Arowana Australasian Special Situations 1B Pty Ltd: 388,889 Aevitas convertible preferred shares
with an outstanding amount of $1,216,880;
• Arowana Australasian Special Situations 1C Pty Ltd: 388,889 Aevitas convertible preferred shares
with an outstanding amount of $1,216,880; and,
• Arowana Australasian Special Situations Fund 1 Pty Limited: 833,333 Aevitas convertible preferred
shares with an outstanding amount of $2,607,597.
Aevitas is indebted to The Panaga Group Trust, of which Mr. Kevin Chin is a beneficiary and one of the
directors of the corporate trustee of such trust, who holds 4,500 Aevitas convertible loan notes with an
outstanding amount of $30,359 representing face value plus interest accrued to 30 June 2020 and earned
interest of $1,483 for the year ended 30 June 2020.
Aevitas is also indebted to The Panaga Group Trust, who also holds 4,500 Aevitas convertible preferred
shares with an outstanding amount of $13,426 representing face value plus dividends accrued to 30 June
2020 and earned dividends of $636 for the year ended 30 June 2020.
29. Subsequent event
At an extraordinary meeting of the ordinary shareholders, exchangeable preference shareholders and
exchangeable noteholders of the Company’s subsidiary, Aevitas Group Limited, held on 10 July 2020, a
proposal to reconstitute each Aevitas convertible preference share and convertible note together into one
Aevitas preference share, was approved. The Aevitas preference share will pay the same coupon as the
current Aevitas convertible preference shares and convertible notes, being 7% per annum and this will be
cumulative. The preference share will not be dilutive to VivoPower ordinary shareholders, as there is no
mandatory exchangeability feature.
30. Key management personnel compensation
Key management personnel, which are those roles that have a Group management aspect to them are
included in Note 8 to the consolidated financial statements.
31. Ultimate controlling party
The ultimate controlling party and the results into which these financials are consolidated is AWN Holdings
Limited (formerly Arowana International Limited), a company registered in Australia.
Page | 92
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
32. Transition period comparative information (unaudited)
The condensed consolidated statement of operations for the year ended 30 June 2019 is as follows:
(US dollars in thousands)
Revenue from contracts with customers
Costs of sales
Gross profit
General and administrative expenses
Loss on sale of assets
Depreciation and amortisation
Operating profit/(loss)
Restructuring costs
Finance expense – net
Loss before income tax
Income tax
Loss for the period
Year Ended 30 June 2019
(unaudited)
43,545
(37,452)
6,093
(7,195)
(2,668)
(1,447)
(5,217)
(2,404)
(3,345)
(10,966)
(353)
(11,319)
Page | 93
Notes to the Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
The condensed consolidated statement of cash flow for the year ended 30 June 2019 is as follows:
(US dollars in thousands)
Cash flows from operating activities
Loss for the period
Income tax
Finance expense - net
Depreciation and amortization
Loss on solar development
Increase in non-cash working capital
Net cash from operating activities
Cash flows from investing activities
Proceeds on sale of capital projects
Purchase of property, plant and equipment
Net cash from investing activities
Cash flows from financing activities
Repayment of related party loans
Debtor finance borrowings
Lease repayments
Finance agreements repayments
Finance expense – net
Transfer from/(to) restricted cash
Cash flows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of exchange rate movements on cash held
Cash and cash equivalents at end of period
Year Ended 30 June 2019
(unaudited)
(11,319)
353
3,345
1,477
2,668
4,708
1,232
11,601
(358)
11,243
(134)
901
(275)
(3,761)
(3,345)
(632)
(7,246)
5,229
1,900
-
7,129
Page | 94
Company Statement of Financial Position
VivoPower International PLC for the year ended 30 June 2020
Company Statement of Financial Position
(US dollars in thousands)
Note
2020
2019
2019
2018
30 June
31 March
ASSETS
Non-current assets
Deferred tax assets
Investments
Intercompany loan receivable
Total non-current assets
Current assets
Cash and cash equivalents
Other receivables
Total current assets
TOTAL ASSETS
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Equity
Share capital
Share premium
Other reserves
Retained deficit
Total Equity
TOTAL EQUITY AND LIABILITIES
Registered number 09978410
3
4
5
6
7
8
-
7,388
24,850
349
7,388
349
7,388
24,353
24,356
-
7,388
25,258
32,238
32,090
32,093
32,646
306
16,534
16,840
49,078
3,750
1,104
4,854
163
40,215
19,185
1
18,577
18,578
50,668
4
18,238
18,242
50,335
20
17,257
17,277
49,923
5,347
4,670
1,230
-
-
-
5,347
4,670
1,230
163
40,215
18,330
163
40,215
18,101
163
40,215
18,657
(15,339)
(13,387)
(12,814)
(10,342)
44,224
49,078
45,321
50,668
45,665
50,335
48,693
49,923
As allowed by S408 Companies Act 2006, no profit and loss account is presented in respect of the parent
company. The loss for parent company after taxation for the year ended 30 June 2020 was $1,952,000 (three
months ended 30 June 2019: $402,031; year ended 31 March 2019: $2,212,235; 2018: $9,260,663 loss).
These financials were approved by the Board of Directors on 7 September 2020 and signed on its behalf by:
Kevin Chin
Chairman
Page | 95
Company Cash Flow Statement
VivoPower International PLC for the year ended 30 June 2020
Company Statement of Cash Flow
(US dollars in thousands, except per
share amounts)
Note
Cash flows from operating activities
3
4
Loss for the period
Income tax
Finance income
Finance expense
Impairment of investment
Increase in trade and other receivables
Increase in trade and other payables
Net cash from/(used in) operating
activities
Cash flows from investing activities
Interest received
Intercompany loan funding
Net cash (used in)/from investing
activities
Cash flows from financing activities
Other reserves
Finance expense
Net cash from/(used in) financing
activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the
beginning of the period
Cash and cash equivalents at the end of
the period
Year Ended
30 June
2020
Three Months
Ended
30 June 2019
Year Ended
31 March
2019
2018
(1,952)
(402)
(2,212)
(9,261)
-
-
46
-
-
(2)
-
-
(11)
709
(378)
-
36
29
(2)
33
-
10,465
(27)
805
277
86
(1,906)
294
(1,776)
1,627
2,223
2,223
(12)
(12)
305
1
306
-
-
2
(299)
1,796
(2,008)
(299)
1,796
(2,006)
-
2
2
-
(36)
(36)
(7)
(33)
(40)
(3)
(16)
(419)
4
1
20
439
4
20
Page | 96
Company Statement of Changes in Equity
VivoPower International PLC for the year ended 30 June 2020
Company Statement of Changes in Equity
(US dollars in thousands)
Share
Capital
Share
Premium
Other
Reserves
Retained
Deficit
Total
At 1 April 2017
163
40,215
18,471
(1,074)
57,775
Total comprehensive income for
the year
Foreign exchange
-
-
-
-
-
-
-
(9,261)
(9,261)
186
186
(7)
179
(9,268)
(9,082)
At 31 March 2018
163
40,215
18,657
(10,342)
48,693
Total comprehensive income for
the year
Equity instruments
Treasury shares granted to
employees
At 31 March 2019
Total comprehensive income for
the period
Equity instruments
Treasury shares granted to
employees
At 30 June 2019
Total comprehensive income for
the period
Equity instruments
Employee share scheme
-
-
-
-
163
-
-
-
-
163
-
-
-
-
-
-
-
-
(1,920)
(2,212)
(4,132)
1,018
-
1,018
346
(260)
86
(556)
(2,472)
(3,028)
40,215
18,101
(12,814)
45,665
-
-
-
-
-
(402)
(402)
(3)
233
230
-
(171)
(3)
62
(573)
(343)
40,215
18,330
(13,387)
45,321
-
-
-
-
(460)
(1,952)
(2,412)
971
344
855
-
-
971
344
(1,952)
(1,097)
At 30 June 2020
163
40,215
19,185
(15,339)
44,224
For further information on “Other Reserves” please see Note 23 to the Company Financial Statements.
Page | 97
Notes to the Company Financial Statements
VivoPower International PLC for the year ended 30 June 2020
Notes to the Company Financial Statements
1. Basis of preparation
VivoPower International PLC company financial statements were prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union, IFRIC interpretations and the
Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been
prepared under the historical cost convention.
As allowed by S408 Companies Act 2006, no profit and loss account is presented in respect of the parent
company.
2. Basis of preparation
(a) Foreign exchange
The Company’s functional and presentational currency is the US dollar. Transactions denominated in
foreign currencies are translated into the functional currency of the entity at the rates prevailing at the dates
of the individual transactions. Foreign currency monetary assets and liabilities are translated at the rates
prevailing at the balance sheet date. Exchange gains and losses arising are charged or credited to the profit
and loss account.
(b) Taxation
Deferred taxation is provided in full for material timing differences except where recoverability of a deferred
tax is considered to be remote in the foreseeable future. Deferred tax balances are not discounted unless
the effects are considered to be material the Company’s results.
(c)
Investments
Investments held as non-current assets are shown at cost less provision for impairment.
(d)
Related party transactions
Details of the related party transactions can be found in Note 28 within the consolidated financial
statements.
3.
Investment
(US dollars in thousands)
Shares in group undertakings
As at 30 June
As at 31
March
2020
2019
2019
2018
Investment in VivoPower International Services Limited
Total
7,388
7,388
7,388
7,388
7,388
7,388
7,388
7,388
The details of the principal undertakings in which the Group’s interest at the period-end was more than 20%,
all of which are referred to in Note 13 in the consolidated financial statements.
As at 31 March 2018, VivoPower International Services Limited (“VISL”) recorded an impairment charge of
$10.5 million against goodwill that arose on the acquisition of VivoPower Pty Ltd in the year ended 31 March
2018, as disclosed in Note 12 in the consolidated financial statements. Accordingly, this impairment has
been reflected in the Company’s investment in VISL.
Page | 98
Notes to the Company Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
4. Other receivables
As at 30 June
As at 31
March
(US dollars in thousands)
2020
2019
2019
2018
Amounts owed by group undertakings
16,338
18,427
18,099
17,145
Prepaid expenses
Total
196
150
139
112
16,534
18,577
18,238
17,257
5. Trade and other payables
(US dollars in thousands)
Trade payables
Accrued expenses
Payroll tax liabilities
Other borrowings
Amounts owed to group undertakings
Other creditors
Total
6. Provisions
(US dollars in thousands)
At 30 June 2019
Charged/(credited) to profit or loss:
Additional provisions
Provisions utilized
At 30 June 2020
7. Share capital
(US dollars in thousands)
Allotted, called up and fully paid
As at 30 June
As at 31
March
2019
2019
2018
2020
2,792
157
4
46
751
-
-
-
1,158
1,161
25
-
9
-
1,816
1,848
-
-
3,750
2,999
3,018
-
565
6
-
-
29
600
Litigation
Total
1,104
-
1,104
1,104
-
1,104
As at 30 June
As at 31
March
2020
2019
2019
2018
Ordinary shares of $0.012 each
$ 162,689
$ 162,689
$ 162,689
$ 162,689
Number allotted
Ordinary shares of $0.012 each
13,557,376
13,557,376
13,557,376
13,557,376
Page | 99
Notes to the Company Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
At 31 March 2018
Issue of new shares
At 31 March 2019
Issue of new shares
At 30 June 2019
Issue of new shares
At 30 June 2020
No. of shares
13,557,376
-
13,557,376
-
13,557,376
-
13,557,376
The Company issued 13,557,376 ordinary shares at a nominal value of $0.012 during the period ended 31
March 2017.
On 30 March 2017, the Company repurchased 129,805 shares at a price of $4.50 for a total sum of $591,916,
including commission. The shares are being held as treasury shares. During the three months ended 30 June
2019, 51,000 shares (year ended 31 March 2019: 75,805 shares) were awarded to employees under the
Company’s 2017 Omnibus Incentive Plan. Based on the closing market value of these shares on the day of
award, $61,560 (year ended 31 March 2019: $85,660) was expensed as employee compensation during the
three months ended 30 June 2019 and the remaining cost of $171,000 (year ended 31 March 2019: $260,011)
was charged against retained earnings. The remaining 3,000 shares were awarded to employees in the year
ended 30 June 2020.
8. Other reserves
(US dollars in thousands)
2020
2019
2019
2018
As at 30 June
As at 31
March
Equity instruments
Capital raising costs
Share option reserve
Treasury shares (see Note 6)
Foreign exchange
Total
27,429
26,108
26,090
25,072
(6,009)
(9,722)
(9,722)
(9,722)
-
-
3,713
(14)
3,713
(246)
(2,235)
(1,755)
(1,734)
3,713
(592)
186
19,185
18,330
18,101
18,657
Equity instruments relate to convertible preference shares and convertible loan notes that are exchangeable
for shares in VivoPower International PLC. There are 2,473,367 convertible preference shares at an issue price
of $3.00 per share. There are 2,473,367 convertible loan notes at an issue price of $7.00 per share. The value
held in reserves represents their face value plus the accrued interest to 30 June 2020. Interest is payable
quarterly in arrears at a rate of 7% on both instruments.
Share option reserve relates to share options whereby the holder can buy VivoPower International PLC
shares at US$8.70 at any time before 30 April 2020. No share options were exercised prior to that date,
accordingly the share options have expired and the share option reserve has been released against capital
raising costs.
Page | 100
Notes to the Company Financial Statements (continued)
VivoPower International PLC for the year ended 30 June 2020
9. Employee and directors
The company employed no members of staff during the course of the period. Contractual agreements are in
place for five directors to serve on the board of VivoPower International PLC.
See the Directors’ Report in the consolidated financial statements for full details of the directors.
Page | 101
Company Information
VivoPower International PLC for the year ended 30 June 2020
Company Information
Advisors
Company Registrars
Computershare Inc.
250 Royall Street
Canton, MA, USA 02021
Correspondence address:
Computershare Inc.,
P.O. Box 505000,
Louisville, KY, USA 40233
Independent Auditors
PKF Littlejohn LLP,
15 Westferry Circus,
Canary Wharf,
London, UK E14 4HD
Legal Advisers
Shoosmiths LLP
6th Floor, 1 St Martin’s Le Grand
London, UK EC1A 4AS
Principal Bankers
Barclays Bank PLC,
Level 16, 1 Churchill Place,
Canary Wharf,
London, UK E14 5HP
Company Secretary
JTC (UK) Limited
The Scalpel, 18th Floor
52 Lime Street
London, UK EC3M 7AF
Shareholder Information
Country of Incorporation and Main Number of Securities in Issue
Countries of Operation
As of 27 August 2020, the Company’s issued share capital consists of 13,557,376 ordinary shares with a nominal
value of $0.012 each.
VivoPower International PLC is incorporated in England & Wales. The Company operates in the United Kingdom,
United States and Australia.
Company Registration
Registered office:
The Scalpel, 18th Floor
52 Lime Street
London, EC3M 7AF, UK
Registered in England & Wales
Company number: 09978410
Financial Calendar
Annual General Meeting (“AGM”)
The Company’s AGM will be held on 6 October 2020. The notice of the meeting will be sent to shareholders at
least 21 days before the meeting.
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